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 commohn stock offering,” Davis said in an interviews after the shareholders meeting at the Manof House in Mason. “We’re very We feel very comfortable with ourcapitak position.” Norwood-based First Financial received $80 millionm from the U.S. Treasury’s Capita l Purchase Program, part of the Troubled Asset Relief Program, in December by selling preferred stocm tothe government. It pays a 5 percentf annual dividend for five the rate rises to 9 percent after FirstFinancial (NASDAQ: FFBC) raised $98 million in net proceeds June 8 from a common stoc k offering.
Part of the use of that capital could be to pay back theTreasuryy money, Davis said. The board would have to approvwe sucha move. The bank would have to go through an applicationm process to get government approval to pay backthe money. Some banksx have already received that Regulators asked First Financial to participate in thecapitao plan, Davis said in responss to a shareholder questio about why a healthy bank would take the money. The prograk was voluntary, but First Financial wanted tostockpile “We weren’t sure how deep the recessionn would be, and we thought it was important to ensure we had amplwe capital,” he told shareholders.
William Harding, a shareholder from Columbus, asked how the company planx to handle buying back the stock from the The board willconsider it, Davi s said. But, he added, the interest it receivezs from investing part of that Treasury monet is enough to pay the dividends it A stipulation of the Treasury money is that companiesa cannot raisetheir common-stock dividends beyond the level they were beforr the company decided to take the money. Firs Financial wasn’t part of the recent federal government “streses tests.” Those gauged the nation’w 19 largest banks’ ability to withstandx a worsening economy.
But David said First Financial performed its own test s internally using thegovernment criteria. Those testds showed the bank is ingood shape. He pointed to numberds showing First Financial is wellbeyond regulators’ requirements to be considerexd well-capitalized. Its tangible common equitgy totaling 8.6 percent of tangible assets aftee the stock offering is far above the roughly 5 percenr peergroup average, he said. The recent public stock offerinfg also made it unnecessargy for First Financial to go ahead with a shareholderr vote that would have allowed the boarfd to issue more preferred stocik in order toraise capital.
That proposal was firsyt raised, Davis said, when other means of raisingh capital weren’t readily Harding said he would oppose the company issuinf any morepreferred stock, even though it’s a moot poin for now. “It’s a major concern for me that issuingv new preferred stock dilutes the stock my fatheer purchasedin 1983,” Hardingt said. “I want to make sure my father’ investment is safe.” Several shareholders asked whether and when the dividend wouled be raised back to itsprevious level.
Firstg Financial said in January it would cut the quarterly dividene from 17 cents a share to10 “It was a tough decision,” Davis “We were in a period of the worst economic stresw in 80 years, and we felt it was the pruden t thing to do. “We want to provide some good leve l ofdividend payment, but we also want to see the stocik price improve. To do we need earnings improvement, so we need While Davis isn’t pleased with First Financial’s totao return to shareholders a loss of 26 percent since January2008 – it stacks up well with other banksx and with the market, he The S&P 500 fell 32 percen in that span while the stocks of a grouo of First Financial’s peers plunged 57 percent.
“Thisw is the most difficult banking environmeng andeconomy I’ve ever seen or experienced,” Davies said. “But I think we’rre weathering it quite well.” A shareholder proposal passed that that asks the board to consider declassifying the boare so that each member has to runfor re-electiobn each year. In the past, board memberzs served staggered three-year terms. “If you have a boardc that stands for election every you have a board that is subject to replacemen tif it’s not acting in the best interests of shareholders,” said Williamk Singer, a downtown attorney representing Denver-based shareholder Geralf Armstrong, who put the proposal up for a