By JAMES FINK AND ALLISSA KLINE
jfink@bizjournals.com | 716-541-1611

A combination of recent acquisitions and its own growth is prompting a plan by First Niagara Financial Group Inc. to add 500 employees to its workforce, mostly in Western New York.

The hirings will take place between now and 2016 and the jobs will range from customer-facing and direct support roles to administrative and back-office functions. The expansion is being fueled by a handsome incentive package totaling $5.7 million from Empire State Development Corp.

John Koelmel, First Niagara president and CEO, made the formal announcement Monday during a news conference in the lobby of the Larkin at Exchange building. The former Lockport Savings Bank moved its headquarters from Pendleton to Buffalo in fall 2009.

The addition of so many new jobs demonstrates the bank's commitment to the region and its plan to become something more than it is today, Koelmel said.

"These are full-time, career-building positions," he said.

The promise of jobs shows "strong evidence" of the bank's ongoing ties to Buffalo and Western New York, he added.

Right now, about 400 First Niagara employees work in the Larkin at Exchange building while the company employs about 1,300 workers across the region, Koelmel said. In total, the company employs about 5,000, including those retained during the April 15 acquisition of NewAlliance Bancshares Inc. in Connecticut and Massachusetts. It has 346 branches in four states and $30 billion in assets.

The new jobs mean First Niagara will have to find more physical room for employees.

Koelmel has acknowledged that First Niagara is "out of space" in the Larkin District, where it leases one full floor and half of two other floors. He said Monday that the bank plans to make "substantial capital investments" to expand its infrastructure.

He stopped short of confirming that the bank will be the anchor tenant in Howard Zemsky's proposed redevelopment of the historic "U Building" on Van Rensselaer Street. Zemsky is working with Buffalo and Erie County officials on an incentive package for renovations at the circa 1893, 46,000-square-foot building. That plan is working its way through the municipal approval process.

"It is not an illogical conclusion," Koelmel said about First Niagara occupying the U Building.

Andrew Rudnick, Buffalo Niagara Partnership president and CEO, said the bank's decision will have nothing but positive impact on the fast-emerging Larkinville District evolving along Seneca, Exchange and Van Rensselaer streets.

"It will stimulate activity along the Seneca Street corridor," Rudnick said. "We're already seeing signs of that."

Those include the development trio of Jim Cornell, Peter Krog and Gordon Reger starting a $50 million renovation of the Larkin Commerce Center, which neighbors the Larkin at Exchange building.

Also, Capital Management's plan to occupy a new building Zemsky is developing on Seneca Street.

Buffalo Mayor Byron Brown said expansion plans like that of First Niagara make "his job easier" when trying to convince companies to invest in the city.

"Whether it's Howard Zemsky or First Niagara, they are creating a sense of investment," Brown said. "Developers look at this and see something that makes sense. And they think, 'If this makes sense to them (First Niagara), then it makes sense to me.' "