First Financial Approves $5M Share Buyback; Street Sticks To Hold

First Financial Bancorp approved a plan to buy back $5 million of its common stock, which represents approximately 5% of the company’s outstanding shares as of Sept. 30, 2020.

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First Financial Bancorp (FFBC) said that the new share repurchase plan will continue for two years and the company will begin repurchasing shares after the expiry of the existing repurchase plan on Dec. 31, 2020.

First Financials’ CEO Archie Brown said, “In response to the Covid-19 pandemic, we decided to suspend share repurchase activity in the first quarter of 2020.” He added, “While we currently have no specific timeline for resuming share repurchases, the reauthorization of this plan is a part of our normal capital planning process and provides us with the option to be opportunistic as we gain more clarity around the current economic environment.” (See FFBC stock analysis on TipRanks).

On Dec. 10, Raymond James analyst David Long maintained a Hold rating on the stock. The analyst said, “While we believe the bank is well positioned to handle rising credit costs given its robust capital and reserve levels, we believe 2021 NCOs [net charge-offs] may exceed that of its peers given its heightened exposure to the hotel industry. Longer-term, we believe FFBC is positioned to produce solid growth and better-than-peer profitability.”

Currently, the Street is sidelined on the stock with a Hold analyst consensus. The average price target stands at $15 and implies downside potential of about 10.5% to current levels. Shares have declined by 34.2% year-to-date.