10. First Financial Bancorp
Shares of First Financial Bancorp (FFBC) of Cincinnati closed at $16.43 Monday, down 7% from a year earlier. Based on a quarterly payout of 12 cents, the shares have a forward dividend yield of 2.92%.
The company had $6.3 billion in assets as of March 31, with 114 branches in Ohio, Indiana, Kentucky, and Michigan, and a national lending operation. The company underwent a major expansion in 2009, with the purchase of three failed institutions from the Federal Deposit Insurance Corp.First Financial reported first-quarter net income of $17.2 million, or 29 cents a share, increasing from $11.6 million, or 17 cents a share, in the first quarter of 2010. The company's first-quarter net interest margin -- the difference between its average yields on loans and investments and its average cost of funds -- was 4.68% according to SNL Financial, which was the highest among the 10 banks listed here, although the margin declined from 4.84% a year earlier, as it was "continued to be negatively impacted by the combination of normal amortization and paydowns in the acquired loan portfolio," according to the company. First Financial's first-quarter return on average assets (ROA) was 1.10%, according to SNL. The year-over-year bottom-line improvement reflected a 62% increase in noninterest income, which included $23.4 million in income from FDIC loss-sharing agreements during the first quarter. Excluding that income and similar items, noninterest income increased 16% year-over-year, to $14.9 million during the first quarter. On April 28, Ross Demmerle of Hilliard Lyons reiterated his neutral rating on the shares, saying that the company appeared "to have more than enough capital with a Tier 1 capital ratio of 20.5% and tangible common ratio of 10.4%.," which "could allow for another dividend increase, stock buybacks or acquisitions." Demmerle said that "in light of an above average uncertain earnings stream" because of purchase accounting rules for loans acquired from the FDIC, and a price at a "premium price to book and price to earnings valuations," the shares were appropriately valued. The shares trade for 13 times the consensus 2012 earnings estimate of $1.28 a share, among analysts polled by FactSet. Out of eight analysts covering First Financial, two rate the shares a buy, while the remaining analysts all have neutral ratings.
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