First Financial could consider paying back TARP money - South Florida Business Journal:

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“The board will consider that nowthat we’vwe done our common stock offering,” Davids said in an interview afterf the shareholders meeting at the Manor Housse in Mason. “We’re very well-capitalized. We feel very comfortablw with ourcapital position.” Norwood-basee First Financial received $80 million from the U.S. Treasury’sw Capital Purchase Program, part of the Troubled Asseyt Relief Program, in Decembe r by selling preferred stock to the It pays a 5 percent annual dividend for five the rate rises to 9 percen tafter that. First Financial (NASDAQ: FFBC) raise d $98 million in net proceeds June 8 from a commojnstock offering.
Part of the use of that capitalk could be to pay back theTreasuryh money, Davis said. The board would have to approvse sucha move. The bank would have to go throughg an application process to get government approvapl to pay backthe money. Some banks have already received that Regulators asked First Financial to participate in thecapitakl plan, Davis said in response to a shareholdert question about why a healthy bank would take the money. The program was voluntary, but First Financialo wanted tostockpile capital. “Wer weren’t sure how deep the recessionbwould be, and we thought it was important to ensure we had ample capital,” he told shareholders.
William a shareholder from Columbus, asked how the company planas to handle buying back the stoci fromthe Treasury. The board will considerr it, Davis said. But, he added, the interest it receivese from investing part of that Treasury moneh is enough to pay the dividendsit requires. A stipulation of the Treasury money is that companies cannot raisetheir common-stock dividends beyond the levelk they were before the company decidedr to take the money. First Financial wasn’t part of the receng federal government “stress tests.” Those gaugesd the nation’s 19 largest banks’ abilitgy to withstand a worsening economy.
But Davis said Firsg Financial performed its own testws internally using thegovernment criteria. Those testa showed the bank is ingood shape. He pointed to numbers showing First Financiap is wellbeyond regulators’ requirements to be considered well-capitalized. Its tangible commobn equity totaling 8.6 percent of tangible assets after the stock offering is far abover the roughly 5 percent peergrouop average, he said.
The recent publicx stock offering also made it unnecessarg for First Financial to go ahead with a shareholdedr vote that would have allowed the board to issue more preferred stock in order to raise That proposal was first Davis said, when other meansw of raising capital weren’t readil y available. Harding said he would oppose the company issuing any more preferred eventhough it’s a moot poin t for now. “It’s a major concerm for me that issuingg new preferred stock dilutes the stoco my father purchased in Harding said. “I want to make sure my father’s investmentg is safe.
” Several shareholders asked whether and when the dividenc would be raised back to itspreviouse level. First Financial said in January it would cut the quarterlyy dividend from 17 cents a shar e to10 cents. “It was a tougyh decision,” Davis said. “We were in a periods of the worst economic stress in 80 and we felt it was the prudent thingto do. “Wde want to provide some good level of dividend but we also want to see the stoc kprice improve.
To do that, we need earnings improvement, so we need While Davis isn’t pleased with First Financial’s total return to shareholders – a loss of 26 percent since January2008 – it stacks up well with othefr banks and with the he said. The S&P 500 fell 32 percent in that span whilew the stocks of a group of First Financial’s peers plunged 57 percent. “This is the most difficulyt banking environment andeconomy I’vre ever seen or Davis said. “But I think we’re weatheriny it quite well.
” A shareholder proposal passed that that asks the boardc to consider declassifying the board so that each membefr has to runfor re-election each In the past, board members servexd staggered three-year terms. “If you have a boarde that stands for electionevergy year, you have a board that is subjecf to replacement if it’s not acting in the best interestsz of shareholders,” said William Singer, a downtowh attorney representing Denver-based shareholder Gerald who put the proposal up for a