First Financial Bancorp Reports Second Quarter 2010 Financial Results

CINCINNATI, Aug. 3 /PRNewswire-FirstCall/ -- First Financial Bancorp (Nasdaq: FFBC) (“First Financial” or the “Company”) announced today financial and operational results for the second quarter 2010 and for the six month period ended June 30, 2010.

Second quarter 2010 net income and net income available to common shareholders was $17.8 million and earnings per diluted common share were $0.30.  This compares with first quarter 2010 net income of $11.6 million, net income available to common shareholders of $9.7 million and earnings per diluted common share of $0.17 and second quarter 2009 net income of $1.5 million, net income available to common shareholders of $0.5 million and earnings per diluted common share of $0.01.

For the six month period ended June 30, 2010, net income was $29.4 million, net income available to common shareholders was $27.5 million and earnings per diluted common share were $0.48 as compared to net income of $7.2 million, net income available to common shareholders of $5.6 million and earnings per diluted common share of $0.14 for the six month period ended June 30, 2009.

• Strong quarterly profitability despite continued economic downturn
  • Return on average assets of 1.07%
  • Return on average shareholders’ equity of 10.24%
• Earnings continue to add to already robust capital ratios
  • Tangible common equity to tangible assets of 9.90%
  • Tier 1 capital ratio of 18.75%
  • Total risk-based capital of 20.02%
• Net interest margin remains strong at 4.51%
  • Margin declined 36 basis points compared to first quarter 2010; however, still high when compared to regional peers
  • Total liquidity of $842 million creating downward pressure on margin, but provides opportunity for future margin expansion
• Stable credit performance as compared to first quarter 2010 and second quarter 2009
  • Net loan charge-offs related to uncovered loans down significantly to $5.0 million; a decrease of 64% and 39%, respectively
  • Provision for uncovered loan losses decreased to $6.2 million, representing a decline of 46% and 41%, respectively
• Markedly low risk balance sheet
  • FDIC loss share coverage on 38% of loan portfolio
  • 100% risk-weighted assets represent only 43% of balance sheet
• Continued growth in strategic deposit balances
  • Average strategic transaction and savings deposits increased $158.5 million, or 5.4% on a linked quarter basis, during the second quarter 2010
  • Expected continued runoff of acquired-non-strategic deposits, most of which consist of time and brokered accounts
• Solid growth in recurring and strategic fee revenue and other noninterest income, increasing 13% quarter-over-quarter

Claude Davis, President and Chief Executive Officer, commented, “Despite the continued challenging operating environment, we achieved solid financial results for the quarter.  We continued to execute our client-focused business model with improvement in our wealth management, mortgage and deposit businesses, including over $150 million of average growth in low cost transaction and savings deposits within our strategic markets.

“New loan demand remains sluggish due to the economic environment and as a result, our cash position continues to build, which had a negative impact on our net interest margin.  However, this liquidity, combined with our robust capital position, is the foundation of our strong balance sheet which provides the ability to take advantage of opportunities within our strategic markets.  Additionally, we managed our ongoing operating expenses in a prudent manner while continuing to invest in infrastructure and growing our business.”

DETAILS OF RESULTS

When compared to the second quarter 2009 and the six month period ended June 30, 2009, the results of the comparable periods in 2010 were impacted by a number of acquisition-related items.  During the third quarter 2009, through FDIC-assisted transactions, First Financial assumed the banking operations of Peoples Community Bank (“Peoples”), Irwin Union Bank and Trust Company and Irwin Union Bank, F.S.B. (collectively, “Irwin”).  

In connection with the FDIC-assisted transactions, the Company has loss sharing arrangements with the FDIC.  Under the terms of these agreements, the FDIC will reimburse the Company for losses with respect to certain loans (“covered loans”) and other real estate owned (“OREO”) (collectively, “covered assets”).

As a result of the acquisitions, the Company’s business and operating markets expanded significantly.  To assist readers in understanding the financial and strategic impact of the acquisitions, the combined operations of First Financial’s legacy and acquired businesses will be discussed in three categories: “Legacy-Strategic”, “Acquired-Strategic” and “Acquired-Non-Strategic”.  Additional disclosures have been added in a separate section of the earnings release that segregate the effect acquisition-related items have on certain reported income statement and balance sheet amounts, “Section II – Supplemental Information on Covered Assets and Acquisition-Related Items”.  Definitions of the business categories and other financial items related to the acquisitions can be found below in “Glossary of Terms”.

In an effort to simplify and clarify the financial performance of First Financial, a number of significant items are noted separately throughout this release and will address the nature, timing and expected recurrence of each item.  Available on the Company’s website at www.bankatfirst.com is a presentation providing supplemental information regarding its quarterly results.

Glossary of Terms

To assist readers in understanding the Company’s financial results and the effect of the acquisitions on reported amounts, the following terms are used throughout this release to refer to specific acquisition-related items.  The first three define the business components referred to above and the remaining items define specific covered loan terminology.

Legacy-strategic – Elements of the business that existed prior to the acquisitions and will continue to be supported.

Acquired-strategic – Elements of the business that the Company intends to retain and will continue to support and build.  Legacy-strategic and acquired-strategic are collectively referred to as “strategic.”

Acquired-non-strategic – Elements of the business that the Company intends to exit but will continue to support to obtain maximum economic value.  No growth or replacement is expected.

Rate-based valuation mark – Represents the carrying value discount required to establish the appropriate effective yield for covered loans.

Credit-based valuation mark – The valuation adjustment applied to covered loans related to credit loss assumptions.

Accelerated discount on loan prepayments and dispositions – The acceleration of the unrealized rate-based valuation mark plus any recognition of the credit-based valuation mark.  This item will be ongoing but diminishing as covered loan balances decline over time.

UPB – Unpaid principal balance

Carrying value – The unpaid principal balance of a covered loan less any rate- or credit-based valuation mark.

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.

SECTION I – RESULTS OF OPERATIONS

NET INTEREST INCOME

Net interest income on a fully tax-equivalent basis for the second quarter 2010 was $68.0 million as compared to $72.2 million for the first quarter 2010 and $31.5 million as compared to the comparable year-over-year period.  While the average balances of interest-earning assets and interest-bearing liabilities remained relatively unchanged for the second quarter 2010 as compared to the first quarter, the asset mix continued to change as higher yielding loans paid down and converted to lower yielding cash or investments, which negatively impacted the net interest margin and resulted in the lower level of net interest income.  In addition to higher levels of interest-earning assets and interest-bearing liabilities resulting from the 2009 acquisitions, the year-over-year increase of $36.4 million was also impacted by the significant increase in the net interest margin (see further discussion below).  

For the six month period ended June 30, 2010, net interest income on a fully tax-equivalent basis was $140.2 million as compared to $62.8 million for the comparable period in 2009.  Similar to the quarterly year-over-year items noted above, the increase was driven by the larger balance sheet items as well as a higher net interest margin (see further discussion below).

Included in net interest income for both the second quarter and first quarter 2010 were the results of operations classified by the Company as acquired-non-strategic.  These amounts totaled $10.2 million and $10.9 million during those periods, respectively, and in sum totaled $21.1 million for the six months ended June 30, 2010.  See additional discussion in Section II.

NET INTEREST MARGIN

Net interest margin was 4.51% for the second quarter 2010 as compared to 4.87% for the first quarter 2010 and 3.59% for the second quarter 2009.  The net interest margin was significantly impacted by normal amortization and paydowns in both the covered and uncovered loan portfolios.  As loan demand remains slow in the Company’s strategic markets, the incoming cash flows from the loan portfolios contributed to an increased cash position which accounted for 34 basis points of the linked quarter net interest margin decline.  While the Company experienced a lower level of interest income and, as a result, a lower net interest margin during the quarter due partly to its cash position, it deliberately avoided redeploying the cash into long term securities as it did not want to introduce higher levels of duration and pricing risk.  The average balance of cash and interest-bearing deposits during the second quarter was $827 million which earned a combined yield of 0.22%.  As such, opportunities for net interest margin enhancement may exist as the Company considers alternatives for deploying its high level of liquidity, including purchasing investment securities consistent with its asset / liability management objectives, future loan demand and restructuring liabilities.  See additional discussion in the Investments section.

The increase of 92 basis points over the comparable year-over-year period was primarily attributable to the higher yield on covered loans, improved pricing in new loan originations, lower funding costs of deposits as a result of repricing acquired CDs and disciplined pricing strategies, and an overall increase in earning assets.

Net interest margin for the six month period ended June 30, 2010 was 4.69% as compared to 3.60% for the six month period ended June 30, 2009.

NONINTEREST INCOME

The following table presents noninterest income for the three months ended June 30, 2010, March 31, 2010 and December 31, 2009 highlighting the estimated impact of covered loan activity and other transition items on the Company’s reported balance.

During the quarterly periods presented above, covered loan activity positively impacted noninterest income.  This activity is discussed in more detail in Section II.  Also included in noninterest income for the second quarter 2010 was $2.3 million of non-recurring income related to the settlement of certain initial cash items and valuations related to the 2009 FDIC acquisitions.  Excluding the impact of all accelerated discounts and other transition items as well as gains on the sales of investment securities and other items not expected to recur, estimated noninterest income earned in the second quarter 2010 was $14.5 million as compared to $12.8 million in the first quarter 2010 and $10.6 million in the second quarter 2009.  The increase from the linked quarter was primarily attributable to higher service charges on deposits, gains on sales of residential mortgages, bankcard interchange income, trust and wealth management fees and BOLI income, partially offset by lower insurance income.  The increase in the comparable year-over-year quarter was driven primarily by higher service charges on deposit accounts resulting from an increase in transaction-based deposits, increased bankcard income, higher trust and wealth management fees and higher brokerage and insurance income as a result of the 2009 acquisitions.

For the six month period ended June 30, 2010, noninterest income totaled $44.7 million as compared to $26.1 million for the similar year-over-year period.  Excluding the items mentioned above in Table I as well as the gain on sale of the property & casualty portion of the insurance business which occurred during the first quarter 2009, noninterest income was $27.3 million for the six month period ended June 30, 2010 as compared to $22.1 million for the six months ended June 30, 2009.

NONINTEREST EXPENSE

The following table presents noninterest expense for the three months ended June 30, 2010, March 31, 2010 and December 31, 2009 including the estimated effect of acquired-non-strategic operations, acquisition-related costs and other transition items.

Similar to the first quarter 2010 and fourth quarter 2009, noninterest expense during the second quarter 2010 continued to be affected by acquisition-related costs as well as other transition-related items and costs related to the Company’s acquired-non-strategic operations.  After adjusting for these items, estimated noninterest expense was essentially unchanged, totaling $47.7 million for the second quarter 2010.  Compared to the year-over-year quarter, excluding the FDIC special assessment and acquisition-related expenses incurred during the second quarter 2009, estimated noninterest expense increased $17.1 million, primarily driven by higher salaries and employment benefits, occupancy costs, equipment expenses and marketing costs resulting from the 2009 acquisitions.

For the six month period ended June 30, 2010, noninterest expense totaled $121.5 million compared to $62.7 million for the comparable year-over-year period.  Excluding the items mentioned above in Table II as well as severance costs related to the first quarter 2009 sale of the property & casualty portion of the insurance business, noninterest expense was $95.3 million for the six month period ended June 30, 2010 as compared to $60.3 million for the six months ended June 30, 2009.

INCOME TAXES

For the second quarter 2010, income tax expense was $9.5 million, resulting in an effective tax rate of 34.8%, compared with income tax expense of $6.3 million and an effective tax rate of 35.0% during the first quarter 2010 and $0.7 million and an effective tax rate of 32.6% during the comparable year-over-year period.

For the six month period ended June 30, 2010, income tax expense was $15.8 million, resulting in an effective tax rate of 34.9%, compared with income tax expense of $3.7 million and an effective tax rate of 34.2% during the six months ended June 30, 2009.

CREDIT QUALITY – EXCLUDING COVERED ASSETS

The following table presents certain credit quality metrics related to the Company’s uncovered loan portfolio for the trailing five quarter periods as of June 30, 2010.

Net Charge-offs

Second quarter 2010 net charge-offs were $5.0 million, or 0.71% of average loans and leases, compared with $14.0 million, or 2.00%, for the linked quarter and $8.1 million, or 1.19%, for the comparable year-over-year quarter.  The decrease compared to the linked quarter was impacted by the alleged fraudulent activity noted during the first quarter 2010 which totaled $8.8 million, representing 125 basis points of average loans and leases for the period.  Excluding this activity, net charge-offs decreased slightly during the second quarter 2010 both in terms of dollar amount as well as a percentage of average loans and leases.

For the six months ended June 30, 2010, net charge-offs were $19.0 million, or 1.36% of average loans and leases.  Excluding the alleged fraudulent activity noted above, net charge-offs were $10.2 million, or 0.73%, as compared to $11.8 million, or 0.88%, for the six month period ended June 30, 2009.

Nonperforming Assets

Nonperforming loans totaled $79.4 million and nonperforming assets totaled $96.2 million as of June 30, 2010 compared with $74.5 million and $92.5 million, respectively, for the linked quarter and $37.8 million and $43.0 million, respectively, for the comparable year-over-year quarter.  While total nonaccrual loans remained essentially unchanged, the individual components changed as commercial nonaccrual loans decreased $8.7 million, partially driven by a credit that was transferred to restructured loans (see further discussion below), offset by increases in construction nonaccrual loans of $1.2 million and commercial real estate nonaccrual loans of $7.1 million.

Restructured loans increased $5.2 million during the second quarter 2010 due primarily  to one commercial relationship totaling $5.0 million that was previously classified as nonaccrual in which the Company worked with the borrower to modify certain terms including the addition of an interest-only feature for a specified period of time and re-amortization.  Restructured loans remain on nonaccrual status until the borrower demonstrates the ability to comply with the modified terms.

Total classified assets increased $30.7 million during the second quarter to $201.9 million.  Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.  This increase was driven by the reclassification of certain performing loans rated special mention or pass to substandard, primarily commercial real estate relationships involving borrowers in a range of industries including hospitality, entertainment and residential development.  All credits included in classified assets are monitored closely and have workout strategies in place should their status continue to deteriorate.

Recovery within the Company’s strategic markets remains sluggish consistent with the prolonged stress in both the business and consumer economic environments and, as a result, First Financial’s credit results may continue to be volatile.  Commercial real estate may face additional challenges as the combination of maturing credits and existing loan-to-value levels may create difficulties for those borrowers exploring refinancing opportunities.

Delinquent Loans

Loans 30-to-89 days past due totaled $21.8 million, or 0.78% of period end loans, as of June 30, 2010.  This compares to $22.6 million, or 0.80%, as of March 31, 2010 and $20.5 million, or 0.71%, as of June 30, 2009.

Provision for Loan and Lease Losses

Second quarter 2010 provision expense related to uncovered loans and leases was $6.2 million as compared to $11.4 million during the linked quarter and $10.4 million during the comparable year-over-year quarter.  As a percentage of net charge-offs, second quarter 2010 provision expense equaled 123.4% compared to 81.0% during the first quarter 2010 and 127.2% during the second quarter 2009.

Allowance for Loan and Lease Losses

As of the end of the second quarter 2010, the allowance for uncovered loan and lease losses increased to $57.8 million from $56.6 million as of March 31, 2010 and was $38.6 million as of June 30, 2009.  As a percentage of period-end loans, the allowance for loan and lease losses totaled 2.07% as of June 30, 2010 as compared to 2.01% as of March 31, 2010 and 1.34% as of June 30, 2009.  The allowance for loan and lease losses as of June 30, 2010 reflects management’s estimate of credit risk inherent in the Company’s portfolio at that time.

LOANS (EXCLUDING COVERED LOANS)

The following table presents the loan portfolio, not including covered loans, as of June 30, 2010, March 31, 2010 and June 30, 2009.

Loans, excluding covered loans, totaled $2.79 billion at the end of the second quarter, a decrease of $21.5 million, or 0.8%, compared to the balance of $2.82 billion as of March 31, 2010 and a decrease of $98.8 million, or 3.4%, compared to the amount of $2.89 billion as of June 30, 2009.  As compared to the linked quarter, the composition of the loan portfolio remained essentially the same with the slight overall decrease occurring in the commercial, construction and residential real estate portfolios offset by a modest increase in the commercial real estate portfolio.  Overall, loan demand continued to remain slow in the Company’s strategic operating markets.

INVESTMENTS

The following table presents a summary of the total investment portfolio at June 30, 2010.

The net increase relative to the comparable periods was due to the purchase of $100 million of FNMA agency securities during the quarter.  While loan demand remains muted, the Company intends to selectively redeploy a portion of its large cash position to purchase investments as market conditions permit.  Future purchases will be made utilizing the same discipline and portfolio management philosophy applied in the past, including avoidance of credit risk and geographic concentration risk within mortgage-backed securities, while also balancing the Company’s overall asset / liability management objectives.  During the third quarter 2010, the Company continued to redeploy its liquidity, purchasing approximately $150 million of adjustable rate FNMA / FHLMC mortgage backed securities in accordance with these guidelines.

DEPOSITS

The following table presents a roll-forward of deposit activity during the second quarter 2010, including activity related to deposits acquired through the FDIC-assisted transactions.

Strategic transaction and savings accounts experienced solid growth during the second quarter 2010 increasing 4.76% as compared to the linked quarter.  The acquisition of low cost core deposits and customer relationships is central to the Company’s long term operating strategy despite the current strong liquidity position.  As expected, acquired-non-strategic balances continued to decline, the majority of which consisted of brokered deposits.  As of June 30, 2010, brokered deposits had declined to less than 5% of total deposits.  Overall, strategic deposit retention from the acquisitions continues to exceed management’s expectations.

CAPITAL MANAGEMENT

The following table presents First Financial’s preliminary regulatory and other capital ratios as of June 30, 2010, March 31, 2010 and June 30, 2009.

Capital levels continued to improve during the second quarter 2010.  As of June 30, 2010, tangible book value per common share was $11.16 as compared to $10.96 as of March 31, 2010 and up 68.8% compared to $6.61 per share as of June 30, 2009.  First Financial’s tangible common equity ratio increased to 9.90% for the second quarter 2010 as compared to 9.73% for the linked quarter and 9.06% for the comparable year-over-year quarter.

At the beginning of the second quarter 2010, a warrant issued in connection with the senior preferred shares issued by the Company under its participation in the Capital Purchase Program (“CPP”), a component of the Troubled Asset Relief Program (“TARP”) continued to be held by the U.S. Treasury.  The warrant enables the holder to purchase up to 465,117 shares of the Company’s common stock at an exercise price of $12.90 per share and expires on December 23, 2018.  In June 2010, the U.S. Treasury conducted an auction of the warrants in which they were sold in a public offering at a price of $6.70 per warrant.  This transaction represents the final step in the CPP redemption process and the U.S. Treasury no longer owns any securities issued by First Financial.

During February 2010, First Financial successfully completed a follow-on equity offering and, after deducting underwriting and other offering costs, received net proceeds of $91.2 million.  Following the offering, First Financial used most of the net proceeds to redeem all of the $80 million in senior preferred shares issued to the U.S. Treasury in December 2008.

ACQUISITIONS

Subsequent Events

The Irwin and Peoples acquisitions were considered business combinations and accounted for under FASB Codification Topic 805: Business Combinations (“Topic 805”), FASB Codification Topic 820: Fair Value Measurements and FASB Codification Topic 310-30: Loans and Debt Securities Acquired with Deteriorated Credit Quality.  All acquired assets and liabilities were recorded at their estimated fair values as of the date of acquisition and identifiable intangible assets were recorded at their estimated fair value.

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

Certain reclassifications of prior periods’ amounts may also be made to conform to the current period’s presentation and would have no effect on previously reported net income amounts.

Integration

During the first quarter 2010, the Company successfully completed the technology conversion and operational integration of Irwin.  In total, 27 Irwin banking centers were acquired in the FDIC transaction including ten locations in the western part of the United States that were considered to be acquired-non-strategic.  In late December 2009, the Company closed the St. Louis, Missouri location and during the first quarter 2010 seven additional branches were closed.  In the aggregate, the two remaining western locations had $139.6 million in unpaid principal balances on loans and $104.4 million in deposits as of June 30, 2010. The Company expects to exit these two remaining markets on or about September 30, 2010.

While the technology and operational integration of Irwin and Peoples is complete, it is expected that there will be additional integration-related costs incurred throughout 2010.

SECTION II – SUPPLEMENTAL INFORMATION ON COVERED ASSETS AND ACQUISITION-RELATED ITEMS

Due to the FDIC-assisted transactions and other acquisitions occurring during 2009, the size of First Financial’s business expanded significantly.  To assist in analyzing the effect of these transactions on the financial results, supplemental information that segregates the estimated impact on pre-tax earnings of certain acquisition-related items and provides additional detail on the covered loan portfolio follows.

SUMMARY OF SIGNIFICANT ACQUISITION-RELATED ITEMS

The following table illustrates the estimated effect certain acquisition-related items had on the results of operations for the three months ended June 30, 2010, March 31, 2010 and December 31, 2009.

When unpaid covered loan principal balances decrease faster than expected, which could occur either through a loan sale, any prepayment by the borrower, either in full or in part, or is charged-off, the remaining or pro rata carrying value of the rate-based valuation mark is recognized as noninterest income.  The carrying value of the credit-based valuation mark impacts both noninterest income and noninterest expense.  When covered loan balances paydown early, again through either a loan sale or prepayments by the borrower, and credit experience is better than originally estimated, the remaining carrying value is recognized as noninterest income, net of a corresponding valuation adjustment on the FDIC indemnification asset.  However, when losses are incurred on covered loans that exceed the initial estimate, the Company will recognize noninterest expense representing its proportional share of the unanticipated losses.

The Company did not conduct any material acquired-non-strategic loan sales during the second quarter 2010.  During the first quarter 2010, First Financial sold $21.2 million of acquired-non-strategic western market covered loans at 100% of their UPB, resulting in the acceleration of income of which $1.6 million pertained to the rate-based valuation mark and $295,000 pertained to the credit-based valuation mark.

COVERED ASSETS & LOSS SHARE AGREEMENTS

As of June 30, 2010, 38.0% of the Company’s total loans were covered loans.  As required under the loss-share arrangements, First Financial must file monthly certifications with the FDIC on single-family residential loans and quarterly certifications on all other loans.  To date, all certifications have been filed in a timely manner and without significant issues.

COVERED LOAN PORTFOLIO

The following table presents estimated activity in the covered loan portfolio by loan type during the second quarter 2010.

During the second quarter 2010, the total balance of covered loans decreased $115.7 million, or 6.3%, as compared to the previous quarter.  Of this decrease, $49.5 million, or 2.7%, was attributable to prepayments and $53.4 million, or 2.9%, related to repayments in accordance with contractual obligations.  The remaining decrease related to credit losses in excess of the credit-based valuation mark.  Credit experience to date related to covered loans is nominally better than the Company’s expectations.

The Company established an allowance for loan losses of $1.3 million associated with covered loans during the second quarter 2010 based upon its most recent impairment analysis.  Of this total reserve, $0.3 million, or 20%, was recognized as a non-cash provision expense and the remaining $1.0 million, or 80%, was recorded as an increase to the FDIC indemnification asset representing the portion of loss reimbursement expected from the FDIC under the loss sharing agreement.  On an after-tax basis, the non-cash provision expense had an immaterial impact on diluted earnings per share for the second quarter 2010.

Under the applicable accounting guidance, impairment is generally recognized in the current period as provision expense while improvement in the credit outlook is not recognized immediately but instead is reflected as a loan yield adjustment on a prospective basis.  The timing inherent in this accounting treatment may result in earnings volatility in future periods.

Teleconference / Webcast Information

First Financial’s senior management will host a conference call to discuss the Company’s financial and operating results on Wednesday, August 4, 2010 at 9:00 a.m.  Members of the public who would like to listen to the conference call should dial (877) 317-6789 (U.S. toll free), (866) 605-3852 (Canada toll free) or +1 (412) 317-6789 (International) (no passcode required).  The number should be dialed five to ten minutes prior to the start of the conference call.  The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company’s website at www.bankatfirst.com/investor.  A replay of the conference call will be available beginning one hour after the completion of the live call through August 19, 2010 at (877) 344-7529 (U.S. toll free) and +1 (412) 317-0088 (International); conference number 442890.  The webcast will be archived on the Investor Relations section of the Company’s website through August 4, 2011.

Press Release and Additional Information on Website

This press release as well as the Company’s most recent Investor Presentation is available to the public through the Investor Relations section of First Financial’s website at www.bankatfirst.com/investor.

Forward-Looking Statement

Certain statements contained in this news release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the ‘‘Act’’). In addition, certain statements in future filings by us with the SEC, in press releases, and in oral and written statements made by or with our approval which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to, projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure and other financial items, statements of plans and objectives of us or our management or board of directors, and statements of future economic performances and statements of assumptions underlying such statements. Words such as ‘‘believes’’, ‘‘anticipates’’, ‘‘intends’’, and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

• management’s ability to effectively execute its business plan; the risk that the strength of the United States economy in general and the strength of the local economies in which we conduct operations may continue to deteriorate resulting in, among other things, a further deterioration in credit quality or a reduced demand for credit, including the resultant effect on our loan portfolio, allowance for loan and lease losses and overall financial performance;
• the ability of financial institutions to access sources of liquidity at a reasonable cost; the impact of recent upheaval in the financial markets and the effectiveness of domestic and international governmental actions taken in response, including in connection with recent sovereign debt related matters and the high degree of volatility in U.S. and foreign capital markets, and the effect of such governmental actions on us, our competitors and counterparties, financial markets generally and availability of credit specifically, and the U.S. and international economies, including increased payments from Federal Depository Insurance Company (‘‘FDIC’’) insurance funds;
• the effect of legislative proposals that are currently pending in Congress and regulatory actions affecting the financial services industry generally or our operations;
• the effects of and changes in policies and laws of regulatory agencies, inflation and interest rates;
• technology changes;
• mergers and acquisitions, including costs or difficulties related to the integration of acquired companies, including our ability to successfully integrate the branches of Peoples Community Bank, Irwin Union Bank and Trust Company and Irwin Union Bank, F.S.B., which were acquired out of FDIC receivership;
• the risk that exploring merger and acquisition opportunities may detract from management’s time and ability to successfully manage our business;
• expected cost savings in connection with the consolidation of recent acquisitions may not be fully realized or realized within the expected time frames, and deposit attrition, customer loss and revenue loss following completed acquisitions may be greater than expected;
• our ability to increase market share and control expenses;
• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as the Financial Accounting Standards Board and the SEC; adverse changes in the securities and debt markets;
• our success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services;
• monetary and fiscal policies of the Board of Governors of the Federal Reserve System (the ‘‘Federal Reserve’’) and the U.S. government and legislative, regulatory and other governmental initiatives affecting the financial services industry;
• our ability to manage loan delinquency and charge-off rates and changes in estimation of the adequacy of the allowance for loan losses; and
• the costs and effects of litigation and of unexpected or adverse outcomes in such litigation.

In addition, please refer to our Annual Report on Form 10-K for the year ended December 31, 2009, our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010, as well as our other filings with the SEC, for a more detailed discussion of these risks and uncertainties and other factors. Such forward-looking statements are meaningful only on the date when such statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such a statement is made to reflect the occurrence of unanticipated events.

About First Financial Bancorp

First Financial Bancorp is a Cincinnati, Ohio based bank holding company.  As of June 30, 2010, the Company had $6.6 billion in assets, $4.4 billion in loans, $5.2 billion in deposits and $707 million in shareholders’ equity.  The Company’s subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and financial services products through its three lines of business: Commercial, Retail and Wealth Resource Group.  The Commercial and Retail units provide traditional banking services to business and consumer clients and the Wealth Resource Group provides financial planning, investment management, trust & estate, brokerage, insurance and retirement plan services and had approximately $2.2 billion in assets under management as of June 30, 2010.  The Company’s strategic operating markets are located in Ohio, Indiana, Kentucky and Michigan where it operates 113 banking centers across 75 communities.  Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.

SOURCE First Financial Bancorp