John R. Koelmel did a great job turning First Niagara Bank from a sleepy local thrift into a Northeastern banking power.

But he did a lousy job taking care of First Niagara’s shareholders, and it is likely their displeasure with his “growth at any price” strategy contributed to him losing his job as the bank’s president and chief executive officer last week.

Koelmel may not be the only loser in First Niagara’s leadership shift. It could signal a major weakening of First Niagara’s strong ties to the Buffalo Niagara region and its growing role as a major Buffalo booster, especially if its directors – only one of whom has ties to Western New York – picks an outsider to fill the top spot on a permanent basis.

It could get even dicier if the board decides if will take too long to fix First Niagara’s problems by cutting costs and making its business more efficient and profitable. A quicker fix would be to sell the bank, although its shares have sunk so low that it would take a hefty premium to put long-time investors back in the black, and the line of potential suitors may not be long because of upstate New York’s sluggish economy.

Regardless of how it all plays out, Koelmel’s ouster is a stark reminder that the acquisition game is one that needs to be played very carefully.

Koelmel’s growth-on-steroids approach yielded quick results, with First Niagara gobbling up whole banks in three deals and significant branch networks in two others over a five-year span.

Thanks to those deals, First Niagara’s asset base more than quadrupled to $37 billion, all coming at a time when the banking industry was reeling and big mergers were as rare as a savings account that pays 10 percent interest.

The deals helped Koelmel carve out a name for himself in banking circles, and the bank’s growth stood out as a bright spot in a community starved for jobs and fast-growing businesses.

Under Koelmel, First Niagara thrust itself into the public eye, putting its name on the First Niagara Center and writing a big check to keep the Empire State Games alive for an extra year. Koelmel even took to the airwaves as First Niagara’s pitchman, giving Western New Yorkers a taste of the sports analogies that he loves so much.

“They were relentless in acquiring. They were buying and buying,” said Joseph Curatolo, the president of Georgetown Capital, an Amherst money management firm. “But First Niagara didn’t buy on the cheap. They paid full retail, and they couldn’t swallow it.”

First Niagara’s early deals, beginning with its 2007 purchase of Greater Buffalo Savings Bank, went smoothly. Its acquisition of 57 PNC Bank branches in the Pittsburgh area during 2009 was “terrific,” while its purchase of Harleysville National Corp. in suburban Philadelphia later that year was “very good,” said Joseph Fenech, a Sandler O’Neill & Partners analyst in a January report.

The next year, First Niagara was back at it, gobbling up New Alliance Bancshares in Connecticut for $1.5 billion, and in 2011, agreeing to buy HSBC USA’s upstate branch network for $1 billion.

Analysts criticized First Niagara for overpaying, and making matters worse, the timing of the HSBC deal turned out to be lousy. The European debt crisis was in full swing and the deal was announced weeks before the U.S. financial markets were roiled by the U.S. debt ceiling debacle.

“Economic growth has been lackluster, and in a more normal economic expansion, many of these problems would have been swept under the rug,” said Gerald T. Cole, the chief investment officer at Arbor Capital Management, an Amherst money management firm. “Margins are razor thin across the board, and when you have thin margins, it just amplifies any missteps.”

First Niagara executives decided to wait to raise the capital it needed to pay for the HSBC deal, hoping the financial markets would improve. Instead, they got worse. So when the bank finally raised $1.1 billion in December by selling a combination of stock and debt, its shares were worth 30 percent less than they were when the HSBC deal was announced. That exacerbated the dilution First Niagara’s shareholders were subjected to. It also saddled the bank with dividend and interest payments on the preferred stock and bonds that it issued, further depressing its earnings.

“The implications of raising capital at a very distressed price several months later obviously changed the entire complexion of the transaction,” Fenech said.

Evercore Partners analyst John Pancari, in a research note last week, was even more blunt. He said the HSBC deal was “poorly executed.”

With most acquisitions, the purchasing company will quickly move to squeeze costs out of the business it bought. With First Niagara’s deals, cost-saving opportunities were relatively limited, since the acquisitions primarily pushed the bank into new markets that lacked the overlapping branches that make ripe targets for shaving expenses.

Despite the criticism, First Niagara succeeded in making its business more profitable. The bank’s profits have nearly doubled since 2009 as a result of the acquisitions, but First Niagara’s shareholders haven’t shared in those gains because of all the shares of stock that it has sold over the past five years to finance its buying binge. First Niagara now has three times as many shares in circulation than it did in 2008, so even with its profits almost doubling, the bank’s earnings per share have plunged by 50 percent.

The dilution also has hurt First Niagara’s tangible book value per share – which measures what the bank would be worth if it were liquidated. At the end of 2006, First Niagara’s stock traded for 2.5 times its tangible book value. Now, it’s about 1.3 times its tangible book value.

To conserve cash, the bank slashed its common stock dividend in half, further dinging shareholders.

Put it together, and First Niagara’s stock is down 41 percent since its shares hit their post-recession peak of $15.06 in February 2011. In contrast, the benchmark KBW Bank index is up 3 percent over the same period. First Niagara is the worst-performing stock in that bank index; it’s cross-town rival, M&T Bank, is up 13 percent and is the fourth-best stock in the 24-member index.

“The company, under Koelmel, pursued growth for the sake of growth and this was not always consistent with shareholder value creation,” Citigroup Global Markets analyst Josh Levin wrote in a report.

Anthony J. Ogorek, who runs Ogorek Wealth Management in Amherst, said First Niagara’s missteps weren’t just Koelmel’s fault. “The board approved everything,” he said. “It’s incredible that the CEO should be ousted, but no one on the board should be held responsible for approving all these deals.”

Koelmel knew full well First Niagara was suffering from a bad case of indigestion. He told investors earlier in the year that the bank was taking a break from acquisitions and focusing on integrating its new additions. The bank was looking to cut its costs by $40 million this year, and close five to 10 branches as part of its bid to squeeze more profits from its banking operations.

Even more telling, John Koelmel, after playing offense throughout his tenure at First Niagara, started talking defense.

“There’s not a whole lot going on in the market that gives us, as an industry, a whole lot of upside opportunity,” he said last month. “So it’s important we protect on the downside.”

But by then, it was too late.