John R. Koelmel, the burly, deep-voiced chief executive of First Niagara Financial Group, loves to "seize the moment."
After enduring years of criticism from impatient investors and analysts displeased that the Lockport-based banking company's stock was sputtering while the banking industry was roaring, First Niagara now is sitting in the catbird's seat while the once-mighty fall one by one.
First Niagara's stock is up 22 percent this year in a stock market that's down 25 percent. And the bank did something else equally extraordinary over the last couple of weeks: As the financial markets reeled while banks and investors hoarded their cash and waited for the next shoe to drop, First Niagara managed to raise nearly $109 million for its already well-stocked coffers by selling additional shares to investors.
"We opted to seize the moment," Koelmel says, repeating the same phrase he used a year ago after First Niagara snatched up Greater Buffalo Savings Bank in a $153 million deal to become a bigger player in the Buffalo Niagara banking market. "The dots all connect there. The stock is strong because our underlying fundamentals are strong."
It all happened quickly. The decision
,6l,7p6 to try to sell stock was made two Fridays ago. The offering was lined up early the next week. And last Wednesday, the deal closed.
Now, Koelmel is sitting pretty, with an extra $109 million in his back pocket, waiting for the right opportunity that will help First Niagara grow, either by bolstering its presence in its existing markets or by pushing into a new one.
Maybe that will mean buying more branches, if as Koelmel expects, some of the bigger banks now in the upstate market have to sell some assets to raise capital. Maybe it will be an outright acquisition. Maybe it will mean buying other bank operations at distressed prices. Maybe it will mean using that extra capital to expand First Niagara's own base.
"Our first priority is organic growth," Koelmel says. "Our primary focus continues to be on the upstate market where we're already doing business."
The stock sale and First Niagara's revived stock price "sends a loud and clear message" to the bank's customers and investors, Koelmel says. "We will have the capacity to continue to lend and to continue to grow."
That's pretty standard, but it stands out now because so many bankers have headed for the bunkers to ride out the financial storm.
In times like this, it's good to have cash, and that's exactly what Koelmel has. "I have no doubt that things will continue to get worse," he says. "I think the capital markets will continue to be skittish."
That cash also will come in handy if, as Koelmel expects, banking regulators increase capital requirements. "The market gave us an opportunity to raise a nice slug of capital and put that issue behind us for the next couple of years," he says.
What a change a year makes. Last fall, some investors thought First Niagara should put itself up for sale to bring at least some upside to shareholders whose investment, up to that point, had underperformed the Standard & Poor's mid-cap financials index by 45 percentage points. Now, that shortfall is down to about 22 percent and closing.
Since early last year, First Niagara has been cutting costs to bolster its profits. And now, doing business in the stable yet fairly stagnant upstate economy looks a lot better to investors burned by bad loans in the nation's go-go markets.
"We were initially defending how we could be successful and grow in a market like upstate New York, where there is little or no growth," Koelmel says. "Now, people smile when they talk about doing business in upstate New York."
Now that times are getting tougher, Koelmel says, "our story plays pretty well."