First Niagara says repays all TARP money

(Reuters) - First Niagara Financial Group Inc (FNFG.O) said it has repaid all the funds it received as part of the Troubled Asset Relief Program, after it repurchased a warrant issued to the U.S. Treasury for $2.7 million.

The company said it repurchased the warrant for the remaining 953,000 common shares issued to the Treasury on November 21, 2008, and the buyback will not impact its earnings.

"During their six-month investment in First Niagara, the government earned more than $7.4 million for an annualized return of nearly 8 percent," the company said.

Late last month, the company said it redeemed all of its $184 million non-voting senior preferred stock sold to the Treasury.

In April, the company said it would sell $300 million of common stock to repay the bailout funds.

Since October of last year, First Niagara said it has raised over $495 million in private-sector capital.

John Koelmel, chief executive officer of First Niagara, said the company had raised more than twice the amount originally received from the government.

The government created TARP last fall to unlock the flow of credit after credit markets were brought to a near halt by shocks such as Lehman Brothers Holdings Inc's (LEHMQ.PK) bankruptcy.

At first, banks viewed TARP money as a positive, signaling government confidence. But TARP also allows the government to unilaterally impose restrictions, including on pay, and many investors now believe holding bailout money signals weakness.

Shares of the company were up 29 cents at $11.74 Monday morning on Nasdaq.

(Reporting by Santosh Nadgir in Bangalore; Editing by Deepak Kannan)