First Financial Bancorp Reports First Quarter 2011 Financial Results

CINCINNATI, April 27, 2011 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced today financial and operational results for the first quarter 2011.

First quarter 2011 net income and net income available to common shareholders were $17.2 million and earnings per diluted common share were $0.29.  This compares with fourth quarter 2010 net income and net income available to common shareholders of $14.3 million and earnings per diluted common share of $0.24 and 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.  

• 82nd consecutive quarter of profitability
• Continued strong performance
  • Quarterly return on average assets of 1.11%
  • Quarterly return on risk-weighted assets of 2.07%
  • Quarterly return on average shareholders' equity of 10.04%
• Significant core deposit growth
  • Strategic commercial and retail transaction and savings deposits increased $109.1 million during the quarter
  • 20.2% growth in average savings account balance compared to the first quarter 2010
• Capital ratios remain strong as a result of earnings power
  • Tangible common equity to tangible assets of 10.40%
  • Tier 1 capital ratio of 20.49%
  • Total risk-based capital of 21.77%
• Quarterly net interest margin increased to 4.73%
  • Improved cash flow expectations on acquired loans continues to enhance yield on portfolio
  • $161.1 million of liquidity redeployed in investment securities
  • Cost of deposits declined 9 bps due to continued emphasis on core transaction and savings accounts
• Continued improvement in credit metrics
  • Net loan charge-offs declined to $4.2 million from $9.8 million, or 57%, compared to the fourth quarter 2010
  • Total classified assets decreased $16.4 million, or 8.1%, compared to the linked quarter
  • Delinquent loans 30-to-89 days past due declined 8.8% quarter-over-quarter
• Balance sheet risk continues to remain low
  • FDIC loss share coverage on 32.5% of loan portfolio
  • 100% risk-weighted assets continue to represent less than 50% of balance sheet

Claude Davis, President and Chief Executive Officer, commented, "We are pleased to report another quarter of strong performance, driven by lower credit costs.  While the economic environment is still in a state of uncertainty, we began to see positive trends as our levels of classified assets and delinquencies declined and net charge-offs dropped substantially.  

"Our core deposit balances continued to grow as a result of the strong sales efforts by our commercial, treasury management and retail teams.  We have been successful in building the First Financial brand across our strategic footprint, enabling us to continually shift our deposit mix towards lower cost core transactional and savings accounts as retail and brokered CDs from our FDIC transactions mature.  Consequently, our total cost of deposits dropped to 90 bps from 99 bps in the prior quarter and 117 bps in the first quarter 2010.

"Loan demand continued to be low in our strategic markets due to the lingering effects of the recession as average loan balances were essentially flat and we experienced slight quarter-over-quarter period end declines in most product categories.  However, we continue to be active in our sales and calling efforts and were encouraged as originations increased toward the end of the first quarter in several categories and our pipeline across all product lines is growing.

"One of our strategic goals for 2011 is to continue our focus on improving efficiency and managing costs while still providing the high level of service First Financial clients have come to expect.  During the quarter, we completed our previously announced exit of the Michigan and Louisville, Kentucky markets involving the closure of five banking centers.  We also completed a branch consolidation plan under which seven banking centers in our strategic footprint were closed with the client relationships transferred to a nearby location.  We have already begun to realize the benefits of cost management initiatives implemented in 2010 as our noninterest expenses, excluding the impact of non-strategic operations and other items not expected to recur, decreased over 15% on an annualized basis compared to the fourth quarter 2010."

SECTION I – RESULTS OF OPERATIONS

NET INTEREST INCOME

Net interest income on a fully tax-equivalent basis for the first quarter 2011 was $67.6 million as compared to $68.1 million for the fourth quarter 2010 and $72.2 million as compared to the year-over-year period.  During the first quarter 2011, net interest income was flat as the decline in interest income earned on loans resulting from lower covered loan balances was generally offset by an increase in interest earned on investments as a result of redeploying liquidity and lower interest expense on deposits. The decrease compared to the year-over-year quarter was primarily driven by the 24.8% decline in average covered loan balances and the reduced yield on the FDIC indemnification asset, offset partially by lower funding costs as a result of the continued runoff of higher cost time deposits and the prepayment of $232 million of FHLB advances during the third quarter 2010.

NET INTEREST MARGIN

Net interest margin was 4.73% for the first quarter 2011 as compared to 4.65% for the fourth quarter 2010 and 4.89% for the first quarter 2010.  As in prior quarters, the net interest margin continued to be negatively impacted by the combination of normal amortization and paydowns in the acquired loan portfolio.  However, the Company continued to use a significant portion of its liquidity to purchase investment securities, totaling $161.1 million during the quarter, and realized a full quarter's impact of $182.4 million of investment purchases that settled during the last two weeks of the fourth quarter 2010, helping to offset the margin decline from lower loan balances.  Net interest margin also benefited from an improvement in cash flow expectations related to certain loan pools in the acquired loan portfolio as discussed in more detail in Section II.  Additionally, net interest margin was positively impacted by the expected runoff of retail and brokered certificates of deposit and disciplined pricing across all deposit product lines.

NONINTEREST INCOME

The following table presents noninterest income for the three months ended March 31, 2011, December 31, 2010 and March 31, 2010 highlighting the estimated impact of covered loan activity and other transition items on the Company's reported balance.

During the quarterly periods presented above, excluding reimbursements due from the FDIC resulting from loss share agreements, covered loan activity continued to positively impact noninterest income due to loan sales and prepayments.  This activity is discussed in more detail in Section II.  

Excluding the items highlighted in Table I, estimated noninterest income earned in the first quarter 2011 was $14.9 million as compared to $16.0 million in the fourth quarter 2010 and $12.8 million in the first quarter 2010.  The primary reasons for the decrease related to the linked quarter were lower service charges on deposits, gain on sale from residential mortgage originations, bankcard income and other miscellaneous income; offset partially by higher trust and wealth management fees.

NONINTEREST EXPENSE

The following table presents noninterest expense for the three months ended March 31, 2011, December 31, 2010 and March 31, 2010 including the estimated effect of acquired-non-strategic operations, acquisition-related costs and other transition items.    

Noninterest expense continued to be affected by items related to the Company's acquired-non-strategic operations, as discussed in more detail in Section II.  Included in other items not expected to recur was a $3.1 million write-down of an OREO property related to the legacy portfolio, which is discussed further in Credit Quality – Excluding Covered Assets below.

Excluding the items highlighted in Table II, estimated noninterest expense in the first quarter 2011 was $45.7 million as compared to $47.6 million in the fourth quarter 2010 and $47.5 million in the first quarter 2010.  The decrease in noninterest expenses compared to the linked quarter were primarily driven by lower salaries and benefits, data processing costs, marketing and communications expenses and professional services fees; offset by an increase in occupancy costs and FDIC expense.

While the technology and operational integration of Irwin and Peoples is complete, it is expected that wind-down costs related to acquired subsidiaries will continue through 2011.

INCOME TAXES

For the first quarter 2011, income tax expense was $9.3 million, resulting in an effective tax rate of 35.2%, compared with income tax expense of $8.1 million and an effective tax rate of 36.2% during the fourth quarter 2010 and $6.3 million and an effective tax rate of 35.0% during the comparable year-over-year period.

CREDIT QUALITY – EXCLUDING COVERED ASSETS

The following table presents certain credit quality metrics related to the Company's uncovered loan portfolio as of March 31, 2011 and for the trailing four quarters.

Net Charge-offs

First quarter 2011 net charge-offs were $4.2 million, or 0.61% of average loans and leases, compared with $9.8 million, or 1.39%, for the linked quarter and $14.0 million, or 2.00%, for the comparable year-over-year quarter.  Included in the first quarter 2010 total net charge-off amount was $8.8 million related to alleged fraudulent activity noted in prior periods', representing 125 basis points of average loans and leases.  Excluding this activity, net charge-offs for the period totaled $5.2 million, or 75 basis points of average loans and leases.  

Nonperforming Assets

Nonperforming loans totaled $80.6 million and nonperforming assets totaled $95.5 million as of March 31, 2011 compared with $79.9 million and $97.8 million, respectively, for the linked quarter and $74.5 million and $92.5 million, respectively, for the comparable year-over-year quarter.  The decrease in nonperforming assets relative to the linked quarter was driven primarily by a reduction in OREO.  During the quarter, the Company recognized a reduction in value of $3.1 million related to vacant land obtained from a commercial real estate developer.  Prior to the write-down, this property was the largest single item in OREO and subsequently has a remaining exposure of $3.4 million, or 22.8% of the total OREO balance.

Total classified assets decreased $16.4 million, or 8.1%, during the first quarter 2011 to $185.7 million.  Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.  The reduction was the result of resolution strategies outpacing growth in downgraded loans during the quarter, due primarily to the combination of ongoing efforts in working with stressed borrowers and noting pockets of stabilization within the Company's strategic markets.

While the Company has experienced positive migration patterns in its level of classified assets and delinquent loans, economic factors and market conditions within the Company's strategic markets remain challenging.  Borrowers continue to experience stress and valuations on real estate loan collateral and OREO will continue to impact restructurings and resolutions.  If recent progress made by the economy reverses and begins demonstrating recession-like characteristics, the Company's portfolio will likely reflect that deterioration.

Delinquent Loans

As of March 31, 2011, loans 30-to-89 days past due declined 8.8% to $20.4 million, or 0.73% of period end loans, from $22.3 million, or 0.79% of period end loans, as of December 31, 2010.  The first quarter 2011 balance also declined 9.8% from $22.6 million, or 0.80% of period end loans, for the comparable year-over-year quarter.  During the quarter, the improvement in delinquency rates was realized across almost all the Company's portfolios with only the commercial real estate book experiencing a small increase in past due loans.

Provision for Loan & Lease Losses

First quarter 2011 provision expense related to uncovered loans and leases was $647,000 as compared to $9.7 million during the linked quarter and $11.4 million during the comparable year-over-year quarter.  Provision expense, which is a result of the Company's modeling efforts to estimate the period end allowance for loan and lease losses, decreased relative to the linked quarter primarily as a result of positive migration trends in classified assets and delinquencies as well as the impact on the loan portfolio of improving macro-economic trends.

Allowance for Loan & Lease Losses

As of the end of the first quarter 2011, the allowance for uncovered loan and lease losses was $53.6 million as compared to $57.2 million as of December 31, 2010 and $56.6 million as of March 31, 2010.  As a percentage of period-end loans, the allowance for loan and lease losses was 1.93% as of March 31, 2011 as compared to 2.03% as of December 31, 2010 and 2.01% as of March 31, 2010.  The allowance for loan and lease losses as of March 31, 2011 reflects management's estimate of credit risk inherent in the Company's uncovered loan portfolio at that time.

LOANS (EXCLUDING COVERED LOANS)

The following table presents the loan portfolio, not including covered loans, as of March 31, 2011, December 31, 2010 and March 31, 2010.

Loans, excluding covered loans, totaled $2.8 billion at the end of the first quarter, representing a decrease of $35.0 million, or 1.2%, compared to December 31, 2010 and a decrease of $34.5 million, or 1.2%, compared to March 31, 2010.  The composition of the loan portfolio remained similar to the linked quarter with slight net declines occurring in all portfolios except lease financing, which is a relatively new product line for the Company.  Loan demand remains a challenge in the Company's strategic operating markets due to uncertainty in the economic environment.

INVESTMENTS

The following table presents a summary of the total investment portfolio at March 31, 2011.

The increase in the investment portfolio as compared to the linked quarter was due to the purchase of $161.1 million of agency mortgage backed securities during the quarter, net of maturities and amortizations.  The growth in the investment portfolio relative to both the linked and year-over-year quarters is primarily due to the investment of liquidity resulting from continued muted loan demand and deposit inflows.  The addition of short and long-term securities was executed in conjunction with the Company's overall asset/liability structure and interest rate risk modeling activities, and, to a lesser extent, market and rate expectations.  As in past quarters, First Financial has avoided adding to its portfolio any particular securities that would materially increase credit risk or geographic concentration risk.  The Company does, however, include these risks in its total evaluation of current market opportunities that would enhance the overall performance of the portfolio.

DEPOSITS

The following table presents a roll-forward of deposit activity during the first quarter 2011, including activity related to deposits acquired through the FDIC-assisted transactions.

Strategic transaction and savings accounts increased $249.4 million during the first quarter 2011, driven by $140.4 million of seasonal growth in public funds accounts and an increase of $109.1 million in business and retail transactional and savings accounts.  Average savings account balances continued to grow, increasing 6.4% during the first quarter 2011 as compared to the linked quarter.  The decline in acquired-non-strategic transaction and savings accounts was primarily driven by activity in the recently exited markets of Michigan and Louisville.  As in prior quarters', acquired-non-strategic time deposit and brokered deposit balances continued to decline.

CAPITAL MANAGEMENT

The following table presents First Financial's regulatory and other capital ratios as of March 31, 2011, December 31, 2010 and March 31, 2010.

Capital levels increased during the first quarter 2011 as a result of the strong earnings performance, supporting the 20% increase in the quarterly dividend paid compared to the linked quarter.  Regulatory capital ratios benefited additionally from a decline in risk-weighted assets.  As of March 31, 2011, tangible book value per common share was $11.17 compared to $11.02 as of December 31, 2010 and $10.53 as of March 31, 2010.  Regulatory capital ratios as of March 31, 2011 are considered preliminary pending the filing of the Company's regulatory reports.

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

To assist in analyzing the effect of the Company's 2009 FDIC assisted 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 of certain acquisition-related items on the results of operations for the three months ended March 31, 2011, December 31, 2010 and March 31, 2010.

ACCELERATED DISCOUNT ON LOAN PREPAYMENTS AND DISPOSITIONS

During the first quarter 2011, First Financial recognized approximately $5.8 million in accelerated discount from acquired loans.  Accelerated discount is recognized when acquired loans, which are recorded on the Company's balance sheet at an amount less than the unpaid principal balance, prepay at an amount greater than their recorded book value.  Prepayments can occur either through customer driven payments before the maturity date or loan sales.  The amount of discount attributable to the credit loss component of each loan varies and the recognized amount is offset by a related reduction in the FDIC Indemnification Asset.  The Company sold covered loans associated with the exited market of Michigan during the quarter with a carrying value of $36.8 million.  These loans were sold at 100% of the unpaid principal balance and represented $3.1 million of the total accelerated discount noted above.  The remaining $2.7 million of accelerated discount was due to covered loan prepayments during the quarter.

OPERATING EXPENSES AND OTHER ACQUISITION-RELATED COSTS

Acquired-non-strategic operating expenses remained consistent with the linked quarter as staffing and facilities costs associated with the exited markets of Michigan and Louisville, KY were incurred through the closing date of March 31, 2011 for the respective branches.  However, expenses related to transition-related items and acquisition-related costs continued to decline as planned.

NET INTEREST MARGIN IMPACT

Net interest margin is affected by certain activity related to the acquired loan portfolio.  The majority of these loans are accounted for under ASC Topic 310-30 and, as such, the Company is required to periodically update its forecast of expected cash flows from these loans.  The Company recognized an improvement in the cash flow expectations related to certain loan pools, which is reflected as a yield adjustment on a prospective basis.  However, this yield improvement will be partially offset as the Company also recognized a decline in expected cash flows, and, hence, a lower prospective yield, related to the FDIC indemnification asset.

The following table shows the estimated yield earned by the Company on its legacy and originated loan portfolio, acquired loan portfolio and the FDIC indemnification asset for the three months ended March 31, 2011.

As part of its on-going valuation procedures, the Company experienced a $20.7 million net improvement in the cash flow expectations related to certain loan pools during the first quarter 2011.  As a result, the average yield earned on covered loans increased from 10.29% during the fourth quarter 2010 to 10.97% during the first quarter 2011.  On a prospective basis and until its next periodic valuation, the Company expects the yield on covered loans to be 11.53%.

This projected improvement in cash flow expectations on loans is partially offset by a related decline in cash flow expectations on the FDIC indemnification asset which is recognized through its yield.  The net result of improvement and impairment activity related to covered loans affected the average yield earned on the indemnification asset, decreasing from 0.40% during the fourth quarter 2010 to -2.28% during the first quarter 2011.  On a prospective basis and until its next periodic valuation, the Company expects the yield on the indemnification asset to be -3.07%.

COVERED ASSETS & LOSS SHARE AGREEMENTS

As of March 31, 2011, 32.5% 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.

When losses are incurred on covered assets that exceed expectations, the Company recognizes the gross credit losses in excess of the valuation mark as either provision expense if related to loans or noninterest expense if related to OREO.  Reimbursements due from the FDIC under loss share agreements related to these credit losses are recorded as noninterest income.  As such, the net impact on earnings is the difference between the gross credit losses and FDIC reimbursements, representing the Company's proportionate share of the credit losses realized on covered assets.

COVERED LOAN PORTFOLIO

The following table presents estimated activity in the covered loan portfolio by loan type during the first quarter 2011.

During the first quarter 2011, the total balance of covered loans decreased $145.5 million, or 9.8%, as compared to the previous quarter.  Loans with coverage removed represent loans to primarily high quality borrowers involving a change in loan terms which caused the respective loans to no longer qualify for reimbursement from the FDIC in the event of credit losses.

ALLOWANCE FOR LOAN LOSSES

Under the applicable accounting guidance, the allowance for loan losses related to covered loans is a result of impairment identified in on-going valuation procedures and is generally recognized in the current period as provision expense.  Improvement in the credit outlook is generally not recognized immediately but instead is reflected as an adjustment to the yield earned on the related loan pools on a prospective basis.  However, if improvement is noted in a loan pool that had previously experienced impairment, the amount of improvement is recognized as a reduction to the applicable period's provision expense.  Additional improvement beyond previously recorded impairment is reflected as a yield adjustment on a prospective basis.  The timing inherent in this accounting treatment may result in earnings volatility in future periods.

The Company has established an allowance for loan losses associated with covered loans based on estimated valuation procedures performed each quarter.  As a result of net impairment identified in certain loan pools of $15.0 million and net charge-offs of $11.0 million during the first quarter, it recognized a provision expense related to covered loans of $26.0 million, resulting in an allowance for covered loan losses of $31.6 million as of March 31, 2011.  The related receivable due from the FDIC under loss share agreements related to these loans of $23.4 million was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset.

Loss share and covered asset expense consists primarily of a $3.1 million loss related to covered other real estate owned ("OREO"), approximately 80% of which will be reimbursed under loss share agreements with the FDIC.  

SUMMARY OF ACQUISITIONS

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".  Definitions of the business categories and other financial items related to the acquisitions can be found below in "Glossary of Terms".  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.

Accelerated discount on covered loans – The acceleration of the unrealized valuation discount.  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 valuation discount.

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.

Teleconference / Webcast Information

First Financial's senior management will host a conference call to discuss the Company's financial and operating results on Thursday, April 28, 2011 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.  A replay of the conference call will be available beginning one hour after the completion of the live call through May 12, 2011 at (877) 344-7529 (U.S. toll free) and +1 (412) 317-0088 (International); conference number 447697.  The webcast will be archived on the Investor Relations section of the Company's website through April 27, 2012.

Press Release and Additional Information on Website

This press release as well as supplemental information related to this release is available to the public through the Investor Relations section of First Financial's website at www.bankatfirst.com/investor.

Forward-Looking Statements

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 First Financial with the SEC, in press releases, and in oral and written statements made by or with the approval of First Financial 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 First Financial or its management or board of directors, and statements of future economic performances and statements of assumptions underlying such statements.  Words such as ''believes'', ''anticipates'', "likely", "expected", ''intends'', and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Management's analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance.  However, such performance involves risks and uncertainties that may cause actual results to differ materially.  Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

• management's ability to effectively execute its business plan;
• the risk that the strength of the United States economy in general and the strength of the local economies in which we conduct operations may continue to deteriorate resulting in, among other things, a further deterioration in credit quality or a reduced demand for credit, including the resultant effect on our loan portfolio, allowance for loan and lease losses and overall financial performance;
• the ability of financial institutions to access sources of liquidity at a reasonable cost;
• the impact of recent upheaval in the financial markets and the effectiveness of domestic and international governmental actions taken in response, such as the U.S. Treasury's TARP and the FDIC's Temporary Liquidity Guarantee Program, and the effect of such governmental actions on us, our competitors and counterparties, financial markets generally and availability of credit specifically, and the U.S. and international economies, including potentially higher FDIC premiums arising from increased payments from FDIC insurance funds as a result of depository institution failures;
• the effect of and changes in policies and laws or regulatory agencies (notably the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act);
• inflation and possible changes in interest rates;
• our ability to keep up with technological changes;
• our ability to comply with the terms of loss sharing agreements with the FDIC;
• mergers and acquisitions, including costs or difficulties related to the integration of acquired companies and the wind-down of non-strategic operations that may be greater than expected;
• the risk that exploring merger and acquisition opportunities may detract from management's time and ability to successfully manage our company;
• expected cost savings in connection with the consolidation of recent acquisitions may not be fully realized or realized within the expected time frames, and deposit attrition, customer loss and revenue loss following completed acquisitions may be greater than expected;
• our ability to increase market share and control expenses;
• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as the Financial Accounting Standards Board and the SEC;
• adverse changes in the securities and debt markets;
• our success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services;
• monetary and fiscal policies of the Board of Governors of the Federal Reserve System (Federal Reserve) and the U.S. government and other governmental initiatives affecting the financial services industry;
• our ability to manage loan delinquency and charge-off rates and changes in estimation of the adequacy of the allowance for loan losses; 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, 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 First Financial undertakes 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 March 31, 2011, the Company had $6.3 billion in assets, $4.1 billion in loans, $5.2 billion in deposits and $708 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 management.  The commercial and retail units provide traditional banking services to business and consumer clients.  First Financial Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.4 billion in assets under management as of March 31, 2011.  The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 102 banking centers.  Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.

SOURCE First Financial Bancorp