By Richard Lee

When the Davis Companies bought 40 Richards Ave. in Norwalk from Mack-Cali last June, it knew it was acquiring a property with untapped potential, and now, with the expansion of First Niagara Bank’s operation within the building, the company is seeing validation of its investment.

The Buffalo, N.Y.-based financial institution acquired tenant Pierson & Smith, an insurance brokerage and consulting firm in 2011, and informed the new owner it planned to create a regional administrative office for Fairfield County.

Pierson & Smith has moved from 8,000 square feet on the fourth floor of the 147,000-square-foot building to a 21,000-square-foot space on the fifth floor, and joining the firm are First Niagara staff involved in retail banking management, commercial real estate banking, residential mortgages, small business banking, middle market banking, private client banking, treasury services, government banking and its health care banking group.

In total, the regional office, which does not offer customer services, has more than 50 employees.

The new facility also houses the desks of Cathie Schaffer, tri-state regional president, David Ring, New England regional president, and Bruce Rogers, regional director of insurance for Pierson & Smith/First Niagara Risk Management.

First Niagara’s expansion indicates the bank’s commitment to being a strong player in the Fairfield County market, according to Schaffer.

“This is definitely a growth area for the bank,” she said, adding that offices in New Haven will focus on other areas of Connecticut. “The markets are very different.”

Knowing that the bank had made plans with Mack-Cali only heightened the Davis Companies interest in the property, said Stephen Rice, regional director for the tri-state area.

“The building was under-managed,” said Rice, adding his company will embark on an upgrade of common areas of the building in February. “We thought that with our management skills we could improve the occupancy of the building.”

The move also helps Pierson & Smith, Rogers said, because under its new ownership, the business expanded and grew to more than 30 employees, but it was limited by space.

“We’ve had double-digit growth since joining First Niagara and its insurance operations,” Rogers said.

Earlier this month, First Niagara Financial, parent of First Niagara Bank, announced that it will lay off up to 170 administrative workers across its four-state service area, but said many will be eligible to apply for other jobs within the bank.

The new regional office shows First Niagara’s belief in Norwalk and its presence in Fairfield County, said Brian Griffin, vice president of the Greater Norwalk Chamber of Commerce, and its arrival is not ignored by other financial institutions.

“Businesses watch each other in certain industries, and competitors take note,” he said.

In the third quarter of 2013, First Niagara reported net income rose to $71.6 million, or 20 cents a share, compared with $50.8 million or 14 cents a share for the same period in 2012. It will report its fourth quarter results on Friday before stock markets open.

Traded on the Nasdaq under the ticker symbol “FNFG,” First Niagara’s share price fell 1 cent to $10.48 in Wednesday trading.

The bank and Norwalk business community will celebrate the opening of the new office on Thursday from 5 to 7 p.m. at 40 Richards Ave.