First International Bancorp's shares soared 20 per cent in morning trade on Tuesday after United Parcel Service, the world's largest package delivery company, said it had reached an agreement to buy the small business lender for about $78m in stock.

UPS said the acquisition of First International Bancorp - the parent company of First International Bank - would add to the offerings of UPS Capital, the company's financial services subsidiary, particularly in the area of government-backed lending.

UPS said the acquisition would not dilute its 2001 earnings per share and would add slightly to 2002 earnings. UPS also said that it does not plan to lay off any staff as a result of the acquisition.

Under the terms of the agreement, UPS will offer 0.16 shares of UPS Class B common stock for each share of First International Bancorp common stock.

Majority shareholders of First Bancorp have agreed to vote in favor of the transaction. The deal is expected to close during the second quarter of 2001, subject to regulatory approval.

As part of the deal, First International Bank will sell all of its deposits, about $260m, to a third party. As a result, First International Bank will operate as a non-depository bank and will be subject to Connecticut's state banking laws and regulations.