November 03, 2008

The U.S. government plans to purchase $80 million of preferred stock from First Financial Bancorp as part of the Treasury Department's Capital Purchase Program. Although the funds are part of the government's $700 billion "bailout" plan, this particular program is voluntary and only open to "healthy institutions," according to David Barr with the Federal Deposit Insurance Corp. However, in First Financials case, it was approached by officials to participate, said Claude Davis, president and CEO of the Hamilton-based bank.

In the third quarter, the bank posted a net income of $5.7 million. It's biggest hit was in the 200,000 shares it held in Freddie Mac, which did not pay out its quarterly dividend after the government takeover in September. The move cost First Financial $2.2 million.” We view this (program) as a very good thing. It's a statement of confidence in us by our regulators and it provides a very strong level of capital for us to expand our lending program, which was its intent," he said. Davis said the company will also use the funds to expand operations into other regions. Although the funds will help the bank, the government may be getting an even sweeter deal.