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First Financial Bancorp. Reports Operating Results (10-K)

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Feb 28, 2011
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First Financial Bancorp. (FFBC, Financial) filed Annual Report for the period ended 2010-12-31.

First Financial Bancorp. has a market cap of $985.82 million; its shares were traded at around $16.98 with a P/E ratio of 19.08 and P/S ratio of 2.01. The dividend yield of First Financial Bancorp. stocks is 2.36%. First Financial Bancorp. had an annual average earning growth of 4.1% over the past 10 years.Hedge Fund Gurus that owns FFBC: Manning & Napier Advisors, Inc , Paul Tudor Jones of The Tudor Group. Mutual Fund and Other Gurus that owns FFBC: Chuck Royce of Royce& Associates.

Highlight of Business Operations:

In 2010, the annual insurance premiums on bank deposits insured by the DIF varied between $0.07 per $100 of deposits for banks classified in the highest capital and supervisory evaluation categories to $0.78 per $100 of deposits for banks classified in the lowest capital and supervisory evaluation categories.

The Dodd-Frank Act requires changes to a number of components of the FDIC insurance assessment, with an implementation date of April 1, 2011. The changes amend the current methodology used to determine the assessments paid by institutions with assets greater than $10 billion, including changing the assessment base from deposits to total average assets less Tier 1 capital. Additionally, the FDIC has developed a scorecard approach to determine a separate assessment rate for each institution with assets greater than $10 billion. As a result of these changes, First Financial s FDIC insurance expense is expected to decrease by approximately $1.6 million in 2011 as compared to 2010.

In addition to risk-based deposit insurance premiums, additional assessments may be imposed by the Financing Corporation, a separate U.S. government agency affiliated with the FDIC, on insured deposits to pay for the interest cost of Financing Corporation bonds. Financing Corporation assessment rates for 2010 ranged from $0.0102 to $0.0104 for each $100 of deposits. Financing Corporation assessments of $0.5 million, $0.3 million and $0.3 million were paid by First Financial Bank for 2010, 2009, and 2008, respectively.

The U.S. Department of the Treasury (Treasury), working with the Federal Reserve Board, established late in 2008 the TARP Capital Purchase Program (CPP), which was intended to stabilize the financial services industry. One of the components of the CPP included a $250 billion voluntary capital purchase program for certain qualified and healthy banking institutions. Pursuant to the CPP, Treasury purchased from First Financial 80,000 shares of $1,000 par value senior perpetual preferred securities at a price of $80.0 million equal to approximately 3.0% of the Company s then risk-weighted assets. Such preferred shares paid a dividend of 5% for the first five years and was to increase to 9% thereafter. In addition, subject to certain limited exceptions, as a participant in the CPP, the Company was prohibited from (a) increasing its dividend to common shareholders and (b) conducting share repurchases without prior approval of the Treasury. First Financial also was subject to certain limitations on executive compensation as well as other conditions. On January 21, 2009, First Financial filed a registration statement on Form S-3 with the SEC to register these securities as required by the security purchase agreement with the Treasury. On February 19, 2009, the registration statement was deemed effective by the SEC.

During February 2010, First Financial successfully completed a follow-on common equity offering and, after deducting underwriting and other offering costs, received net proceeds of $91.2 million. On February 24, 2010, First Financial used most of the net proceeds to redeem all of the $80.0 million in senior preferred shares issued to the Treasury in December 2008 under CPP. Subsequent to the equity offering and redemption of the preferred shares, the Company experienced an increase in its already strong regulatory and GAAP capitalization levels.

In connection with the Company s participation in the CPP, Treasury also received a warrant for the purchase of common stock in the amount of 930,233 shares at a strike price of $12.90 per share and expires on December 23, 2018. As a result of the common equity raised during the second quarter of 2009, the number of common shares eligible for purchase under the warrant agreement was reduced by 50% to 465,117 shares. In June 2010, the Treasury conducted an auction of the warrants in which the warrants were sold in a public offering at a price of $6.70 per warrant. This transaction represented the final step in the redemption process and the Treasury no longer owns any securities issued by First Financial.

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