First Niagara Will Offer $300 Million In Stock

LOCKPORT, N.Y. (AP) — First Niagara Financial Group Inc. said Monday it will offer $300 million in stock in a public offering, partly to pay back stock issued to the U.S. Treasury.

The offering will be made through Keefe Bruyette & Woods and Goldman Sachs & Co. Underwriters will have the option to purchase an additional 15 percent of shares to cover overallotments.

Net proceeds will be used to improve capital levels as it closes an acquisition of 57 Western Pennsylvania bank branches from National City Bank. It will also be used to help repay $184 million in preferred stock issued to the U.S. Treasury Department under the capital purchase program, as well as general corporate purposes.

First Niagara also has the option to sell to The PNC Financial Services Group Inc. up to more than 6.8 million shares for a total of not more than $75 million. If it opts to do so, PNC is obligated to purchase them. Similarly, First Niagara could opt to sell up to $150 million shares — minus the amount of common shares it sells to PNC — 12 percent senior notes due 2014 to National City, which is obligated to purchase them.

Also Monday, First Niagara said first-quarter profit fell 15 percent, as the company increased its provision to cover bad loans.