April 13, 2009 / 12:44 PM / 10 years ago

UPDATE 1-First Niagara offers $300 mln stock to repay TARP fund

* Use proceeds to repay $184 mln to U.S. Treasury

* Q1 non-GAAP EPS $0.16 vs $0.19 last year

April 13 (Reuters) - First Niagara Financial Group Inc FNFG.O said it will sell $300 million of common stock to repay the bailout funds it received from the U.S. Treasury, and posted a marginal drop in first-quarter profit.

The company reported a net income of $18.7 million for the first quarter, compared with $18.8 million recorded a year ago.

Net interest income rose almost 21 percent to $72.6 million. Provision for bad loans increased three-fold to $8.8 million.

The company intends to use proceeds from the stock offering to close its acquisition of 57 branches, $4.2 billion of deposits and $839 million in loans from City National Bank, a unit of PNC Financial Services Group Inc (PNC.N), it said in a statement.

First Niagara said last week that it had the option to issue a combination of common stock and debt to close the deal with PNC, in order to maintain strong capital levels. [ID:nBNG441458]

The deal will help the bank to pay back the $184 million it received as a part of the Capital Purchase Program from the government, First Niagara said.

First Niagara is one of the many U.S. banks that have applied for and received TARP money. It also joins the few small and mid-cap banks that are starting to repay the bailout funds.

Shares of the company closed at $13.50 Thursday on Nasdaq. (Reporting by Adheesha Sarkar in Bangalore; Editing by Ratul Ray Chaudhuri)

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