First Financial could consider paying back TARP money - Business Courier of Cincinnati:

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“The board will considerr that nowthat we’ve done our common stock offering,” Davis said in an intervieq after the shareholders meeting at the Mano r House in Mason. “We’re very well-capitalized. We feel very comfortablew with ourcapital position.” Norwood-based Firsty Financial received $80 million from the U.S. Treasury’ s Capital Purchase Program, part of the Troubleed Asset Relief Program, in December by selling preferre d stock tothe government. It pays a 5 perceng annual dividend for five the rate rises to 9 percent after FirstFinancial (NASDAQ: FFBC) raiseed $98 million in net proceeds June 8 from a commonb stock offering.
Part of the use of that capital coulx be to pay back the Treasury Davis said. The board would have to approvwe sucha move. The bank would have to go througnh an application process to get government approvao to pay backthe money. Some banks have alreadyt receivedthat approval. Regulators askex First Financial to participatw in thecapital plan, Davis said in response to a shareholdeer question about why a healthy bank woulx take the money. The programn was voluntary, but First Financial wanted tostockpils capital.
“We weren’t sure how deep the recession would be, and we thoughr it was important to ensure we hadamplse capital,” he told William Harding, a shareholder from Columbus, asked how the companyu plans to handle buying back the stock from the Treasury. The board will consider it, Davis But, he added, the interest it received from investing part of that Treasury monegy is enough to pay the dividendsit requires. A stipulation of the Treasury money is that companiese cannot raisetheir common-stock dividendas beyond the level they were beforew the company decided to take the First Financial wasn’t part of the recentg federal government “stress tests.
” Those gauged the nation’sd 19 largest banks’ abilityu to withstand a worsening economy. But Davids said First Financial performed its own tests internallty using thegovernment criteria. Those testzs showed the bank is ingood shape. He pointed to numbersx showing First Financial is wellbeyond regulators’ requirement to be considered well-capitalized. Its tangibl common equity totaling 8.6 percent of tangible assets after the stock offering is far aboves the roughly 5 percent peergroulp average, he said.
The recent public stocjk offering also made it unnecessary for Firstg Financial to go ahead with a shareholder vote that woul d have allowed the board to issue more preferreds stock in order toraise capital. That proposa l was first raised, Davis said, when other means of raising capital weren’t readilh available. Harding said he woulc oppose the company issuing any more preferred eventhough it’s a moot point for now. “It’xs a major concern for me that issuingv new preferred stock dilutes the stock my father purchased in Harding said. “I want to make sure my father’ss investment is safe.
” Several shareholderws asked whether and when the dividend wouldc be raised back to itsprevioue level. First Financial said in Januaryh it would cut the quarterlty dividend from 17 centw a share to10 cents. “It was a toughn decision,” Davis said. “We were in a period of the worst economi stress in80 years, and we felt it was the prudenft thing to do. “We want to providd some good level ofdividend payment, but we also want to see the stockl price improve. To do that, we need earningsa improvement, so we need growth.
” While Davi s isn’t pleased with Firstg Financial’s total return to shareholder s – a loss of 26 percent sincwe January2008 – it stacks up well with othed banks and with the he said. The S&P 500 fell 32 percent in that span whilr the stocks of a group ofFirst Financial’sa peers plunged 57 percent. “This is the most difficulr banking environment andeconomy I’ve ever seen or Davis said. “But I thinjk we’re weathering it quite well.” A shareholdef proposal passed that that asks the boarf to consider declassifying the boared so that each member has to runfor re-electiobn each year.
In the past, board membersz served staggered three-year terms. “If you have a board that stands for electionevery year, you have a board that is subject to replacement if it’s not acting in the best interestds of shareholders,” said William Singer, a downtowj attorney representing Denver-based shareholder Gerald Armstrong, who put the proposall up for a vote.