First Niagara ( FNFG) will acquire $4.2 billion in deposits and 57 former National City branches from PNC Financial Services ( PNC), the bank said Tuesday.

PNC, which acquired Nat City in December 2008, was required to divest itself of the branches in New York and Pennsylvania as a regulatory condition.

First Niagara, a regional bank based in Lockport, N.Y., expects the deal to close in September and boost earnings per share by 20% next year. It will pay a deposit premium of 1.3% to receive $3.2 billion in cash and $839 million of performing business and consumer loans. It will pay for the deal with a combination of stock and debt not to exceed $150 million or 6.8 million shares.

The purchase will give First Niagara an additional 400,000 customer accounts and rank it as No. 3 in deposit market share for the combined Pittsburgh, Erie and Warren areas where the branches are located. It will add 500 existing employees to its ranks, along with another 150 to 200 new positions First Niagara plans to create.

Shares of First Niagara were up 13.5% to $12.70 and PNC shares were off 5.4% to $31.97 in morning trading.

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