UPDATE 1-Fulton Financial redeems TARP preferred stock

Wed Jul 14, 2010 5:19pm EDT

* Says repayment to hit Q3 profit by 3 cents/share

* Says repayment to eliminate $18.8 mln div expenses

July 14 (Reuters) - Fulton Financial Corp (FULT.O), a U.S. regional bank, said it redeemed the $376.5 million of preferred stock issued to the U.S. Treasury under the government's Troubled Asset Relief Program.

The company, which paid $379.6 million to the government including unpaid dividends, said the redemption will hurt its third-quarter net income available to shareholders by 3 cents a share.

The parent company of Fulton Bank N.A. said the U.S. Treasury still holds a warrant for 5.5 million common shares, which Fulton intends to purchase after negotiations. The bank said by repaying the bailout money, it would eliminate the $18.8 million annual expense of dividends paid to the government.

Fulton had recently raised about $230 million through a common stock offering to repay the government.

Shares of the company closed at $10.24 Wednesday on Nasdaq. (Reporting by Archana Shankar in Bangalore)

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