You could forgive First Niagara chief John Koelmel for reaching that conclusion after his company announced the biggest bank merger since the financial crisis of 2008 – and was rewarded with a 6% pasting in the stock market.

Koelmel said he wasn’t fazed by the reaction, because he made the deal with the bank’s long-term growth strategy in mind. First Niagara is based in Buffalo but has spent recent years expanding beyond its western New York home, and the acquisition of New Haven, Conn.-based NewAlliance  gives the bank the New England stronghold Koelmel has coveted.

The bank, which will have expanded tenfold over a decade with the completion of this deal, now has branches in an area stretching from Buffalo to Boston in the north and from Philadelphia to Pittsburgh in the south.

“This is a step out from what people were predicting for us,” Koelmel said in an interview Friday. “We were able to find a strong organization in NewAlliance, and there aren’t that many strong organizations out there.”

But this seems to have been lost on investors, who lately seem consumed by debates over the likelihood of deflation or the prospect of a double dip recession or even sightings of the Hindenburg omen, whatever that is.

Indeed, even on TV appearances tied to the acquisition, Koelmel said he fielded few questions about the merger, as questioners focused on the latest  pronouncements of the Philly Fed and the like.

That said, it’s not exactly shocking that First Niagara shares fell on the announcement of the deal, given the amount of stock the bank stands to issue in the deal and the sharp decline in bank stocks in recent weeks. The KBW banks index has dropped 11% this month.

“The market is kind of prickly on bank stocks right at the moment,” Koelmel said, pointing to worries about the economy and questions about the impact of last month’s Dodd Frank financial reform legislation. “But we aren’t about to make decisions based on what the market thinks.”

Koelmel also pointed out that contrary to what I suggested yesterday, there is abundant evidence investors are embracing First Niagara’s expansion.

I noted that the stock has fallen modestly since Koelmel took over as CEO in December 2006, but failed to pair that observation with the obviously relevant comparison of First Niagara’s regional bank peers.

First Niagara has dropped 7%, adjusted for dividend payments, since Koelmel’s appointment, while the KBW banks index has plunged 61%. The stock has held up even as the bank raised $1 billion in capital, he points out.

Of course, past performance is no guarantee of future results, particularly at a time when the economy’s path is “unusually uncertain,” by Ben Bernanke’s lights.

But while Koelmel doesn’t expect to see any substantial improvement or deterioration in the economy in coming months, he said First Niagara aims to keep taking market share. That, he says, is a formula for growth at a time when the average bank customer is not exactly rolling in dough.

“The pot isn’t expanding,” Koelmel said. “You’ve got to grab market share because the pie is what’s stagnant.”