Atlanta, Jan. 16 (Bloomberg) -- United Parcel Service Inc. said it agreed to buy First International Bancorp Inc. for about $78 million in stock, using the bank's expertise in handling government-backed loans to broaden the operations of its own financial services unit.

UPS agreed to exchange about 0.160 shares of its Class B common stock for each share of First International Bancorp. Based on 8.3 million First International shares outstanding as of Sept. 30, UPS would exchange about 1.3 million of its Class B common shares valued at $78 million in the transaction.

First International primarily makes loans to small and midsize manufacturers, distributors and wholesalers, using U.S. government-backed loan programs through the Small Business Administration, Department of Agriculture and Export-Import Bank of the U.S.

First International serves ``businesses that have traditionally been underserved by financial institutions,'' said Bob Bernabucci, UPS Capital chief executive, in a statement. ``UPS and UPS Capital also are focused on this customer segment with distribution and financial solutions.''

The acquisition will add to UPS earnings beginning in 2002, UPS said. Specifics weren't immediately available.

First International Bank, a unit of Hartford, Connecticut-based First International Bancorp, will sell its $260 million in deposits to a third party prior to the UPS acquisition. As of Sept. 30, First International Bank had a managed loan portfolio of $1.2 billion.

UPS Capital provides a variety of services to businesses, including equipment leasing, inventory and distribution financing and international trade.