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First Financial to Pay 100% of Earnings to Shareholders

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Jul 29, 2011
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First Financial Bancorp (FFBC, Financial) introduced a new dividend policy within today’s second quarter earnings release: The bank holding company plans to maintain a 100% payout ratio. In other words, distribute 100% of its profits to shareholders.

The parent company of First Financial Bank reported second quarter earnings of $0.27 per share within today’s release, and true to its word, also declared a quarterly dividend of $0.27 per share. That’s 125% better than its previous payout, and a 170% improvement over the dividend it paid during the same period last year.

As for how long the company plans to maintain its new policy, First Financial says it expects to follow the plan “until we have acquisitions or organic capital utilization rates that equal or exceed our capital generation rates.”

Shares of FFBC closed Thursday’s session trading at $15.37, where a quarterly dividend of $0.27 per share produces a 7.03% dividend yield — and that may actually turn out to be a conservative figure. Using consensus earnings estimates for this year ($1.19 per share) and next year ($1.35 per share) as the stock’s dividend rate produces even higher yields: 7.74% and 8.78%, respectively.

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