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

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“The board will consider that nowthat we’ve done our commonn stock offering,” Davis said in an intervieq after the shareholders meeting at the Manor House in “We’re very well-capitalized. We feel very comfortable with ourcapital Norwood-based First Financial received $80 millio n from the U.S. Treasury’s Capital Purchasre Program, part of the Troubled Asset Reliefg Program, in December by selling preferred stock to the It pays a 5 percent annual dividend for five the rate rises to 9 percentyafter that. First Financial (NASDAQ: FFBC) raised $98 milliomn in net proceeds June 8 from a commobnstock offering.
Part of the use of that capital coulde be to pay back theTreasury money, Davis The board would have to approve such a move. The bank woul d have to go throughb an application process to get government approval to pay back the Some banks have already received that approval. Regulators askeds First Financial to participate in thecapitall plan, Davis said in responses to a shareholder question about why a healthy bank woulde take the money. The program was but First Financial wanted tostockpiler capital.
“We weren’t sure how deep the recessiohnwould be, and we thought it was importantf to ensure we had ample capital,” he told William Harding, a shareholder from Columbus, aske how the company plans to handlee buying back the stock from the The board will consider it, Davis But, he added, the interest it receivesd from investing part of that Treasury money is enoughn to pay the dividend s it requires. A stipulation of the Treasury money is that companies cannot raisetheird common-stock dividends beyond the level they were befores the company decided to take the money.
First Financial wasn’t part of the recent federal government “stress Those gauged the nation’s 19 largestr banks’ ability to withstand a worseningv economy. But Davis said First Financial performed its own testsx internally using thegovernment criteria. Those tests showed the bank is in good He pointed to numbers showing Firsyt Financial is well beyond requirements to beconsidere well-capitalized. Its tangible common equity totalinyg 8.
6 percent of tangible assetws after the stock offering is far above the roughly 5 percenyt peergroup average, he The recent public stock offering also made it unnecessaryt for First Financial to go ahead with a shareholderf vote that would have allowed the board to issuee more preferred stock in order to raise That proposal was first raised, Davis said, when othe means of raising capital weren’t readil available. Harding said he would oppose the company issuing any morepreferred stock, even though it’ss a moot point for now. “It’s a major concern for me that issuin new preferred stock dilutes the stock my fathetr purchasedin 1983,” Harding said.
“I want to make sure my father’as investment is safe.” Several shareholders asked whether and when the dividen would be raised back to itsprevious level. Firsf Financial said in January it wouldr cut the quarterly dividend from 17 centes a share to10 “It was a touggh decision,” Davis said. “We were in a periof of the worst economic stress in80 years, and we felt it was the prudent thing to do. “We want to provide some good levekl ofdividend payment, but we also want to see the stocj price improve. To do that, we need earningsa improvement, so we need growth.
” Whil e Davis isn’t pleased with First Financial’sw total return to shareholders – a loss of 26 percen t since January2008 – it stacks up well with other bankw and with the market, he said. The S& P 500 fell 32 percent in that span whiled the stocks of a grou ofFirst Financial’s peers plunger 57 percent. “This is the most difficult bankiny environment andeconomy I’ve ever seen or experienced,” Davixs said. “But I think we’re weatheringg it quite well.” A shareholder proposal passed that that asks the boarx to consider declassifying the board so that each membetr has to runfor re-election each year.
In the board members served staggered three-yead terms. “If you have a board that stands for election every year, you have a board that is subject to replacemenyt if it’s not acting in the best interestsz of shareholders,” said William Singer, a downtown attorne y representing Denver-based shareholder Gerald who put the proposal up for a