October
1, 2009
Dear
Shareholder:
Enclosed
is your quarterly dividend payment of $0.10 per share. This dividend was
declared by the Board of Directors of First Financial Bancorp on August 25,
2009, and is being paid to shareholders of record as of September 4,
2009.
We are
committed to keeping you informed of the company’s actions. In early August, we
reported second quarter and year-to-date 2009 financial results for the period
ended June 30, 2009.
|
§
|
Second
quarter net income available to common shareholders was $0.5 million and
earnings per diluted common share were
$0.01.
|
|
§
|
Year-to-date
net income available to common shareholders was $5.6 million and earnings
per diluted common share were
$0.14.
|
|
§
|
We
reported solid loan and deposit growth, and strong capital and liquidity
ratios.
|
Over the
past several quarters, our results have been impacted by higher credit costs.
While the overall credit quality in our lending portfolios remained relatively
strong throughout most of the economic downturn, late in the fourth quarter of
2008 and continuing into the first half of 2009, we began to see a higher level
of borrower stress related to the prolonged weak economic
conditions.
Prior to
and throughout the economic downturn, we have maintained strong underwriting
policies, originated loans within our footprint, proactively managed our credit
portfolio and worked with clients on loan resolution issues. In an effort to
further strengthen our loan underwriting standards and improve the management of
potential problem credits, we conducted an extensive review of our lending
strategies, policies and procedures. As a result of this review, we enhanced a
number of our existing procedures and implemented some new lending strategies.
We believe that this process will help us to identify problem credits before
they emerge. Although our credit quality has experienced some stress, it remains
relatively strong compared with industry and peer levels. We are maintaining a
cautious outlook for credit and anticipate that credit costs may remain volatile
until we begin to see some improvement in the economy.
It is
important to note that despite the higher credit costs that have impacted our
results over the past several quarters, First Financial remains strong. Our
track record of profitability and disciplined credit processes, combined with
the strong capital and liquidity levels we have maintained throughout this
recessionary period, has afforded us the flexibility to capitalize on a number
of opportunities in the marketplace. Over the past several months, we completed
a number of strategic transactions, including a successful public offering of
13.8 million shares of our common stock, which resulted in net proceeds of
approximately $98 million. In addition, we have significantly expanded our
banking center network.
|
§
|
On
June 30, 2009, we purchased approximately $145 million in loans and
strategic client relationships in Indiana from Irwin Union Bank and Trust
Company (Irwin).
|
|
§
|
On
July 31, 2009, we purchased the banking operations of Peoples Community
Bank in an FDIC-assisted transaction. Through this transaction, we
acquired approximately $538 million in deposits and approximately $436
million in loans, and 19 banking centers, which includes 13 banking
centers in the greater Cincinnati
market.
|
|
§
|
On
August 28, 2009, we purchased 3 banking centers in Indiana, approximately
$85 million in deposits and an additional $41 million in loans from
Irwin.
|
|
§
|
On
September 18, 2009, we purchased the banking operations of Irwin Union
Bank and Trust Company and Irwin Union Bank. F.S.B. in FDIC-assisted
transactions. Through these transactions, we acquired in aggregate
approximately $2.5 billion in deposits and approximately $2.5 billion in
loans, and 27 banking centers, which includes 12 banking centers in
Indiana.
|
The
addition of these banking centers significantly expands our presence in key
metropolitan markets. The Peoples banking centers gives us a much stronger
position in the greater Cincinnati market, and the Irwin banking centers in
Indiana will make us the 5th largest
financial institution in the state, based on deposits. We now operate 131
banking centers in 10 states; however, within our primary operating region of
Ohio, Kentucky and Indiana, we operate 116 First Financial Bank banking centers
serving 69 communities.
First
Financial associates – both existing and new – are working relentlessly to
ensure the efficient integration of these banking centers. We are grateful to
all of our associates for their hard work and the professional manner in which
they helped to execute these transactions.
|
Our
strong and stable foundation has also allowed us to be one of the few
banks still in a position to take advantage of organic growth
opportunities. Earlier this year, we opened a new banking center in the
Cincinnati suburb of Madeira, and we are currently building new banking
centers in Edgewood, Kentucky and St. Marys, Ohio. We are very excited
about our growth prospects and believe that our recent expansion efforts
will leverage the First Financial brand to increase market
share.
|
 New
banking center under construction in
Edgewood
|
Although
some signs of economic stability are beginning to emerge throughout the country,
many economists believe that recovery will be slow and that the lingering
effects of the recession are likely to continue well into 2010. We are
optimistic about our future and are confident that our approach to managing the
company, including the recent investments to expand our presence within the
markets we serve, further strengthens our company and places us in a
favorable position as economic conditions improve.
We value
the investment you have made in First Financial Bancorp and welcome every
opportunity to help you on your path to success.
|
Sincerely,
 |
Sincerely,
 |
|
Murph
Knapke
Chairman
of the Board
|
Claude
E. Davis
President
& Chief Executive Officer
|