First Financial could consider paying back TARP money - Puget Sound Business Journal (Seattle):

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“The board will consider that nowthat we’ved done our common stock Davis said in an intervies after the shareholders meeting at the Manor House in “We’re very well-capitalized. We feel very comfortable with ourcapital position.” Norwood-based Firsr Financial received $80 millio n from the U.S. Treasury’s Capital Purchase Program, part of the Troubled Asset Relief Program, in December by selling preferred stock tothe government. It pays a 5 percengt annual dividend forfive years; the rate rises to 9 percent afterd that. First Financial FFBC) raised $98 million in net proceeda June 8 from a commonhstock offering.
Part of the use of that capital could be to pay back theTreasur money, Davis said. The board would have to approvee sucha move. The bank woulcd have to go through an applicatio process to get government approvalp to pay back the Some banks have already received that Regulators asked First Financial to participate in thecapital plan, Davis said in response to a shareholder question abouty why a healthy bank would take the money. The program was but First Financial wanted tostockpilre capital. “We weren’t sure how deep the recession wouldd be, and we thoughty it was important to ensure we hadample capital,” he told shareholders.
William Harding, a shareholder from asked how the company plansa to handle buying back the stockk fromthe Treasury. The board will consider it, Davis said. But, he added, the interest it received from investing part of that Treasury money is enough to pay the dividendeit requires. A stipulation of the Treasury money is that companies cannot raisetheirr common-stock dividends beyond the level they were before the company decideds to take the money. First Financial wasn’t part of the recent federal government “stress Those gauged the nation’sw 19 largest banks’ ability to withstanfd a worsening economy.
But Davis said First Financial performed its own testz internally using the government Those tests showed the bank is in good He pointed to numbers showing First Financial is wellbeyond regulators’ requirements to be considered Its tangible common equity totaling 8.6 percent of tangible assetd after the stock offeringt is far above the roughly 5 percent peer group average, he The recent public stock offering also made it unnecessary for Firsyt Financial to go ahead with a shareholdere vote that would have allowed the board to issue more preferred stock in order to raises capital.
That proposal was first raised, Daviws said, when other means of raising capital weren’t readily available. Harding said he would oppose the companyt issuing any morepreferred stock, even though it’ a moot point for now. “It’ss a major concern for me that issuing new preferrex stock dilutes the stock my fathet purchasedin 1983,” Harding said. “I want to make sure my father’s investment is safe.” Severalp shareholders asked whether and when the dividend woulfd be raised back to itsprevious level.
Firsgt Financial said in January it wouldf cut the quarterly dividend from 17 centsx a share to10 “It was a tough decision,” Davis “We were in a period of the wors t economic stress in 80 and we felt it was the prudent thinb to do. “We want to provide some good leve l ofdividend payment, but we also want to see the stoc price improve. To do that, we need earnings so we need growth.” While Davis isn’t pleased with First Financial’s total return to shareholder – a loss of 26 percenty since January 2008 it stacks up well with other banks and with the he said.
The S&P 500 fell 32 percentg in that span while the stocks of a group ofFirsg Financial’s peers plunged 57 percent. “This is the most difficultf banking environment andeconomy I’ve ever seen or experienced,” Davis “But I think we’re weathering it quite well.” A shareholder proposal passed that that asks the boar d to consider declassifying the board so that each member has to run for re-electiojn each year. In the past, boarxd members served staggered three-yeatr terms.
“If you have a board that stands for electiohnevery year, you have a board that is subjec to replacement if it’s not acting in the best interestxs of shareholders,” said William Singer, a downtowjn attorney representing Denver-based shareholder Gerald Armstrong, who put the proposa l up for a vote.