First Financial Bancorp Reports 2009 Financial & Operational Results

CINCINNATI, Ohio, Jan. 26 /PRNewswire-FirstCall/ --

-- Full-year 2009 net income of $246.5 million or $5.33 per common share -- Fourth quarter 2009 net income of $13.8 million or $0.25 per common share -- Temporary and other items not expected to recur negatively impacted reported quarterly earnings by approximately $0.12 per common share -- Capital and liquidity positions remain among industry leaders -- Tangible common equity to tangible assets increased to 8.10% -- Total risk-based capital ratio of 18.00%, exceeding the minimum "well capitalized" level by $390.7 million -- Credit costs remain elevated due to continued stress in the commercial lending portfolio, consistent with the current economic downturn. Excluding covered assets, nonperforming assets to total assets was 1.23%, which remains well below industry peers -- Integration of the previously announced FDIC-assisted transactions of Peoples Community Bank, Irwin Union Bank and Trust Company and Irwin Union, F.S.B. remains on schedule with full completion expected in the first quarter of 2010

First Financial Bancorp announced today financial and operational results for the full-year and fourth quarter of 2009.

Full-year 2009 net income was $246.5 million, net income available to common shareholders was $243.0 million, and earnings per diluted common share were $5.33. This compares with full-year 2008 net income of $23.0 million and earnings per diluted common share of $0.61. Fourth quarter 2009 net income was $13.8 million, net income available to common shareholders was $12.8 million and earnings per diluted common share were $0.25. This compares with net income of $2.1 million and earnings per diluted common share of $0.06 for the fourth quarter of 2008, and net income of $225.6 million, net income available to common shareholders of $224.6 million and earnings per diluted common share of $4.36 for the third quarter of 2009.

Full-year 2009 results when compared with full-year 2008 were impacted by a number of acquisition-related items as well as increased credit costs.

Claude Davis, First Financial's president and chief executive officer, commented, "We generated strong earnings in 2009. This quarter marks the first full quarter of earnings from both the Peoples and Irwin acquisitions, and we are pleased with the results. We continue to invest in the growth of our company and we took advantage of opportunities created by the recession and gained market share. In 2009 we significantly expanded our retail banking network by building three new banking centers and adding a total of 39 banking centers through acquisitions within Ohio, Indiana, Kentucky and Michigan.

"The impact of slow economic conditions continued to affect credit quality. Credit costs remained elevated as high unemployment persists and the decline in real estate values continues to plague borrowers. Fortunately, we expect to have both the capital and the earnings power to weather these difficult times and produce earnings for our shareholders.

"Strong capital, liquidity and reserves have supported the company throughout the economic downturn. Although there have been some early signs of stabilization, the economy remains fragile and as a result, we will exercise caution as we continue to invest in and grow our business. We plan to maintain our expansion efforts in new and existing markets through the execution of our strategic plan. The infrastructure investments we have made to support our recent growth, along with our expanded footprint, places us in an excellent position to take advantage of additional market opportunities.

"On behalf of the board of directors and the executive management team of First Financial, I am grateful to our associates for their commitment to the execution of our strategic plan which supported and strengthened our company and allowed us to produce positive results throughout the economic downturn. We have built a strong foundation on which we can serve clients and create value for our shareholders."

SUMMARY OF FOURTH QUARTER 2009 RESULTS Pre-tax, Pre-provision (PTPP) Earnings

Strong PTPP earnings of approximately $35.7 million on a GAAP basis and approximately $46.1 million excluding items that are temporary and those expected not to recur. The higher levels of PTPP are attributable to a full quarter of earnings power of the consolidated franchise and the acquired portfolios.

Net Interest Margin

Fourth quarter 2009 net interest margin of 4.63% was enhanced significantly by the recent acquisitions representing an increase of approximately 73 basis points from the third quarter of 2009.

Credit Quality (excluding covered loans)

Nonperforming assets to total assets increased from 0.94% of total assets at September 30, 2009 to 1.23% of total assets at December 31, 2009 due to continued stress in the commercial and commercial real estate portfolios. This trend is consistent with managements' expectations as volatility continues in this difficult economy. Quarterly provision expense exceeded net chargeoffs by approximately $3.5 million.

Noninterest Income

Strong fourth quarter noninterest income was due to the performance of acquired deposit accounts and increases in interchange income. Approximately $3.5 million of other income is due to income recognized on covered loans that were sold in the western markets.

Noninterest Expense

Noninterest expenses totaled $61.6 million for the quarter and $47.9 million when excluding approximately $13.7 million of temporary items and items not expected to recur. Excluding these items, the level of noninterest expense is consistent with management expectations.

Deposit Retention and Liquidity

Deposit retention from recent acquisitions has exceeded management expectations and has contributed to a larger than expected cash and interest-bearing deposit combined balance of approximately $606 million.

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.

CREDIT QUALITY (excluding covered assets) The following table presents First Financial's key credit quality metrics. Table I ($ in thousands) ---------------- Three Months Ended ------------------ September December 31, 30, 2009 June 30, ------------ ---------- -------- 2009 2009 ---- ---- Total Nonperforming Loans $77,782 $63,608 $37,790 Total Nonperforming Assets $81,927 $67,909 $42,956 Nonperforming Assets as a % of: Period-End Loans, plus OREO 2.83% 2.36% 1.48% Total Assets 1.23% 0.94% 1.14% Nonperforming Loans as a % of Total Loans 2.69% 2.21% 1.31% Provision for Loan & Lease Losses $14,812 $26,655 $10,358 Allowance for Loan & Lease Losses $59,311 $55,770 $38,649 Allowance for Loan & Lease Losses as a % of: Period-End Loans 2.05% 1.94% 1.34% Nonaccrual Loans 82.8% 92.2% 102.8% Nonperforming Loans 76.3% 87.7% 102.3% Total Net Charge-Offs $11,271 $9,534 $8,146 Annualized Net Charge-Offs as a % of Average Loans & Leases 1.53% 1.31% 1.19% Three Months Ended ------------------ December March 31, 31, 2008 --------- --------- 2009 ---- Total Nonperforming Loans $24,892 $18,185 Total Nonperforming Assets $28,405 $22,213 Nonperforming Assets as a % of: Period-End Loans, plus OREO 1.04% 0.83% Total Assets 0.75% 0.60% Nonperforming Loans as a % of Total Loans 0.91% 0.68% Provision for Loan & Lease Losses $4,259 $10,475 Allowance for Loan & Lease Losses $36,437 $35,873 Allowance for Loan & Lease Losses as a % of: Period-End Loans 1.33% 1.34% Nonaccrual Loans 147.6% 199.5% Nonperforming Loans 146.4% 197.3% Total Net Charge-Offs $3,695 $4,955 Annualized Net Charge-Offs as a % of Average Loans & Leases 0.55% 0.73% Full-Year 2009 2008 ---- ---- Total Nonperforming Loans $77,782 $18,185 Total Nonperforming Assets $81,927 $22,213 Nonperforming Assets as a % of: Period-End Loans, plus OREO 2.83% 0.83% Total Assets 1.23% 0.60% Nonperforming Loans as a % of Total Loans 2.69% 0.68% Provision for Loan & Lease Losses $56,084 $19,410 Allowance for Loan & Lease Losses $59,311 $35,873 Allowance for Loan & Lease Losses as a % of: Period-End Loans 2.05% 1.34% Nonaccrual Loans 82.8% 199.5% Nonperforming Loans 76.3% 197.3% Total Net Charge-Offs $32,646 $12,594 Annualized Net Charge-Offs as a % of Average Loans & Leases 1.16% 0.47%

Higher credit costs impacted First Financial's 2009 results when compared with 2008. While the overall credit quality of First Financial's lending portfolios remained relatively strong throughout the early part of the economic downturn, late in the fourth quarter of 2008 and continuing throughout 2009, the company saw a higher level of borrower stress. The elevated levels of net charge-offs and nonperforming assets and the higher provision expense recorded in 2009 reflected the sluggish economic conditions, including persistent high unemployment rates and still depressed consumer spending. These factors continued to place pressure on the company's lending portfolios, but not to the extent seen in the commercial and commercial construction real estate sectors. These segments were marked by increased stress during 2009 as reflected in the sharp increases in both net charge-offs and nonperforming loans.

Net Charge-offs

The full-year, year-over-year quarter and linked quarter increases in total net charge-offs were driven primarily by continued deterioration within the commercial and commercial construction real estate portfolios.

Full-year 2009 total net charge-offs were $32.6 million or 116 basis points of average loans and leases, compared with $12.6 million or 47 basis points of average loans and leases for the full-year of 2008. Below is a summary of significant lending relationships that were charged-off during 2009:

-- First Quarter: a single commercial credit related to a borrower in the hotel industry of $1.1 million, representing 4 basis points of average loans and leases -- Second Quarter: two separate and unrelated vehicle floor plan relationships totaling approximately $3.8 million, representing 14 basis points of average loans and leases; and a commercial real estate construction relationship of $1.3 million, representing 5 basis points of average loans and leases -- Third Quarter: sold the entire $34.5 million portfolio of shared national credits resulting in a $2.2 million charge-off, representing 8 basis points of average loans and leases -- Fourth Quarter: charged off two unrelated commercial real estate construction relationships totaling $5.1 million, representing 17 basis points of average loans and leases

These charge-offs totaled $13.5 million and represented 48 basis points of full-year 2009 average loans and leases.

Fourth quarter 2009 total net charge-offs were $11.3 million, or 153 basis points of fourth quarter 2009 average loans and leases, compared with $9.5 million or 131 basis points of average loans and leases in the third quarter of 2009, and $5.0 million or 73 basis points of average loans and leases in the fourth quarter of 2008.

Nonperforming Assets

Nonperforming loans were $77.8 million and nonperforming assets were $81.9 million at December 31, 2009, compared with $63.6 million and $67.9 million, respectively, at September 30, 2009, and $18.2 million and $22.2 million, respectively, at December 31, 2008. A significant portion of the increase in nonperforming loans at December 31, 2009 from September 30, 2009 was due to the addition of four related commercial loans totaling $12.1 million that were added during the fourth quarter.

Similar to the past several quarters, the higher level of nonperforming loans, which are accounted for under Financial Accounting Standards Board (FASB) Codification Topic 310-10-35: Subsequent Measurement of Receivables, continues to adversely impact the company's nonperforming loan coverage ratios. The allowance for loan and lease losses as a percent of nonaccrual loans was 82.8% at December 31, 2009, compared with 92.2% at September 30, 2009, and 199.5% at December 31, 2008, and the allowance for loan and lease losses as a percent of nonperforming loans was 76.3% compared with 87.7% at September 30, 2009, and 197.3% at December 31, 2008.

First Financial is aggressive both in the monitoring of performing credits and in the workout of credits that become nonperforming, however, this elevated level of nonperforming loans is expected to continue as the economy continues to experience stress and the related impact on borrowers remains negative. The emergence of borrower fraud is expected to increase as is an increase in bankruptcy levels, as has occurred in previous recessions.

Restructured Loans

During the fourth quarter of 2009, the company restructured approximately $3.0 million of residential mortgage loans and commercial loans for borrowers. The terms of the modifications included a combination of temporary interest rate reductions, term extensions and re-amortizations. These actions did not have a significant financial impact on the company. There can be no assurance these actions will be successful in improving the long-term performance of the borrowers.

Delinquent Loans

Total loans 30 to 89 days past due were $19.1 million or 0.66% of period end loans at December 31, 2009, compared with $20.8 million, or 0.72% at September 30, 2009 and $22.6 million or 0.84% at December 31, 2008.

Provision Expense / Allowance for Loan & Lease Losses

Full-year 2009 provision expense was $56.1 million compared with $19.4 million for the full-year of 2008, and was $14.8 million in the fourth quarter of 2009, compared with $26.7 million in the third quarter of 2009, and $10.5 million in the fourth quarter of 2008. Provision expense for the full-year of 2009 represented approximately 171.8% of full-year 2009 net charge-offs, and represented approximately 131.4% of fourth quarter 2009 net charge-offs.

The elevated provision expense is due to the company's expectation of the risk inherent in the commercial loan portfolios. While not necessarily credit specific for First Financial, generally the outlook for this sector has continued to deteriorate and is not likely to soon recover, according to most industry data.

At December 31, 2009, the allowance for loan and lease losses increased to $59.3 million from $55.8 million at September 30, 2009, and $35.9 million at December 31, 2008. The allowance for loan and lease losses as a percent of period-end loans was 2.05% at December 31, 2009, compared with 1.34% at December 31, 2008, and 1.94% at September 30, 2009.

First Financial expects to maintain a higher reserve level until it believes that the current economic cycle, including credit losses, for both the industry and the company, have peaked. The economy remains fragile and the company expects that certain credit metrics may remain volatile and at these historically higher levels over the next several quarters, or until there are more definite signs of economic recovery, including lower unemployment rates and increased consumer spending.

Other Real Estate Owned (OREO)

At December 31, 2009, OREO was $4.1 million, compared with $4.3 million at September 30, 2009, and $4.0 million at December 30, 2008.

Covered Assets / Loss Share Agreements

In connection with the FDIC-assisted transactions, First Financial entered into loss sharing arrangements with the FDIC. Under the terms of these agreements the FDIC will reimburse the company for losses with respect to certain loans and other real estate owned (OREO) (collectively, "covered assets") beginning with the first dollar of loss. At December 31, 2009, approximately 40% of total loans were covered loans. As required, First Financial has filed monthly certifications with the FDIC on single-family residential loans. To-date, all filings have been accepted. The initial commercial loan certifications, which are filed quarterly, will be filed with the FDIC by the end of January 2010.

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

CAPITAL MANAGEMENT

First Financial continues to maintain superior capital ratios. All regulatory capital ratios significantly exceeded the amounts necessary to be classified as "well capitalized" at December 31, 2009. In addition, total regulatory capital exceeded the "minimum" requirement by approximately $390.7 million, on a consolidated basis.

The following table presents First Financial's regulatory capital ratios at December 31, 2009.

Table II FFBC Regulatory -------- ---- ---------- "well- capitalized" ------------- minimum ------- Leverage Ratio 9.57% 5% -------------- ---- --- Tier 1 Capital Ratio 16.74% 6% -------------------- ----- --- Total Risk-Based Capital Ratio 18.00% 10% ---------------- ----- --- EOP Tangible Equity / 9.30% N/A --------------------- ---- --- EOP Tangible Assets ------------------- EOP Tangible Common Equity / 8.10% N/A ------------------- ---- --- EOP Tangible Assets ------------------- N/A = not applicable

The Irwin FDIC-assisted transaction, which was accounted for as a business combination with a bargain purchase gain, generated a significant level of capital during the third quarter of 2009. The acquired covered assets and the FDIC Indemnification Asset, which represents the fair value of estimated future payments by the FDIC to First Financial for both Peoples and Irwin, are both risk-weighted at 20% for regulatory capital requirement purposes.

NET INTEREST INCOME & NET INTEREST MARGIN

Full-year 2009 net interest income increased $59.8 million from 2008's comparable period, and the net interest margin increased 34 basis points. Fourth quarter 2009 net interest income increased $32.5 million from the third quarter of 2009, and the net interest margin increased 73 basis points. Approximately 56 basis points of the linked-quarter increase in the net interest margin was due to the yield on both covered loans and the indemnification asset. The linked quarter increase was also positively impacted by the repricing of the assumed deposit portfolios (15 basis points) and other balance sheet mix changes (7 basis points), which were partially offset by the increased interest expense in the acquired long-term borrowing portfolios (4 basis points).

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

Other income from covered loans will be impacted as described in the following two scenarios:

For covered loans that prepay, this income is a result of the net effect of:

-- The recovery of the yield-based fair value adjustment -- The value adjustment associated with assumed credit impairment -- Offset by the corresponding valuation adjustment on the FDIC indemnification asset

This scenario can occur either through a strategic loan sale or ordinary prepayments that are typical in a loan portfolio.

For covered loans that pay according to their contractual obligation, this income is a result of the net effect of:

-- The value adjustment associated with assumed credit impairment -- Offset by the corresponding valuation adjustment on the FDIC indemnification asset

As First Financial's experience with the acquired portfolios increase, greater predictability will emerge on the timing of the recognition of this portion of the economic value of the transaction. First Financial will consider income associated with strategic loan sales as non-core and will highlight sales when they occur. All other income associated with prepayments or contractual performance will be considered core as it arises from the expected behavior of the purchased portfolios.

Full-year 2009 noninterest income, excluding the third quarter 2009 bargain purchase gain of $379.1 million, was $62.2 million, compared with $51.7 million for the full-year of 2008. Included in this increase was other noninterest income related to covered loans that were paid off as described above, as well as higher income on the sales of investment securities.

Fourth quarter 2009 noninterest income increased $12.2 million to $24.1 million from $11.9 million, excluding the $379.1 million bargain purchase gain, from the third quarter of 2009. Contributing to this increase was the previously mentioned other noninterest income from covered loans, higher service charges on deposit accounts driven primarily by an increase in transaction-based deposits, as well as increases in bankcard and interchange income, and trust and wealth management fees.

NONINTEREST EXPENSE

Noninterest expense was relatively well-controlled throughout the year excluding higher FDIC costs and some higher expenses related to incentive compensation, general growth and market expansion, including acquisition-related costs. Acquisition-related costs were primarily comprised of legal, professional, technology and other integration costs. Staffing, occupancy and marketing expenses also increased due to the additional banking centers in operation during the second half of 2009 compared with 2008's comparable period.

As First Financial continues with plans to sell, consolidate or close locations during the first quarter of 2010, it anticipates that the reduction of operating costs and capital requirements related to the operation of these locations will have a positive impact on noninterest expense during the second half of 2010. However, the company may incur additional exit costs during 2010 related to these activities.

Full-year 2009 noninterest expense was $170.6 million, an increase of $55.5 million from $115.2 million in 2008's comparable period. Fourth quarter 2009 noninterest expense was $61.6 million, an increase of $15.3 million from $46.3 million in the third quarter of 2009.

The increase in noninterest expense across all comparative periods is primarily related to the following:

-- FDIC insurance premium assessments of $6.6 million -- Integration-related costs of $13.4 million -- Temporary costs of $5.0 million related to staffing and non-strategic facilities -- Higher professional services fees of $2.6 million INCOME TAXES

For the full-year of 2009, income tax expense was $144.0 million with an effective tax rate of 36.9% compared with income tax expense of $10.4 million and an effective tax rate of 31.2% for 2008's comparable period. Fourth quarter 2009 income tax expense was $7.1 million and the effective tax rate was 34.0%, compared with income tax expense of $0.4 million and an effective tax rate of 15.1% for the fourth quarter of 2008, and income tax expense of $133.2 million and an effective tax rate of 37.1% for the third quarter of 2009.

The increase in the overall tax rate for the full-year and third quarter of 2009 was driven by the tax impact from the bargain purchase gain and other changes resulting from the Irwin acquisition.

LOANS (excluding covered loans) Full-Year 2009 versus Full-Year 2008 -- Average total loans increased $157.0 million, or 5.9%. -- Average commercial, commercial real estate and construction loans increased $277.6 million, or 15.7%. Fourth Quarter 2009 versus fourth Quarter 2008 -- Average total loans increased $237.9 million or 8.8%. -- Average commercial, commercial real estate and construction loans increased $284.2 million, or 15.3%. Fourth Quarter 2009 versus Third Quarter 2009 -- Average total loans increased $42.8 million, or 5.9% on an annualized basis. -- Average commercial, commercial real estate and construction loans increased $25.4 million, or 4.8% on an annualized basis. INVESTMENTS

The investment securities portfolio totaled $579.1 million at December 31, 2009, compared with $692.8 million at December 31, 2008 and $629.3 million at September 30, 2009. The linked quarter decrease in the portfolio at December 31, 2009 was due to net securities paydowns and maturities. First Financial has not used any portion of its available liquidity to purchase investment securities since the first quarter of 2009 primarily due to the higher pricing on bonds which has persisted throughout 2009. Additions during the third quarter of 2009 were a result of investment securities acquired in the Peoples and Irwin transactions. All securities acquired through these FDIC-assisted transactions are conforming investments as outlined in First Financial's investment policy.

The majority of the investment portfolio is comprised of low-risk investment securities, primarily treasury, government agency and agency residential mortgage-backed securities. The December 31, 2009 investment securities portfolio included a net unrealized pre-tax gain of $16.5 million representing the difference between fair value and amortized cost. This compares with net unrealized pre-tax gains of $11.1 million and $19.2 million at December 31, 2008 and September 30, 2009, respectively. The net unrealized pre-tax gain increased in 2009 over 2008 due to improved liquidity and pricing in agency securities markets, primarily related to residential mortgage-backed securities. The total investment portfolio represented 8.7% and 18.7% of total assets at December 31, 2009 and 2008, respectively, and 8.7% of total assets at September 30, 2009.

The following table presents a summary of the total investment portfolio at December 31, 2009.

Table III ($ in thousands, excluding book price and market value) % of Book Book Book Total Value Yield Price ----- ----- ----- ----- UST Notes & Agencies 6.0% $34,478 4.33 99.82 CMOs (Agency) 10.0% 58,158 4.57 100.49 CMOs (Private) 0.0% 62 0.94 100.00 MBSs (Agency) 62.9% 364,188 4.69 100.94 Agency Preferred 0.0% 200 1.00 --- --- Subtotal 78.9% $457,086 4.65 100.76 ---- -------- -- ---- Municipal 4.0% $22,855 7.12 99.08 Other * 17.1% 99,206 3.24 101.58 ---- -- ---- Subtotal 21.1% $122,061 3.96 101.11 ---- -------- -- ---- Total Investment Portfolio 100.0% $579,147 4.50 100.83 ----- -------- ---- ------ December 31, 2009 Pre-Tax Market Gain/ Value (Loss) UST Notes & 102.05 $759 Agencies CMOs (Agency) 104.10 2,020 CMOs (Private) 98.21 (1) MBSs (Agency) 104.69 13,020 Agency Preferred 1.00 - ---------------- Subtotal 103.24 $15,798 -------- Municipal 101.11 $464 Other * 101.85 263 ------- Subtotal 101.71 $727 -------- Total Investment Portfolio 102.94 $16,525 ---------------- Net Unrealized Gain/(Loss) $16,525 Aggregate Gains $17,068 Aggregate Losses $(543) Net Unrealized Gain/(Loss) % of Book Value 2.85% * Other includes $88 million of regulatory stock DEPOSITS & FUNDING

The table below presents the progression of deposits during the fourth quarter of 2009, including the progression of the deposits acquired during the third quarter of 2009.

Table IV Fourth Quarter 2009 Deposit Activity ($ in thousands) Legacy Market Total Deposits Portfolio Expansion at 9/30/2009 Growth Growth ------------ ------ ------ End of Period Transaction & Savings $3,096,110 $132,427 $(89,628) Time 2,058,877 25,929 (119,687) Broker 680,997 899 - ------- --- --- Total $5,835,984 $159,255 $(209,315) ========== ======== ========= Western & Total Brokered Deposits at Deposits 12/31/2009 -------- ---------- End of Period Transaction & Savings $(17,669) $3,121,240 Time (101,004) 1,864,115 Broker (316,611) 365,285 -------- ------- Total $(435,284) $5,350,640 ========= ==========

Total deposits at December 31, 2009 were $5.4 billion, a decline of $485.3 million from $5.8 billion at September 30, 2009. A majority of this decrease occurred in the time deposits category, which was impacted by the repricing initiative of both time and broker deposits that were acquired in the Irwin FDIC-assisted transaction. Also contributing to the decline were year-end seasonal fluctuations in public fund deposits.

As reported in the third quarter 2009, First Financial had the option to reprice the acquired deposit portfolios to current market rates within seven days of the acquisition dates. In addition, depositors with repriced accounts had the option to withdraw funds without penalty. The company chose to reprice approximately $1.0 billion in acquired deposits. The repriced deposits were comprised of all assumed brokered deposits, all time deposits from Peoples, as well as related time deposits from Irwin Union Bank, F.S.B. First Financial received approximately $1.0 billion from the FDIC associated with the transactions and believes that this provides sufficient liquidity to fund the potential at-risk deposit outflows. Through the end of December 2009, approximately 47% of the repriced Irwin deposit accounts were redeemed without penalty. Approximately $430 million of the funds received by First Financial from the FDIC remains invested in short-term liquidity.

As a result of First Financial's plans to exit the nine remaining western market locations it acquired from Irwin, the company anticipates that those deposits will roll off at a more rapid pace over the next few months. Deposits in these nine markets totaled $347.0 million at December 31, 2009.

Borrowed funds for the fourth quarter of 2009 were $462.8 million, a decline of $69.0 million, or 13.0%, from the third quarter of 2009. This decrease was primarily due to maturities of short term and long term advances of Federal Home Loan Bank borrowings. Since the third quarter of 2008, First Financial has not increased long-term borrowings, other than the Federal Home Loan Bank long-term debt acquired in the Peoples and Irwin transactions in the third quarter of 2009.

The table below presents the quarterly progression of First Financial's borrowed funds position.

Table V ($ in thousands) September 30, 2009 Ending Additions Balance ------- Short Term Borrowings: Federal Funds Purchased and Securities Sold Under Agreements to Repurchase $35,763 $1,667 Federal Home Loan Bank Advances 65,000 - Other - - --- --- Total Short Term Borrowings $100,763 $1,667 Long Term Borrowings: Federal Home Loan Bank Advances (1) $345,356 $- Securities Sold Under Agreements to Repurchase 65,000 - Other 20,620 - ------ --- Total Long Term Borrowings $430,976 $- Total Short & Long Term Borrowings $531,739 $1,667 ======== ====== December 31, 2009 Maturities Ending Balance ------- Short Term Borrowings: Federal Funds Purchased and Securities Sold Under Agreements to Repurchase $- $37,430 Federal Home Loan Bank Advances (65,000) - Other - - --- --- Total Short Term Borrowings $(65,000) $37,430 Long Term Borrowings: Federal Home Loan Bank Advances (1) $(5,640) $339,716 Securities Sold Under Agreements to Repurchase - 65,000 Other - 20,620 --- ------ Total Long Term Borrowings $(5,640) $425,336 Total Short & Long Term Borrowings $(70,640) $462,766 ======== ======== (1) Includes Market Value Adjustment --- --------------------------------

At December 31, 2009, in addition to liquidity on hand, First Financial had unused and available overnight wholesale funding of approximately $2.3 billion to fund any significant deposit runoff that may occur as a result of the repriced deposits and from the markets that the company is exiting.

ACQUISITIONS Overview

During the third quarter of 2009, through FDIC-assisted transactions, First Financial assumed the banking operations of Peoples Community Bank (Peoples), Irwin Union Bank and Trust Company and Irwin Union Bank, F.S.B. (collectively, "Irwin"). Also during the third quarter of 2009, in a separate and unrelated transaction, First Financial purchased three banking centers from Irwin. Through these transactions, the company acquired total assets of $3.9 billion, including $2.1 billion in loans, and assumed a total of $3.5 billion in liabilities, including $3.0 billion in deposits. Assets and liabilities were recorded at their estimated fair value.

Subsequent Events

Each transaction was considered a business combination and accounted for under FASB Codification Topic 805: Business Combinations ("Topic 805"), FASB Codification Topic 820: Fair Value Measurements and FASB Codification Topic 310-30: Loans and Debt Securities Acquired with Deteriorated Credit Quality. All acquired assets and liabilities were recorded at their estimated fair values as of the date of acquisition, and identifiable intangible assets were recorded at their estimated fair value.

Estimated fair values are considered preliminary and in accordance with Topic 805, are subject to change up to one year after the acquisition date. This allows for adjustments to the initial purchase entries if additional information relative to closing date fair values becomes available. Adjustments to acquisition date estimated fair values are recorded in the period in which the acquisition occurred and as a result, previously reported results are subject to change.

During the fourth quarter of 2009, initial estimates of loan carrying values and other related balance sheet items were revised and resulted in adjustments to the estimated carrying values of the acquired assets and liabilities previously recorded in the third quarter of 2009. In accordance with Topic 805, previously reported third quarter 2009 results have been adjusted to reflect the impact of this additional information. These adjustments resulted in an increase in goodwill and other intangibles of $6.0 million, a net decrease in total assets of $2.2 million, a net decrease in total shareholders' equity of $0.6 million and a net decrease in after-tax net income of $0.6 million.

The significant items that were adjusted in the previously reported third quarter 2009 results are as follows:

-- Goodwill for the Peoples transaction declined by $0.6 million, bringing the total recorded goodwill to $18.1 million. This was primarily due to an increase in other identifiable intangibles. -- An after-tax reduction of $2.7 million to the bargain purchase gain recognized in the Irwin FDIC-assisted transaction, bringing the total adjusted after-tax bargain purchase gain to $238.4 million. This reduction was primarily the result of changes to the originally recorded carrying value of loans from the acquired balance sheet. -- Recorded goodwill effective in the third quarter of 2009 in the amount of $5.4 million related to the purchase of the three banking centers from Irwin, as the estimated fair value of liabilities assumed exceed the estimated fair value of assets acquired. -- Pre-tax net interest income increased $3.2 million as a result of additional accretion income on covered loans and the indemnification asset. Integration

During the fourth quarter of 2009, First Financial successfully completed the technology conversion and operational integration of Peoples. The company did not acquire the 19 banking properties and their contents on the acquisition date, but held a purchase option from the FDIC for each location. During the first quarter of 2010, First Financial exercised the option to purchase 17 locations at fair market values; however, a settlement date with the FDIC for the exercise of the purchase option has not yet been determined.

First Financial expects to complete the technology conversion and operational integration of Irwin later in the first quarter of 2010. In total, 27 Irwin banking centers were acquired in the FDIC transaction including 10 locations in the western part of the United States that are outside of the company's strategic operating markets, and as a result, do not align with its long-term strategic plans. In late December, the company elected to close the St. Louis, Missouri location. Over the past several months, the company has worked to identify suitable financial institutions or business partners for the purpose of acquiring the nine remaining locations, either individually or collectively. Exit strategies, which are expected to coincide with the conversion and operational integration process, have been established for each location if suitable business partners are not identified. Late in the fourth quarter of 2009, First Financial sold $43.0 million in western market loans, at their unpaid principal balances. At December 31, 2009, the nine remaining offices combined had $684.3 million in unpaid principal balances on loans and $347.0 million in deposits.

The loans acquired from Irwin were purchased under a modified loan purchase agreement with the FDIC, whereby the FDIC was to retain the land acquisition, construction and development loans. As stated previously, this identification process has not yet concluded. To date, the company has identified approximately $73 million in loans that it believes should have been excluded from the original transaction settlement due to this criteria, and has filed a formal request to the FDIC for them to repurchase the loans. These loans remain in the company's covered loan portfolio.

OUTLOOK

While it is First Financial's historic practice not to provide earnings guidance, due to the material changes in the company over the past several months, the company is disclosing expectations regarding certain areas of its core operations that impact earnings:

-- Full year 2010 net interest margin is expected to be between 4.45% and 4.55%. This is a decrease from the current quarter due to the expected and intentional runoff of higher yielding acquired loans -- Full year earning assets are expected to decrease 7% to 9% when compared to fourth quarter 2009 average -- Full year average deposits are expected to decrease 8% to 10% when compared to fourth quarter 2009 average due to expected wholesale and western states deposit runoff -- Full year average loans are expected to decrease 5% to 7% when compared to fourth quarter 2009 average -- Quarterly non-interest income is expected to be between $19.5 million and $21.0 million excluding non-core items -- Quarterly non-interest expense is expected to be between $47.0 million and $48.5 million excluding temporary staff and other items deemed to be non-core

First Financial's outlook for 2010 includes, but is not limited to the impact of certain factors such as inflation, unemployment, growth, and forward market interest rates. In addition, a material change in economic conditions would have an impact on expected 2010 performance. Please refer to the forward- looking statement found at the end of this news release for additional information.

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 we conduct operations may continue to deteriorate resulting in, among other things, a further deterioration in credit quality or a reduced demand for credit, including the resultant effect on our loan portfolio, allowance for loan and lease losses and overall financial performance; 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 Troubled Asset Relief Program and the Federal Deposit Insurance Corporation's ("FDIC") Temporary Liquidity Guarantee Program, and the effect of such governmental actions on us, our 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 depositary institution failures; the effects of and changes in policies and laws of regulatory agencies, inflation and interest rates; technology changes; mergers and acquisitions, including costs or difficulties related to the integration of acquired companies, including our ability to successfully integrate the branches of Peoples Community Bank, Irwin Union Bank and Trust Company and Irwin Union Bank, F.S.B., which were acquired out of FDIC receivership, and the risk that exploring merger and acquisition opportunities may detract from management's time and ability to successfully manage our company; expected cost savings in connection with the consolidation of recent acquisitions may not be fully realized or realized within the expected time frames, and deposit attrition, customer loss and revenue loss following completed acquisitions may be greater than expected; our ability to increase market share and control expenses; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as the Financial Accounting Standards Board and the SEC; adverse changes in the securities and debt markets; our 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; monetary and fiscal policies of the Board of Governors of the Federal Reserve System (the "Federal Reserve") and the U.S. government and other governmental initiatives affecting the financial services industry; our ability to manage loan delinquency and charge-off rates and changes in estimation of the adequacy of the allowance for loan losses; the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; the uncertainties arising from our continued participation in the TARP CPP, 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 our 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 September 30, 2009. These documents are available at no cost within the investor relations section of First Financial's website at http://www.bankatfirst.com/investor and on the SEC's website at http://www.sec.gov/.

About First Financial Bancorp

First Financial Bancorp is a Cincinnati, Ohio based bank holding company. At December 31, 2009, the company had $6.7 billion in assets, including $4.8 billion in total loans and $5.4 billion in deposits. Its banking subsidiary, First Financial Bank, N.A., founded in 1863, provides consumer and commercial banking products and services, and investment and insurance products through its retail banking center network. Currently First Financial Bank, N.A. operates 127 banking centers. Its strategic operating markets are located within the four state regions of Ohio, Indiana, Kentucky and Michigan where it operates 118 banking centers. The bank's wealth management division, First Financial Wealth Resource Group, provides investment management, traditional trust, brokerage, private banking, and insurance services, and had approximately $2.2 billion in assets under management at December 31, 2009. Additional information about the company, including its products, services, and banking locations, is available at http://www.bankatfirst.com/investor.

FIRST FINANCIAL BANCORP. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share) (Unaudited) Three months ended, Dec. 31, Sep. 30, 2009 2009 ---- ---- RESULTS OF OPERATIONS Net interest income $73,182 $40,664 Net income $13,795 $225,566 Net income available to common shareholders $12,795 $224,566 Net earnings per common share - basic $0.25 $4.40 Net earnings per common share - diluted $0.25 $4.36 Dividends declared per common share $0.10 $0.10 KEY FINANCIAL RATIOS Return on average assets 0.80% 19.85% Return on average shareholders' equity 8.05% 186.11% Return on average common shareholders' equity 8.44% 221.29% Return on average tangible common shareholders' equity 9.37% 260.04% Net interest margin 4.63% 3.90% Net interest margin (fully tax equivalent) (1) 4.65% 3.93% Ending equity as a percent of ending assets 10.11% 9.24% Ending common equity as a percent of ending assets 8.92% 8.16% Ending tangible common equity as a percent of: Ending tangible assets 8.10% 7.40% Risk-weighted assets 13.73% 13.26% Average equity as a percent of average assets 9.90% 10.66% Average common equity as a percent of average assets 8.76% 8.93% Average tangible common equity as a percent of average tangible assets 7.96% 7.70% Book value per common share $11.59 $11.52 Tangible book value per common share $10.43 $10.35 Tier 1 Ratio (2) 16.74% 16.07% Total Capital Ratio (2) 18.00% 17.32% Leverage Ratio (2) 9.57% 14.41% AVERAGE BALANCE SHEET ITEMS Loans (3) $2,929,850 $2,886,729 Covered loans and FDIC indemnification asset 2,278,431 539,330 Investment securities 608,952 575,697 Interest-bearing deposits with other banks 447,999 136,210 ------- ------- Total earning assets $6,265,232 $4,137,966 Total assets $6,863,923 $4,508,809 Noninterest-bearing deposits $768,573 $543,320 Interest-bearing deposits 4,781,908 3,065,377 --------- --------- Total deposits $5,550,481 $3,608,697 Borrowings $471,916 $377,406 Shareholders' equity $679,840 $480,839 CREDIT QUALITY RATIOS (excluding covered assets) Allowance to ending loans 2.05% 1.94% Allowance to nonaccrual loans 82.77% 92.17% Allowance to nonperforming loans 76.25% 87.68% Nonperforming loans to total loans 2.69% 2.21% Nonperforming assets to ending loans, plus OREO 2.83% 2.36% Nonperforming assets to total assets 1.23% 0.94% Net charge-offs to average loans (annualized) 1.53% 1.31% Three months ended, Jun. 30, Mar. 31, Dec. 31, 2009 2009 2008 ---- ---- ---- RESULTS OF OPERATIONS Net interest income $31,209 $30,928 $30,129 Net income $1,450 $5,735 $2,084 Net income available to common shareholders $450 $5,157 $2,084 Net earnings per common share - basic $0.01 $0.14 $0.06 Net earnings per common share - diluted $0.01 $0.14 $0.06 Dividends declared per common share $0.10 $0.10 $0.17 KEY FINANCIAL RATIOS Return on average assets 0.15% 0.62% 0.23% Return on average shareholders' equity 1.53% 6.63% 2.89% Return on average common shareholders' equity 0.60% 7.67% 2.97% Return on average tangible common shareholders' equity 0.66% 8.57% 3.32% Net interest margin 3.60% 3.61% 3.67% Net interest margin (fully tax equivalent) (1) 3.64% 3.65% 3.71% Ending equity as a percent of ending assets 11.81% 9.29% 9.42% Ending common equity as a percent of ending assets 9.74% 7.24% 7.31% Ending tangible common equity as a percent of: Ending tangible assets 9.06% 6.54% 6.57% Risk-weighted assets 11.05% 8.38% 8.37% Average equity as a percent of average assets 10.04% 9.29% 8.04% Average common equity as a percent of average assets 7.98% 7.22% 7.82% Average tangible common equity as a percent of average tangible assets 7.27% 6.51% 7.05% Book value per common share $7.16 $7.36 $7.21 Tangible book value per common share $6.61 $6.59 $6.43 Tier 1 Ratio (2) 14.77% 12.16% 12.38% Total Capital Ratio (2) 16.02% 13.39% 13.62% Leverage Ratio (2) 12.02% 9.51% 10.00% AVERAGE BALANCE SHEET ITEMS Loans (3) $2,744,063 $2,717,097 $2,690,895 Covered loans and FDIC indemnification asset 0 0 0 Investment securities 731,119 758,257 574,893 Interest-bearing deposits with other banks 8,614 7,291 1,737 ----- ----- ----- Total earning assets $3,483,796 $3,482,645 $3,267,525 Total assets $3,784,458 $3,777,510 $3,566,051 Noninterest-bearing deposits $425,330 $416,206 $412,644 Interest-bearing deposits 2,408,054 2,405,700 2,367,121 --------- --------- --------- Total deposits $2,833,384 $2,821,906 $2,779,765 Borrowings $542,578 $566,808 $474,655 Shareholders' equity $379,944 $350,857 $286,582 CREDIT QUALITY RATIOS (excluding covered assets) Allowance to ending loans 1.34% 1.33% 1.34% Allowance to nonaccrual loans 102.81% 147.57% 199.51% Allowance to nonperforming loans 102.27% 146.38% 197.27% Nonperforming loans to total loans 1.31% 0.91% 0.68% Nonperforming assets to ending loans, plus OREO 1.48% 1.04% 0.83% Nonperforming assets to total assets 1.14% 0.75% 0.60% Net charge-offs to average loans (annualized) 1.19% 0.55% 0.73% Twelve months ended Dec. 31, 2009 2008 ---- ---- RESULTS OF OPERATIONS Net interest income $175,983 $116,202 Net income $246,546 $22,962 Net income available to common shareholders $242,968 $22,962 Net earnings per common share - basic $5.40 $0.62 Net earnings per common share - diluted $5.33 $0.61 Dividends declared per common share $0.40 $0.68 KEY FINANCIAL RATIOS Return on average assets 5.20% 0.67% Return on average shareholders' equity 52.04% 8.21% Return on average common shareholders' equity 61.43% 8.27% Return on average tangible common shareholders' equity 72.27% 9.24% Net interest margin 4.05% 3.71% Net interest margin (fully tax equivalent) (1) 4.08% 3.77% Ending equity as a percent of ending assets 10.11% 9.42% Ending common equity as a percent of ending assets 8.92% 7.31% Ending tangible common equity as a percent of: Ending tangible assets 8.10% 6.57% Risk-weighted assets 13.73% 8.37% Average equity as a percent of average assets 9.99% 8.16% Average common equity as a percent of average assets 8.34% 8.11% Average tangible common equity as a percent of average tangible assets 7.18% 7.31% Book value per common share $11.59 $7.21 Tangible book value per common share $10.43 $6.43 Tier 1 Ratio (2) 16.74% 12.38% Total Capital Ratio (2) 18.00% 13.62% Leverage Ratio (2) 9.57% 10.00% AVERAGE BALANCE SHEET ITEMS Loans (3) $2,820,202 $2,661,546 Covered loans and FDIC indemnification asset 710,230 0 Investment securities 667,843 452,921 Interest-bearing deposits with other banks 151,198 18,603 ------- ------ Total earning assets $4,349,473 $3,133,070 Total assets $4,741,514 $3,426,275 Noninterest-bearing deposits $539,336 $397,267 Interest-bearing deposits 3,171,496 2,400,136 --------- --------- Total deposits $3,710,832 $2,797,403 Borrowings $489,109 $321,539 Shareholders' equity $473,793 $279,709 CREDIT QUALITY RATIOS (excluding covered assets) Allowance to ending loans 2.05% 1.34% Allowance to nonaccrual loans 82.77% 199.51% Allowance to nonperforming loans 76.25% 197.27% Nonperforming loans to total loans 2.69% 0.68% Nonperforming assets to ending loans, plus OREO 2.83% 0.83% Nonperforming assets to total assets 1.23% 0.60% Net charge-offs to average loans (annualized) 1.16% 0.47% (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) December 31, 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, Dec. 31, -------- 2009 2008 % Change ---- ---- -------- Interest income Loans, including fees $81,471 $37,864 115.2% Investment securities Taxable 6,422 6,697 (4.1%) Tax-exempt 320 519 (38.3%) --- --- ------- Total investment securities interest 6,742 7,216 (6.6%) Other earning assets 5,132 6 85433.3% ----- --- ------- Total interest income 93,345 45,086 107.0% Interest expense Deposits 17,207 12,015 43.2% Short-term borrowings 23 1,186 (98.1%) Long-term borrowings 2,611 1,395 87.2% Subordinated debentures and capital securities 322 361 (10.8%) --- --- ------- Total interest expense 20,163 14,957 34.8% ------ ------ ---- Net interest income 73,182 30,129 142.9% Provision for loan and lease losses 14,812 10,475 41.4% ------ ------ ---- Net interest income after provision for loan and lease losses 58,370 19,654 197.0% Noninterest income Service charges on deposit accounts 5,886 4,752 23.9% Trust and wealth management fees 3,584 3,745 (4.3%) Bankcard income 1,869 1,457 28.3% Net gains from sales of loans 341 321 6.2% Gains on sales of investment securities 0 0 N/M Gain on acquisition 0 0 N/M (Loss) income on preferred securities (138) (137) 0.7% Other 12,607 2,510 402.3% ------ ----- ----- Total noninterest income 24,149 12,648 90.9% Noninterest expenses Salaries and employee benefits 30,141 17,015 77.1% Net occupancy 7,290 2,635 176.7% Furniture and equipment 2,527 1,748 44.6% Data processing 890 840 6.0% Marketing 1,283 935 37.2% Communication 1,169 704 66.1% Professional services 2,605 912 185.6% State intangible tax 564 435 29.7% FDIC expense 1,529 158 867.7% Other 13,609 4,465 204.8% ------ ----- ----- Total noninterest expenses 61,607 29,847 106.4% ------ ------ ----- Income before income taxes 20,912 2,455 751.8% Income tax expense 7,117 371 1818.3% ----- --- ------ Net income 13,795 2,084 561.9% Dividends on preferred stock 1,000 0 N/M ----- --- --- Income available to common shareholders $12,795 $2,084 514.0% ======= ====== ===== ADDITIONAL DATA Net earnings per common share -basic $0.25 $0.06 Net earnings per common share -diluted $0.25 $0.06 Dividends declared per common share $0.10 $0.17 Return on average assets 0.80% 0.23% Return on average shareholders' equity 8.05% 2.89% Interest income $93,345 $45,086 107.0% Tax equivalent adjustment 295 360 (18.1%) --- --- ------- Interest income -tax equivalent 93,640 45,446 106.0% Interest expense 20,163 14,957 34.8% ------ ------ ---- Net interest income -tax equivalent $73,477 $30,489 141.0% ======= ======= ===== Net interest margin 4.63% 3.67% Net interest margin (fully tax equivalent) (1) 4.65% 3.71% Full-time equivalent employees (2) 1,390 1,061 Twelve months ended, Dec. 31, -------- 2009 2008 % Change ---- ---- -------- Interest income Loans, including fees $195,917 $159,985 22.5% Investment securities Taxable 29,376 19,954 47.2% Tax-exempt 1,492 2,733 (45.4%) ----- ----- ------- Total investment securities interest 30,868 22,687 36.1% Other earning assets 6,443 633 917.9% ----- --- ----- Total interest income 233,228 183,305 27.2% Interest expense Deposits 47,580 57,997 (18.0%) Short-term borrowings 1,318 4,828 (72.7%) Long-term borrowings 7,145 2,892 147.1% Subordinated debentures and capital securities 1,202 1,386 (13.3%) ----- ----- ------- Total interest expense 57,245 67,103 (14.7%) ------ ------ ------- Net interest income 175,983 116,202 51.4% Provision for loan and lease losses 56,084 19,410 188.9% ------ ------ ----- Net interest income after provision for loan and lease losses 119,899 96,792 23.9% Noninterest income Service charges on deposit accounts 19,662 19,658 0.0% Trust and wealth management fees 13,465 17,411 (22.7%) Bankcard income 5,961 5,653 5.4% Net gains from sales of loans 1,196 1,104 8.3% Gains on sales of investment securities 3,349 1,585 111.3% Gain on acquisition 379,086 0 N/M (Loss) income on preferred securities 139 (3,738) (103.7%) Other 18,449 10,076 83.1% ------ ------ ---- Total noninterest income 441,307 51,749 752.8% Noninterest expenses Salaries and employee benefits 86,068 66,862 28.7% Net occupancy 16,202 10,635 52.3% Furniture and equipment 8,054 6,708 20.1% Data processing 3,475 3,238 7.3% Marketing 3,494 2,548 37.1% Communication 3,246 2,859 13.5% Professional services 6,032 3,463 74.2% State intangible tax 2,508 2,506 0.1% FDIC expense 6,847 363 1786.2% Other 34,712 15,994 117.0% ------ ------ ----- Total noninterest expenses 170,638 115,176 48.2% ------- ------- ---- Income before income taxes 390,568 33,365 1070.6% Income tax expense 144,022 10,403 1284.4% ------- ------ ------ Net income 246,546 22,962 973.7% Dividends on preferred stock 3,578 0 N/M ----- --- --- Income available to common shareholders $242,968 $22,962 958.1% ======== ======= ===== ADDITIONAL DATA Net earnings per common share -basic $5.40 $0.62 Net earnings per common share -diluted $5.33 $0.61 Dividends declared per common share $0.40 $0.68 Return on average assets 5.20% 0.67% Return on average shareholders' equity 52.04% 8.21% Interest income $233,228 $183,305 27.2% Tax equivalent adjustment 1,265 1,808 (30.0%) ----- ----- ------- Interest income -tax equivalent 234,493 185,113 26.7% Interest expense 57,245 67,103 (14.7%) ------ ------ ------- Net interest income -tax equivalent $177,248 $118,010 50.2% ======== ======== ==== Net interest margin 4.05% 3.71% Net interest margin (fully tax equivalent) (1) 4.08% 3.77% Full-time equivalent employees (2) (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. (2) Does not include associates from acquisitions that are currently in a temporary hire status. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) 2009 ---- Fourth Third Second Quarter Quarter Quarter ------- ------- ------- Interest income Loans, including fees $81,471 $46,811 $33,978 Investment securities Taxable 6,422 6,241 8,023 Tax-exempt 320 352 386 --- --- --- Total investment securities interest 6,742 6,593 8,409 Other earning assets 5,132 1,311 0 ----- ----- --- Total interest income 93,345 54,715 42,387 Interest expense Deposits 17,207 11,490 9,080 Short-term borrowings 23 261 527 Long-term borrowings 2,611 1,977 1,251 Subordinated debentures and capital securities 322 323 320 --- --- --- Total interest expense 20,163 14,051 11,178 ------ ------ ------ Net interest income 73,182 40,664 31,209 Provision for loan and lease losses 14,812 26,655 10,358 ------ ------ ------ Net interest income after provision for loan and lease losses 58,370 14,009 20,851 Noninterest income Service charges on deposit accounts 5,886 5,408 4,289 Trust and wealth management fees 3,584 3,339 3,253 Bankcard income 1,869 1,379 1,422 Net gains from sales of loans 341 63 408 Gains on sales of investment securities 0 0 3,349 Gain on acquisition 0 379,086 0 (Loss) income on preferred securities (138) 154 112 Other 12,607 1,599 1,264 ------ ----- ----- Total noninterest income 24,149 391,028 14,097 Noninterest expenses Salaries and employee benefits 30,141 22,051 16,223 Net occupancy 7,290 3,442 2,653 Furniture and equipment 2,527 1,874 1,851 Data processing 890 973 794 Marketing 1,283 871 700 Communication 1,169 737 669 Professional services 2,605 1,220 1,254 State intangible tax 564 628 648 FDIC expense 1,529 1,612 3,424 Other 13,609 12,893 4,580 ------ ------ ----- Total noninterest expenses 61,607 46,301 32,796 ------ ------ ------ Income before income taxes 20,912 358,736 2,152 Income tax expense 7,117 133,170 702 ----- ------- --- Net income 13,795 225,566 1,450 Dividends on preferred stock 1,000 1,000 1,000 ----- ----- ----- Income available to common shareholders $12,795 $224,566 $450 ======= ======== ==== ADDITIONAL DATA Net earnings per common share - basic $0.25 $4.40 $0.01 Net earnings per common share - diluted $0.25 $4.36 $0.01 Dividends declared per common share $0.10 $0.10 $0.10 Return on average assets 0.80% 19.85% 0.15% Return on average shareholders' equity 8.05% 186.11% 1.53% Interest income $93,345 $54,715 $42,387 Tax equivalent adjustment 295 300 307 --- --- --- Interest income -tax equivalent 93,640 55,015 42,694 Interest expense 20,163 14,051 11,178 ------ ------ ------ Net interest income -tax equivalent $73,477 $40,964 $31,516 ======= ======= ======= Net interest margin 4.63% 3.90% 3.60% Net interest margin (fully tax equivalent) (1) 4.65% 3.93% 3.64% Full-time equivalent employees (2) 1,390 1,150 1,048 2009 ---- First % Change Linked Quarter Full Year Qtr. ------- --------- ------- Interest income Loans, including fees $33,657 $195,917 74.0% Investment securities Taxable 8,690 29,376 2.9% Tax-exempt 434 1,492 (9.1%) --- ----- ------ Total investment securities interest 9,124 30,868 2.3% Other earning assets 0 6,443 N/M --- ----- --- Total interest income 42,781 233,228 70.6% Interest expense Deposits 9,803 47,580 49.8% Short-term borrowings 507 1,318 (91.2%) Long-term borrowings 1,306 7,145 32.1% Subordinated debentures and capital securities 237 1,202 (0.3%) --- ----- ------ Total interest expense 11,853 57,245 43.5% ------ ------ ---- Net interest income 30,928 175,983 80.0% Provision for loan and lease losses 4,259 56,084 (44.4%) ----- ------ ------- Net interest income after provision for loan and lease losses 26,669 119,899 316.7% Noninterest income Service charges on deposit accounts 4,079 19,662 8.8% Trust and wealth management fees 3,289 13,465 7.3% Bankcard income 1,291 5,961 35.5% Net gains from sales of loans 384 1,196 441.3% Gains on sales of investment securities 0 3,349 N/M Gain on acquisition 0 379,086 (100.0%) (Loss) income on preferred securities 11 139 (189.6%) Other 2,979 18,449 688.4% ----- ------ ----- Total noninterest income 12,033 441,307 (93.8%) Noninterest expenses Salaries and employee benefits 17,653 86,068 36.7% Net occupancy 2,817 16,202 111.8% Furniture and equipment 1,802 8,054 34.8% Data processing 818 3,475 (8.5%) Marketing 640 3,494 47.3% Communication 671 3,246 58.6% Professional services 953 6,032 113.5% State intangible tax 668 2,508 (10.2%) FDIC expense 282 6,847 (5.1%) Other 3,630 34,712 5.6% ----- ------ --- Total noninterest expenses 29,934 170,638 33.1% ------ ------- ---- Income before income taxes 8,768 390,568 (94.2%) Income tax expense 3,033 144,022 (94.7%) ----- ------- ------- Net income 5,735 246,546 (93.9%) Dividends on preferred stock 578 3,578 0.0% --- ----- --- Income available to common shareholders $5,157 $242,968 (94.3%) ====== ======== ======= ADDITIONAL DATA Net earnings per common share -basic $0.14 $5.40 Net earnings per common share -diluted $0.14 $5.33 Dividends declared per common share $0.10 $0.40 Return on average assets 0.62% 5.20% Return on average shareholders' equity 6.63% 52.04% Interest income $42,781 $233,228 70.6% Tax equivalent adjustment 363 1,265 (1.7%) --- ----- ------ Interest income -tax equivalent 43,144 234,493 70.2% Interest expense 11,853 57,245 43.5% ------ ------ ---- Net interest income -tax equivalent $31,291 $177,248 79.4% ======= ======== ==== Net interest margin 3.61% 4.05% Net interest margin (fully tax equivalent) (1) 3.65% 4.08% Full-time equivalent employees (2) 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. (2) Does not include associates from acquisitions that are currently in a temporary hire status. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) 2008 ---- Fourth Third Second Quarter Quarter Quarter ------- ------- ------- Interest income Loans, including fees $37,864 $39,754 $39,646 Investment securities Taxable 6,697 5,349 4,387 Tax-exempt 519 631 792 --- --- --- Total investment securities interest 7,216 5,980 5,179 Other earning assets 6 22 40 --- --- --- Total interest income 45,086 45,756 44,865 Interest expense Deposits 12,015 13,608 14,635 Short-term borrowings 1,186 1,720 1,130 Long-term borrowings 1,395 707 384 Subordinated debentures and capital securities 361 311 302 --- --- --- Total interest expense 14,957 16,346 16,451 ------ ------ ------ Net interest income 30,129 29,410 28,414 Provision for loan and lease losses 10,475 3,219 2,493 ------ ----- ----- Net interest income after provision for loan and lease losses 19,654 26,191 25,921 Noninterest income Service charges on deposit accounts 4,752 5,348 4,951 Trust and wealth management fees 3,745 4,390 4,654 Bankcard income 1,457 1,405 1,493 Net gains from sales of loans 321 376 188 Gains on sales of investment securities 0 0 0 (Loss) income on preferred securities (137) (3,400) (221) Other 2,510 2,359 2,683 ----- ----- ----- Total noninterest income 12,648 10,478 13,748 Noninterest expenses Salaries and employee benefits 17,015 16,879 15,895 Net occupancy 2,635 2,538 2,510 Furniture and equipment 1,748 1,690 1,617 Data processing 840 791 814 Marketing 935 622 474 Communication 704 601 749 Professional services 912 729 1,061 State intangible tax 435 697 688 FDIC expense 158 115 121 Other 4,465 3,678 4,040 ----- ----- ----- Total noninterest expenses 29,847 28,340 27,969 ------ ------ ------ Income before income taxes 2,455 8,329 11,700 Income tax expense 371 2,597 3,892 --- ----- ----- Net income 2,084 5,732 7,808 Dividends on preferred stock 0 0 0 --- --- --- Net income available to common shareholders $2,084 $5,732 $7,808 ====== ====== ====== ADDITIONAL DATA Net earnings per common share - basic $0.06 $0.15 $0.21 Net earnings per common share - diluted $0.06 $0.15 $0.21 Dividends declared per common share $0.17 $0.17 $0.17 Return on average assets 0.23% 0.66% 0.93% Return on average shareholders' equity 2.89% 8.24% 11.26% Interest income $45,086 $45,756 $44,865 Tax equivalent adjustment 360 424 510 --- --- --- Interest income - tax equivalent 45,446 46,180 45,375 Interest expense 14,957 16,346 16,451 ------ ------ ------ Net interest income -tax equivalent $30,489 $29,834 $28,924 ======= ======= ======= Net interest margin 3.67% 3.68% 3.72% Net interest margin (fully tax equivalent) (1) 3.71% 3.73% 3.78% Full-time equivalent employees 1,061 1,052 1,058 2008 ---- First Full Quarter Year ------- ---- Interest income Loans, including fees $42,721 $159,985 Investment securities Taxable 3,521 19,954 Tax-exempt 791 2,733 --- ----- Total investment securities interest 4,312 22,687 Other earning assets 565 633 --- --- Total interest income 47,598 183,305 Interest expense Deposits 17,739 57,997 Short-term borrowings 792 4,828 Long-term borrowings 406 2,892 Subordinated debentures and capital securities 412 1,386 --- ----- Total interest expense 19,349 67,103 ------ ------ Net interest income 28,249 116,202 Provision for loan and lease losses 3,223 19,410 ----- ------ Net interest income after provision for loan and lease losses 25,026 96,792 Noninterest income Service charges on deposit accounts 4,607 19,658 Trust and wealth management fees 4,622 17,411 Bankcard income 1,298 5,653 Net gains from sales of loans 219 1,104 Gains on sales of investment securities 1,585 1,585 (Loss) income on preferred securities 20 (3,738) Other 2,524 10,076 ----- ------ Total noninterest income 14,875 51,749 Noninterest expenses Salaries and employee benefits 17,073 66,862 Net occupancy 2,952 10,635 Furniture and equipment 1,653 6,708 Data processing 793 3,238 Marketing 517 2,548 Communication 805 2,859 Professional services 761 3,463 State intangible tax 686 2,506 FDIC expense 127 521 Other 3,653 15,836 ----- ------ Total noninterest expenses 29,020 115,176 ------ ------- Income before income taxes 10,881 33,365 Income tax expense 3,543 10,403 ----- ------ Net income 7,338 22,962 Dividends on preferred stock 0 0 --- --- Net income available to common shareholders $7,338 $22,962 ====== ======= ADDITIONAL DATA Net earnings per common share - basic $0.20 $0.62 Net earnings per common share - diluted $0.20 $0.61 Dividends declared per common share $0.17 $0.68 Return on average assets 0.89% 0.67% Return on average shareholders' equity 10.66% 8.21% Interest income $47,598 $183,305 Tax equivalent adjustment 514 1,808 --- ----- Interest income - tax equivalent 48,112 185,113 Interest expense 19,349 67,103 ------ ------ Net interest income -tax equivalent $28,763 $118,010 ======= ======== Net interest margin 3.78% 3.71% Net interest margin (fully tax equivalent) (1) 3.85% 3.77% Full-time equivalent employees 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) Dec. 31, Sep. 30, Jun. 30, Mar. 31, 2009 2009 2009 2009 ---- ---- ---- ---- ASSETS Cash and due from banks $344,150 $243,924 $74,347 $72,508 Interest- bearing deposits with other banks 262,017 728,853 6,591 7,055 Investment securities trading 200 338 184 72 Investment securities available- for-sale 471,002 523,355 528,179 732,868 Investment securities held-to- maturity 18,115 17,928 4,536 4,701 Other investments 89,830 87,693 27,976 27,976 Loans held for sale 8,052 2,729 6,193 6,342 Loans Commercial 798,622 818,608 876,730 850,111 Real estate - construction 253,223 245,535 266,452 251,115 Real estate - commercial 1,079,628 1,037,121 988,901 859,303 Real estate - residential 321,047 331,678 337,704 360,013 Installment 82,989 86,940 88,370 91,767 Home equity 328,940 324,340 307,749 298,000 Credit card 29,027 27,713 27,023 26,191 Lease financing 14 19 25 45 --- --- --- --- Total loans, excluding covered loans 2,893,490 2,871,954 2,892,954 2,736,545 Covered loans 1,929,549 2,041,691 0 0 --------- --------- --- --- Total loans 4,823,039 4,913,645 2,892,954 2,736,545 Less Allowance for loan and lease losses 59,311 55,770 38,649 36,437 ------ ------ ------ ------ Net loans 4,763,728 4,857,875 2,854,305 2,700,108 Premises and equipment 107,351 106,401 86,216 85,385 Goodwill 51,908 51,908 28,261 28,261 Other intangibles 7,461 8,094 465 500 OREO covered by loss share 12,916 11,057 0 0 FDIC indemnification asset 316,040 316,389 0 0 Accrued interest and other assets 228,353 301,162 166,100 143,420 ------- ------- ------- ------- Total Assets $6,681,123 $7,257,706 $3,783,353 $3,809,196 ========== ========== ========== ========== LIABILITIES Deposits Interest- bearing $1,356,249 $1,364,556 $599,365 $622,263 Savings 1,010,469 965,750 657,300 705,229 Time 2,229,400 2,703,392 1,111,399 1,137,398 --------- --------- --------- --------- Total interest- bearing deposits 4,596,118 5,033,698 2,368,064 2,464,890 Noninterest- bearing 754,522 802,286 423,781 427,068 ------- ------- ------- ------- Total deposits 5,350,640 5,835,984 2,791,845 2,891,958 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 37,430 35,763 206,777 162,549 Federal Home Loan Bank 0 65,000 125,000 160,000 Other 0 0 25,000 40,000 --- --- ------ ------ Total short- term borrowings 37,430 100,763 356,777 362,549 Long-term debt 404,716 410,356 135,908 136,832 Other long- term debt 20,620 20,620 20,620 20,620 Accrued interest and other liabilities 192,550 219,357 31,567 43,477 ------- ------- ------ ------ Total Liabilities 6,005,956 6,587,080 3,336,717 3,455,436 SHAREHOLDERS' EQUITY Preferred stock 79,195 78,271 78,173 78,075 Common stock 490,532 490,854 490,292 394,887 Retained earnings 301,328 293,610 74,285 77,695 Accumulated other comprehensive loss (10,487) (6,659) (10,700) (8,564) Treasury stock, at cost (185,401) (185,450) (185,414) (188,333) -------- -------- -------- -------- Total Shareholders' Equity 675,167 670,626 446,636 353,760 ------- ------- ------- ------- Total Liabilities and Shareholders' Equity $6,681,123 $7,257,706 $3,783,353 $3,809,196 ========== ========== ========== ========== Dec. 31, % Change % Change Linked Comparable 2008 Qtr. Qtr. ---- ------- ---------- ASSETS Cash and due from banks $100,935 41.1% 241.0% Interest-bearing deposits with other banks 0 (64.1%) N/M Investment securities trading 61 (40.8%) 227.9% Investment securities available-for-sale 659,756 (10.0%) (28.6%) Investment securities held-to-maturity 4,966 1.0% 264.8% Other investments 27,976 2.4% 221.1% Loans held for sale 3,854 195.1% 108.9% Loans Commercial 807,720 (2.4%) (1.1%) Real estate -construction 232,989 3.1% 8.7% Real estate -commercial 846,673 4.1% 27.5% Real estate -residential 383,599 (3.2%) (16.3%) Installment 98,581 (4.5%) (15.8%) Home equity 286,110 1.4% 15.0% Credit card 27,538 4.7% 5.4% Lease financing 50 (26.3%) (72.0%) --- ------- ------- Total loans, excluding covered loans 2,683,260 0.7% 7.8% Covered loans 0 N/M N/M --- --- --- Total loans 2,683,260 (1.8%) 79.7% Less Allowance for loan and lease losses 35,873 6.3% 65.3% ------ --- ---- Net loans 2,647,387 (1.9%) 79.9% Premises and equipment 84,105 0.9% 27.6% Goodwill 28,261 0.0% 83.7% Other intangibles 1,002 (7.8%) 644.6% OREO covered by loss share 0 16.8% N/M FDIC indemnification asset 0 (0.1%) N/M Accrued interest and other assets 140,839 (24.2%) 62.1% ------- ------- ---- Total Assets $3,699,142 (7.9%) 80.6% ========== ====== ==== LIABILITIES Deposits Interest-bearing $636,945 (0.6%) 112.9% Savings 583,081 4.6% 73.3% Time 1,150,208 (17.5%) 93.8% --------- ------- ---- Total interest-bearing deposits 2,370,234 (8.7%) 93.9% Noninterest-bearing 413,283 (6.0%) 82.6% ------- ------ ---- Total deposits 2,783,517 (8.3%) 92.2% Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 147,533 4.7% (74.6%) Federal Home Loan Bank 150,000 (100.0%) (100.0%) Other 57,000 N/M (100.0%) ------ --- -------- Total short-term borrowings 354,533 (62.9%) (89.4%) Long-term debt 148,164 (1.4%) 173.2% Other long-term debt 20,620 0.0% 0.0% Accrued interest and other liabilities 43,981 (12.2%) 337.8% ------ ------- ----- Total Liabilities 3,350,815 (8.8%) 79.2% SHAREHOLDERS' EQUITY Preferred stock 78,019 1.2% 1.5% Common stock 394,169 (0.1%) 24.4% Retained earnings 76,339 2.6% 294.7% Accumulated other comprehensive loss (11,905) 57.5% (11.9%) Treasury stock, at cost (188,295) (0.0%) (1.5%) -------- ------ ------ Total Shareholders' Equity 348,327 0.7% 93.8% ------- --- ---- Total Liabilities and Shareholders' Equity $3,699,142 (7.9%) 80.6% ========== ====== ==== N/M = Not meaningful. FIRST FINANCIAL BANCORP. AVERAGE CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) Quarterly Averages Dec. 31, Sep. 30, Jun. 30, 2009 2009 2009 ---- ---- ---- ASSETS Cash and due from banks $274,601 $107,216 $72,402 Interest-bearing deposits with other banks 447,999 136,210 8,614 Investment securities 608,952 575,697 731,119 Loans held for sale 2,936 2,629 5,942 Loans Commercial 839,456 855,996 843,183 Real estate - construction 256,915 261,601 257,487 Real estate -commercial 1,048,650 1,002,073 869,985 Real estate -residential 333,858 333,981 348,834 Installment 87,825 87,506 89,857 Home equity 332,169 315,629 302,159 Credit card 28,025 27,292 26,577 Lease financing 16 22 39 --- --- --- Total loans, excluding covered loans 2,926,914 2,884,100 2,738,121 Covered loans 1,968,136 460,943 0 --------- ------- --- Total loans 4,895,050 3,345,043 2,738,121 Less Allowance for loan and lease losses 54,164 42,034 36,644 ------ ------ ------ Net loans 4,840,886 3,303,009 2,701,477 Premises and equipment 106,999 91,252 85,433 Goodwill 51,627 64,309 28,261 Other intangibles 7,885 2,553 489 OREO covered by loss share 11,383 7,065 0 FDIC indemnification asset 310,295 78,387 0 Accrued interest and other assets 200,360 140,482 150,721 ------- ------- ------- Total Assets $6,863,923 $4,508,809 $3,784,458 ========== ========== ========== LIABILITIES Deposits Interest-bearing $1,424,199 $745,604 $630,885 Savings 978,842 835,615 645,197 Time 2,378,867 1,484,158 1,131,972 --------- --------- --------- Total interest-bearing deposits 4,781,908 3,065,377 2,408,054 Noninterest-bearing 768,573 543,320 425,330 ------- ------- ------- Total deposits 5,550,481 3,608,697 2,833,384 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 41,456 55,197 176,592 Federal Home Loan Bank 1,096 72,855 169,341 Other 0 22,826 39,836 --- ------ ------ Total short-term borrowings 42,552 150,878 385,769 Long-term debt 408,744 205,908 136,189 Other long-term debt 20,620 20,620 20,620 ------ ------ ------ Total borrowed funds 471,916 377,406 542,578 Accrued interest and other liabilities 161,686 41,867 28,552 ------- ------ ------ Total Liabilities 6,184,083 4,027,970 3,404,514 SHAREHOLDERS' EQUITY Preferred stock 78,573 78,221 78,126 Common stock 490,889 490,596 418,086 Retained earnings 302,159 106,729 78,296 Accumulated other comprehensive loss (6,372) (9,290) (7,936) Treasury stock, at cost (185,409) (185,417) (186,628) -------- -------- -------- Total Shareholders' Equity 679,840 480,839 379,944 ------- ------- ------- Total Liabilities and Shareholders' Equity $6,863,923 $4,508,809 $3,784,458 ========== ========== ========== Quarterly Averages Mar. 31, Dec. 31, 2009 2008 ---- ---- ASSETS Cash and due from banks $78,359 $87,307 Interest-bearing deposits with other banks 7,291 1,737 Investment securities 758,257 574,893 Loans held for sale 5,085 1,876 Loans Commercial 825,399 809,869 Real estate - construction 242,750 220,839 Real estate - commercial 858,403 830,121 Real estate - residential 372,853 417,499 Installment 94,881 102,814 Home equity 291,038 280,900 Credit card 26,641 26,902 Lease financing 47 75 --- --- Total loans, excluding covered loans 2,712,012 2,689,019 Covered loans 0 0 --- --- Total loans 2,712,012 2,689,019 Less Allowance for loan and lease losses 37,189 29,710 ------ ------ Net loans 2,674,823 2,659,309 Premises and equipment 84,932 83,307 Goodwill 28,261 28,261 Other intangibles 982 613 OREO covered by loss share 0 0 FDIC indemnification asset 0 0 Accrued interest and other assets 139,520 128,748 ------- ------- Total Assets $3,777,510 $3,566,051 ========== ========== LIABILITIES Deposits Interest-bearing $642,934 $611,129 Savings 620,509 604,370 Time 1,142,257 1,151,622 --------- --------- Total interest-bearing deposits 2,405,700 2,367,121 Noninterest-bearing 416,206 412,644 ------- ------- Total deposits 2,821,906 2,779,765 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 127,652 98,690 Federal Home Loan Bank 218,100 150,867 Other 56,078 53,044 ------ ------ Total short-term borrowings 401,830 302,601 Long-term debt 144,358 151,434 Other long-term debt 20,620 20,620 ------ ------ Total borrowed funds 566,808 474,655 Accrued interest and other liabilities 37,939 25,049 ------ ------ Total Liabilities 3,426,653 3,279,469 SHAREHOLDERS' EQUITY Preferred stock 78,038 7,805 Common stock 394,500 391,601 Retained earnings 77,317 81,932 Accumulated other comprehensive loss (10,677) (6,462) Treasury stock, at cost (188,321) (188,294) -------- -------- Total Shareholders' Equity 350,857 286,582 ------- ------- Total Liabilities and Shareholders' Equity $3,777,510 $3,566,051 ========== ========== Year-to-Date Averages Dec. 31, 2009 2008 ---- ---- ASSETS Cash and due from banks $133,611 $86,265 Interest-bearing deposits with other banks 151,198 18,603 Investment securities 667,843 452,921 Loans held for sale 4,138 2,525 Loans Commercial 841,088 803,945 Real estate - construction 254,746 188,763 Real estate - commercial 945,456 771,014 Real estate - residential 347,238 486,568 Installment 89,991 116,851 Home equity 310,376 265,362 Credit card 27,138 26,348 Lease financing 31 170 --- --- Total loans, excluding covered loans 2,816,064 2,659,021 Covered loans 612,261 0 ------- --- Total loans 3,428,325 2,659,021 Less Allowance for loan and lease losses 42,553 29,391 ------ ------ Net loans 3,385,772 2,629,630 Premises and equipment 92,212 80,561 Goodwill 43,368 28,261 Other intangibles 2,995 646 OREO covered by loss share 4,650 0 FDIC indemnification asset 97,969 0 Accrued interest and other assets 157,758 126,863 ------- ------- Total Assets $4,741,514 $3,426,275 ========== ========== LIABILITIES Deposits Interest-bearing $862,730 $608,708 Savings 771,202 610,875 Time 1,537,564 1,180,553 --------- --------- Total interest-bearing deposits 3,171,496 2,400,136 Noninterest-bearing 539,336 397,267 ------- ------- Total deposits 3,710,832 2,797,403 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 99,865 46,913 Federal Home Loan Bank 114,637 118,550 Other 29,512 56,680 ------ ------ Total short-term borrowings 244,014 222,143 Long-term debt 224,475 78,776 Other long-term debt 20,620 20,620 ------ ------ Total borrowed funds 489,109 321,539 Accrued interest and other liabilities 67,780 27,624 ------ ------ Total Liabilities 4,267,721 3,146,566 SHAREHOLDERS' EQUITY Preferred stock 78,241 1,962 Common stock 448,897 390,946 Retained earnings 141,647 81,396 Accumulated other comprehensive loss (8,559) (6,069) Treasury stock, at cost (186,433) (188,526) -------- -------- Total Shareholders' Equity 473,793 279,709 ------- ------- Total Liabilities and Shareholders' Equity $4,741,514 $3,426,275 ========== ========== FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1) (Dollars in thousands) (Unaudited) Quarterly Averages ------------------ Dec. 31, 2009 Sep. 30, 2009 Balance Yield Balance Yield ------- ----- ------- ----- Earning assets Investment securities $608,952 4.39% $575,697 4.54% Interest-bearing deposits with other banks 447,999 0.18% 136,210 0.25% Gross loans, including covered loans and indemnification asset (2) 5,208,281 6.58% 3,426,059 5.57% --------- ---- --------- ---- Total earning assets 6,265,232 5.91% 4,137,966 5.25% Nonearning assets Allowance for loan and lease losses (54,164) (42,034) Cash and due from banks 274,601 107,216 Accrued interest and other assets 378,254 305,661 ------- ------- Total assets $6,863,923 $4,508,809 ========== ========== Interest-bearing liabilities Total interest-bearing deposits $4,781,908 1.43% $3,065,377 1.49% Borrowed funds Short-term borrowings 42,552 0.21% 150,878 0.69% Long-term debt 408,744 2.53% 205,908 3.81% Other long-term debt 20,620 6.20% 20,620 6.21% ------ ---- ------ ---- Total borrowed funds 471,916 2.49% 377,406 2.69% ------- ---- ------- ---- Total interest-bearing liabilities 5,253,824 1.52% 3,442,783 1.62% Noninterest-bearing liabilities Noninterest-bearing demand deposits 768,573 543,320 Other liabilities 161,686 41,867 Shareholders' equity 679,840 480,839 ------- ------- $6,863,923 $4,508,809 ========== ========== Net interest income (1) $73,182 $40,664 ======= ======= Net interest spread (1) 4.39% 3.63% ==== ==== Net interest margin (1) 4.63% 3.90% ==== ==== Quarterly Averages ------------------ Dec. 31, 2008 Balance Yield ------- ----- Earning assets Investment securities $574,893 4.99% Interest-bearing deposits with other banks 1,737 1.37% Gross loans, including covered loans and indemnification asset (2) 2,690,895 5.60% --------- ---- Total earning assets 3,267,525 5.49% Nonearning assets Allowance for loan and lease losses (29,710) Cash and due from banks 87,307 Accrued interest and other assets 240,929 ------- Total assets $3,566,051 ========== Interest-bearing liabilities Total interest-bearing deposits $2,367,121 2.02% Borrowed funds Short-term borrowings 302,601 1.56% Long-term debt 151,434 3.66% Other long-term debt 20,620 6.96% ------ ---- Total borrowed funds 474,655 2.47% ------- ---- Total interest-bearing liabilities 2,841,776 2.09% Noninterest-bearing liabilities Noninterest-bearing demand deposits 412,644 Other liabilities 25,049 Shareholders' equity 286,582 ------- $3,566,051 ========== Net interest income (1) $30,129 ======= Net interest spread (1) 3.40% ==== Net interest margin (1) 3.67% ==== Year-to-Date Averages --------------------- Dec. 31, 2009 Dec. 31, 2008 Balance Yield Balance Yield ------- ----- ------- ----- Earning assets Investment securities $667,843 4.62% $452,921 5.01% Interest-bearing deposits with other banks 151,198 0.14% 18,603 3.40% Gross loans, including covered loans and indemnification asset (2) 3,530,432 5.73% 2,661,546 6.01% --------- ---- --------- ---- Total earning assets 4,349,473 5.36% 3,133,070 5.85% Nonearning assets Allowance for loan and lease losses (42,553) (29,391) Cash and due from banks 133,611 86,265 Accrued interest and other assets 300,983 236,331 ------- ------- Total assets $4,741,514 $3,426,275 ========== ========== Interest-bearing liabilities Total interest-bearing deposits $3,171,496 1.50% $2,400,136 2.42% Borrowed funds Short-term borrowings 244,014 0.54% 222,143 2.17% Long-term debt 224,475 3.18% 78,776 3.67% Other long-term debt 20,620 5.83% 20,620 6.72% ------ ---- ------ ---- Total borrowed funds 489,109 1.98% 321,539 2.83% ------- ---- ------- ---- Total interest-bearing liabilities 3,660,605 1.56% 2,721,675 2.47% Noninterest-bearing liabilities Noninterest-bearing demand deposits 539,336 397,267 Other liabilities 67,780 27,624 Shareholders' equity 473,793 279,709 ------- ------- $4,741,514 $3,426,275 ========== ========== Net interest income (1) $175,983 $116,202 ======== ======== Net interest spread (1) 3.80% 3.39% ==== ==== Net interest margin (1) 4.05% 3.71% ==== ==== (1) Not tax equivalent. (2) Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans. FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1) (Dollars in thousands) (Unaudited) Linked Qtr. Income Variance ----------------------------- Rate Volume Total ----------------------------- Earning assets Investment securities $(219) $368 $149 Interest-bearing deposits with other banks 63 145 208 Gross loans, including covered loans and indemnification asset (2) 8,709 29,564 38,273 ----- ------ ------ Total earning assets 8,553 30,077 38,630 Interest-bearing liabilities Total interest-bearing deposits $(460) $6,177 $5,717 Borrowed funds Short-term borrowings (179) (59) (238) Long-term debt (662) 1,296 634 Other long-term debt (1) - (1) --- --- --- Total borrowed funds (842) 1,237 395 ---- ----- --- Total interest-bearing liabilities (1,302) 7,414 6,112 Net interest income (1) $9,855 $22,663 $32,518 ====== ======= ======= Comparable Qtr. Income Variance ----------------------------- Rate Volume Total ----------------------------- Earning assets Investment securities $(851) $377 $(474) Interest-bearing deposits with other banks (5) 207 202 Gross loans, including covered loans and indemnification asset (2) 6,773 41,758 48,531 Total earning assets 5,917 42,342 48,259 Interest-bearing liabilities Total interest-bearing deposits $(3,497) $8,689 $5,192 Borrowed funds Short-term borrowings (1,022) (141) (1,163) Long-term debt (428) 1,644 1,216 Other long-term debt (39) - (39) Total borrowed funds (1,489) 1,503 14 Total interest-bearing liabilities (4,986) 10,192 5,206 Net interest income (1) $10,903 $32,150 $43,053 Year-to-Date Income Variance ---------------------------------- Rate Volume Total ---------------------------------- Earning assets Investment securities $(1,753) $9,934 $8,181 Interest-bearing deposits with other banks (607) 182 (425) Gross loans, including covered loans and indemnification asset (2) (7,585) 49,752 42,167 ------ ------ ------ Total earning assets (9,945) 59,868 49,923 Interest-bearing liabilities Total interest- bearing deposits $(21,989) $11,572 $(10,417) Borrowed funds Short-term borrowings (3,628) 118 (3,510) Long-term debt (385) 4,638 4,253 Other long-term debt (184) - (184) ---- --- ---- Total borrowed funds (4,197) 4,756 559 ------ ----- --- Total interest- bearing liabilities (26,186) 16,328 (9,858) Net interest income (1) $16,241 $43,540 $59,781 ======= ======= ======= (1) Not tax equivalent. (2) Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans. FIRST FINANCIAL BANCORP. CREDIT QUALITY (excluding covered assets) (Dollars in thousands) (Unaudited) Dec. 31, Sep. 30, Jun. 30, 2009 2009 2009 ---- ---- ---- ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY Balance at beginning of period $55,770 $38,649 $36,437 Provision for loan and lease losses 14,812 26,655 10,358 Gross charge-offs Commercial 1,143 2,924 4,707 Real estate - construction 6,788 4,552 1,340 Real estate - commercial 1,854 927 1,351 Real estate - residential 262 471 351 Installment 449 315 304 Home equity 1,105 382 332 All other 454 492 386 --- --- --- Total gross charge-offs 12,055 10,063 8,771 Recoveries Commercial 148 91 333 Real estate - construction 0 0 0 Real estate - commercial 360 167 14 Real estate - residential 3 2 20 Installment 195 205 203 Home equity 6 9 1 All other 72 55 54 -- -- -- Total recoveries 784 529 625 --- --- --- Total net charge-offs 11,271 9,534 8,146 ------ ----- ----- Ending allowance for loan and lease losses $59,311 $55,770 $38,649 ======= ======= ======= NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) Commercial 0.47% 1.31% 2.08% Real estate - construction 10.48% 6.90% 2.09% Real estate - commercial 0.57% 0.30% 0.62% Real estate - residential 0.31% 0.56% 0.38% Installment 1.15% 0.50% 0.45% Home equity 1.31% 0.47% 0.44% All other 5.40% 6.35% 5.00% ---- ---- ---- Total net charge-offs 1.53% 1.31% 1.19% ==== ==== ==== COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS Nonaccrual loans Commercial $13,756 $13,244 $8,100 Real estate - construction 35,604 26,575 11,936 Real estate - commercial 15,320 12,407 10,130 Real estate - residential 3,993 5,253 4,897 Installment 660 493 394 Home equity 2,324 2,534 2,136 All other 0 0 0 - - - Total nonaccrual loans 71,657 60,506 37,593 Restructured loans 6,125 3,102 197 ----- ----- --- Total nonperforming loans 77,782 63,608 37,790 Other real estate owned (OREO) 4,145 4,301 5,166 ----- ----- ----- Total nonperforming assets 81,927 67,909 42,956 Accruing loans past due 90 days or more 417 308 318 --- --- --- Total underperforming assets $82,344 $68,217 $43,274 ======= ======= ======= Total classified assets $163,451 $137,288 $106,315 ======== ======== ======== CREDIT QUALITY RATIOS Allowance for loan and lease losses to Nonaccrual loans 82.77% 92.17% 102.81% Nonperforming loans 76.25% 87.68% 102.27% Total ending loans 2.05% 1.94% 1.34% Nonperforming loans to total loans 2.69% 2.21% 1.31% Nonperforming assets to Ending loans, plus OREO 2.83% 2.36% 1.48% Total assets 1.23% 0.94% 1.14% Mar. 31, Dec. 31, Full Year Full Year 2009 2008 2009 2008 ---- ---- ---- ---- ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY Balance at beginning of period $35,873 $30,353 35,873 $29,057 Provision for loan and lease losses 4,259 10,475 56,084 19,410 Gross charge-offs Commercial 2,521 2,168 11,295 5,227 Real estate - construction 0 0 12,680 0 Real estate - commercial 382 2,083 4,514 3,526 Real estate - residential 231 47 1,315 648 Installment 400 493 1,468 1,963 Home equity 218 238 2,037 1,549 All other 308 374 1,640 1,724 --- --- ----- ----- Total gross charge-offs 4,060 5,403 34,949 14,637 Recoveries Commercial 60 165 632 654 Real estate - construction 0 0 0 0 Real estate - commercial 16 40 557 99 Real estate - residential 2 5 27 25 Installment 254 189 857 975 Home equity 0 0 16 30 All other 33 49 214 260 -- -- --- --- Total recoveries 365 448 2,303 2,043 --- --- ----- ----- Total net charge-offs 3,695 4,955 32,646 12,594 ----- ----- ------ ------ Ending allowance for loan and lease losses $36,437 $35,873 59,311 $35,873 ======= ======= ====== ======= NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) Commercial 1.21% 0.98% 1.27% 0.57% Real estate - construction 0.00% 0.00% 4.98% 0.00% Real estate - commercial 0.17% 0.98% 0.42% 0.44% Real estate - residential 0.25% 0.04% 0.37% 0.13% Installment 0.62% 1.18% 0.68% 0.85% Home equity 0.30% 0.34% 0.65% 0.57% All other 4.18% 4.79% 5.25% 5.52% ---- ---- ---- ---- Total net charge-offs 0.55% 0.73% 1.16% 0.47% ==== ==== ==== ==== COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS Nonaccrual loans Commercial $8,412 $5,930 $13,756 $5,930 Real estate - construction 240 240 35,604 240 Real estate - commercial 9,170 4,779 15,320 4,779 Real estate - residential 4,724 5,363 3,993 5,363 Installment 464 459 660 459 Home equity 1,681 1,204 2,324 1,204 All other 0 6 0 6 - - - - Total nonaccrual loans 24,691 17,981 71,657 17,981 Restructured loans 201 204 6,125 204 --- --- ----- --- Total nonperforming loans 24,892 18,185 77,782 18,185 Other real estate owned (OREO) 3,513 4,028 4,145 4,028 ----- ----- ----- ----- Total nonperforming assets 28,405 22,213 81,927 22,213 Accruing loans past due 90 days or more 255 138 417 138 --- --- --- --- Total underperforming assets $28,660 $22,351 $82,344 $22,351 ======= ======= ======= ======= Total classified assets $79,256 $67,393 $163,451 $67,393 ======= ======= ======== ======= CREDIT QUALITY RATIOS Allowance for loan and lease losses to Nonaccrual loans 147.57% 199.51% 82.77% 199.51% Nonperforming loans 146.38% 197.27% 76.25% 197.27% Total ending loans 1.33% 1.34% 2.05% 1.34% Nonperforming loans to total loans 0.91% 0.68% 2.69% 0.68% Nonperforming assets to Ending loans, plus OREO 1.04% 0.83% 2.83% 0.83% Total assets 0.75% 0.60% 1.23% 0.60% FIRST FINANCIAL BANCORP. CAPITAL ADEQUACY (Dollars in thousands) (Unaudited) Dec. 31, Sep. 30, Jun. 30, 2009 2009 2009 ---- ---- ---- PER COMMON SHARE Market Price High $15.48 $12.07 $11.92 Low $11.83 $7.52 $7.35 Close $14.56 $12.05 $7.53 Average common shares outstanding -basic 51,030,661 51,027,887 40,734,254 Average common shares outstanding -diluted 51,653,562 51,457,189 41,095,949 Ending common shares outstanding 51,433,821 51,431,422 51,434,346 REGULATORY CAPITAL Preliminary Tier 1 Capital $654,223 $644,988 $454,243 Tier 1 Ratio 16.74% 16.06% 14.77% Total Capital $703,323 $695,420 $492,696 Total Capital Ratio 18.00% 17.32% 16.02% Total Capital in excess of minimum requirement $390,665 $374,219 $246,613 Total Risk-Weighted Assets $3,908,225 $4,015,018 $3,076,042 Leverage Ratio 9.57% 14.41% 12.02% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 10.11% 9.24% 11.81% Ending common shareholders' equity to ending assets 8.92% 8.16% 9.74% Ending tangible shareholders' equity to ending tangible assets 9.30% 8.48% 11.14% Ending tangible common shareholders' equity to ending tangible assets 8.10% 7.40% 9.06% Average shareholders' equity to average assets 9.90% 10.66% 10.04% Average common shareholders' equity to average assets 8.76% 8.93% 7.98% Average tangible shareholders' equity to average tangible assets 9.12% 9.46% 9.35% Average tangible common shareholders' equity to average tangible assets 7.96% 7.70% 7.27% Mar. 31, Dec. 31, 2009 2008 ---- ---- PER COMMON SHARE Market Price High $12.10 $14.30 Low $5.58 $10.81 Close $9.53 $12.39 Average common shares outstanding -basic 37,142,531 37,133,725 Average common shares outstanding -diluted 37,840,954 37,567,032 Ending common shares outstanding 37,474,422 37,481,201 REGULATORY CAPITAL Tier 1 Capital $358,834 $356,307 Tier 1 Ratio 12.16% 12.38% Total Capital $395,271 $392,180 Total Capital Ratio 13.39% 13.62% Total Capital in excess of minimum requirement $159,133 $161,896 Total Risk-Weighted Assets $2,951,721 $2,878,548 Leverage Ratio 9.51% 10.00% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 9.29% 9.42% Ending common shareholders' equity to ending assets 7.24% 7.31% Ending tangible shareholders' equity to ending tangible assets 8.60% 8.70% Ending tangible common shareholders' equity to ending tangible assets 6.54% 6.57% Average shareholders' equity to average assets 9.29% 8.04% Average common shareholders' equity to average assets 7.22% 7.82% Average tangible shareholders' equity to average tangible assets 8.59% 7.28% Average tangible common shareholders' equity to average tangible assets 6.51% 7.05% Twelve months ended, Dec. 31, Dec. 31, 2009 2008 ---- ---- PER COMMON SHARE Market Price High $15.48 $14.80 Low $5.58 $8.10 Close $14.56 $12.39 Average common shares outstanding -basic 45,028,640 37,112,065 Average common shares outstanding -diluted 45,556,868 37,484,198 Ending common shares outstanding 51,433,821 37,481,201 REGULATORY CAPITAL Preliminary Tier 1 Capital $654,223 $356,307 Tier 1 Ratio 16.74% 12.38% Total Capital $703,323 $392,180 Total Capital Ratio 18.00% 13.62% Total Capital in excess of minimum requirement $390,665 $161,896 Total Risk-Weighted Assets $3,908,225 $2,878,548 Leverage Ratio 9.57% 10.00% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 10.11% 9.42% Ending common shareholders' equity to ending assets 8.92% 7.31% Ending tangible shareholders' equity to ending tangible assets 9.30% 8.70% Ending tangible common shareholders' equity to ending tangible assets 8.10% 6.57% Average shareholders' equity to average assets 9.99% 8.16% Average common shareholders' equity to average assets 8.34% 8.11% Average tangible shareholders' equity to average tangible assets 8.85% 7.37% Average tangible common shareholders' equity to average tangible assets 7.18% 7.31%

First Financial Bancorp

CONTACT: Investors/Analysts: Patti Forsythe, Vice President, Investor
Relations, [phone], [e-mail]; or Media: Cheryl
Lipp, First Vice President, Marketing Director, [phone],
[e-mail]

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