Exhibit 99.1
 
First Financial Bancorp Reports Second Quarter 2009
Earnings & Financial Results
 
§
Net income available to common shareholders of $0.5 million and earnings per diluted common share of $0.01
 
§
Credit quality experiencing some stress but remains relatively strong
–
Provision expense exceeded net charge-offs by 27% and increased $6.1 million over first quarter 2009
–
Three significant charge-offs totaling $5.1 million or 75 basis points of average loans and leases
–
Nonperforming loans to total loans of 1.31% remains below peers
 
§
Capital and liquidity positions remain strong
–
Successfully completed a public offering of 13.8 million shares of common stock resulting in approximately $98.0 million of additional common equity
–
Total risk-based capital ratio of 16.02%, tangible common equity ratio of 9.06%
 
§
Continued growth in commercial lending
–
Second quarter 2009 average commercial loans increased $239.4 million from the second quarter of 2008 and $44.1 million from the first quarter of 2009
 
§
Accelerating growth strategy in key metropolitan markets
 
Cincinnati, Ohio – August 3, 2009 – First Financial Bancorp (Nasdaq: FFBC) today reported second quarter and year-to-date results for the period ended June 30, 2009. Second quarter 2009 net income was $1.5 million, net income available to common shareholders was $0.5 million and earnings per diluted common share were $0.01. This compares with net income of $7.8 million and earnings per diluted common share of $0.21 for the second quarter of 2008, and net income of $5.7 million, net income available to common shareholders of $5.2 million and earnings per diluted common share of $0.14 for the first quarter of 2009. Year-to-date 2009 net income was $7.2 million, net income available to common shareholders was $5.6 million, and earnings per diluted common share were $0.14. This compares with year-to-date 2008 net income of $15.1 million and earnings per diluted common share of $0.40.

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

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

Second quarter 2009 results, when compared with the first quarter of 2009 were impacted by a $6.1 million increase in provision expense and a higher level of net charge-offs. The higher level of net charge-offs was primarily the result of two separate and unrelated vehicle floor plan relationships totaling approximately $3.8 million. Recently, the company discovered unusual activity related to these relationships resulting in violations of the terms of the loan agreements. These activities adversely impacted the borrowers’ abilities to repay their loans and given current market conditions, the market value of related collateral was not sufficient to remedy the situations. The involvement of federal law enforcement agencies and the resultant investigations of the borrowers are ongoing. First Financial has undertaken a complete review of its floor plan lending and audit procedures and has made appropriate changes that it believes will help prevent similar situations in the future. The financial impact of the charge-offs related to these floor plan relationships was a decrease to second quarter 2009 net income and earnings per diluted common share on an after-tax basis of $2.4 million, or $0.06 per diluted common share, respectively. The company’s vehicle floor plan lending portfolio totaled $25.0 million at June 30, 2009. Also during the quarter, First Financial charged off $1.3 of a million commercial real estate construction relationship, which represented the first charge-off in this particular loan category in six quarters.
 
Other significant items impacting second quarter earnings included elevated FDIC deposit insurance expense of $3.4 million, including a $1.7 million special FDIC assessment, a $3.3 million gain on the sale of investment securities, $0.4 million of acquisition-related expenses and a $0.3 million increase in professional services related to loan collection and resolution efforts.  These items also had an impact on the company’s performance metrics during the quarter, specifically return on average assets and return on average common equity.

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

 
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Table I
  
($ in thousands, excluding per share data)
  
   
2009
    
2008
  
   
Year-to-
Date
      
2Q
      
1Q
    
Full-Year
      
4Q
      
3Q
      
2Q
      
1Q
  
                                                             
Gain (Loss) on FHLMC shares1
   $ 123     $ 112     $ 11     $ (3,738 )   $ (137 )   $ (3,400 )   $ (221 )   $ 20  
                                                                 
Increase in Loan Loss Reserve & Higher Charge-offs
     -       -       -       (7,539 )     (7,539 )     -       -       -  
                                                                 
Higher Charge-offs Related to Floor Plan Relationships
     (3,752 )     (3,752 )     -       -       -       -       -       -  
                                                                 
Gain on Sale of Property & Casualty Portion of Insurance Business
     574       -       574       -       -       -       -       -  
                                                                 
Gains on Sales of Investment Securities (CPP 2009; VISA 2008)
     3,349       3,349       -       1,585       -       -       -       1,585  
                                                                 
FDIC Special Assessment
     (1,737 )     (1,737 )     -       -       -       -       -       -  
                                                                 
FDIC Expense - Other
     (1,969 )     (1,687 )     (282 )     (521 )     (158 )     (115 )     (121 )     (127 )
                                                                 
Acquisition-Related Expenses
     (426 )     (426 )     -       -       -       -       -       -  
                                                                 
Severance Costs Related to Sale of Property & Casualty Insurance Business
     (232 )     -       (232 )     -       -       -       -       -  
                                                                 
Liability for Retiree Medical Benefits
     -       -       -       1,285       -       -       1,285       -  
                                                                 
Impact to Pre-Tax Net Income
   $ (4,070 )   $ (4,141 )   $ 71     $ (8,928 )   $ (7,834 )   $ (3,515 )   $ 943     $ 1,478  
After-Tax Impact to Earnings Per Diluted Common Share
   $ (0.06 )   $ (0.07 )   $ 0.00     $ (0.15 )   $ (0.14 )   $ (0.06 )   $ 0.02     $ 0.03  

1   Gain (Loss) related to the company's investment in 200,000 Federal Home Loan Mortgage Corporation (FHLMC) perpetual preferred series V shares.

Table II
  
($ in thousands)
  
   
Quarter
    
Year-to-Date
  
     
2Q-09
      
1Q-09
      
2Q-08
    
June 30,
2009
    
June 30,
2008
  
                                     
Pre-Tax Income
   $ 2,152     $ 8,768     $ 11,700     $ 10,920     $ 22,581  
Excluding Provision Expense
     10,358       4,259       2,493       14,617       5,716  
Pre-Tax, Pre-Provision Income
   $ 12,510     $ 13,027     $ 14,193     $ 25,537     $ 28,297  
                                         
Significant Items 1
     1,298       353       1,064       1,651       2,669  
Pre-Tax, Pre-Provision Income, excluding Significant Items
   $ 11,212     $ 12,674     $ 13,129     $ 23,886     $ 25,628  
 
1   Includes significant items summarized in Table I, with the exception of FDIC Expense - Other and provision-related items.

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

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

 
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UPDATE ON STRATEGIC TRANSACTIONS

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

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

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

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

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

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

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

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

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

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

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

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

CREDIT QUALITY
The following table presents First Financial’s key credit quality metrics.

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

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

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

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

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

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

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

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

The allowance for loan and lease losses increased to $38.6 million at June 30, 2009, from $36.4 million at March 31, 2009, and $29.6 million at June 30, 2008. The higher reserve reflects the impact from the addition of $145.1 million in performing commercial and consumer loans that were purchased from Irwin on June 30, 2009, as well as the continued weak economic environment, near record levels of unemployment and the uncertainty surrounding the timing of a recovery. The growth in period end loans as a result of the loan purchase reduced the allowance for loan and lease losses as a percent of period-end loans at June 30, 2009, by 5 basis points. The company believes that the $38.6 million allowance for loan and lease losses at June 30, 2009, or 1.34% of period end loans, is adequate to absorb probable credit losses inherent in its lending portfolio.
 
 
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Other real estate owned increased to $5.2 million at June 30, 2009, from $3.5 million at March 31, 2009, and $3.8 million at June 30, 2008. The linked quarter and year-over-year increases were primarily the result of commercial real estate additions, specifically, collateral related to the previously mentioned vehicle floor plan relationships that were charged-off during the quarter. Balances related to residential real estate experienced a net decline during the second quarter of 2009.

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

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

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

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

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

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

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

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

NET INTEREST INCOME & NET INTEREST MARGIN

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

Table VIII
  
($ in thousands)
  
   
Quarter
    
Year-to-Date
  
     
2Q-09
      
1Q-09
      
2Q-08
    
June 30,
2009
    
June 30,
2008
  
                                     
FDIC Special Assessment
   $ 1,737     $ -     $ -     $ 1,737     $ -  
                                         
FDIC Expense - Other
     1,687       282       121       1,969       248  
                                         
Acquisition-Related Expenses (other noninterest expense)
     426       -       -       426       -  
                                         
Severance Costs Related to Sale of Property & Casualty Insurance Business (salaries and employee benefits)
     -       232       -       232       -  
                                         
Liability for Retiree Medical Benefits (salaries and employee benefits)
     -       -       (1,285 )     -       (1,285 )
Impact to Noninterest Expense
   $ 3,850     $ 514     $ (1,164 )   $ 4,364     $ (1,037 )
 
Second quarter 2009 noninterest expense was $32.8 million, an increase of $4.8 million from the second quarter of 2008, and an increase of $2.9 million from the first quarter of 2009. Excluding the items disclosed in the table, second quarter 2009 noninterest expense decreased $0.2 million from the second quarter of 2008 and $0.5 million from the first quarter of 2009. The year-over-year quarter and linked quarter declines in noninterest expense were primarily related to lower salaries and benefits due to lower incentive based pay, partially offset by increased marketing costs as well as higher professional services and other noninterest expenses related to loan collection and resolution efforts.

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

 
- 10 -
 

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

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

LOANS
Second Quarter 2009 versus Second Quarter 2008
 
§
Average total loans increased $92.8 million or 3.5%.
 
§
Average commercial, commercial real estate and construction loans increased $239.4 million, or 13.8%.

Second Quarter 2009 versus First Quarter 2009
 
§
Average total loans increased $26.1 million, or 3.9% on an annualized basis.
 
§
Average commercial, commercial real estate and construction loans increased $44.1 million, or 9.2% on an annualized basis.

Year-to-Date 2009 versus Year-to-Date 2008
 
§
Average total loans increased $105.8 million, or 4.0%.
 
§
Average commercial, commercial real estate and construction loans increased $257.0 million, or 15.2%.

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

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

 
- 11 -
 

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

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

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

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

Table IX
($ in thousands, excluding book price and market value)

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

* Other includes $28.0 million of regulatory stock

 
- 12 -
 

DEPOSITS
Second Quarter 2009 compared with Second Quarter 2008
§
Average total deposits increased $38.1 million, or 1.4%.
§
Average transaction and savings deposits increased $99.6 million, or 6.2%.
§
Average time deposits declined $61.5 million, or 5.2%.

Second Quarter 2009 compared with First Quarter 2009
§
Average total deposits increased $11.5 million, or 1.6% on an annualized basis.
§
Average transaction and savings deposits increased $21.8 million, or 5.2% on an annualized basis.
§
Average time deposits declined $10.3 million, or 3.6% on an annualized basis.

Year-to-Date 2009 versus Year-to-Date 2008
§
Average total deposits increased $13.9 million, or 0.5%.
§
Average transaction and savings deposits increased $83.2 million, or 5.2%.
§
Average time deposits declined $69.3 million, or 5.7%.

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

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

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

 
- 13 -
 

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

Additional Information
Investors/Analysts
Patti Forsythe
Vice President, Investor Relations
513-979-5837
patti.forsythe@bankatfirst.com
Media
Cheryl Lipp
First Vice President, Marketing Director
513-979-5797
cheryl.lipp@bankatfirst.com
 
 
- 14 -
 
FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars in thousands, except per share)
(Unaudited)

           
Three months ended,
            
Six months ended
  
   
Jun. 30,
  
Mar. 31,
  
Dec. 31,
  
Sep. 30,
  
Jun. 30,
    
Jun. 30,
  
   
2009
  
2009
  
2008
  
2008
  
2008
    
2009
    
2008
  
RESULTS OF OPERATIONS
                                  
Net interest income
   $ 31,209   $ 30,928   $ 30,129   $ 29,410   $ 28,414     $ 62,137     $ 56,663  
Net income
   $ 1,450   $ 5,735   $ 2,084   $ 5,732   $ 7,808     $ 7,185     $ 15,146  
Net income available to common shareholders
   $ 450   $ 5,157   $ 2,084   $ 5,732   $ 7,808     $ 5,607     $ 15,146  
Net earnings per common share - basic
   $ 0.01   $ 0.14   $ 0.06   $ 0.15   $ 0.21     $ 0.14     $ 0.41  
Net earnings per common share - diluted
   $ 0.01   $ 0.14   $ 0.06   $ 0.15   $ 0.21     $ 0.14     $ 0.40  
Dividends declared per common share
   $ 0.10   $ 0.10   $ 0.17   $ 0.17   $ 0.17     $ 0.20     $ 0.34  
                                                 
KEY FINANCIAL RATIOS
                                                
Return on average assets
     0.15 %   0.62 %   0.23 %   0.66 %   0.93 %     0.38 %     0.91 %
Return on average shareholders' equity
     1.53 %   6.63 %   2.89 %   8.24 %   11.26 %     3.96 %     10.96 %
Return on average common shareholders' equity
     0.60 %   7.67 %   2.97 %   8.24 %   11.26 %     3.93 %     10.96 %
Return on average tangible common shareholders' equity
     0.66 %   8.57 %   3.32 %   9.21 %   12.57 %     4.37 %     12.24 %
                                                 
Net interest margin
     3.60 %   3.61 %   3.67 %   3.68 %   3.72 %     3.62 %     3.75 %
Net interest margin (fully tax equivalent) (1)
     3.64 %   3.65 %   3.71 %   3.73 %   3.78 %     3.65 %     3.81 %
                                                 
Ending equity as a percent of ending assets
     11.81 %   9.29 %   9.42 %   7.89 %   7.96 %     11.81 %     7.96 %
Ending common equity as a percent of ending assets
     9.74 %   7.24 %   7.31 %   7.89 %   7.96 %     9.74 %     7.96 %
Ending tangible common equity as a percent of:
                                                
Ending tangible assets
     9.06 %   6.54 %   6.57 %   7.13 %   7.18 %     9.06 %     7.18 %
Risk-weighted assets
     11.05 %   8.38 %   8.37 %   8.86 %   8.97 %     11.04 %     8.97 %
                                                 
Average equity as a percent of average assets
     10.04 %   9.29 %   8.04 %   7.96 %   8.29 %     9.67 %     8.34 %
Average common equity as a percent of average assets
     7.98 %   7.22 %   7.82 %   7.96 %   8.29 %     7.60 %     8.34 %
Average tangible common equity as a percent of average tangible assets
     7.27 %   6.51 %   7.05 %   7.18 %   7.50 %     6.89 %     7.54 %
                                                 
Book value per common share
   $ 7.16   $ 7.36   $ 7.21   $ 7.40   $ 7.34     $ 7.16     $ 7.34  
Tangible book value per common share
   $ 6.61   $ 6.59   $ 6.43   $ 6.62   $ 6.57     $ 6.61     $ 6.57  
                                                 
Tier 1 Ratio (2)
     14.77 %   12.16 %   12.38 %   9.80 %   9.99 %     14.77 %     9.99 %
Total Capital Ratio (2)
     16.02 %   13.39 %   13.62 %   10.89 %   11.06 %     16.02 %     11.06 %
Leverage Ratio (2)
     12.02 %   9.51 %   10.00 %   7.95 %   8.21 %     12.02 %     8.21 %
                                                 
AVERAGE BALANCE SHEET ITEMS
                                                
Loans (3)
   $ 2,744,063   $ 2,717,097   $ 2,690,895   $ 2,709,629   $ 2,648,327     $ 2,730,654     $ 2,622,405  
Investment securities
     731,119     758,257     574,893     467,524     422,463       744,613       383,883  
Other earning assets
     0     0     1,737     3,137     4,095       0       34,947  
Total earning assets
   $ 3,475,182   $ 3,475,354   $ 3,267,525   $ 3,180,290   $ 3,074,885     $ 3,475,267     $ 3,041,235  
Total assets
   $ 3,784,458   $ 3,777,510   $ 3,566,051   $ 3,476,648   $ 3,361,649     $ 3,781,002     $ 3,330,156  
Noninterest-bearing deposits
   $ 425,330   $ 416,206   $ 412,644   $ 402,604   $ 394,352     $ 420,793     $ 386,796  
Interest-bearing deposits
     2,408,054     2,405,700     2,367,121     2,380,037     2,400,940       2,406,883       2,426,984  
Total deposits
   $ 2,833,384   $ 2,821,906   $ 2,779,765   $ 2,782,641   $ 2,795,292     $ 2,827,676     $ 2,813,780  
Borrowings
   $ 542,578   $ 566,808   $ 474,655   $ 394,708   $ 256,409     $ 554,626     $ 207,154  
Shareholders' equity
   $ 379,944   $ 350,857   $ 286,582   $ 276,594   $ 278,803     $ 365,480     $ 277,809  
                                                 
CREDIT QUALITY RATIOS
                                                
Allowance to ending loans
     1.34 %   1.33 %   1.34 %   1.14 %   1.11 %     1.34 %     1.11 %
Allowance to nonaccrual loans
     102.81 %   147.57 %   199.51 %   219.47 %   199.70 %     102.81 %     199.70 %
Allowance to nonperforming loans
     102.27 %   146.38 %   197.27 %   216.22 %   192.50 %     102.27 %     192.50 %
Nonperforming loans to total loans
     1.31 %   0.91 %   0.68 %   0.53 %   0.57 %     1.31 %     0.57 %
Nonperforming assets to ending loans, plus OREO
     1.48 %   1.04 %   0.83 %   0.70 %   0.71 %     1.48 %     0.71 %
Nonperforming assets to total assets
     1.14 %   0.75 %   0.60 %   0.53 %   0.55 %     1.14 %     0.55 %
Net charge-offs to average loans (annualized)
     1.19 %   0.55 %   0.73 %   0.36 %   0.40 %     0.88 %     0.40 %

(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate.  Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provide useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.
(2) June 30, 2009 regulatory capital ratios are preliminary.
(3) Includes loans held for sale.

 
- 15 -
 

FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands)
(Unaudited)

   
Three months ended,
    
Six months ended,
  
   
Jun. 30,
    
Jun. 30,
  
   
2009
  
2008
  
% Change
    
2009
  
2008
    
% Change
  
Interest income
                              
Loans, including fees
   $ 33,978   $ 39,646     (14.3 )%   $ 67,635   $ 82,367       (17.9 )%
Investment securities
                                          
Taxable
     8,023     4,387     82.9 %     16,713     7,908       111.3 %
Tax-exempt
     386     792     (51.3 )%     820     1,583       (48.2 )%
Total investment securities interest
     8,409     5,179     62.4 %     17,533     9,491       84.7 %
Federal funds sold
     0     40     (100.0 )%     0     605       (100.0 )%
  Total interest income
     42,387     44,865     (5.5 )%     85,168     92,463       (7.9 )%
                                           
Interest expense
                                          
Deposits
     9,080     14,635     (38.0 )%     18,883     32,374       (41.7 )%
Short-term borrowings
     527     1,130     (53.4 )%     1,034     1,922       (46.2 )%
Long-term borrowings
     1,251     384     225.8 %     2,557     790       223.7 %
Subordinated debentures and capital securities
     320     302     6.0 %     557     714       (22.0 )%
Total interest expense
     11,178     16,451     (32.1 )%     23,031     35,800       (35.7 )%
Net interest income
     31,209     28,414     9.8 %     62,137     56,663       9.7 %
Provision for loan and lease losses
     10,358     2,493     315.5 %     14,617     5,716       155.7 %
Net interest income after provision for loan and lease losses
     20,851     25,921     (19.6 )%     47,520     50,947       (6.7 )%
                                           
Noninterest income
                                          
Service charges on deposit accounts
     4,289     4,951     (13.4 )%     8,368     9,558       (12.5 )%
Trust and wealth management fees
     3,253     4,654     (30.1 )%     6,542     9,276       (29.5 )%
Bankcard income
     1,422     1,493     (4.8 )%     2,713     2,791       (2.8 )%
Net gains from sales of loans
     408     188     117.0 %     792     407       94.6 %
Gains on sales of investment securities
     3,349     0     N/M       3,349     1,585       111.3 %
Income (loss) on preferred securities
     112     (221 )   150.7 %     123     (201 )     161.2 %
Other
     1,264     2,683     (52.9 )%     4,243     5,207       (18.5 )%
Total noninterest income
     14,097     13,748     2.5 %     26,130     28,623       (8.7 )%
                                           
Noninterest expenses
                                          
Salaries and employee benefits
     16,223     15,895     2.1 %     33,876     32,968       2.8 %
Net occupancy
     2,653     2,510     5.7 %     5,470     5,462       0.1 %
Furniture and equipment
     1,851     1,617     14.5 %     3,653     3,270       11.7 %
Data processing
     794     814     (2.5 )%     1,612     1,607       0.3 %
Marketing
     700     474     47.7 %     1,340     991       35.2 %
Communication
     669     749     (10.7 )%     1,340     1,554       (13.8 )%
Professional services
     1,254     1,061     18.2 %     2,207     1,822       21.1 %
State intangible tax
     648     688     (5.8 )%     1,316     1,374       (4.2 )%
FDIC expense
     3,424     121     2729.8 %     3,706     248       1394.4 %
Other
     4,580     4,040     13.4 %     8,210     7,693       6.7 %
Total noninterest expenses
     32,796     27,969     17.3 %     62,730     56,989       10.1 %
Income before income taxes
     2,152     11,700     (81.6 )%     10,920     22,581       (51.6 )%
Income tax expense
     702     3,892     (82.0 )%     3,735     7,435       (49.8 )%
Net income
     1,450     7,808     (81.4 )%     7,185     15,146       (52.6 )%
Dividends on preferred stock
     1,000     0     N/M       1,578     0       N/M  
Income available to common shareholders
   $ 450   $ 7,808     (94.2 )%   $ 5,607   $ 15,146       (63.0 )%
                                           
ADDITIONAL DATA
                                          
Net earnings per common share - basic
   $ 0.01   $ 0.21           $ 0.14   $ 0.41          
Net earnings per common share - diluted
   $ 0.01   $ 0.21           $ 0.14   $ 0.40          
Dividends declared per common share
   $ 0.10   $ 0.17           $ 0.20   $ 0.34          
                                           
Return on average assets
     0.15 %   0.93 %           0.38 %   0.91 %        
Return on average shareholders' equity
     1.53 %   11.26 %           3.96 %   10.96 %        
                                           
Interest income
   $ 42,387   $ 44,865     (5.5 )%   $ 85,168   $ 92,463       (7.9 )%
Tax equivalent adjustment
     307     510     (39.8 )%     670     1,024       (34.6 )%
Interest income - tax equivalent
     42,694     45,375     (5.9 )%     85,838     93,487       (8.2 )%
Interest expense
     11,178     16,451     (32.1 )%     23,031     35,800       (35.7 )%
Net interest income - tax equivalent
   $ 31,516   $ 28,924     9.0 %   $ 62,807   $ 57,687       8.9 %
                                           
Net interest margin
     3.60 %   3.72 %           3.62 %   3.75 %        
Net interest margin (fully tax equivalent) (1)
     3.64 %   3.78 %           3.65 %   3.81 %        
                                           
Full-time equivalent employees
     1,048     1,058                              

(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

N/M = Not meaningful.

 
- 16 -
 

FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME

(Dollars in thousands)
(Unaudited)
   
2009
  
   
Second
  
First
        
% Change
  
   
Quarter
  
Quarter
  
Year-to-date
    
Linked Qtr.
  
Interest income
                    
Loans, including fees
   $ 33,978   $ 33,657   $ 67,635       1.0 %
Investment securities
                            
Taxable
     8,023     8,690     16,713       (7.7 )%
Tax-exempt
     386     434     820       (11.1 )%
Total investment securities interest
     8,409     9,124     17,533       (7.8 )%
Federal funds sold
     0     0     0       N/M  
  Total interest income
     42,387     42,781     85,168       (0.9 )%
                             
Interest expense
                            
Deposits
     9,080     9,803     18,883       (7.4 )%
Short-term borrowings
     527     507     1,034       3.9 %
Long-term borrowings
     1,251     1,306     2,557       (4.2 )%
Subordinated debentures and capital securities
     320     237     557       35.0 %
Total interest expense
     11,178     11,853     23,031       (5.7 )%
Net interest income
     31,209     30,928     62,137       0.9 %
Provision for loan and lease losses
     10,358     4,259     14,617       143.2 %
Net interest income after provision for loan and lease losses
     20,851     26,669     47,520       (21.8 )%
                             
Noninterest income
                            
Service charges on deposit accounts
     4,289     4,079     8,368       5.1 %
Trust and wealth management fees
     3,253     3,289     6,542       (1.1 )%
Bankcard income
     1,422     1,291     2,713       10.1 %
Net gains from sales of loans
     408     384     792       6.3 %
Gains on sales of investment securities
     3,349     0     3,349       N/M  
Income on preferred securities
     112     11     123       918.2 %
Other
     1,264     2,979     4,243       (57.6 )%
Total noninterest income
     14,097     12,033     26,130       17.2 %
                             
Noninterest expenses
                            
Salaries and employee benefits
     16,223     17,653     33,876       (8.1 )%
Net occupancy
     2,653     2,817     5,470       (5.8 )%
Furniture and equipment
     1,851     1,802     3,653       2.7 %
Data processing
     794     818     1,612       (2.9 )%
Marketing
     700     640     1,340       9.4 %
Communication
     669     671     1,340       (0.3 )%
Professional services
     1,254     953     2,207       31.6 %
State intangible tax
     648     668     1,316       (3.0 )%
FDIC expense
     3,424     282     3,706       1114.2 %
Other
     4,580     3,630     8,210       26.2 %
Total noninterest expenses
     32,796     29,934     62,730       9.6 %
Income before income taxes
     2,152     8,768     10,920       (75.5 )%
Income tax expense
     702     3,033     3,735       (76.9 )%
Net income
     1,450     5,735     7,185       (74.7 )%
Dividends on preferred stock
     1,000     578     1,578       73.0 %
Income available to common shareholders
   $ 450   $ 5,157   $ 5,607       (91.3 )%
                             
ADDITIONAL DATA
                            
Net earnings per common share - basic
   $ 0.01   $ 0.14   $ 0.14          
Net earnings per common share - diluted
   $ 0.01   $ 0.14   $ 0.14          
Dividends declared per common share
   $ 0.10   $ 0.10   $ 0.20          
                             
Return on average assets
     0.15 %   0.62 %   0.38 %        
Return on average shareholders' equity
     1.53 %   6.63 %   3.96 %        
                             
Interest income
   $ 42,387   $ 42,781   $ 85,168       (0.9 )%
Tax equivalent adjustment
     307     363     670       (15.4 )%
Interest income - tax equivalent
     42,694     43,144     85,838       (1.0 )%
Interest expense
     11,178     11,853     23,031       (5.7 )%
Net interest income - tax equivalent
   $ 31,516   $ 31,291   $ 62,807       0.7 %
                             
Net interest margin
     3.60 %   3.61 %   3.62 %        
Net interest margin (fully tax equivalent) (1)
     3.64 %   3.65 %   3.65 %        
                             
Full-time equivalent employees
     1,048     1,063                

(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate.  Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

N/M = Not meaningful.

 
- 17 -
 

FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME

(Dollars in thousands)
(Unaudited)

   
2008
  
   
Fourth
  
Third
  
Second
  
First
    
Full
  
   
Quarter
  
Quarter
  
Quarter
  
Quarter
    
Year
  
Interest income
                        
Loans, including fees
   $ 37,864   $ 39,754   $ 39,646   $ 42,721     $ 159,985  
Investment securities
                                  
Taxable
     6,697     5,349     4,387     3,521       19,954  
Tax-exempt
     519     631     792     791       2,733  
Total investment securities interest
     7,216     5,980     5,179     4,312       22,687  
Federal funds sold
     6     22     40     565       633  
  Total interest income
     45,086     45,756     44,865     47,598       183,305  
                                   
Interest expense
                                  
Deposits
     12,015     13,608     14,635     17,739       57,997  
Short-term borrowings
     1,186     1,720     1,130     792       4,828  
Long-term borrowings
     1,395     707     384     406       2,892  
Subordinated debentures and capital securities
     361     311     302     412       1,386  
Total interest expense
     14,957     16,346     16,451     19,349       67,103  
Net interest income
     30,129     29,410     28,414     28,249       116,202  
Provision for loan and lease losses
     10,475     3,219     2,493     3,223       19,410  
Net interest income after provision for loan and lease losses
     19,654     26,191     25,921     25,026       96,792  
                                   
Noninterest income
                                  
Service charges on deposit accounts
     4,752     5,348     4,951     4,607       19,658  
Trust and wealth management fees
     3,745     4,390     4,654     4,622       17,411  
Bankcard income
     1,457     1,405     1,493     1,298       5,653  
Net gains from sales of loans
     321     376     188     219       1,104  
Gains on sales of investment securities
     0     0     0     1,585       1,585  
Income (loss) on preferred securities
     (137 )   (3,400 )   (221 )   20       (3,738 )
Other
     2,510     2,359     2,683     2,524       10,076  
Total noninterest income
     12,648     10,478     13,748     14,875       51,749  
                                   
Noninterest expenses
                                  
Salaries and employee benefits
     17,015     16,879     15,895     17,073       66,862  
Net occupancy
     2,635     2,538     2,510     2,952       10,635  
Furniture and equipment
     1,748     1,690     1,617     1,653       6,708  
Data processing
     840     791     814     793       3,238  
Marketing
     935     622     474     517       2,548  
Communication
     704     601     749     805       2,859  
Professional services
     912     729     1,061     761       3,463  
State intangible tax
     435     697     688     686       2,506  
FDIC expense
     158     115     121     127       521  
Other
     4,465     3,678     4,040     3,653       15,836  
Total noninterest expenses
     29,847     28,340     27,969     29,020       115,176  
Income before income taxes
     2,455     8,329     11,700     10,881       33,365  
Income tax expense
     371     2,597     3,892     3,543       10,403  
Net income
     2,084     5,732     7,808     7,338       22,962  
Dividends on preferred stock
     0     0     0     0       0  
Net income available to common shareholders
   $ 2,084   $ 5,732   $ 7,808   $ 7,338     $ 22,962  
                                   
ADDITIONAL DATA
                                  
Net earnings per common share - basic
   $ 0.06   $ 0.15   $ 0.21   $ 0.20     $ 0.62  
Net earnings per common share - diluted
   $ 0.06   $ 0.15   $ 0.21   $ 0.20     $ 0.61  
Dividends declared per common share
   $ 0.17   $ 0.17   $ 0.17   $ 0.17     $ 0.68  
                                   
Return on average assets
     0.23 %   0.66 %   0.93 %   0.89 %     0.67 %
Return on average shareholders' equity
     2.89 %   8.24 %   11.26 %   10.66 %     8.21 %
                                   
Interest income
   $ 45,086   $ 45,756   $ 44,865   $ 47,598     $ 183,305  
Tax equivalent adjustment
     360     424     510     514       1,808  
Interest income - tax equivalent
     45,446     46,180     45,375     48,112       185,113  
Interest expense
     14,957     16,346     16,451     19,349       67,103  
Net interest income - tax equivalent
   $ 30,489   $ 29,834   $ 28,924   $ 28,763     $ 118,010  
                                   
Net interest margin
     3.67 %   3.68 %   3.72 %   3.78 %     3.71 %
Net interest margin (fully tax equivalent) (1)
     3.71 %   3.73 %   3.78 %   3.85 %     3.77 %
                                   
Full-time equivalent employees
     1,061     1,052     1,058     1,056          

(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

N/M = Not meaningful.

 
- 18 -
 

FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands)
(Unaudited)
 
   
Jun. 30,
    
Mar. 31,
    
Dec. 31,
    
Sep. 30,
    
Jun. 30,
    
% Change
    
% Change
  
   
2009
    
2009
    
2008
    
2008
    
2008
    
Linked Qtr.
    
Comparable Qtr.
  
ASSETS
                                          
Cash and due from banks
   $ 80,938     $ 79,563     $ 100,935     $ 90,341     $ 106,248       1.7 %     (23.8 )%
Federal funds sold
     0       0       0       0       4,005       N/M       (100.0 )%
Investment securities trading
     184       72       61       198       3,598       155.6 %     (94.9 )%
Investment securities available-for-sale
     528,179       732,868       659,756       492,554       421,697       (27.9 )%     25.3 %
Investment securities held-to-maturity
     4,536       4,701       4,966       5,037       5,316       (3.5 )%     (14.7 )%
Other investments
     27,976       27,976       27,976       34,976       34,632       0.0 %     (19.2 )%
Loans held for sale
     6,193       6,342       3,854       2,437       2,228       (2.3 )%     178.0 %
Loans
                                                        
Commercial
     876,730       850,111       807,720       819,430       814,779       3.1 %     7.6 %
Real estate - construction
     266,452       251,115       232,989       203,809       186,178       6.1 %     43.1 %
Real estate - commercial
     988,901       859,303       846,673       814,578       769,555       15.1 %     28.5 %
Real estate - residential
     337,704       360,013       383,599       424,902       499,002       (6.2 )%     (32.3 )%
Installment
     88,370       91,767       98,581       106,456       115,575       (3.7 )%     (23.5 )%
Home equity
     307,749       298,000       286,110       276,943       263,063       3.3 %     17.0 %
Credit card
     27,023       26,191       27,538       27,047       26,399       3.2 %     2.4 %
Lease financing
     25       45       50       92       111       (44.4 )%     (77.5 )%
Total loans
     2,892,954       2,736,545       2,683,260       2,673,257       2,674,662       5.7 %     8.2 %
Less
                                                        
Allowance for loan and lease losses
     38,649       36,437       35,873       30,353       29,580       6.1 %     30.7 %
Net loans
     2,854,305       2,700,108       2,647,387       2,642,904       2,645,082       5.7 %     7.9 %
Premises and equipment
     86,216       85,385       84,105       81,989       79,380       1.0 %     8.6 %
Goodwill
     28,261       28,261       28,261       28,261       28,261       0.0 %     0.0 %
Other intangibles
     465       500       1,002       872       641       (7.0 )%     (27.5 )%
Accrued interest and other assets
     166,100       143,420       140,839       132,107       128,874       15.8 %     28.9 %
Total Assets
   $ 3,783,353     $ 3,809,196     $ 3,699,142     $ 3,511,676     $ 3,459,962       (0.7 )%     9.3 %
                                                         
LIABILITIES
                                                        
Deposits
                                                        
Interest-bearing
   $ 599,365     $ 622,263     $ 636,945     $ 580,417     $ 575,236       (3.7 )%     4.2 %
Savings
     657,300       705,229       583,081       608,438       615,613       (6.8 )%     6.8 %
Time
     1,111,399       1,137,398       1,150,208       1,118,511       1,167,024       (2.3 )%     (4.8 )%
Total interest-bearing deposits
     2,368,064       2,464,890       2,370,234       2,307,366       2,357,873       (3.9 )%     0.4 %
Noninterest-bearing
     423,781       427,068       413,283       404,315       419,045       (0.8 )%     1.1 %
Total deposits
     2,791,845       2,891,958       2,783,517       2,711,681       2,776,918       (3.5 )%     0.5 %
Short-term borrowings
                                                        
Federal funds purchased and securities sold under agreements to repurchase
     206,777       162,549       147,533       45,495       25,932       27.2 %     697.4 %
Federal Home Loan Bank
     125,000       160,000       150,000       215,000       237,900       (21.9 )%     (47.5 )%
Other
     25,000       40,000       57,000       53,000       54,000       (37.5 )%     (53.7 )%
Total short-term borrowings
     356,777       362,549       354,533       313,495       317,832       (1.6 )%     12.3 %
Long-term debt
     135,908       136,832       148,164       152,568       41,263       (0.7 )%     229.4 %
Other long-term debt
     20,620       20,620       20,620       20,620       20,620       0.0 %     0.0 %
Accrued interest and other liabilities
     31,567       43,477       43,981       36,092       28,039       (27.4 )%     12.6 %
Total Liabilities
     3,336,717       3,455,436       3,350,815       3,234,456       3,184,672       (3.4 )%     4.8 %
                                                         
SHAREHOLDERS' EQUITY
                                                        
Preferred stock
     78,173       78,075       78,019       0       0       0.1 %     N/M  
Common stock
     490,292       394,887       394,169       391,249       390,545       24.2 %     25.5 %
Retained earnings
     74,285       77,695       76,339       80,632       81,263       (4.4 )%     (8.6 )%
Accumulated other comprehensive loss
     (10,700 )     (8,564 )     (11,905 )     (6,285 )     (8,236 )     (24.9 )%     (29.9 )%
Treasury stock, at cost
     (185,414 )     (188,333 )     (188,295 )     (188,376 )     (188,282 )     1.5 %     1.5 %
Total Shareholders' Equity
     446,636       353,760       348,327       277,220       275,290       26.3 %     62.2 %
Total Liabilities and Shareholders' Equity
   $ 3,783,353     $ 3,809,196     $ 3,699,142     $ 3,511,676     $ 3,459,962       (0.7 )%     9.3 %
 
N/M = Not meaningful.

 
- 19 -
 

FIRST FINANCIAL BANCORP.
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands)
(Unaudited)

   
Quarterly Averages
    
Year-to-Date Averages
  
   
Jun. 30,
    
Mar. 31,
    
Dec. 31,
    
Sep. 30,
    
Jun. 30,
    
Jun. 30,
  
   
2009
    
2009
    
2008
    
2008
    
2008
    
2009
    
2008
  
ASSETS
                                          
Cash and due from banks
   $ 81,016     $ 85,650     $ 87,307     $ 89,498     $ 81,329     $ 83,320     $ 84,104  
Federal funds sold
     0       0       1,737       3,137       4,095       0       34,947  
Investment securities
     731,119       758,257       574,893       467,524       422,463       744,613       383,883  
Loans held for sale
     5,942       5,085       1,876       2,080       3,034       5,516       3,078  
Loans
                                                        
Commercial
     843,183       825,399       809,869       819,199       805,122       834,340       793,240  
Real estate - construction
     257,487       242,750       220,839       192,731       179,078       250,159       170,543  
Real estate - commercial
     869,985       858,403       830,121       797,143       747,077       864,226       727,928  
Real estate - residential
     348,834       372,853       417,499       490,089       508,837       360,777       519,702  
Installment
     89,857       94,881       102,814       110,933       121,000       92,355       126,938  
Home equity
     302,159       291,038       280,900       270,659       257,954       296,629       254,830  
Credit card
     26,577       26,641       26,902       26,692       26,043       26,609       25,894  
Lease financing
     39       47       75       103       182       43       252  
Total loans
     2,738,121       2,712,012       2,689,019       2,707,549       2,645,293       2,725,138       2,619,327  
Less
                                                        
Allowance for loan and lease losses
     36,644       37,189       29,710       29,739       29,248       36,915       29,054  
Net loans
     2,701,477       2,674,823       2,659,309       2,677,810       2,616,045       2,688,223       2,590,273  
Premises and equipment
     85,433       84,932       83,307       81,000       78,933       85,184       78,951  
Goodwill
     28,261       28,261       28,261       28,261       28,261       28,261       28,261  
Other intangibles
     489       982       613       639       652       734       666  
Accrued interest and other assets
     150,721       139,520       128,748       126,699       126,837       145,151       125,993  
Total Assets
   $ 3,784,458     $ 3,777,510     $ 3,566,051     $ 3,476,648     $ 3,361,649     $ 3,781,002     $ 3,330,156  
                                                         
LIABILITIES
                                                        
Deposits
                                                        
Interest-bearing
   $ 630,885     $ 642,934     $ 611,129     $ 609,992     $ 590,464     $ 636,876     $ 606,835  
Savings
     645,197       620,509       604,370       611,713       617,029       632,921       613,739  
Time
     1,131,972       1,142,257       1,151,622       1,158,332       1,193,447       1,137,086       1,206,410  
Total interest-bearing deposits
     2,408,054       2,405,700       2,367,121       2,380,037       2,400,940       2,406,883       2,426,984  
Noninterest-bearing
     425,330       416,206       412,644       402,604       394,352       420,793       386,796  
Total deposits
     2,833,384       2,821,906       2,779,765       2,782,641       2,795,292       2,827,676       2,813,780  
Short-term borrowings
                                                        
Federal funds purchased and securities sold under agreements to repurchase
     176,592       127,652       98,690       36,476       25,771       152,257       26,016  
Federal Home Loan Bank
     169,341       218,100       150,867       206,741       114,654       193,586       57,634  
Other
     39,836       56,078       53,044       53,836       53,758       47,912       59,956  
Total short-term borrowings
     385,769       401,830       302,601       297,053       194,183       393,755       143,606  
Long-term debt
     136,189       144,358       151,434       77,035       41,606       140,251       42,928  
Other long-term debt
     20,620       20,620       20,620       20,620       20,620       20,620       20,620  
Total borrowed funds
     542,578       566,808       474,655       394,708       256,409       554,626       207,154  
Accrued interest and other liabilities
     28,552       37,939       25,049       22,705       31,145       33,220       31,413  
Total Liabilities
     3,404,514       3,426,653       3,279,469       3,200,054       3,082,846       3,415,522       3,052,347  
                                                         
SHAREHOLDERS' EQUITY
                                                        
Preferred stock
     78,126       78,038       7,805       0       0       78,082       0  
Common stock
     418,086       394,500       391,601       390,861       390,237       406,358       390,658  
Retained earnings
     78,296       77,317       81,932       82,636       81,045       77,809       80,498  
Accumulated other comprehensive loss
     (7,936 )     (10,677 )     (6,462 )     (8,594 )     (4,211 )     (9,299 )     (4,594 )
Treasury stock, at cost
     (186,628 )     (188,321 )     (188,294 )     (188,309 )     (188,268 )     (187,470 )     (188,753 )
Total Shareholders' Equity
     379,944       350,857       286,582       276,594       278,803       365,480       277,809  
Total Liabilities and Shareholders' Equity
   $ 3,784,458     $ 3,777,510     $ 3,566,051     $ 3,476,648     $ 3,361,649     $ 3,781,002     $ 3,330,156  

 
- 20 -
 

FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1)

(Dollars in thousands)
(Unaudited)
   
Quarterly Averages
    
Year-to-Date Averages
  
   
Jun. 30, 2009
    
Mar. 31, 2009
    
Jun. 30, 2008
    
Jun. 30, 2009
    
Jun. 30, 2008
  
   
Balance
    
Yield
    
Balance
    
Yield
    
Balance
    
Yield
    
Balance
    
Yield
    
Balance
    
Yield
  
Earning assets
                                                            
Investment securities
   $ 731,119       4.61 %   $ 758,257       4.88 %   $ 422,463       4.93 %   $ 744,613       4.75 %   $ 383,883       4.99 %
Interest-bearing deposits with other banks
                                                                                
Federal funds sold
     -       N/M       -       0.00 %     4,095       3.93 %     -       N/M       34,947       3.49 %
Gross loans (2)
     2,744,063       4.97 %     2,717,097       5.02 %     2,648,327       6.02 %     2,730,654       4.99 %     2,622,405       6.33 %
Total earning assets
     3,475,182       4.89 %     3,475,354       4.99 %     3,074,885       5.87 %     3,475,267       4.94 %     3,041,235       6.13 %
                                                                                 
Nonearning assets
                                                                                
Allowance for loan and lease losses
     (36,644 )             (37,189 )             (29,248 )             (36,915 )             (29,054 )        
Cash and due from banks
     81,016               85,650               81,329               83,320               84,104          
Accrued interest and other assets
     264,904               253,695               234,683               259,330               233,871          
Total assets
   $ 3,784,458             $ 3,777,510             $ 3,361,649             $ 3,781,002             $ 3,330,156          
                                                                                 
Interest-bearing liabilities
                                                                                
Total interest-bearing deposits
   $ 2,408,054       1.51 %   $ 2,405,700       1.65 %   $ 2,400,940       2.45 %   $ 2,406,883       1.58 %   $ 2,426,984       2.69 %
Borrowed funds
                                                                                
Short-term borrowings
     385,769       0.55 %     401,830       0.51 %     194,183       2.34 %     393,755       0.53 %     143,606       2.70 %
Long-term debt
     136,189       3.68 %     144,358       3.67 %     41,606       3.71 %     140,251       3.68 %     42,928       3.71 %
Other long-term debt
     20,620       6.22 %     20,620       4.66 %     20,620       5.89 %     20,620       5.45 %     20,620       6.98 %
Total borrowed funds
     542,578       1.55 %     566,808       1.47 %     256,409       2.85 %     554,626       1.51 %     207,154       3.34 %
Total interest-bearing liabilities
     2,950,632       1.52 %     2,972,508       1.62 %     2,657,349       2.49 %     2,961,509       1.57 %     2,634,138       2.74 %
                                                                                 
Noninterest-bearing liabilities
                                                                                
Noninterest-bearing demand deposits
     425,330               416,206               394,352               420,793               386,796          
Other liabilities
     28,552               37,939               31,145               33,220               31,413          
Shareholders' equity
     379,944               350,857               278,803               365,480               277,809          
Total liabilities & shareholders' equity
   $ 3,784,458             $ 3,777,510             $ 3,361,649             $ 3,781,002             $ 3,330,156          
                                                                                 
Net interest income (1)
   $ 31,209             $ 30,928             $ 28,414             $ 62,137             $ 56,663          
Net interest spread (1)
             3.37 %             3.37 %             3.38 %             3.37 %             3.39 %
Net interest margin (1)
             3.60 %             3.61 %             3.72 %             3.61 %             3.75 %

(1) Not tax equivalent.
(2) Loans held for sale and nonaccrual loans are both included in gross loans.

 
- 21 -
 

FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1)
 
(Dollars in thousands)
(Unaudited)

   
Linked Qtr. Income Variance
    
Comparable Qtr. Income Variance
    
Year-to-Date Income Variance
  
   
Rate
    
Volume
    
Total
    
Rate
    
Volume
    
Total
    
Rate
    
Volume
    
Total
  
Earning assets
                                                      
Investment securities
   $ (499 )   $ (216 )   $ (715 )   $ (320 )   $ 3,550     $ 3,230       (452 )   $ 8,494     $ 8,042  
Interest-bearing deposits with other banks
                                                                        
Federal funds sold
     -       -       -       -       (40 )     (40 )     -       (605 )     (605 )
Gross loans (2)
     (383 )     704       321       (6,853 )     1,185       (5,668 )     (17,413 )     2,681       (14,732 )
Total earning assets
     (882 )     488       (394 )     (7,173 )     4,695       (2,478 )     (17,865 )     10,570       (7,295 )
                                                                         
Interest-bearing liabilities
                                                                        
Total interest-bearing deposits
   $ (832 )   $ 109     $ (723 )   $ (5,582 )   $ 27     $ (5,555 )   $ (13,333 )   $ (158 )   $ (13,491 )
Borrowed funds
                                                                        
Short-term borrowings
     36       (16 )     20       (865 )     262       (603 )     (1,545 )     657       (888 )
Long-term debt
     5       (60 )     (55 )     (2 )     869       867       (7 )     1,774       1,767  
Other long-term debt
     79       4       83       18       -       18       (157 )     -       (157 )
Total borrowed funds
     120       (72 )     48       (849 )     1,131       282       (1,709 )     2,431       722  
Total interest-bearing liabilities
     (712 )     37       (675 )     (6,431 )     1,158       (5,273 )     (15,042 )     2,273       (12,769 )
                                                                         
Net interest income (1)
   $ (170 )   $ 451     $ 281     $ (742 )   $ 3,537     $ 2,795     $ (2,823 )   $ 8,297     $ 5,474  
Net interest spread (1)
                                                                        
Net interest margin (1)
                                                                        

(1) Not tax equivalent.
(2) Loans held for sale and nonaccrual loans are both included in gross loans.

 
- 22 -
 

FIRST FINANCIAL BANCORP.
CREDIT QUALITY

(Dollars in thousands)
(Unaudited)

   
Jun. 30,
    
Mar. 31,
    
Dec. 31,
    
Sep. 30,
    
Jun. 30,
  
   
2009
    
2009
    
2008
    
2008
    
2008
  
                               
ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY
                          
Balance at beginning of period
   $ 36,437     $ 35,873     $ 30,353     $ 29,580     $ 29,718  
  Provision for loan and lease losses
     10,358       4,259       10,475       3,219       2,493  
  Gross charge-offs
                                        
    Commercial
     4,707       2,521       2,168       1,568       946  
    Real estate - construction
     1,340       0       0       0       0  
    Real estate - commercial
     1,351       382       2,083       48       589  
    Real estate - residential
     351       231       47       335       227  
    Installment
     304       400       493       424       482  
    Home equity
     332       218       238       135       525  
    All other
     386       308       374       426       426  
      Total gross charge-offs
     8,771       4,060       5,403       2,936       3,195  
  Recoveries
                                        
    Commercial
     333       60       165       179       166  
    Real estate - construction
     0       0       0       0       0  
    Real estate - commercial
     14       16       40       37       19  
    Real estate - residential
     20       2       5       4       5  
    Installment
     203       254       189       225       246  
    Home equity
     1       0       0       0       30  
    All other
     54       33       49       45       98  
      Total recoveries
     625       365       448       490       564  
  Total net charge-offs
     8,146       3,695       4,955       2,446       2,631  
Ending allowance for loan and lease losses
   $ 38,649     $ 36,437     $ 35,873     $ 30,353     $ 29,580  
                                         
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED)
                          
  Commercial
     2.08 %     1.21 %     0.98 %     0.67 %     0.39 %
  Real estate - construction
     2.09 %     0.00 %     0.00 %     0.00 %     0.00 %
  Real estate - commercial
     0.62 %     0.17 %     0.98 %     0.01 %     0.31 %
  Real estate - residential
     0.38 %     0.25 %     0.04 %     0.27 %     0.18 %
  Installment
     0.45 %     0.62 %     1.18 %     0.71 %     0.78 %
  Home equity
     0.44 %     0.30 %     0.34 %     0.20 %     0.77 %
  All other
     5.00 %     4.18 %     4.79 %     5.66 %     5.03 %
    Total net charge-offs
     1.19 %     0.55 %     0.73 %     0.36 %     0.40 %
                                         
                                         
COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS
  
  Nonaccrual loans
                                        
    Commercial
   $ 8,100     $ 8,412     $ 5,930     $ 5,194     $ 4,957  
    Real estate - construction
     11,936       240       240       0       490  
    Real estate - commercial
     10,130       9,170       4,779       3,361       3,592  
    Real estate - residential
     4,897       4,724       5,363       3,742       4,461  
    Installment
     394       464       459       417       438  
    Home equity
     2,136       1,681       1,204       1,084       866  
    All other
     0       0       6       32       8  
      Total nonaccrual loans
     37,593       24,691       17,981       13,830       14,812  
  Restructured loans
     197       201       204       208       554  
    Total nonperforming loans
     37,790       24,892       18,185       14,038       15,366  
  Other real estate owned (OREO)
     5,166       3,513       4,028       4,610       3,763  
    Total nonperforming assets
     42,956       28,405       22,213       18,648       19,129  
  Accruing loans past due 90 days or more
     318       255       138       241       245  
    Total underperforming assets
   $ 43,274     $ 28,660     $ 22,351     $ 18,889     $ 19,374  
Total classified assets
   $ 106,315     $ 79,256     $ 67,393     $ 58,284     $ 54,511  
                                         
CREDIT QUALITY RATIOS
                                        
Allowance for loan and lease losses to
                                        
  Nonaccrual loans
     102.81 %     147.57 %     199.51 %     219.47 %     199.70 %
  Nonperforming loans
     102.27 %     146.38 %     197.27 %     216.22 %     192.50 %
  Total ending loans
     1.34 %     1.33 %     1.34 %     1.14 %     1.11 %
Nonperforming loans to total loans
     1.31 %     0.91 %     0.68 %     0.53 %     0.57 %
Nonperforming assets to
                                        
  Ending loans, plus OREO
     1.48 %     1.04 %     0.83 %     0.70 %     0.71 %
  Total assets
     1.14 %     0.75 %     0.60 %     0.53 %     0.55 %

 
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FIRST FINANCIAL BANCORP.
CAPITAL ADEQUACY

(Dollars in thousands)
(Unaudited)

                                 
Six months ended,
  
   
Jun. 30,
    
Mar. 31,
    
Dec. 31,
    
Sep. 30,
    
Jun. 30,
    
Jun. 30,
    
Jun. 30,
  
   
2009
    
2009
    
2008
    
2008
    
2008
    
2009
    
2008
  
PER COMMON SHARE
                                          
Market Price
                                          
  High
   $ 11.92     $ 12.10     $ 14.30     $ 14.80     $ 13.88     $ 12.10     $ 13.88  
  Low
   $ 7.35     $ 5.58     $ 10.81     $ 8.10     $ 9.20     $ 5.58     $ 9.20  
  Close
   $ 7.53     $ 9.53     $ 12.39     $ 14.60     $ 9.20     $ 7.53     $ 9.20  
                                                         
Average common shares outstanding - basic
     40,734,254       37,142,531       37,133,725       37,132,864       37,114,451       38,928,557       37,090,603  
Average common shares outstanding - diluted
     41,095,949       37,840,954       37,567,032       37,504,231       37,524,789       39,458,443       37,478,353  
Ending common shares outstanding
     51,434,346       37,474,422       37,481,201       37,476,607       37,483,384       51,434,346       37,483,384  
                                                         
REGULATORY CAPITAL
  
Preliminary
                                    
Preliminary
          
Tier 1 Capital
   $ 454,243     $ 358,834     $ 356,307     $ 274,513     $ 274,372     $ 454,243     $ 274,372  
Tier 1 Ratio
     14.77 %     12.16 %     12.38 %     9.80 %     9.99 %     14.77 %     9.99 %
Total Capital
   $ 492,696     $ 395,271     $ 392,180     $ 304,866     $ 303,952     $ 492,696     $ 303,952  
Total Capital Ratio
     16.02 %     13.39 %     13.62 %     10.89 %     11.06 %     16.02 %     11.06 %
Total Capital in excess of minimum requirement
   $ 246,613     $ 159,133     $ 161,896     $ 80,806     $ 84,147     $ 246,613     $ 84,147  
Total Risk-Weighted Assets
   $ 3,076,042     $ 2,951,721     $ 2,878,548     $ 2,800,753     $ 2,747,559     $ 3,076,042     $ 2,747,559  
Leverage Ratio
     12.02 %     9.51 %     10.00 %     7.95 %     8.21 %     12.02 %     8.21 %
                                                         
OTHER CAPITAL RATIOS
                                                        
Ending shareholders' equity to ending
                                                        
  assets
     11.81 %     9.29 %     9.42 %     7.89 %     7.96 %     11.81 %     7.96 %
Ending common shareholders' equity
                                                        
  to ending assets
     9.74 %     7.24 %     7.31 %     7.89 %     7.96 %     9.74 %     7.96 %
Ending tangible shareholders' equity
                                                        
  to ending tangible assets
     11.14 %     8.60 %     8.70 %     7.13 %     7.18 %     11.14 %     7.18 %
Ending tangible common shareholders'
                                                        
  equity to ending tangible assets
     9.06 %     6.54 %     6.57 %     7.13 %     7.18 %     9.06 %     7.18 %
Average shareholders' equity to
                                                        
  average assets
     10.04 %     9.29 %     8.04 %     7.96 %     8.29 %     9.67 %     8.34 %
Average common shareholders' equity
                                                        
  to average assets
     7.98 %     7.22 %     7.82 %     7.96 %     8.29 %     7.60 %     8.34 %
Average tangible shareholders' equity
                                                        
  to average tangible assets
     9.35 %     8.59 %     7.28 %     7.18 %     7.50 %     8.97 %     7.54 %
Average tangible common shareholders'
                                                        
  equity to average tangible assets
     7.27 %     6.51 %     7.05 %     7.18 %     7.50 %     6.89 %     7.54 %

 
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