Ohio bank selling stock, looking to exit TARP

Cincinnati-based First Financial Bancorp Inc. is seeking to raise $85 million through the sale of common stock.

The company, which operates First Financial Bank, N.A., received $80 million from the government's Troubled Asset Relief Program in December of 2008.  First Financial intends to use the proceeds of the offering to make its exit from the program.

The company reported a profit of $246.5 million last year--more than ten times the $23 million it earned in 2008. First Financial is hoping its strong showing will help pursuade the Treasury Department and regulators to allow the bank to repurchase the preferred stock it issued to the government as part of its participation in TARP.

First Financial warned in its prospectus that although it intends to use the net proceeds from the offering to pay back the government, there is no guarantee it will receive that approval. If regulators deny the request, it will use the proceeds for general corporate purposes.

When First Financial sold the $80 million in preferred stock to the Treasury at the end of 2008, it also issued the government a warrant to purchase 930,233 common shares.  That number decreased to 465,117 (as outlined in the securities purchase agreement between the parties) after the company sold 13.8 million common shares in a public offering this past June.

As such, First Financial does not plan to repurchase the warrant when it redeems the preferred stock.

The company said in its latest earnings report that nonperforming loans totaled $77.8 million at the end of 2009, up from $18.2 million a year earlier Over the same period, however, its total assets rose by nearly $3.3 billion, to $6.86 billion, and deposits nearly doubled, to $5.55 billion.

First Financial took over the assets and deposits of the failed Irwin Union Bank of Louisville, Ky., and Irwin Union Bank and Trust Co., of Columbus, Ind., in September. That transaction added $2.7 billion in assets and $2.1 billion in deposits.