First Niagara Financial Group&#8217s top executive told shareholders Tuesday that bank

management wants to create a franchise that would be attractive to investors and also

potential buyers but that it intends to keep growing, not sell out.

Responding to a question at the bank&#8217s annual meeting, CEO John R. Koelmel said the

bank&#8217s &#8220ultimate objective&#8221 as a public company is to increase shareholder

value. As such, he said, executives would consider any offer that &#8220we, as shareholders,

deem as appropriate.&#8221

But that&#8217s not why the bank has pursued a strategy of aggressive growth,

capital-raising and conversion to a commercial bank charter in the last year, he said.

Koelmel called 2009 &#8220a breakout year for us.&#8221

&#8220First Niagara is clearly emerging as a recognized winner,&#8221 he said. &#8220. . .

We have rapidly emerged as a player.&#8221

Just two years ago, he noted, the bank had $8 billion and 110 branches in upstate New York.

Today, after two deals in Pennsylvania in eight months, it has $20 billion and 255 branches in

two states. And it&#8217s one of the nation&#8217s top 35 banks in size and top 30 in market

value.

&#8220We&#8217ve caught the attention of many,&#8221 he said. &#8220But this is not about

pursuing size just to be bigger.&#8221

Instead, Koelmel said, executives want to show that they can do a better job of creating

shareholder value than any buyer could offer through an acquisition. In turn, that would

justify the bank&#8217s continued autonomy, without having to put special protections in place

to prevent a takeover.

&#8220We&#8217re confident our opportunities are on the buy side, not the sell side,&#8221

he said. &#8220Our commitment is for the long run.&#8221

That will likely include more acquisitions, as the &#8220dramatic upheaval in our industry

offers a window of opportunity&#8221 for the bank to &#8220keep playing offense,&#8221 Koelmel

said. Options include whole bank deals, purchases of failed banks from the Federal Deposit

Insurance Corp., and branches that &#8220some of the bigger guys shake loose,&#8221 as well as

capturing business from banks that are distracted.

&#8220Since this window won&#8217t stay open forever, we are proceeding with a continuing

sense of pace and urgency,&#8221 Koelmel said. &#8220I am very confident there will be many

more opportunities.&#8221

Koelmel spoke during the bank&#8217s first annual meeting held at its new Buffalo

headquarters since moving to the Larkin at Exchange Building downtown several months ago. More

than 70 people filled the room, even lining the back wall &#8212 including a past president of

predecessor Lockport Savings Bank, Norman W. Sinclair.

&#8220We&#8217re firing on all cylinders and cranked up to drive forward,&#8221 Koelmel

said. &#8220We&#8217ve accumulated significant earnings power. . . . We now need to make that

a reality.&#8221

His remarks came a day after the bank reported first-quarter earnings of $28.9 million and

operating profits of $33 million, or 18 cents per share. And it followed a year in which the

bank doubled in size, raised $1 billion in capital through three stock offerings and posted

annual operating profits that exceeded $100 million for the first time.

Earlier this month, the bank completed its purchase of Harleysville National Corp. outside

Philadelphia in the second big deal, retaining 98 percent of deposit accounts and balances. In

just two weeks, First Niagara opened 1,000 new accounts with $11.3 million and made $18.5

million in new loans.

&#8220All of our hard work and relentless focus on execution and discipline is really

paying dividends,&#8221 said Chief Financial Officer Michael W. Harrington.

But even as the bank has grown, the executives stressed to shareholders that they&#8217re

committed to delivering value to them while also serving the credit and deposit needs of the

communities it serves &#8212 missions that are not mutually exclusive.

&#8220We are a poster child for what banks should always be doing,&#8221 he said.

&#8220Whether you sit on Wall Street or Main Street, we serve both constituencies.&#8221

He said the bank made $3.5 billion in loans, served 150,000 new customers and created 300

jobs last year. &#8220We&#8217re doing all we can to serve as a catalyst for real economic

stimulus,&#8221 Koelmel said. &#8220Better yet, we&#8217ve got real plans to do more than that

this year and beyond.&#8221

He also cited the bank&#8217s increase in charitable giving, support for employee

volunteers and mentoring, and collaboration with developer Howard A. Zemsky &#8212 the

&#8220Mayor of Larkinville,&#8221 as Koelmel called him &#8212 in revitalizing the area around

the Larkin building.

Shareholders have seen a 33 percent return since the financial crisis began at the end of

2007, in contrast to &#8220deep losses&#8221 at other banks, Harrington noted. First Niagara

ranks in the Top 10 for total shareholder return over the last two, three, five and 10 years,

in part because it never cut its dividend.

&#8220We know we have raised the bar and generated higher expectations,&#8221 Koelmel said.

&#8220But that&#8217s just fine with us.

&#8220Please be assured that we have a lot left in the tank. ... We won&#8217t

disappoint.&#8221