CINCINNATI, Aug. 3 /PRNewswire-FirstCall/ --

    --  Net income available to common shareholders of $0.5 million and earnings
        per diluted common share of $0.01
    --  Credit quality experiencing some stress but remains relatively strong

        --  Provision expense exceeded net charge-offs by 27% and increased $6.1
            million over first quarter 2009
        --  Three significant charge-offs totaling $5.1 million or 75 basis
            points of average loans and leases
        --  Nonperforming loans to total loans of 1.31% remains below peers
    --  Capital and liquidity positions remain strong

        --  Successfully completed a public offering of 13.8 million shares of
            common stock resulting in approximately $98.0 million of additional
            common equity
        --  Total risk-based capital ratio of 16.02%, tangible common equity
            ratio of 9.06%
    --  Continued growth in commercial lending

        --  Second quarter 2009 average commercial loans increased $239.4
            million from the second quarter of 2008 and $44.1 million from the
            first quarter of 2009
    --  Accelerating growth strategy in key metropolitan markets

First Financial Bancorp today reported second quarter and year-to-date results for the period ended June 30, 2009. Second quarter 2009 net income was $1.5 million, net income available to common shareholders was $0.5 million and earnings per diluted common share were $0.01. This compares with net income of $7.8 million and earnings per diluted common share of $0.21 for the second quarter of 2008, and net income of $5.7 million, net income available to common shareholders of $5.2 million and earnings per diluted common share of $0.14 for the first quarter of 2009. Year-to-date 2009 net income was $7.2 million, net income available to common shareholders was $5.6 million, and earnings per diluted common share were $0.14. This compares with year-to-date 2008 net income of $15.1 million and earnings per diluted common share of $0.40.

Claude Davis, First Financial Bancorp's president and chief executive officer, said, "It is important to note that despite the higher provision expense and charge-offs this quarter, First Financial remains strong. Our track record of profitability and disciplined credit processes, combined with the healthy capital and liquidity levels we have maintained throughout this recessionary period, has afforded us the flexibility to capitalize on opportunities in the marketplace.

"During the quarter, we took advantage of opportunities to invest in and grow our business," added Mr. Davis. "On Friday of last week, we announced the purchase of loans and the assumption of deposits at 19 Peoples Community Bank banking centers in an FDIC assisted transaction and in July we announced plans to purchase 3 banking centers from Irwin Union Bank and Trust Company. The addition of the Peoples banking centers gives us a strong position as a key player in the greater Cincinnati market, and the Irwin banking centers take us into affluent and fast-growing markets surrounding the Indianapolis metropolitan area. By year-end, we plan to operate over 100 First Financial Bank banking centers and ATMs in 9 regional markets and 63 communities in Ohio, Kentucky and Indiana."

Second quarter 2009 results, when compared with the first quarter of 2009 were impacted by a $6.1 million increase in provision expense and a higher level of net charge-offs. The higher level of net charge-offs was primarily the result of two separate and unrelated vehicle floor plan relationships totaling approximately $3.8 million. Recently, the company discovered unusual activity related to these relationships resulting in violations of the terms of the loan agreements. These activities adversely impacted the borrowers' abilities to repay their loans and given current market conditions, the market value of related collateral was not sufficient to remedy the situations. The involvement of federal law enforcement agencies and the resultant investigations of the borrowers are ongoing. First Financial has undertaken a complete review of its floor plan lending and audit procedures and has made appropriate changes that it believes will help prevent similar situations in the future. The financial impact of the charge-offs related to these floor plan relationships was a decrease to second quarter 2009 net income and earnings per diluted common share on an after-tax basis of $2.4 million, or $0.06 per diluted common share, respectively. The company's vehicle floor plan lending portfolio totaled $25.0 million at June 30, 2009. Also during the quarter, First Financial charged off $1.3 million of a commercial real estate construction relationship, which represented the first charge-off in this particular loan category in six quarters.

Other significant items impacting second quarter earnings included elevated FDIC deposit insurance expense of $3.4 million, including a $1.7 million special FDIC assessment, a $3.3 million gain on the sale of investment securities, $0.4 million of acquisition-related expenses and a $0.3 million increase in professional services related to loan collection and resolution efforts. These items also had an impact on the company's performance metrics during the quarter, specifically return on average assets and return on average common equity.

The following tables present First Financial's earnings excluding provision expense and other significant items impacting the company's performance. The company believes that excluding these items presents a more representative comparison of operational performance for each period without the volatility of credit quality that is typically present in times of economic stress, as well as other significant items not related to the company's core business.

Table I ($ in thousands, excluding per share data) ---------------------------------------- 2009 ---- Year-to-Date 2Q 1Q ------------ -- -- Gain (Loss) on FHLMC shares(1) $123 $112 $11 Increase in Loan Loss Reserve & Higher Charge-offs - - - Higher Charge-offs Related to Floor Plan Relationships (3,752) (3,752) - Gain on Sale of Property & Casualty Portion of Insurance Business 574 - 574 Gains on Sales of Investment Securities (CPP 2009; VISA 2008) 3,349 3,349 - FDIC Special Assessment (1,737) (1,737) - FDIC Expense - Other (1,969) (1,687) (282) Acquisition-Related Expenses (426) (426) - Severance Costs Related to Sale of Property & Casualty Insurance Business (232) - (232) Liability for Retiree Medical Benefits - - - ------- ------- --- Impact to Pre-Tax Net Income $(4,070) $(4,141) $71 ------- ------- --- After-Tax Impact to Earnings Per Diluted Common Share $(0.06) $(0.07) $0.00 ------ ------ ----- 2008 ---- Full-Year 4Q 3Q 2Q 1Q --------- -- -- -- -- Gain (Loss) on FHLMC shares(1) $(3,738) $(137) $(3,400) $(221) $20 Increase in Loan Loss Reserve & Higher Charge-offs (7,539) (7,539) - - - Higher Charge-offs Related to Floor Plan Relationships - - - - - Gain on Sale of Property & Casualty Portion of Insurance Business - - - - - Gains on Sales of Investment Securities (CPP 2009; VISA 2008) 1,585 - - - 1,585 FDIC Special Assessment - - - - - FDIC Expense - Other (521) (158) (115) (121) (127) Acquisition-Related Expenses - - - - - Severance Costs Related to Sale of Property & Casualty Insurance Business - - - - - Liability for Retiree Medical Benefits 1,285 - - 1,285 - ------- ------- ------- ------ ---- Impact to Pre-Tax Net Income $(8,928) $(7,834) $(3,515) $943 $1,478 ------- ------- ------- ---- ------ After-Tax Impact to Earnings Per Diluted Common Share $(0.15) $(0.14) $(0.06) $0.02 $0.03 ------ ------ ------ ----- ----- (1) Gain (Loss) related to the company's investment in 200,000 Federal Home Loan Mortgage Corporation (FHLMC) perpetual preferred series V shares. Table II ($ in thousands) ---------------- Quarter Year-to-Date ------- ------------ June 30, June 30, 2Q-09 1Q-09 2Q-08 2009 2008 ----- ----- ----- -------- -------- Pre-Tax Income $2,152 $8,768 $11,700 $10,920 $22,581 Excluding Provision Expense 10,358 4,259 2,493 14,617 5,716 ------ ----- ----- ------ ----- Pre-Tax, Pre-Provision Income $12,510 $13,027 $14,193 $25,537 $28,297 ------- ------- ------- ------- ------- Significant Items(1) 1,298 353 1,064 1,651 2,669 ----- --- ----- ----- ----- Pre-Tax, Pre-Provision Income, excluding Significant Items $11,212 $12,674 $13,129 $23,886 $25,628 ======= ======= ======= ======= ======= (1) Includes significant items summarized in Table I, with the exception of FDIC Expense - Other and provision-related items.

For additional information on First Financial's comparable financial results, please refer to the discussions that follow detailing revenue and expense fluctuations.

DETAILS OF RESULTS

Unless otherwise noted, all amounts discussed in this earnings release are pre-tax except net income and per-share data which are presented after-tax. Percentage changes are not annualized unless specifically noted. In some instances, financial data may not add up due to rounding.

UPDATE ON STRATEGIC TRANSACTIONS

Peoples Community Bank Purchase

As announced in a July 31, 2009 press release, First Financial Bank, N.A. has acquired substantially all the assets and assumed substantially all the liabilities of Peoples Community Bank through the receivership and resolution process of the FDIC.

This acquisition, in its expanded form, remains a significant addition to the advancement of the company's growth strategy in the Greater Cincinnati region. In addition to the original 17 offices, 2 additional offices are located in the Lebanon, Ohio market and will mark First Financials entry into that desirable community.

First Financial paid a 1.5% premium for all deposits and acquired substantially all the assets at a $42 million discount. Total deposits are approximately $538 million and total loans are estimated at $436 million based on gross loans from the seller's records. Losses incurred from the loan portfolio will be partially absorbed by the FDIC under a loss sharing agreement whereby 80% of losses up to $190 million, and 95% of losses beyond $190 million, are covered by the FDIC. This loss sharing agreement provides First Financial with total loss protection on 88.5% of the $436 million loan portfolio and gives the company assurance that this transaction, despite the purchase of nonperforming loans, is conservative and will create added value to shareholders.

Under the accounting rules for business combinations, all assets and liabilities will be recorded at fair value. The final fair value determinations will be made throughout the third quarter.

The risk-weighting of the covered assets is 20% for regulatory capital calculations. The result is a comparative reduction of risk-weighted assets and an increase in earning assets from the previously announced transaction.

First Financial also has the opportunity under the FDIC agreement to modify pricing on existing deposits. The company is evaluating the appropriate strategy for deposit pricing and will likely modify pricing for high-cost, long-term deposits under this FDIC option. Furthermore, First Financial has a 90-day option to determine which banking centers it will purchase, or leases it will assume, from the FDIC as receiver.

First Financial expects to convert all offices purchased to a single data processing platform in the fourth quarter of 2009.

The incremental benefit relative to the incremental risk is substantial and is expected to generate between $0.08 and $0.11 per share on a cash basis in 2010.

Irwin Union Bank Loan Purchase and Branch Purchase

Loan Purchase - First Financial completed a purchase of $145.1 million in performing commercial loans on June 30, 2009. This transaction was discussed in greater detail in an 8-K dated July 6, 2009.

Branch Purchase - First Financial entered into a Branch Purchase Agreement on July 1, 2009, whereby it has agreed to purchase 3 branches from Irwin Union Bank in the Indiana cities of Carmel, Greensburg and Shelbyville. Approximately $143 million of deposits will be assumed at that time at par. The company also expects to purchase an additional $50 million in select performing commercial and consumer loans from Irwin in the third quarter when the acquisition of the 3 branches is expected to close.

The branch purchase remains scheduled to close late in the third quarter of 2009, subject to regulatory approval.

The Peoples Community Bank and Irwin Union transactions are expected to add a combined $0.16 to $0.19 per share on a cash basis in their first full year of operation.

CREDIT QUALITY

The following table presents First Financial's key credit quality metrics.

Table III ($ in thousands) ---------------- Three Months Ended ------------------ June March December September June 30, 31, 31, 30, 30, 2009 2009 2008 2008 2008 ----- ----- --------- --------- ----- Total Nonperforming Loans $37,790 $24,892 $18,185 $14,038 $15,366 Total Nonperforming Assets $42,956 $28,405 $22,213 $18,648 $19,129 Nonperforming Assets as a % of: Period-End Loans, Plus Other Real Estate Owned 1.48% 1.04% 0.83% 0.70% 0.71% Total Assets 1.14% 0.75% 0.60% 0.53% 0.55% Nonperforming Loans as a % of Total Loans 1.31% 0.91% 0.68% 0.53% 0.57% Allowance for Loan & Lease Losses $38,649 $36,437 $35,873 $30,353 $29,580 Allowance for Loan & Lease Losses as a % of: Period-End Loans 1.34% 1.33% 1.34% 1.14% 1.11% Nonaccrual Loans 102.8% 147.6% 199.5% 219.5% 199.7% Nonperforming Loans 102.3% 146.4% 197.3% 216.2% 192.5% Total Net Charge-Offs $8,146 $3,695 $4,955 $2,446 $2,631 Annualized Net Charge-Offs as a % of Average Loans & Leases 1.19% 0.55% 0.73% 0.36% 0.40% Year-to-Date ------------ June 30, 2009 June 30, 2008 ------------- ------------- Total Nonperforming Loans $37,790 $15,366 Total Nonperforming Assets $42,956 $19,129 Nonperforming Assets as a % of: Period-End Loans, Plus Other Real Estate Owned 1.48% 0.71% Total Assets 1.14% 0.55% Nonperforming Loans as a % of Total Loans 1.31% 0.57% Allowance for Loan & Lease Losses $38,649 $29,580 Allowance for Loan & Lease Losses as a % of: Period-End Loans 1.34% 1.11% Nonaccrual Loans 102.8% 199.7% Nonperforming Loans 102.3% 192.5% Total Net Charge-Offs $11,841 $5,193 Annualized Net Charge-Offs as a % of Average Loans & Leases 0.88% 0.40%

While the economies in most of the markets the company serves are well diversified and economic deterioration has been less severe compared with other parts of the United States, the prolonged downturn and near record unemployment levels have begun to negatively affect clients who just a short time ago were not impacted by these adverse conditions.

The overall credit quality of the commercial lending portfolios has remained relatively strong throughout the economic downturn. Late in the fourth quarter of 2008 and continuing into the first half of 2009, First Financial has seen a higher level of borrower stress related to the prolonged weak economic conditions.

Prior to and throughout the economic downturn, the company has maintained strong underwriting policies, originated loans within its footprint and proactively managed its credit portfolio and worked with clients on loan resolution issues. However, in a continued effort to strengthen its loan underwriting standards and improve its management of potential problem credits, First Financial conducted an extensive review of its lending strategies, policies and procedures during the recent quarter. Lending officers met face-to-face with substantially all clients whose lending relationship exceeded $0.5 million to obtain an update on each borrower's current situation, including updating financial information. As a result of this review, the company enhanced a number of its existing procedures and implemented some new lending strategies, including revising underwriting standards for larger commercial real estate construction loans, placing further restrictions on automotive industry lending and discontinuing commercial and residential real estate development lending.

The second quarter 2009 provision expense represented approximately 127% of second quarter 2009 total net charge-offs. Total net charge-offs increased $4.5 million from the first quarter of 2009 and $5.5 million from the second quarter of 2008. This increase was primarily related to the aforementioned floor plan relationships totaling approximately $3.8 million, or 55 basis points of average loans and leases, and the commercial real estate construction relationship of $1.3 million, or 20 basis points of average loans and leases. As previously discussed, these floor plan relationships remain the subject of ongoing federal investigations.

Second quarter 2009 nonperforming loans increased to $37.8 million from $24.9 million in the first quarter of 2009 and $15.4 million in the second quarter of 2008. Both the linked-quarter and year-over-year increases were primarily attributable to continued deterioration within the commercial lending portfolios. During the quarter, an $8.2 million commercial real estate construction loan participation was placed in nonaccrual.

Similar to the first quarter of 2009, the higher level of nonperforming loans in the second quarter of 2009 continued to adversely impact the company's nonperforming loan coverage ratios. The second quarter 2009 allowance for loan and lease losses as a percent of nonaccrual and nonperforming loans was 102.8% and 102.3%, respectively, compared with 147.6% and 146.4%, respectively, in the first quarter of 2009, and 199.7% and 192.5%, respectively, in the second quarter of 2008. Although the allowance for loan and lease losses as a percent of nonaccrual and nonperforming loans has declined over the past several quarters, based on historical information available, the company believes that it continues to compare favorably with the industry and its peers on these and most other key credit ratios and metrics. First Financial expects that the challenging economic conditions will continue to persist over the coming quarters, and as a result, anticipates that credit costs may remain volatile during this uncertain period.

Total loans 30 to 89 days past due at June 30, 2009 were $20.5 million, or 0.71% of period end loans, compared with $20.4 million, or 0.75% at March 31, 2009, and $22.1 million, or 0.83% at June 30, 2008. Management closely monitors these trends and ratios and considers the level of delinquent loans consistent with its expectation of the total loan portfolio's behavior.

The allowance for loan and lease losses increased to $38.6 million at June 30, 2009, from $36.4 million at March 31, 2009, and $29.6 million at June 30, 2008. The higher reserve reflects the impact from the addition of $145.1 million in performing commercial and consumer loans that were purchased from Irwin on June 30, 2009, as well as the continued weak economic environment, near record levels of unemployment and the uncertainty surrounding the timing of a recovery. The growth in period end loans as a result of the loan purchase reduced the allowance for loan and lease losses as a percent of period-end loans at June 30, 2009, by 5 basis points. The company believes that the $38.6 million allowance for loan and lease losses at June 30, 2009, or 1.34% of period end loans, is adequate to absorb probable credit losses inherent in its lending portfolio.

Other real estate owned increased to $5.2 million at June 30, 2009, from $3.5 million at March 31, 2009, and $3.8 million at June 30, 2008. The linked quarter and year-over-year increases were primarily the result of commercial real estate additions, specifically, collateral related to the previously mentioned vehicle floor plan relationships that were charged-off during the quarter. Balances related to residential real estate experienced a net decline during the second quarter of 2009.

For further details on the quarter-over-quarter and year-to-date changes in credit quality, please see the attached Credit Quality schedule.

CAPITAL MANAGEMENT

On June 8, 2009, First Financial completed a public offering of 13.8 million shares of its common stock adding approximately $98.0 million of additional common equity, after offering related costs. As a result of the capital raised during the quarter, the company's already strong capital ratios further improved and continued to significantly exceed the amounts necessary to be classified as well-capitalized. In addition, total regulatory capital exceeded the "minimum" requirement by $246.6 million, on a consolidated basis. Based on historical information available, First Financial's capital and liquidity levels continue to compare favorably with the industry and its peers.

The following table presents regulatory capital ratios at June 30, 2009.

Regulatory "well- capitalized" Table IV FFBC minimum -------- ---- ------------- Leverage Ratio 12.02% 5% -------------- ----- -- Tier 1 Capital Ratio 14.77% 6% -------------------- ----- -- Total Risk-Based Capital Ratio 16.02% 10% -------- ----- -- EOP Tangible Equity / EOP Tangible Assets 11.14% N/A -------------------------- ----- --- EOP Tangible Common Equity / EOP Tangible Assets 9.06% N/A -------------- ---- --- N/A = not applicable

The $145.1 million loan portfolio purchased from Irwin reduced the Tier 1 Capital and Total Risk-Based Capital ratios by 57 and 62 basis points, respectively, at June 30, 2009.

U.S. TREASURY CAPITAL PURCHASE PROGRAM

In October 2008, First Financial was encouraged by banking regulators to participate in the U.S. Treasury's Capital Purchase Program (CPP), a component of the Troubled Asset Relief Program (TARP). On December 23, 2008, the company completed the sale of $80.0 million in perpetual preferred securities to the U.S. Treasury under the CPP.

First Financial designated an investment portfolio specifically supported by the CPP capital. This investment portfolio, referred to as the CPP Investment Portfolio, totaled $59.8 million at June 30, 2009, compared with $225.4 million at March 31, 2009, and $121.9 million at December 31, 2008. During the second quarter of 2009, the company sold $149.4 million of CPP Investment Portfolio securities to fund the $145.1 million loan purchase from Irwin. Additional details on this redeployment strategy are discussed beginning on page 11, in the Investments section of this news release.

Many financial institutions that elected to participate in the CPP have now redeemed the preferred shares they issued to the Treasury and repaid the Treasury in full. First Financial's board of directors continues to evaluate the company's capital plan and structure, including the merits of continued participation in the CPP after having successfully raised approximately $98.0 million in common equity. At this time a decision on First Financial's continued participation in the CPP has not been made.

NET INTEREST INCOME & NET INTEREST MARGIN

Table V ($ in thousands) ---------------- Quarter Year-to-Date ------- ------------ June 30, June 30, 2Q-09 1Q-09 2Q-08 2009 2008 ----- ----- ----- -------- -------- Net Interest Income $31,209 $30,928 $28,414 $62,137 $56,663 Net Interest Margin 3.60% 3.61% 3.72% 3.62% 3.75% Net Interest Margin (fully tax equivalent) 3.64% 3.65% 3.78% 3.65% 3.81%

Second quarter 2009 net interest income increased $2.8 million from the second quarter of 2008 and $0.3 million from the first quarter of 2009. The second quarter 2009 net interest margin declined 12 basis points from the second quarter of 2008 and 1 basis point from the first quarter 2009. Year-to-date 2009 net interest income increased $5.5 million from 2008's comparable period, and the net interest margin declined 13 basis points.

The year-over-year quarter, linked quarter and year-to-date increases in net interest income were due to higher balances in average total loans primarily driven by higher commercial lending volume, as well as an increase in lower-cost transaction deposit accounts. Second quarter and year-to-date 2009 net interest income were also positively impacted by growth in the investment securities portfolio.

The year-over-year quarter and year-to-date net interest margin declines were primarily related to the lower overall market interest rate environment. However, this was partially offset by growth in average total loans and the continued mix shift in the loan portfolio from consumer to commercial, growth in the investment portfolio, as well as increased average total deposits, including the continued transition in the deposit mix from time to transaction deposits.

The linked quarter net interest margin benefited from stabilization of overall market interest rates over the past six months and increased average total loans and deposits combined with the continued transitions in the mix of these portfolios. However, this was offset by monthly cash flows from the investment portfolio that were not reinvested into securities.

For further details on the quarter-over-quarter and year-to-date changes in the net interest margin, please see the attached Net Interest Margin Rate / Volume Analysis.

NONINTEREST INCOME

The following table presents a summary of items impacting noninterest income.

Table VI ($ in thousands) ---------------- Quarter Year-to-Date ------- ------------ June 30, June 30, 2Q-09 1Q-09 2Q-08 2009 2008 ----- ----- ----- -------- -------- Gain (Loss) on FHLMC shares $112 $11 $(221) $123 $(201) Gain on Sale of Property & Casualty Portion of Insurance Business - 574 - 574 - Gain on Sales of Investment Securities (CPP 2Q-09; VISA 1Q-08) 3,349 - - 3,349 1,585 ------ ---- ----- ------ ------ Impact to Noninterest Income $3,461 $585 $(221) $4,046 $1,384 ====== ==== ===== ====== ======

Second quarter 2009 noninterest income was $14.1 million, an increase of $0.3 million from the second quarter of 2008, and an increase of $2.1 million from the first quarter of 2009. Excluding the items disclosed in the table, second quarter 2009 noninterest income declined $3.3 million from the second quarter of 2008 and $0.8 million from the first quarter of 2009. The year-over-year decline was due to lower service charges on deposit accounts, decreases in bankcard income, lower trust and wealth management fees and a decline in other noninterest income. The decline in other noninterest income was related to lower revenue from bank-owned life insurance, brokerage and the property and casualty liability portion of the company's insurance business that was sold during the first quarter of 2009. Market-based revenues such as bank-owned life insurance and trust fees are reflective of the overall market conditions from which these revenues are derived. The linked quarter benefited from increases in service charges on deposit accounts and bankcard income, but was also negatively impacted by lower fee income from the client derivative program and a decrease in trust and wealth management fees.

Year-to-date 2009 noninterest income was $26.1 million, a decline of $2.5 million from $28.6 million in 2008's comparable period. Excluding the items disclosed in the table, year-to-date 2009 noninterest income declined $5.2 million from 2008's comparable period. This decline was primarily due to lower service charges on deposit accounts, decreases in bankcard income and lower trust and wealth management fees as well as a decline in income from bank-owned life insurance.

For the past several quarters, most fee income components of noninterest income have been negatively impacted by the declining economic conditions and their impact on consumer spending, while trust and wealth management fees were negatively impacted by volatility in the investment and equity markets. In the second quarter of 2009, a number of deposit and consumer-based fee income categories realized some improvement over the first quarter of 2009. Total service charges on deposit accounts increased $0.2 million, and bankcard income increased $0.1 million. Trust and wealth management fees were down slightly from the first quarter of 2009; however, the decline was not as severe as it had been over the past several quarters.

The following table presents overdraft/non-sufficient funds fees and trust and wealth management fees.

Table VII ($ in thousands) ---------------- Quarter Year-to-Date ------- ------------ June 30, June 30, 2Q-09 1Q-09 2Q-08 2009 2008 ----- ----- ----- -------- -------- Overdraft/Non- Sufficient Fund Fees $3,003 $2,791 $3,628 $5,794 $6,968 Other 1,286 1,288 1,323 2,574 2,590 ----- ----- ----- ----- ----- Total Service Charges on Deposit Accounts $4,289 $4,079 $4,951 $8,368 $9,558 ====== ====== ====== ====== ====== Trust Fees 2,944 2,946 3,967 5,890 7,880 Investment Advisory Fees 309 343 687 652 1,396 --- --- --- --- ----- Total Trust & Wealth Management Fees $3,253 $3,289 $4,654 $6,542 $9,276 ====== ====== ====== ====== ======

Since June 30, 2008, assets under management by the company's wealth management division have declined by $366.4 million or 18% to $1.7 billion at June 30, 2009, primarily as a result of equity market declines.

NONINTEREST EXPENSE

The following table presents a summary of items impacting noninterest expense.

Table VIII ($ in thousands) ---------------- Quarter Year-to-Date ------- ------------ June 30, June 30, 2Q-09 1Q-09 2Q-08 2009 2008 ----- ----- ----- -------- -------- FDIC Special Assessment $1,737 $- $- $1,737 $- FDIC Expense - Other 1,687 282 121 1,969 248 Acquisition-Related Expenses (other noninterest expense) 426 - - 426 - Severance Costs Related to Sale of Property & Casualty Insurance Business (salaries and employee benefits) - 232 - 232 - Liability for Retiree Medical Benefits (salaries and employee benefits) - - (1,285) - (1,285) --- --- ------ --- ------ Impact to Noninterest Expense $3,850 $514 $(1,164) $4,364 $(1,037) ====== ==== ======= ====== =======

Second quarter 2009 noninterest expense was $32.8 million, an increase of $4.8 million from the second quarter of 2008, and an increase of $2.9 million from the first quarter of 2009. Excluding the items disclosed in the table, second quarter 2009 noninterest expense decreased $0.2 million from the second quarter of 2008 and $0.5 million from the first quarter of 2009. The year-over-year quarter and linked quarter declines in noninterest expense were primarily related to lower salaries and benefits due to lower incentive based pay, partially offset by increased marketing costs as well as higher professional services and other noninterest expenses related to loan collection and resolution efforts.

Year-to-date 2009 noninterest expense increased $5.7 million to $62.7 million from $57.0 million in 2008's comparable period. Excluding the items disclosed in the table, year-to-date 2009 noninterest expense increased $0.3 million from 2008's comparable period. This increase was primarily related to higher professional services and other noninterest expenses related to loan collection and resolution efforts, as well as increased marketing and furniture and equipment costs, partially offset by lower salaries and benefits due to lower incentive based pay. The higher marketing and furniture and equipment costs were related to First Financial's market expansion efforts, as the company opened two new banking centers in late 2008 and one new banking center in the Cincinnati market earlier this year.

The second quarter 2009 FDIC special assessment was applicable to all insured financial institutions. The FDIC is currently evaluating further increases in deposit insurance premiums for all insured institutions later in 2009, including a second possible special assessment later in the year. In addition, regularly assessed FDIC insurance premiums increased significantly industry-wide due to the current funded status of the deposit insurance fund.

INCOME TAXES

Income tax expense was $0.7 million and the effective tax rate was 32.6% for the second quarter of 2009, compared with income tax expense of $3.9 million and an effective tax rate of 33.3% for the second quarter of 2008, and income tax expense of $3.0 million and an effective tax rate of 34.6% for the first quarter of 2009. Year-to-date 2009 income tax expense was $3.7 million with an effective tax rate of 34.2% compared with income tax expense of $7.4 million and an effective tax rate of 32.9% for 2008's comparable period.

LOANS

Second Quarter 2009 versus Second Quarter 2008

    --  Average total loans increased $92.8 million or 3.5%.
    --  Average commercial, commercial real estate and construction loans
        increased $239.4 million, or 13.8%.

Second Quarter 2009 versus First Quarter 2009

    --  Average total loans increased $26.1 million, or 3.9% on an annualized
        basis.
    --  Average commercial, commercial real estate and construction loans
        increased $44.1 million, or 9.2% on an annualized basis.

Year-to-Date 2009 versus Year-to-Date 2008

    --  Average total loans increased $105.8 million, or 4.0%.
    --  Average commercial, commercial real estate and construction loans
        increased $257.0 million, or 15.2%.

INVESTMENTS

In anticipation of the receipt of the $80.0 million in CPP capital, the company began purchasing agency-guaranteed, mortgage backed securities during the fourth quarter 2008. It was expected that as additional organic lending opportunities became available, the cash flows from the CPP Investment Portfolio would provide sufficient liquidity and capital support for redeployment into loans. This investment portfolio was specifically designated as the CPP Investment Portfolio.

As a result of the June 30, 2009 purchase of the $145.1 million loan portfolio from Irwin, the company executed a strategy to restructure the CPP Investment Portfolio to fund this purchase. During the second quarter of 2009, $149.4 million of CPP Investment Portfolio securities, with an effective yield of 4.67%, were sold resulting in an aggregate pre-tax gain of $3.3 million. The CPP Investment Portfolio totaled $59.8 million at June 30, 2009, compared with $225.4 million at March 31, 2009.

Securities available-for-sale at June 30, 2009, totaled $528.2 million, compared with $421.7 million at June 30, 2008, and $732.9 million at March 31, 2009. The total investment portfolio represented 14.8% and 13.4% of total assets at June 30, 2009 and 2008, respectively, and 20.1% of total assets at March 31, 2009.

At June 30, 2009, the company held 82.3% of its available-for-sale securities in residential mortgage-related investments, substantially all of which are held in highly-rated, agency-backed pass-through instruments, including collateralized mortgage obligations (CMO's). All CMO's held by the company are AAA rated by Standard & Poor's Corporation or similar rating agencies. First Financial does not own any interest-only, principal-only, or other high-risk securities.

The company has recorded, as a component of equity in accumulated other comprehensive income, an unrealized after-tax gain on the investment portfolio of approximately $7.5 million at June 30, 2009, compared with an unrealized after-tax loss of $0.9 million at June 30, 2008, and an unrealized after-tax gain of $10.6 million at March 31, 2009.

The following table presents a summary of the total investment portfolio at June 30, 2009.

Table IX ($ in thousands, excluding book price and market value) Base % of Book Book Book June 30, 2009 Gain/ Total Value Yield Price Market Value (Loss) ----- ----- ----- ----- ------------ ------ Agencys 7.3% $41,145 5.31 99.79 102.69 $1,162 CMOs (Agency) 11.8% 65,879 4.71 100.44 103.50 1,950 CMOs (Private) 0.0% 77 1.60 100.00 97.94 (2) MBSs (Agency) 69.8% 391,667 4.72 100.94 103.24 8,709 Agency Preferred 0.0% 184 - 0.92 0.92 - --- --- --- ---- ---- --- Subtotal 88.9% $498,952 4.76 100.74 102.18 $11,819 -------- ---- -------- ---- ------ ------ ------- Municipal 5.4% $30,085 7.16 99.12 100.36 $376 Other * 5.7% 31,839 4.47 101.17 100.90 (87) --- ------ ---- ------ ------ --- Subtotal 11.1% $61,924 5.78 100.18 100.64 $289 -------- ---- ------- ---- ------ ------ ---- Total Investment Portfolio 100.0% $560,876 4.87 100.68 102.03 $12,108 ----- -------- ---- ------ ------ ------- Net Unrealized Gain/(Loss) $12,108 Aggregate Gains $13,072 Aggregate Losses $(964) Net Unrealized Gain/(Loss) % of Book Value 2.16% * Other includes $28.0 million of regulatory stock

DEPOSITS

Second Quarter 2009 compared with Second Quarter 2008

    --  Average total deposits increased $38.1 million, or 1.4%.
    --  Average transaction and savings deposits increased $99.6 million, or
        6.2%.
    --  Average time deposits declined $61.5 million, or 5.2%.

Second Quarter 2009 compared with First Quarter 2009

    --  Average total deposits increased $11.5 million, or 1.6% on an annualized
        basis.
    --  Average transaction and savings deposits increased $21.8 million, or
        5.2% on an annualized basis.
    --  Average time deposits declined $10.3 million, or 3.6% on an annualized
        basis.

Year-to-Date 2009 versus Year-to-Date 2008

    --  Average total deposits increased $13.9 million, or 0.5%.
    --  Average transaction and savings deposits increased $83.2 million, or
        5.2%.
    --  Average time deposits declined $69.3 million, or 5.7%.

First Financial experienced growth in average total deposit balances during the second quarter of 2009, particularly in savings and lower-cost average transaction deposits. This growth is a result of deposit-pricing strategies and other initiatives that the company implemented over the past several quarters in an effort to grow and retain more low-cost transaction-based retail and commercial deposits. One new initiative recently launched is a retail sales program that comprehensively tracks client contacts as well as calling efforts, actual product sales and client service metrics. The declines in average time deposits are attributable to a decrease in average total interest-bearing deposits primarily due to the runoff of time deposits resulting from disciplined pricing and the company's strategy to generate lower-cost transaction-based accounts.

Conference Call & Webcast

As previously announced, a conference call and webcast to discuss First Financial's second quarter 2009 financial results will be held on Tuesday, August 4, 2009, at 8:30 a.m. ET with Claude E. Davis, president and chief executive officer, and J. Franklin Hall, executive vice president and chief financial officer. To access the conference call, dial 800-860-2442 (passcode not required). The webcast will be available at First Financial's website (www.bankatfirst.com/Investor). Participants should join the live conference call and webcast 5 to 10 minutes before its scheduled start. A replay of the call and webcast will be available approximately one hour after the live call has ended. To access the replay, dial 877-344-7529 (passcode 432795).

Forward-Looking Statements

This news release should be read in conjunction with the consolidated financial statements, notes and tables in First Financial Bancorp's most recent Annual Report on Form 10-K for the year ended December 31, 2008. Management's analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risk and uncertainties that may cause actual results to differ materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, management's ability to effectively execute its business plan; the risk that the strength of the United States economy in general and the strength of the local economies in which First Financial conducts operations continue to deteriorate, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on First Financial's loan portfolio, allowance for loan and lease losses and overall financial purpose; the ability of financial institutions to access sources of liquidity at a reasonable cost; the impact of recent upheaval in the financial markets and the effectiveness of domestic and international governmental actions taken in response, such as the U.S. Treasury's TARP and the FDIC's Temporary Liquidity Guarantee Program, and the effect of such governmental actions on First Financial, its competitors and counterparties, financial markets generally and availability of credit specifically, and the U.S. and international economies, including potentially higher FDIC premiums arising from participation in the Temporary Liquidity Guarantee Program or from increased payments from FDIC insurance funds as a result of depository institution failures; the effects of and changes in policies and laws of regulatory agencies, inflation, and interest rates; technology changes; mergers and acquisitions; including our ability to successfully integrate the Peoples Community Bank banking centers, and the banking centers which are being acquired from Irwin Union Bank and Trust Company; the effect of changes in accounting policies and practices; adverse changes in the securities and debt markets; First Financial's success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services; the cost and effects of litigation and of unexpected or adverse outcomes in such litigation; uncertainties arising from First Financial's participation in the TARP, including impacts on employee recruitment and retention and other business practices, and uncertainties concerning the potential redemption of the U.S. Treasury's preferred stock investment under the program, including the timing of, regulatory approvals for, and conditions placed upon, any such redemption; and First Financial's success at managing the risks involved in the foregoing. For further discussion of certain factors that may cause such forward-looking statements to differ materially from actual results, refer to the 2008 Form 10-K and other public documents filed with the Securities and Exchange Commission (SEC), as well as the most recent Form 10-Q filing for the quarter ended March 31, 2009. These documents are available at no cost within the investor relations section of First Financial's website at www.bankatfirst.com/investor and on the SEC's website at www.sec.gov. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended June 30, 2009, which will be filed with the SEC no later than August 10, 2009.

About First Financial Bancorp

First Financial Bancorp is a Cincinnati, Ohio based bank holding company with $3.8 billion in assets. Its banking subsidiary, First Financial Bank, N.A., founded in 1863, provides retail and commercial banking products and services, and investment and insurance products through its 82 retail banking locations in Ohio, Kentucky and Indiana. The bank's wealth management division, First Financial Wealth Resource Group, provides investment management, traditional trust, brokerage, private banking, and insurance services, and has approximately $1.7 billion in assets under management. Additional information about the company, including its products, services, and banking locations, is available at www.bankatfirst.com/investors.

FIRST FINANCIAL BANCORP. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share) (Unaudited) Three months ended, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2009 2009 2008 2008 2008 ---- ---- ---- ---- ---- RESULTS OF OPERATIONS Net interest income $31,209 $30,928 $30,129 $29,410 $28,414 Net income $1,450 $5,735 $2,084 $5,732 $7,808 Net income available to common shareholders $450 $5,157 $2,084 $5,732 $7,808 Net earnings per common share - basic $0.01 $0.14 $0.06 $0.15 $0.21 Net earnings per common share - diluted $0.01 $0.14 $0.06 $0.15 $0.21 Dividends declared per common share $0.10 $0.10 $0.17 $0.17 $0.17 KEY FINANCIAL RATIOS Return on average assets 0.15% 0.62% 0.23% 0.66% 0.93% Return on average shareholders' equity 1.53% 6.63% 2.89% 8.24% 11.26% Return on average common shareholders' equity 0.60% 7.67% 2.97% 8.24% 11.26% Return on average tangible common shareholders' equity 0.66% 8.57% 3.32% 9.21% 12.57% Net interest margin 3.60% 3.61% 3.67% 3.68% 3.72% Net interest margin (fully tax equivalent) (1) 3.64% 3.65% 3.71% 3.73% 3.78% Ending equity as a percent of ending assets 11.81% 9.29% 9.42% 7.89% 7.96% Ending common equity as a percent of ending assets 9.74% 7.24% 7.31% 7.89% 7.96% Ending tangible common equity as a percent of: Ending tangible assets 9.06% 6.54% 6.52% 7.13% 7.18% Risk-weighted assets 11.05% 8.38% 8.32% 8.86% 8.97% Average equity as a percent of average assets 10.04% 9.29% 8.04% 7.96% 8.29% Average common equity as a percent of average assets 7.98% 7.22% 7.82% 7.96% 8.29% Average tangible common equity as a percent of average tangible assets 7.27% 6.51% 7.05% 7.18% 7.50% Book value per common share $7.16 $7.36 $7.21 $7.40 $7.34 Tangible book value per common share $6.61 $6.59 $6.43 $6.62 $6.57 Tier 1 Ratio (2) 14.77% 12.16% 12.38% 9.80% 9.99% Total Capital Ratio (2) 16.02% 13.39% 13.62% 10.89% 11.06% Leverage Ratio (2) 12.02% 9.51% 10.00% 7.95% 8.21% AVERAGE BALANCE SHEET ITEMS Loans (3) $2,744,063 $2,717,097 $2,690,895 $2,709,629 $2,648,327 Investment securities 731,119 758,257 574,893 467,524 422,463 Other earning assets 0 0 1,737 3,137 4,095 ----- ----- ----- ----- ----- Total earning assets $3,475,182 $3,475,354 $3,267,525 $3,180,290 $3,074,885 Total assets $3,784,458 $3,777,510 $3,566,051 $3,476,648 $3,361,649 Noninterest- bearing deposits $425,330 $416,206 $412,644 $402,604 $394,352 Interest- bearing deposits 2,408,054 2,405,700 2,367,121 2,380,037 2,400,940 --------- --------- --------- --------- --------- Total deposits $2,833,384 $2,821,906 $2,779,765 $2,782,641 $2,795,292 Borrowings $542,578 $566,808 $474,655 $394,708 $256,409 Shareholders' equity $379,944 $350,857 $286,582 $276,594 $278,803 CREDIT QUALITY RATIOS Allowance to ending loans 1.34% 1.33% 1.34% 1.14% 1.11% Allowance to nonaccrual loans 102.81% 147.57% 199.51% 219.47% 199.70% Allowance to nonperforming loans 102.27% 146.38% 197.27% 216.22% 192.50% Nonperforming loans to total loans 1.31% 0.91% 0.68% 0.53% 0.57% Nonperforming assets to ending loans, plus OREO 1.48% 1.04% 0.83% 0.70% 0.71% Nonperforming assets to total assets 1.14% 0.75% 0.60% 0.53% 0.55% Net charge- offs to average loans (annualized) 1.19% 0.55% 0.73% 0.36% 0.40% Six months ended Jun. 30, 2009 2008 ---- ---- RESULTS OF OPERATIONS Net interest income $62,137 $56,663 Net income $7,185 $15,146 Net income available to common shareholders $5,607 $15,146 Net earnings per common share - basic $0.14 $0.41 Net earnings per common share - diluted $0.14 $0.40 Dividends declared per common share $0.20 $0.34 KEY FINANCIAL RATIOS Return on average assets 0.38% 0.91% Return on average shareholders' equity 3.96% 10.96% Return on average common shareholders' equity 3.93% 10.96% Return on average tangible common shareholders' equity 4.31% 12.24% Net interest margin 3.62% 3.75% Net interest margin (fully tax equivalent) (1) 3.65% 3.81% Ending equity as a percent of ending assets 11.81% 7.96% Ending common equity as a percent of ending assets 9.74% 7.96% Ending tangible common equity as a percent of: Ending tangible assets 9.06% 7.18% Risk-weighted assets 11.04% 8.97% Average equity as a percent of average assets 9.67% 8.34% Average common equity as a percent of average assets 7.60% 8.34% Average tangible common equity as a percent of average tangible assets 6.89% 7.54% Book value per common share $7.16 $7.34 Tangible book value per common share $6.61 $6.57 Tier 1 Ratio (2) 14.77% 9.99% Total Capital Ratio (2) 16.02% 11.06% Leverage Ratio (2) 12.02% 8.21% AVERAGE BALANCE SHEET ITEMS Loans (3) $2,730,654 $2,622,405 Investment securities 744,613 383,883 Other earning assets 0 34,947 ------ ------ Total earning assets $3,475,267 $3,041,235 Total assets $3,781,002 $3,330,156 Noninterest- bearing deposits $420,793 $386,796 Interest- bearing deposits 2,406,883 2,426,984 --------- --------- Total deposits $2,827,676 $2,813,780 Borrowings $554,626 $207,154 Shareholders' equity $365,480 $277,809 CREDIT QUALITY RATIOS Allowance to ending loans 1.34% 1.11% Allowance to nonaccrual loans 102.81% 199.70% Allowance to nonperforming loans 102.27% 192.50% Nonperforming loans to total loans 1.31% 0.57% Nonperforming assets to ending loans, plus OREO 1.48% 0.71% Nonperforming assets to total assets 1.14% 0.55% Net charge- offs to average loans (annualized) 0.88% 0.40% (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. (2) June 30, 2009 regulatory capital ratios are preliminary. (3) Includes loans held for sale. FIRST FINANCIAL BANCORP. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) Three months ended, Six months ended, Jun. 30, Jun. 30, -------- -------- 2009 2008 % Change 2009 2008 % Change ---- ---- -------- ---- ---- -------- Interest income Loans, including fees $33,978 $39,646 (14.3%) $67,635 $82,367 (17.9%) Investment securities Taxable 8,023 4,387 82.9% 16,713 7,908 111.3% Tax-exempt 386 792 (51.3%) 820 1,583 (48.2%) --- --- ----- --- ----- ----- Total investment securities interest 8,409 5,179 62.4% 17,533 9,491 84.7% Federal funds sold 0 40 (100.0%) 0 605 (100.0%) --- --- ------ --- --- ------ Total interest income 42,387 44,865 (5.5%) 85,168 92,463 (7.9%) Interest expense Deposits 9,080 14,635 (38.0%) 18,883 32,374 (41.7%) Short-term borrowings 527 1,130 (53.4%) 1,034 1,922 (46.2%) Long-term borrowings 1,251 384 225.8% 2,557 790 223.7% Subordinated debentures and capital securities 320 302 6.0% 557 714 (22.0%) --- --- --- --- --- ----- Total interest expense 11,178 16,451 (32.1%) 23,031 35,800 (35.7%) ------ ------ ----- ------ ------ ----- Net interest income 31,209 28,414 9.8% 62,137 56,663 9.7% Provision for loan and lease losses 10,358 2,493 315.5% 14,617 5,716 155.7% ------ ----- ----- ------ ----- ----- Net interest income after provision for loan and lease losses 20,851 25,921 (19.6%) 47,520 50,947 (6.7%) Noninterest income Service charges on deposit accounts 4,289 4,951 (13.4%) 8,368 9,558 (12.5%) Trust and wealth management fees 3,253 4,654 (30.1%) 6,542 9,276 (29.5%) Bankcard income 1,422 1,493 (4.8%) 2,713 2,791 (2.8%) Net gains from sales of loans 408 188 117.0% 792 407 94.6% Gains on sales of investment securities 3,349 0 N/M 3,349 1,585 111.3% Income (loss) on preferred securities 112 (221) (150.7%) 123 (201)(161.2%) Other 1,264 2,683 (52.9%) 4,243 5,207 (18.5%) ----- ----- ----- ----- ----- ----- Total noninterest income 14,097 13,748 2.5% 26,130 28,623 (8.7%) Noninterest expenses Salaries and employee benefits 16,223 15,895 2.1% 33,876 32,968 2.8% Net occupancy 2,653 2,510 5.7% 5,470 5,462 0.1% Furniture and equipment 1,851 1,617 14.5% 3,653 3,270 11.7% Data processing 794 814 (2.5%) 1,612 1,607 0.3% Marketing 700 474 47.7% 1,340 991 35.2% Communication 669 749 (10.7%) 1,340 1,554 (13.8%) Professional services 1,254 1,061 18.2% 2,207 1,822 21.1% State intangible tax 648 688 (5.8%) 1,316 1,374 (4.2%) FDIC expense 3,424 121 2729.8% 3,706 248 1394.4% Other 4,580 4,040 13.4% 8,210 7,693 6.7% ----- ----- ---- ----- ----- --- Total noninterest expenses 32,796 27,969 17.3% 62,730 56,989 10.1% ------ ------ ---- ------ ------ ---- Income before income taxes 2,152 11,700 (81.6%) 10,920 22,581 (51.6%) Income tax expense 702 3,892 (82.0%) 3,735 7,435 (49.8%) --- ----- ----- ----- ----- ----- Net income 1,450 7,808 (81.4%) 7,185 15,146 (52.6%) Dividends on preferred stock 1,000 0 N/M 1,578 0 N/M ----- ----- ----- ----- ----- ----- Income available to common shareholders $450 $7,808 (94.2%) $5,607 $15,146 (63.0%) ==== ====== ===== ====== ======= ===== ADDITIONAL DATA Net earnings per common share - basic $0.01 $0.21 $0.14 $0.41 Net earnings per common share - diluted $0.01 $0.21 $0.14 $0.40 Dividends declared per common share $0.10 $0.17 $0.20 $0.34 Return on average assets 0.15% 0.93% 0.38% 0.91% Return on average shareholders' equity 1.53% 11.26% 3.96% 10.96% Interest income $42,387 $44,865 (5.5%) $85,168 $92,463 (7.9%) Tax equivalent adjustment 307 510 (39.8%) 670 1,024 (34.6%) --- --- ----- --- ----- ----- Interest income - tax equivalent 42,694 45,375 (5.9%) 85,838 93,487 (8.2%) Interest expense 11,178 16,451 (32.1%) 23,031 35,800 (35.7%) ------ ------ ----- ------ ------ ----- Net interest income - tax equivalent $31,516 $28,924 9.0% $62,807 $57,687 8.9% ======= ======= === ======= ======= === Net interest margin 3.60% 3.72% 3.62% 3.75% Net interest margin (fully tax equivalent) (1) 3.64% 3.78% 3.65% 3.81% Full-time equivalent employees 1,048 1,058 (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) 2009 ---- Second First % Change Quarter Quarter Year-to-date Linked Qtr. ------- ------- ------------ ----------- Interest income Loans, including fees $33,978 $33,657 $67,635 1.0% Investment securities Taxable 8,023 8,690 16,713 (7.7%) Tax-exempt 386 434 820 (11.1%) --- --- --- ----- Total investment securities interest 8,409 9,124 17,533 (7.8%) Federal funds sold 0 0 0 N/M --- --- --- --- Total interest income 42,387 42,781 85,168 (0.9%) Interest expense Deposits 9,080 9,803 18,883 (7.4%) Short-term borrowings 527 507 1,034 3.9% Long-term borrowings 1,251 1,306 2,557 (4.2%) Subordinated debentures and capital securities 320 237 557 35.0% --- --- --- ---- Total interest expense 11,178 11,853 23,031 (5.7%) ------ ------ ------ ---- Net interest income 31,209 30,928 62,137 0.9% Provision for loan and lease losses 10,358 4,259 14,617 143.2% ------ ----- ------ ----- Net interest income after provision for loan and lease losses 20,851 26,669 47,520 (21.8%) Noninterest income Service charges on deposit accounts 4,289 4,079 8,368 5.1% Trust and wealth management fees 3,253 3,289 6,542 (1.1%) Bankcard income 1,422 1,291 2,713 10.1% Net gains from sales of loans 408 384 792 6.3% Gains on sales of investment securities 3,349 0 3,349 N/M Income on preferred securities 112 11 123 918.2% Other 1,264 2,979 4,243 (57.6%) ----- ----- ----- ----- Total noninterest income 14,097 12,033 26,130 17.2% Noninterest expenses Salaries and employee benefits 16,223 17,653 33,876 (8.1%) Net occupancy 2,653 2,817 5,470 (5.8%) Furniture and equipment 1,851 1,802 3,653 2.7% Data processing 794 818 1,612 (2.9%) Marketing 700 640 1,340 9.4% Communication 669 671 1,340 (0.3%) Professional services 1,254 953 2,207 31.6% State intangible tax 648 668 1,316 (3.0%) FDIC expense 3,424 282 3,706 1114.2% Other 4,580 3,630 8,210 26.2% ----- ----- ----- ---- Total noninterest expenses 32,796 29,934 62,730 9.6% ------ ------ ------ --- Income before income taxes 2,152 8,768 10,920 (75.5%) Income tax expense 702 3,033 3,735 (76.9%) --- ----- ----- ----- Net income 1,450 5,735 7,185 (74.7%) Dividends on preferred stock 1,000 578 1,578 73.0% ----- --- ----- ---- Income available to common shareholders $450 $5,157 $5,607 (91.3%) ==== ====== ====== ===== ADDITIONAL DATA Net earnings per common share - basic $0.01 $0.14 $0.14 Net earnings per common share - diluted $0.01 $0.14 $0.14 Dividends declared per common share $0.10 $0.10 $0.20 Return on average assets 0.15% 0.62% 0.38% Return on average shareholders' equity 1.53% 6.63% 3.96% Interest income $42,387 $42,781 $85,168 (0.9%) Tax equivalent adjustment 307 363 670 (15.4%) --- --- --- ----- Interest income - tax equivalent 42,694 43,144 85,838 (1.0%) Interest expense 11,178 11,853 23,031 (5.7%) ------ ------ ------ ---- Net interest income - tax equivalent $31,516 $31,291 $62,807 0.7% ======= ======= ======= === Net interest margin 3.60% 3.61% 3.62% Net interest margin (fully tax equivalent) (1) 3.64% 3.65% 3.65% Full-time equivalent employees 1,048 1,063 (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) 2008 ---- Fourth Third Second First Full Quarter Quarter Quarter Quarter Year ------- ------- ------- ------- ---- Interest income Loans, including fees $37,864 $39,754 $39,646 $42,721 $159,985 Investment securities Taxable 6,697 5,349 4,387 3,521 19,954 Tax-exempt 519 631 792 791 2,733 --- --- --- --- ----- Total investment securities interest 7,216 5,980 5,179 4,312 22,687 Federal funds sold 6 22 40 565 633 --- --- --- --- --- Total interest income 45,086 45,756 44,865 47,598 183,305 Interest expense Deposits 12,015 13,608 14,635 17,739 57,997 Short-term borrowings 1,186 1,720 1,130 792 4,828 Long-term borrowings 1,395 707 384 406 2,892 Subordinated debentures and capital securities 361 311 302 412 1,386 --- --- --- --- ----- Total interest expense 14,957 16,346 16,451 19,349 67,103 ------ ------ ------ ------ ------ Net interest income 30,129 29,410 28,414 28,249 116,202 Provision for loan and lease losses 10,475 3,219 2,493 3,223 19,410 ------ ----- ----- ----- ------ Net interest income after provision for loan and lease losses 19,654 26,191 25,921 25,026 96,792 Noninterest income Service charges on deposit accounts 4,752 5,348 4,951 4,607 19,658 Trust and wealth management fees 3,745 4,390 4,654 4,622 17,411 Bankcard income 1,457 1,405 1,493 1,298 5,653 Net gains from sales of loans 321 376 188 219 1,104 Gains on sales of investment securities 0 0 0 1,585 1,585 Income (loss) on preferred securities (137) (3,400) (221) 20 (3,738) Other 2,510 2,359 2,683 2,524 10,076 ----- ----- ----- ----- ------ Total noninterest income 12,648 10,478 13,748 14,875 51,749 Noninterest expenses Salaries and employee benefits 17,015 16,879 15,895 17,073 66,862 Net occupancy 2,635 2,538 2,510 2,952 10,635 Furniture and equipment 1,748 1,690 1,617 1,653 6,708 Data processing 840 791 814 793 3,238 Marketing 935 622 474 517 2,548 Communication 704 601 749 805 2,859 Professional services 912 729 1,061 761 3,463 State intangible tax 435 697 688 686 2,506 FDIC expense 158 115 121 127 521 Other 4,465 3,678 4,040 3,653 15,836 ----- ----- ----- ----- ------ Total noninterest expenses 29,847 28,340 27,969 29,020 115,176 ------ ------ ------ ------ ------- Income before income taxes 2,455 8,329 11,700 10,881 33,365 Income tax expense 371 2,597 3,892 3,543 10,403 --- ----- ----- ----- ------ Net income 2,084 5,732 7,808 7,338 22,962 Dividends on preferred stock 0 0 0 0 0 --- ----- ----- ----- ------ Net income available to common shareholders $2,084 $5,732 $7,808 $7,338 $22,962 ====== ====== ====== ====== ======= ADDITIONAL DATA Net earnings per common share - basic $0.06 $0.15 $0.21 $0.20 $0.62 Net earnings per common share - diluted $0.06 $0.15 $0.21 $0.20 $0.61 Dividends declared per common share $0.17 $0.17 $0.17 $0.17 $0.68 Return on average assets 0.23% 0.66% 0.93% 0.89% 0.67% Return on average shareholders' equity 2.89% 8.24% 11.26% 10.66% 8.21% Interest income $45,086 $45,756 $44,865 $47,598 $183,305 Tax equivalent adjustment 360 424 510 514 1,808 --- --- --- --- ----- Interest income - tax equivalent 45,446 46,180 45,375 48,112 185,113 Interest expense 14,957 16,346 16,451 19,349 67,103 ------ ------ ------ ------ ------ Net interest income - tax equivalent $30,489 $29,834 $28,924 $28,763 $118,010 ======= ======= ======= ======= ======== Net interest margin 3.67% 3.68% 3.72% 3.78% 3.71% Net interest margin (fully tax equivalent) (1) 3.71% 3.73% 3.78% 3.85% 3.77% Full-time equivalent employees 1,061 1,052 1,058 1,056 (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) Jun. 30, Mar. 31, Dec. 31, Sep. 30, 2009 2009 2008 2008 ---- ---- ---- ---- ASSETS Cash and due from banks $80,938 $79,563 $100,935 $90,341 Federal funds sold 0 0 0 0 Investment securities trading 184 72 61 198 Investment securities available-for-sale 528,179 732,868 659,756 492,554 Investment securities held-to-maturity 4,536 4,701 4,966 5,037 Other investments 27,976 27,976 27,976 34,976 Loans held for sale 6,193 6,342 3,854 2,437 Loans Commercial 876,730 850,111 807,720 819,430 Real estate - construction 266,452 251,115 232,989 203,809 Real estate - commercial 988,901 859,303 846,673 814,578 Real estate - residential 337,704 360,013 383,599 424,902 Installment 88,370 91,767 98,581 106,456 Home equity 307,749 298,000 286,110 276,943 Credit card 27,023 26,191 27,538 27,047 Lease financing 25 45 50 92 --- --- --- --- Total loans 2,892,954 2,736,545 2,683,260 2,673,257 Less Allowance for loan and lease losses 38,649 36,437 35,873 30,353 ------ ------ ------ ------ Net loans 2,854,305 2,700,108 2,647,387 2,642,904 Premises and equipment 86,216 85,385 84,105 81,989 Goodwill 28,261 28,261 28,261 28,261 Other intangibles 465 500 1,002 872 Accrued interest and other assets 166,100 143,420 140,839 132,107 ------- ------- ------- ------- Total Assets $3,783,353 $3,809,196 $3,699,142 $3,511,676 ========== ========== ========== ========== LIABILITIES Deposits Interest-bearing $599,365 $622,263 $636,945 $580,417 Savings 657,300 705,229 583,081 608,438 Time 1,111,399 1,137,398 1,150,208 1,118,511 --------- --------- --------- --------- Total interest- bearing deposits 2,368,064 2,464,890 2,370,234 2,307,366 Noninterest-bearing 423,781 427,068 413,283 404,315 ------- ------- ------- ------- Total deposits 2,791,845 2,891,958 2,783,517 2,711,681 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 206,777 162,549 147,533 45,495 Federal Home Loan Bank 125,000 160,000 150,000 215,000 Other 25,000 40,000 57,000 53,000 ------ ------ ------ ------ Total short-term borrowings 356,777 362,549 354,533 313,495 Long-term debt 135,908 136,832 148,164 152,568 Other long-term debt 20,620 20,620 20,620 20,620 Accrued interest and other liabilities 31,567 43,477 43,981 36,092 ------ ------ ------ ------ Total Liabilities 3,336,717 3,455,436 3,350,815 3,234,456 SHAREHOLDERS' EQUITY Preferred stock 78,173 78,075 78,019 0 Common stock 490,292 394,887 394,169 391,249 Retained earnings 74,285 77,695 76,339 80,632 Accumulated other comprehensive loss (10,700) (8,564) (11,905) (6,285) Treasury stock, at cost (185,414) (188,333) (188,295) (188,376) -------- -------- -------- -------- Total Shareholders' Equity 446,636 353,760 348,327 277,220 ------- ------- ------- ------- Total Liabilities and Shareholders' Equity $3,783,353 $3,809,196 $3,699,142 $3,511,676 ========== ========== ========== ========== Jun. 30, % Change % Change 2008 Linked Qtr. Comparable Qtr. ---- ----------- --------------- ASSETS Cash and due from banks $106,248 1.7% (23.8%) Federal funds sold 4,005 N/M (100.0%) Investment securities trading 3,598 155.6% (94.9%) Investment securities available-for-sale 421,697 (27.9%) 25.3% Investment securities held-to-maturity 5,316 (3.5%) (14.7%) Other investments 34,632 0.0% (19.2%) Loans held for sale 2,228 (2.3%) 178.0% Loans Commercial 814,779 3.1% 7.6% Real estate - construction 186,178 6.1% 43.1% Real estate - commercial 769,555 15.1% 28.5% Real estate - residential 499,002 (6.2%) (32.3%) Installment 115,575 (3.7%) (23.5%) Home equity 263,063 3.3% 17.0% Credit card 26,399 3.2% 2.4% Lease financing 111 (44.4%) (77.5%) --- ---- ---- Total loans 2,674,662 5.7% 8.2% Less Allowance for loan and lease losses 29,580 6.1% 30.7% ------ --- ---- Net loans 2,645,082 5.7% 7.9% Premises and equipment 79,380 1.0% 8.6% Goodwill 28,261 0.0% 0.0% Other intangibles 641 (7.0%) (27.5%) Accrued interest and other assets 128,874 15.8% 28.9% ------- ---- ---- Total Assets $3,459,962 (0.7%) 9.3% ========== ==== === LIABILITIES Deposits Interest-bearing $575,236 (3.7%) 4.2% Savings 615,613 (6.8%) 6.8% Time 1,167,024 (2.3%) (4.8%) --------- ---- ---- Total interest-bearing deposits 2,357,873 (3.9%) 0.4% Noninterest-bearing 419,045 (0.8%) 1.1% ------- ---- --- Total deposits 2,776,918 (3.5%) 0.5% Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 25,932 27.2% 697.4% Federal Home Loan Bank 237,900 (21.9%) (47.5%) Other 54,000 (37.5%) (53.7%) ------ ----- ----- Total short-term borrowings 317,832 (1.6%) 12.3% Long-term debt 41,263 (0.7%) 229.4% Other long-term debt 20,620 0.0% 0.0% Accrued interest and other liabilities 28,039 (27.4%) 12.6% ------ ----- ---- Total Liabilities 3,184,672 (3.4%) 4.8% SHAREHOLDERS' EQUITY Preferred stock 0 0.1% N/M Common stock 390,545 24.2% 25.5% Retained earnings 81,263 (4.4%) (8.6%) Accumulated other comprehensive loss (8,236) (24.9%) (29.9%) Treasury stock, at cost (188,282) 1.5% 1.5% -------- --- --- Total Shareholders' Equity 275,290 26.3% 62.2% ------- ---- ---- Total Liabilities and Shareholders' Equity $3,459,962 (0.7%) 9.3% ========== ==== === N/M = Not meaningful. FIRST FINANCIAL BANCORP. AVERAGE CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) Quarterly Averages Jun. 30, Mar. 31, Dec. 31, Sep. 30, 2009 2009 2008 2008 ---- ---- ---- ---- ASSETS Cash and due from banks $81,016 $85,650 $87,307 $89,498 Federal funds sold 0 0 1,737 3,137 Investment securities 731,119 758,257 574,893 467,524 Loans held for sale 5,942 5,085 1,876 2,080 Loans Commercial 843,183 825,399 809,869 819,199 Real estate - construction 257,487 242,750 220,839 192,731 Real estate - commercial 869,985 858,403 830,121 797,143 Real estate - residential 348,834 372,853 417,499 490,089 Installment 89,857 94,881 102,814 110,933 Home equity 302,159 291,038 280,900 270,659 Credit card 26,577 26,641 26,902 26,692 Lease financing 39 47 75 103 --- --- --- --- Total loans 2,738,121 2,712,012 2,689,019 2,707,549 Less Allowance for loan and lease losses 36,644 37,189 29,710 29,739 ------ ------ ------ ------ Net loans 2,701,477 2,674,823 2,659,309 2,677,810 Premises and equipment 85,433 84,932 83,307 81,000 Goodwill 28,261 28,261 28,261 28,261 Other intangibles 489 982 613 639 Accrued interest and other assets 150,721 139,520 128,748 126,699 ------- ------- ------- ------- Total Assets $3,784,458 $3,777,510 $3,566,051 $3,476,648 ========== ========== ========== ========== LIABILITIES Deposits Interest-bearing $630,885 $642,934 $611,129 $609,992 Savings 645,197 620,509 604,370 611,713 Time 1,131,972 1,142,257 1,151,622 1,158,332 --------- --------- --------- --------- Total interest- bearing deposits 2,408,054 2,405,700 2,367,121 2,380,037 Noninterest-bearing 425,330 416,206 412,644 402,604 ------- ------- ------- ------- Total deposits 2,833,384 2,821,906 2,779,765 2,782,641 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 176,592 127,652 98,690 36,476 Federal Home Loan Bank 169,341 218,100 150,867 206,741 Other 39,836 56,078 53,044 53,836 ------ ------ ------ ------ Total short-term borrowings 385,769 401,830 302,601 297,053 Long-term debt 136,189 144,358 151,434 77,035 Other long-term debt 20,620 20,620 20,620 20,620 ------ ------ ------ ------ Total borrowed funds 542,578 566,808 474,655 394,708 Accrued interest and other liabilities 28,552 37,939 25,049 22,705 ------ ------ ------ ------ Total Liabilities 3,404,514 3,426,653 3,279,469 3,200,054 SHAREHOLDERS' EQUITY Preferred stock 78,126 78,038 7,805 0 Common stock 418,086 394,500 391,601 390,861 Retained earnings 78,296 77,317 81,932 82,636 Accumulated other comprehensive loss (7,936) (10,677) (6,462) (8,594) Treasury stock, at cost (186,628) (188,321) (188,294) (188,309) -------- -------- -------- -------- Total Shareholders' Equity 379,944 350,857 286,582 276,594 ------- ------- ------- ------- Total Liabilities and Shareholders' Equity $3,784,458 $3,777,510 $3,566,051 $3,476,648 ========== ========== ========== ========== Quarterly Averages Year-to-Date Averages Jun. 30, Jun. 30, 2008 2009 2008 ---- ---- ---- ASSETS Cash and due from banks $81,329 $83,320 $84,104 Federal funds sold 4,095 0 34,947 Investment securities 422,463 744,613 383,883 Loans held for sale 3,034 5,516 3,078 Loans Commercial 805,122 834,340 793,240 Real estate - construction 179,078 250,159 170,543 Real estate - commercial 747,077 864,226 727,928 Real estate - residential 508,837 360,777 519,702 Installment 121,000 92,355 126,938 Home equity 257,954 296,629 254,830 Credit card 26,043 26,609 25,894 Lease financing 182 43 252 --- -- --- Total loans 2,645,293 2,725,138 2,619,327 Less Allowance for loan and lease losses 29,248 36,915 29,054 ------ ------ ------ Net loans 2,616,045 2,688,223 2,590,273 Premises and equipment 78,933 85,184 78,951 Goodwill 28,261 28,261 28,261 Other intangibles 652 734 666 Accrued interest and other assets 126,837 145,151 125,993 ------- ------- ------- Total Assets $3,361,649 $3,781,002 $3,330,156 ========== ========== ========== LIABILITIES Deposits Interest-bearing $590,464 $636,876 $606,835 Savings 617,029 632,921 613,739 Time 1,193,447 1,137,086 1,206,410 --------- --------- --------- Total interest- bearing deposits 2,400,940 2,406,883 2,426,984 Noninterest-bearing 394,352 420,793 386,796 ------- ------- ------- Total deposits 2,795,292 2,827,676 2,813,780 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 25,771 152,257 26,016 Federal Home Loan Bank 114,654 193,586 57,634 Other 53,758 47,912 59,956 ------ ------ ------ Total short-term borrowings 194,183 393,755 143,606 Long-term debt 41,606 140,251 42,928 Other long-term debt 20,620 20,620 20,620 ------ ------ ------ Total borrowed funds 256,409 554,626 207,154 Accrued interest and other liabilities 31,145 33,220 31,413 ------ ------ ------ Total Liabilities 3,082,846 3,415,522 3,052,347 SHAREHOLDERS' EQUITY Preferred stock 0 78,082 0 Common stock 390,237 406,358 390,658 Retained earnings 81,045 77,809 80,498 Accumulated other comprehensive loss (4,211) (9,299) (4,594) Treasury stock, at cost (188,268) (187,470) (188,753) -------- -------- -------- Total Shareholders' Equity 278,803 365,480 277,809 ------- ------- ------- Total Liabilities and Shareholders' Equity $3,361,649 $3,781,002 $3,330,156 ========== ========== ========== FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE VOLUME ANALYSIS (1) (Dollars in thousands) (Unaudited) Quarterly Averages ------------------ Jun. 30, 2009 Mar. 31, 2009 Jun. 30, 2008 Balance Yield Balance Yield Balance Yield ------- ----- ------- ----- ------- ----- Earning assets Investment securities $731,119 4.61% $758,257 4.88% $422,463 4.93% Interest-bearing deposits with other banks Federal funds sold - N/M - 0.00% 4,095 3.93% Gross loans (2) 2,744,063 4.97% 2,717,097 5.02% 2,648,327 6.02% --------- ---- --------- ---- --------- ---- Total earning assets 3,475,182 4.89% 3,475,354 4.99% 3,074,885 5.87% Nonearning assets Allowance for loan and lease losses (36,644) (37,189) (29,248) Cash and due from banks 81,016 85,650 81,329 Accrued interest and other assets 264,904 253,695 234,683 ------- ------- ------- Total assets $3,784,458 $3,777,510 $3,361,649 ========== ========== ========== Interest-bearing liabilities Total interest- bearing deposits $2,408,054 1.51% $2,405,700 1.65% $2,400,940 2.45% Borrowed funds Short-term borrowings 385,769 0.55% 401,830 0.51% 194,183 2.34% Long-term debt 136,189 3.68% 144,358 3.67% 41,606 3.71% Other long- term debt 20,620 6.22% 20,620 4.66% 20,620 5.89% ------ ---- ------ ---- ------ ---- Total borrowed funds 542,578 1.55% 566,808 1.47% 256,409 2.85% ------- ---- ------- ---- ------- ---- Total interest- bearing liabilities 2,950,632 1.52% 2,972,508 1.62% 2,657,349 2.49% Noninterest- bearing liabilities Noninterest- bearing demand deposits 425,330 416,206 394,352 Other liabilities 28,552 37,939 31,145 Shareholders' equity 379,944 350,857 278,803 ------- ------- ------- Total liabilities & shareholders' equity $3,784,458 $3,777,510 $3,361,649 ========== ========== ========== Net interest income (1) $31,209 $30,928 $28,414 ======= ======= ======= Net interest spread (1) 3.37% 3.37% 3.38% ==== ==== ==== Net interest margin (1) 3.60% 3.61% 3.72% ==== ==== ==== Year-to-Date Averages ------------------------- Jun. 30, 2009 Jun. 30, 2008 Balance Yield Balance Yield ------- ----- ------- ----- Earning assets Investment securities $744,613 4.75% $383,883 4.99% Interest-bearing deposits with other banks Federal funds sold - N/M 34,947 3.49% Gross loans (2) 2,730,654 4.99% 2,622,405 6.33% --------- ---- --------- ---- Total earning assets 3,475,267 4.94% 3,041,235 6.13% Nonearning assets Allowance for loan and lease losses (36,915) (29,054) Cash and due from banks 83,320 84,104 Accrued interest and other assets 259,330 233,871 ------- ------- Total assets $3,781,002 $3,330,156 ========== ========== Interest-bearing liabilities Total interest-bearing deposits $2,406,883 1.58% $2,426,984 2.69% Borrowed funds Short-term borrowings 393,755 0.53% 143,606 2.70% Long-term debt 140,251 3.68% 42,928 3.71% Other long-term debt 20,620 5.45% 20,620 6.98% ------ ---- ------ ---- Total borrowed funds 554,626 1.51% 207,154 3.34% ------- ---- ------- ---- Total interest-bearing liabilities 2,961,509 1.57% 2,634,138 2.74% Noninterest-bearing liabilities Noninterest-bearing demand deposits 420,793 386,796 Other liabilities 33,220 31,413 Shareholders' equity 365,480 277,809 ------- ------- Total liabilities & shareholders' equity $3,781,002 $3,330,156 ========== ========== Net interest income (1) $62,137 $56,663 ======= ======= Net interest spread (1) 3.37% 3.39% ==== ==== Net interest margin (1) 3.61% 3.75% ==== ==== (1) Not tax equivalent. (2) Loans held for sale and nonaccrual loans are both included in gross loans. FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1) (Dollars in thousands) (Unaudited) Linked Qtr. Income Comparable Qtr. Income Variance Variance ----------------------- ----------------------- Rate Volume Total Rate Volume Total ---- ------ ----- ---- ------ ----- Earning assets Investment securities $(499) $(216) $(715) $(320) $3,550 $3,230 Interest-bearing deposits with other banks Federal funds sold - - - - (40) (40) Gross loans (2) (383) 704 321 (6,853) 1,185 (5,668) ---- --- --- ------ ----- ------ Total earning assets (882) 488 (394) (7,173) 4,695 (2,478) Interest-bearing liabilities Total interest- bearing deposits $(832) $109 $(723) $(5,582) $27 $(5,555) Borrowed funds Short-term borrowings 36 (16) 20 (865) 262 (603) Long-term debt 5 (60) (55) (2) 869 867 Other long- term debt 79 4 83 18 - 18 --- --- --- --- --- --- Total borrowed funds 120 (72) 48 (849) 1,131 282 --- --- --- ---- ----- --- Total interest- bearing liabilities (712) 37 (675) (6,431) 1,158 (5,273) Net interest income (1) $(170) $451 $281 $(742) $3,537 $2,795 ===== ==== ==== ===== ====== ====== Net interest spread (1) Net interest margin (1) Year-to-Date Income Variance ---------------------- Rate Volume Total ---- ------ ----- Earning assets Investment securities (452) $8,494 $8,042 Interest-bearing deposits with other banks Federal funds sold - (605) (605) Gross loans (2) (17,413) 2,681 (14,732) ------- ----- ------- Total earning assets (17,865) 10,570 (7,295) Interest-bearing liabilities Total interest- bearing deposits $(13,333) $(158) $(13,491) Borrowed funds Short-term borrowings (1,545) 657 (888) Long-term debt (7) 1,774 1,767 Other long- term debt (157) - (157) ---- --- ---- Total borrowed funds (1,709) 2,431 722 ------ ----- --- Total interest- bearing liabilities (15,042) 2,273 (12,769) Net interest income (1) $(2,823) $8,297 $5,474 ======= ====== ====== Net interest spread (1) Net interest margin (1) (1) Not tax equivalent. (2) Loans held for sale and nonaccrual loans are both included in gross loans. FIRST FINANCIAL BANCORP. CREDIT QUALITY (Dollars in thousands) (Unaudited) Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2009 2009 2008 2008 2008 ---- ---- ---- ---- ---- ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY Balance at beginning of period $36,437 $35,873 $30,353 $29,580 $29,718 Provision for loan and lease losses 10,358 4,259 10,475 3,219 2,493 Gross charge-offs Commercial 4,707 2,521 2,168 1,568 946 Real estate - construction 1,340 0 0 0 0 Real estate - commercial 1,351 382 2,083 48 589 Real estate - residential 351 231 47 335 227 Installment 304 400 493 424 482 Home equity 332 218 238 135 525 All other 386 308 374 426 426 --- --- --- --- --- Total gross charge- offs 8,771 4,060 5,403 2,936 3,195 Recoveries Commercial 333 60 165 179 166 Real estate - construction 0 0 0 0 0 Real estate - commercial 14 16 40 37 19 Real estate - residential 20 2 5 4 5 Installment 203 254 189 225 246 Home equity 1 0 0 0 30 All other 54 33 49 45 98 --- --- --- --- --- Total recoveries 625 365 448 490 564 --- --- --- --- --- Total net charge-offs 8,146 3,695 4,955 2,446 2,631 ----- ----- ----- ----- ----- Ending allowance for loan and lease losses $38,649 $36,437 $35,873 $30,353 $29,580 ======= ======= ======= ======= ======= NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) Commercial 2.08% 1.21% 0.98% 0.67% 0.39% Real estate - construction 2.09% 0.00% 0.00% 0.00% 0.00% Real estate - commercial 0.62% 0.17% 0.98% 0.01% 0.31% Real estate - residential 0.38% 0.25% 0.04% 0.27% 0.18% Installment 0.45% 0.62% 1.18% 0.71% 0.78% Home equity 0.44% 0.30% 0.34% 0.20% 0.77% All other 5.00% 4.18% 4.79% 5.66% 5.03% ---- ---- ---- ---- ---- Total net charge-offs 1.19% 0.55% 0.73% 0.36% 0.40% ==== ==== ==== ==== ==== COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS Nonaccrual loans Commercial $8,100 $8,412 $5,930 $5,194 $4,957 Real estate - construction 11,936 240 240 0 490 Real estate - commercial 10,130 9,170 4,779 3,361 3,592 Real estate - residential 4,897 4,724 5,363 3,742 4,461 Installment 394 464 459 417 438 Home equity 2,136 1,681 1,204 1,084 866 All other 0 0 6 32 8 --- --- --- --- --- Total nonaccrual loans 37,593 24,691 17,981 13,830 14,812 Restructured loans 197 201 204 208 554 --- --- --- --- --- Total nonperforming loans 37,790 24,892 18,185 14,038 15,366 Other real estate owned (OREO) 5,166 3,513 4,028 4,610 3,763 ----- ----- ----- ----- ----- Total nonperforming assets 42,956 28,405 22,213 18,648 19,129 Accruing loans past due 90 days or more 318 255 138 241 245 --- --- --- --- --- Total underperforming assets $43,274 $28,660 $22,351 $18,889 $19,374 ======= ======= ======= ======= ======= Total classified assets $106,315 $79,256 $67,393 $58,284 $54,511 ======== ======= ======= ======= ======= CREDIT QUALITY RATIOS Allowance for loan and lease losses to Nonaccrual loans 102.81% 147.57% 199.51% 219.47% 199.70% Nonperforming loans 102.27% 146.38% 197.27% 216.22% 192.50% Total ending loans 1.34% 1.33% 1.34% 1.14% 1.11% Nonperforming loans to total loans 1.31% 0.91% 0.68% 0.53% 0.57% Nonperforming assets to Ending loans, plus OREO 1.48% 1.04% 0.83% 0.70% 0.71% Total assets 1.14% 0.75% 0.60% 0.53% 0.55% FIRST FINANCIAL BANCORP. CAPITAL EQUITY (Dollars in thousands) (Unaudited) Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2009 2009 2008 2008 2008 ---- ---- ---- ---- ---- PER COMMON SHARE Market Price High $11.92 $12.10 $14.30 $14.80 $13.88 Low $7.35 $5.58 $10.81 $8.10 $9.20 Close $7.53 $9.53 $12.39 $14.60 $9.20 Average common shares outstanding - basic 40,734,254 37,142,531 37,133,725 37,132,864 37,114,451 Average common shares outstanding - diluted 41,095,949 37,840,954 37,567,032 37,504,231 37,524,789 Ending common shares outstanding 51,434,346 37,474,422 37,481,201 37,476,607 37,483,384 REGULATORY CAPITAL Preliminary Tier 1 Capital $454,243 $358,834 $356,307 $274,513 $274,372 Tier 1 Ratio 14.77% 12.16% 12.38% 9.80% 9.99% Total Capital $492,696 $395,271 $392,180 $304,866 $303,952 Total Capital Ratio 16.02% 13.39% 13.62% 10.89% 11.06% Total Capital in excess of minimum requirement $246,613 $159,133 $161,896 $80,806 $84,147 Total Risk- Weighted Assets $3,076,042 $2,951,721 $2,878,548 $2,800,753 $2,747,559 Leverage Ratio 12.02% 9.51% 10.00% 7.95% 8.21% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 11.81% 9.29% 9.42% 7.89% 7.96% Ending common shareholders' equity to ending assets 9.74% 7.24% 7.31% 7.89% 7.96% Ending tangible shareholders' equity to ending tangible assets 11.14% 8.60% 8.70% 7.13% 7.18% Ending tangible common shareholders' equity to ending tangible assets 9.06% 6.54% 6.52% 7.13% 7.18% Average shareholders' equity to average assets 10.04% 9.29% 8.04% 7.96% 8.29% Average common shareholders' equity to average assets 7.98% 7.22% 7.82% 7.96% 8.29% Average tangible shareholders' equity to average tangible assets 9.35% 8.59% 7.28% 7.18% 7.50% Average tangible common shareholders' equity to average tangible assets 7.27% 6.51% 7.05% 7.18% 7.50% Six months ended, Jun. 30, Jun. 30, 2009 2008 ---- ---- PER COMMON SHARE Market Price High $12.10 $13.88 Low $5.58 $9.20 Close $7.53 $9.20 Average common shares outstanding - basic 38,928,557 37,090,603 Average common shares outstanding - diluted 39,458,443 37,478,353 Ending common shares outstanding 51,434,346 37,483,384 REGULATORY CAPITAL Preliminary Tier 1 Capital $454,243 $274,372 Tier 1 Ratio 14.77% 9.99% Total Capital $492,696 $303,952 Total Capital Ratio 16.02% 11.06% Total Capital in excess of minimum requirement $246,613 $84,147 Total Risk-Weighted Assets $3,076,042 $2,747,559 Leverage Ratio 12.02% 8.21% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 11.81% 7.96% Ending common shareholders' equity to ending assets 9.74% 7.96% Ending tangible shareholders' equity to ending tangible assets 11.14% 7.18% Ending tangible common shareholders' equity to ending tangible assets 9.06% 7.18% Average shareholders' equity to average assets 9.67% 8.34% Average common shareholders' equity to average assets 7.60% 8.34% Average tangible shareholders' equity to average tangible assets 8.97% 7.54% Average tangible Common shareholders' equity to average tangible assets 6.89% 7.54%

SOURCE First Financial Bancorp