CINCINNATI, June 3, 2011 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced that its wholly-owned subsidiary, First Financial Bank, has signed a purchase and assumption agreement to acquire all 16 of the retail banking branches of Liberty Savings Bank, FSB ("Liberty") located in Ohio. The deposits associated with these branches totaled approximately $346.2 million as of March 31, 2011. Additionally, First Financial agreed to purchase a diversified portfolio of approximately $143.3 million of in-market performing loans as part of this transaction.
Claude Davis, President and Chief Executive Officer commented, "This transaction allows us to accelerate our planned growth in the greater Dayton area, one of our key strategic markets, and provides a solid entry point for the Wilmington market where Liberty is well established. The acquisition of this branch network and accompanying loan portfolio provides immediate scale and operating profitability in these markets that would otherwise take several years to accomplish on a de novo basis.
"Liberty has built a strong deposit franchise in its core Ohio markets and employs a client-centric business model similar to ours. As a result, we are assuming a low-cost, transaction and savings account-oriented deposit base that resembles our existing portfolio and we anticipate a seamless transition as we welcome Liberty's customers to First Financial. We expect to leverage the First Financial brand and breadth of product offerings to provide a wide range of services to the Liberty client base and drive strong growth in these markets where our presence will be greatly enhanced."
Under the terms of the purchase and assumption agreement, First Financial will pay a 6.41% net premium on deposits, or $22.2 million based on the deposit balance mentioned above. The assumed deposits consist of approximately 59% transaction and savings accounts, 30% retail time deposits and 11% jumbo time deposits, and had a cost of funds of approximately 72 basis points for the month of March 2011. The loans to be purchased consist entirely of in-market, performing loans that were selected after an extensive credit review. The acquired loan portfolio composition includes approximately 38% residential mortgages, 37% commercial real estate and multifamily loans and 20% home equity loans and has a weighted average coupon of approximately 5.61%.First Financial expects the transaction to be accretive to 2012 diluted earnings per share and estimates that it will be approximately 4.2% dilutive to tangible book value per share upon closing. However, as a result of the strong projected future earnings contribution from the acquired operations, the Company expects to recapture tangible book value dilution within approximately three-and-a-half years. Subsequent to the transaction, the Company estimates that its pro forma tangible common equity ratio will be approximately 9.48% and total capital ratio will be 19.33%, down from 10.40% and 20.86%, respectively, as of March 31, 2011. The March 31, 2011 total capital ratio amount has been adjusted to exclude the trust preferred securities that will be redeemed early. The transaction is expected to close during the third quarter 2011 and is subject to regulatory approval and other customary closing conditions.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.