Listen to audio clips of First Niagara President and CEO John Koelmel's conversation with Lauren LaCapra linked throughout the article.

First Niagara Financial Group ( FNFG) has been making headline recently as the little regional bank that could.

The Lockport, N.Y.-based company announced last week that it had raised $380 billion in fresh private capital, which it plans to use in part to repay $184 million worth of Troubled Asset Relief Program funding it received from the government last fall.

First Niagara, which has remained profitable through the economic turmoil, is also on a mission to expand its footprint through the Northeast and Mid-Atlantic area. The bank recently won a bid to acquire a chain of National City branches -- and $4.2 billion in deposits -- from PNC Financial Services ( PNC).

President and CEO John Koelmel, spoke with TheStreet.com about his plans to capture market share from bigger competitors that are focused more on containing troubled assets than expanding their reach, and the decision to raise capital to get out from under the government's wing.

TheStreet.com: Tell me more about the Nat City acquisition. What made First Niagara a key contender, and how did you score the deal?

John Koelmel: As I said to others, I've assumed ... they were negotiating with more than us right up until the final stages of the process, because that's what any good seller would do. In this case it's also complicated by the fact that it wasn't just PNC making the decision here.

The Department of Justice and the Fed had the ultimate approval. They needed to ensure, wanted to ensure, that they got a high-quality competitor and that PNC wasn't frankly structuring a transaction that was advantageous to them since they're the big kahuna, they're the 800-pound gorilla against which we and others will continue to compete...

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