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First Niagara Financial Group’s interim CEO stressed Friday that the bank is “laser-focused on profitability” and will grow only through adding customers and loans – not acquisitions – as the company reported higher first-quarter profits from commercial lending, cost-cutting and strong credit.

“I want to be very clear that our focus is on leveraging the footprint and franchise that we have built over the last few years and translating our strong business fundamentals into strong financial performance and value to our shareholders,” said Gary Crosby, executive vice president and chief operating officer, who was named interim president and CEO on March 25 after John R. Koelmel stepped down.

First Niagara said net income rose 8.9 percent in the first quarter from a year ago, as revenues from the purchase of HSBC Bank USA’s branch network rose faster than expenses.

The Buffalo-based parent of First Niagara Bank, the No. 2 bank in Western New York and one of the 25 largest U.S.-based banks, reported profits for shareholders of $59.7 million, or 17 cents per share, up from $54.8 million, or 16 cents per share, in the first quarter of 2012. Results matched expectations of Wall Street, which sent the bank’s shares up 30 cents to close at $9.09.

Earnings included about $6.3 million before taxes, or 1 cent per share, for severance costs for two executive departures, including Koelmel and Oliver Sommer, former executive vice president of corporate development. Sommer, who oversaw the bank’s acquisitions, left last month after the bank backed off its aggressive growth to appease angry shareholders.

“Coming on the heels of the abrupt departure of the company’s former CEO around quarter-end, the quarter looks to have been as good as could have been expected, given the circumstances,” Sandler O’Neill & Partners analyst Joseph Fenech said in a research report.

Comparisons to a year ago are heavily skewed by the addition of the HSBC operation. Compared to the fourth quarter, when the bank already owned and operated the HSBC branches, net income for shareholders rose 11.4 percent from $53.6 million and 15 cents per share.

“The First Niagara board and management team are committed to delivering enhanced value to our shareholders, by capitalizing on the strong foundation that we have built,” Crosby said. “For us, it’s all about improved profitability ... It is business as usual.”

First Niagara completed its purchase of 195 HSBC branches on May 17 of last year, but then sold 64 branches to KeyCorp, Community Bank System and Five Star Bank, while consolidating 35 offices. The bank kept $9.9 billion in deposits, $1.6 billion in loans and 103 branches.

Koelmel abruptly stepped down from the top job, in what was described as a mutual decision with the board, after his acquisition strategy in recent years failed to produce the returns that shareholders expected. In particular, the $900 million HSBC purchase backfired because of bad timing, as Wall Street pummeled the bank’s shares and the deal proved far more costly for First Niagara than initially promised.

First Niagara’s board appointed a three-member executive search committee, chaired by director Nathaniel D. Woodson and also including Carl A. Florio and Carlton L. Highsmith. The bank also hired search firm Korn/Ferry International to assist the effort.

“The overriding goal is to secure the best possible CEO to guide us as a strong, independent banking franchise that will deliver increasing shareholder value,” Crosby said.

In a separate interview, Crosby said he does not want the job.

“I have told the board that it is not my intention to throw my hat in the ring,” said Crosby, who said he was asked by Chairman Thomas Bowers and Woodson to serve as interim CEO more than a week before the formal announcement by the bank. “I am perfectly content to return to my prior position.”

Net interest income from taking deposits and making loans in the first quarter rose 9.8 percent from a year ago and 5.5 percent from the fourth quarter, to $266.1 million, despite a narrowing of the profit margin.

Average total loans rose 11 percent annualized from the fourth quarter, led by a 17 percent annualized rise in commercial loans – the 13th straight quarter of double-digit growth in average commercial lending.

“It was a very solid, clean quarter,” said Chief Financial Officer Gregory W. Norwood. “We like the loan growth and the fact that it continues across every one of our geographies.”

Fee income rose 27.8 percent from a year ago to $89.3 million, but fell 2.7 percent from the fourth quarter, as margins from originating and selling mortgages tightened industrywide.

Operating expenses rose 18.7 percent from a year ago, but fell less than 1 percent from the fourth quarter, to $237.7 million. The bank plans to limit hiring and investments, and will continue to reduce vendor expenses and focus more on marketing select products rather than the overall brand. Five to 10 branches may also be closed.

email: jepstein@buffnews.com