FIRST FINANCIAL BANCORP /OH/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - FIRST FINANCIAL BANCORP /OH/	a8kearningsrelease1q13.htm
EX-99.2 - EXHIBIT 99.2 - FIRST FINANCIAL BANCORP /OH/	exh992earningsrelease1q1.htm

EXHIBIT 99.1

First Financial Bancorp Reports First Quarter 2013 Financial Results

Cincinnati, Ohio - April 24, 2013 - First Financial Bancorp (Nasdaq: FFBC) (“First Financial” or the “Company”) announced today financial and operational results for the first quarter 2013.

First quarter 2013 net income was $13.8 million and earnings per diluted common share were $0.24. This compares with fourth quarter 2012 net income of $16.3 million and earnings per diluted common share of $0.28 and first quarter 2012 net income of $17.0 million and earnings per diluted common share of $0.29.

During the quarter, the Company incurred certain pre-tax expenses resulting from its efficiency initiative and other staffing-related changes of $2.9 million. Approximately $1.2 million was related to employee benefit expenses associated with staffing reductions and $1.7 million was related to real estate expenses associated with previously announced banking center consolidation and closure plans. Additionally, $0.4 million was recognized due to an isolated fraud loss. The Company also recognized pre-tax gains of $1.5 million resulting from sales of investment securities. In the aggregate, these items had a negative impact on pre-tax earnings of $1.7 million, or $0.02 per diluted share after taxes.

The board of directors has authorized a regular dividend of $0.15 per common share and a variable dividend of $0.09 per common share for the next regularly scheduled dividend, payable on July 1, 2013 to shareholders of record as of May 31, 2013. This is a continuation of the 100% dividend payout ratio first announced in the second quarter 2011 and is expected to continue through 2013 unless the Company's capital position materially changes or capital deployment opportunities arise.

Under the announced share repurchase plan, the Company repurchased 249,000 shares during the first quarter at an average price of $15.39 per share. When combined with the regular and variable dividends paid to shareholders, First Financial returned 144.5% of quarterly net income to shareholders during the first quarter. Additionally, the Company has repurchased 87,400 shares during the second quarter 2013 at an average price of $15.65 per share.


▪	90^th consecutive quarter of profitability


▪	Quarterly adjusted pre-tax, pre-provision income of $25.3 million, or 1.60% of average assets


▪	Continued solid quarterly performance


•	Return on average assets of 0.88%; 0.95% as adjusted for the items noted above


•	Return on average tangible common equity of 9.24%; 9.96% as adjusted for the items noted above


▪	Capital ratios remain strong


•	Tangible common equity to tangible assets of 9.60%


•	Tier 1 capital ratio of 15.87%


•	Total risk-based capital ratio of 17.15%


▪	Solid progress on efficiency initiative


•	Net of expenses covered under loss sharing agreements and those highlighted above, noninterest expense declined $2.6 million compared to the linked quarter


•	Annualized run rate savings of $12.5 million to date and in line with previously disclosed estimates on 2013 realization


▪	Quarterly net interest margin of 4.04%


•	Decline of 7 bps compared to the linked quarter excluding a $2.2 million prepayment fee recognized during the fourth quarter 2012


•	Cost of interest-bearing deposits declined 8 bps during the quarter to 0.41%


•	Yield on uncovered loan portfolio declined 13 bps to 4.60% due to mix of new originations


▪	Total uncovered loan portfolio growth of 8.9% on an annualized basis


•	Strong performance in traditional C&I, commercial real estate and construction lending with solid contributions from residential mortgage and specialty finance


•	Uncovered loan growth exceeded the covered loan decline for the second consecutive quarter as total loans increased $9.5 million


▪	Net charge-offs declined $2.8 million, or 52.6%, compared to the linked quarter and totaled 32 bps of average uncovered loans for the quarter on an annualized basis

Claude Davis, President and Chief Executive Officer, commented, “Our results for the first quarter were impacted by expenses related to implementation of our efficiency initiative as well as seasonal and timing effects related to certain sources of fee revenue. Net of these items, our operating performance was solid given the continued slow pace of economic recovery throughout our markets. We were pleased with the progress we made on reducing operating costs as adjusted noninterest expense declined $2.6 million, or 5.1%, compared to the linked quarter. We feel confident that we remain on track to achieve 85% realization of the $17.1 million in announced annualized savings during 2013. Furthermore, as we execute on the current initiatives, we are identifying additional areas for improvement above the previously disclosed target.

“For the second consecutive quarter, growth in the uncovered loan portfolio outpaced the decline in covered loan balances as total loan balances increased $9.5 million. The uncovered loan portfolio totaled $3.2 billion at quarter end, representing growth of $69.8 million, or 8.9% on an annualized basis, compared to the prior quarter and $285.3 million, or 9.6%, compared to balances one year ago. Growth during the quarter was driven by strong performance in our traditional C&I and owner-occupied commercial real estate portfolios as well as in construction and residential mortgage lending. Additionally, we continued to gain traction in Indianapolis and Dayton as these markets contributed almost 42% of the quarterly growth.

“We were also pleased with our ability to defend net interest income and net interest margin in light of the continued low interest rate environment. Excluding the prepayment fee we recognized in the fourth quarter 2012, net interest income declined a modest $1.1 million, or 1.8%, and net interest margin declined 7 bps to 4.04% during the first quarter. Investment portfolio yields were relatively stable quarter-over-quarter and deposit costs continued to decline, helping to offset a decrease in yields earned on our uncovered loan portfolio. As the rates on loans that paid off during the quarter exceeded new production yields by 79 bps, our ability to generate net loan growth was a key factor in mitigating net interest income and margin compression.

“Our wealth management business had a strong quarter as total assets under management increased over 10% to $2.6 billion driven primarily by the signature win of a large new retirement plan services client relationship. The new assets came on board late in the quarter and as we continue to refine our strategies and product offerings, we have built a strong pipeline of new business opportunities in this business line and feel optimistic about our growth prospects.”

NET INTEREST INCOME AND NET INTEREST MARGIN

Net interest income for the first quarter 2013 was $58.7 million as compared to $62.0 million for the fourth quarter 2012 and $66.7 million for the year-over-year period. Compared to the linked quarter, total interest income declined $4.1 million, or 6.1%, and total interest expense declined $0.8 million, or 14.0%. Net interest margin was 4.04% for the first quarter 2013 as compared to 4.27% for the fourth quarter 2012 and 4.51% for the first quarter 2012.

Interest income earned on loans decreased $4.4 million, or 7.2%, compared to the prior quarter. Excluding a prepayment fee of $2.2 million that was recognized in the fourth quarter 2012, interest income earned on loans decreased $2.2 million, or 3.7%, and net interest income decreased $1.1 million, or 1.8%, during the first quarter 2013. Additionally, excluding this prepayment fee, net interest margin declined 7 bps compared to the linked quarter. The lower interest income earned on loans and decline in net interest margin was driven primarily by an 8.8% decrease in the average balance of covered loans outstanding, partially offset by an increase in the yield earned on the portfolio.

Growth in average uncovered loan balances of $95.0 million, or 3.1% on a linked quarter basis, helped to partially offset the impact from the runoff in covered loans during the quarter. However, a decline in the yield earned on the uncovered loan portfolio of 13 bps and lower loan fees, both adjusted for the prepayment fee recognized in the prior quarter, muted the impact of the increase in uncovered loan balances.

Interest income earned from investment securities increased as a result of a $91.8 million, or 5.3%, increase in average balances compared to the linked quarter. However, the impact on net interest margin was modestly offset as the portfolio yield declined 1 bp to 1.98% as investment rates remain low in the current environment.

Interest expense and net interest margin continued to benefit from declining deposit costs. The average balance of interest-bearing deposits declined 3.3% compared to the prior quarter, driven by a $72.1 million, or 6.4%, decrease in average time deposit balances during the quarter. The cost of funds related to interest-bearing deposits decreased 8 bps to 41 bps compared to 49 bps for the linked quarter.

NONINTEREST INCOME

The following table presents noninterest income for the three months ended March 31, 2013 and for the trailing four quarters, adjusted to exclude the impact of covered loan activity and other selected items on the Company's reported balance.




Table I
	For the Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
(Dollars in thousands)	2013		2012		2012		2012		2012

Total noninterest income	$	26,698	$	26,121	$	30,830	$	33,545	$	31,925
Selected components of noninterest income
Accelerated discount on covered loans¹	1,935		2,455		3,798		3,764		3,645
FDIC loss sharing income	8,934		5,754		8,496		8,280		12,816
Gain on sale of investment securities	1,536		1,011		2,617		—		—
Other items not expected to recur	—		—		—		5,000		—
Total noninterest income excluding items noted above	$	14,293	$	16,901	$	15,919	$	16,501	$	15,464

¹ Net of the corresponding valuation adjustment on the FDIC indemnification asset

Excluding the items highlighted in Table I, noninterest income earned in the first quarter 2013 was $14.3 million compared to $16.9 million in the fourth quarter 2012 and $15.5 million in the first quarter 2012. The decrease of $2.6 million compared to the linked quarter was driven by lower service charges on deposits, net gain from sales of residential mortgages and lower fee income and portfolio valuations related to client derivatives, partially offset by higher trust and wealth management fees.

NONINTEREST EXPENSE

The following table presents noninterest expense for the three months ended March 31, 2013 and for the trailing four quarters, adjusted to exclude the impact of covered asset activity and other selected items on the Company's reported balance.




	Table II
		For the Three Months Ended
		March 31,			December 31,			September 30,			June 30,		March 31,
	(Dollars in thousands)	2013			2012			2012			2012		2012

	Total noninterest expense	$	53,106		$	53,474		$	55,286		$	57,459	$	55,778
	Selected components of noninterest expense
	Loss - covered real estate owned	(157		)	(54		)	(25		)	1,233		1,292
	Loss sharing expense	2,286			2,305			3,584			3,085		1,751
	Expenses associated with efficiency initiative	2,878			952			351			2,160		—
	Other items not expected to recur	390			—			—			—		1,839
	Total noninterest expense excluding items noted above	$	47,709		$	50,271		$	51,376		$	50,981	$	50,896

	FDIC loss share support ¹	$	776		$	798		$	951		$	1,014	$	1,163

¹Represents direct expenses associated with credit management and loan administration related to covered assets as well as compliance with FDIC loss share agreements; included in total noninterest expense excluding the items noted above and comprised of several noninterest expense line items; expected to recur but decline over time as assets covered under loss sharing agreements decrease

Excluding the items highlighted in Table II, noninterest expense in the first quarter 2013 was $47.7 million as compared to $50.3 million in the fourth quarter 2012 and $50.9 million in the first quarter 2012. The decrease of $2.6 million compared to the linked quarter was due primarily to lower salaries and employees benefits, marketing expense and other noninterest expense, partially offset by higher occupancy costs. Expenses associated with the efficiency initiative and other staffing-related changes include $1.2 million of employee benefit expenses related to reductions in staff and $1.7 million of real estate expenses associated with previously announced banking center consolidation and closure plans. Other items not expected to recur includes $0.4 million related to an isolated fraud loss.

INCOME TAXES

For the first quarter 2013, income tax expense was $6.4 million, resulting in an effective tax rate of 31.5%, compared with income tax expense of $9.2 million and an effective tax rate of 36.1% during the fourth quarter 2012 and $9.6 million and an effective tax rate of 36.2% during the comparable year-over-year period. The decrease in the effective tax rate during the first quarter 2013 as compared to the linked quarter was primarily the result of higher income earned on tax-exempt investment securities as well as a favorable tax reversal related to an intercompany tax obligation associated with an unconsolidated former Irwin subsidiary. A normalized effective tax rate reflecting the impact of the increasing investment in tax-exempt securities is estimated to be 35.1%.

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, 2013 and the trailing four quarters.




Table III
	As of or for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in thousands)	2013			2012			2012			2012			2012

Total nonaccrual loans	$	42,128		$	50,930		$	49,404		$	63,093		$	55,945
Troubled debt restructurings - accruing	12,757			10,856			11,604			9,909			9,495
Troubled debt restructurings - nonaccrual	22,324			14,111			13,017			10,185			17,205
Total troubled debt restructurings	35,081			24,967			24,621			20,094			26,700
Total nonperforming loans	77,209			75,897			74,025			83,187			82,645
Total nonperforming assets	89,202			88,423			87,937			98,875			97,681
Nonperforming assets as a % of:
Period-end loans plus OREO	2.74		%	2.77		%	2.86		%	3.27		%	3.28		%
Total assets	1.40		%	1.36		%	1.41		%	1.57		%	1.52		%
Nonperforming assets ex. accruing TDRs as a % of:
Period-end loans plus OREO	2.34		%	2.43		%	2.48		%	2.94		%	2.96		%
Total assets	1.20		%	1.19		%	1.22		%	1.42		%	1.37		%
Nonperforming loans as a % of total loans	2.38		%	2.39		%	2.41		%	2.76		%	2.79		%
Provision for loan and lease losses - uncovered	$	3,041		$	3,882		$	3,613		$	8,364		$	3,258
Allowance for uncovered loan & lease losses	$	48,306		$	47,777		$	49,192		$	50,952		$	49,437
Allowance for loan & lease losses as a % of:
Period-end loans	1.49		%	1.50		%	1.60		%	1.69		%	1.67		%
Nonaccrual loans	114.7		%	93.8		%	99.6		%	80.8		%	88.4		%
Nonaccrual loans plus nonaccrual TDRs	75.0		%	73.5		%	78.8		%	69.5		%	67.6		%
Nonperforming loans	62.6		%	63.0		%	66.5		%	61.3		%	59.8		%
Total net charge-offs	$	2,512		$	5,297		$	5,373		$	6,849		$	6,397
Annualized net-charge-offs as a % of average
loans & leases	0.32		%	0.68		%	0.71		%	0.93		%	0.87		%

Net Charge-offs

For the first quarter 2013, net charge-offs declined significantly to $2.5 million, or 52.6%, compared to the linked quarter driven primarily by reductions in commercial real estate and home equity charge-offs. Items driving net charge-offs for the quarter included three commercial real estate credits totaling $0.8 million and two commercial credits totaling $0.7 million, none of which were individually significant.

Nonperforming Assets

Nonaccrual loans, including nonaccrual troubled debt restructurings, decreased $0.6 million, or 0.9%, to $64.5 million as of March 31, 2013 from $65.0 million as of December 31, 2012. Within these two portfolios, the decrease in nonaccrual loans and increase in nonaccrual troubled debt restructurings was due primarily to the transfer of a single commercial credit totaling $6.9 million with modified borrowing terms. The increase in accruing troubled debt restructurings during the first quarter of $1.9 million was driven by the addition of a performing $1.2 million commercial real estate loan.

OREO decreased $0.5 million, or 4.3%, to $12.0 million during the first quarter as resolutions and valuation adjustments of $1.2 million exceeded $0.7 million of additions during the quarter. There were no individually material items included in either the additions or resolutions for the quarter.

Classified assets as of March 31, 2013 increased to $130.4 million, or 1.1%, from $129.0 million for the linked quarter and decreased $24.2 million, or 15.7%, from $154.7 million as of March 31, 2012. Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.

Delinquent Loans

As of March 31, 2013, loans 30-to-89 days past due totaled $18.2 million, or 0.56% of period-end loans, as compared to $16.3 million, or 0.51%, as of December 31, 2012 and $20.2 million, or 0.68%, as of March 31, 2012. During the first quarter, declines in delinquent commercial and residential real estate loans were offset by increases in the commercial real estate and equipment finance portfolios.

Provision for Loan & Lease Losses

First quarter 2013 provision expense related to uncovered loans and leases was $3.0 million as compared to $3.9 million for the linked quarter and $3.3 million for the comparable year-over-year quarter. Provision expense is a result of the Company's modeling efforts to estimate the period-end allowance for loan and lease losses. As a percentage of net charge-offs, first quarter provision expense equaled 121.1%.

LOANS (EXCLUDING COVERED LOANS)

The following table presents the loan portfolio, excluding covered loans, as of March 31, 2013, December 31, 2012 and March 31, 2012.




Table IV
	As of
	March 31, 2013				December 31, 2012				March 31, 2012
			Percent				Percent				Percent
(Dollars in thousands)	Balance		of Total		Balance		of Total		Balance		of Total

Commercial	$	892,381	27.5	%	$	861,033	27.1	%	$	831,101	28.0	%
Real estate - construction	87,542		2.7	%	73,517		2.3	%	104,305		3.5	%
Real estate - commercial	1,433,182		44.1	%	1,417,008		44.6	%	1,262,775		42.6	%
Real estate - residential	330,260		10.2	%	318,210		10.0	%	288,922		9.7	%
Installment	53,509		1.6	%	56,810		1.8	%	63,793		2.2	%
Home equity	365,943		11.3	%	367,500		11.6	%	359,711		12.1	%
Credit card	32,465		1.0	%	34,198		1.1	%	31,149		1.1	%
Lease financing	53,556		1.6	%	50,788		1.6	%	21,794		0.7	%
Total	$	3,248,838	100.0	%	$	3,179,064	100.0	%	$	2,963,550	100.0	%

Loans, excluding covered loans, totaled $3.2 billion as of March 31, 2013, increasing $69.8 million, or 8.9% on an annualized basis, compared to the linked quarter and $285.3 million, or 9.6%, compared to March 31, 2012. The increase relative to linked quarter was driven by growth in traditional C&I, commercial real estate and construction lending with continued solid performance from residential mortgage and specialty finance.

INVESTMENTS

The following table presents a summary of the total investment portfolio at March 31, 2013.




Table V
	As of March 31, 2013
	Securities		Securities		Other		Total		Percent
(Dollars in thousands)	HTM		AFS		Investments		Securities		of Portfolio

Agency	$	20,222	$	10,872	—		$	31,094	1.8	%
CMO - fixed rate	439,076		417,994		—		857,070		49.2	%
CMO - variable rate	—		100,661		—		100,661		5.8	%
MBS - fixed rate	102,735		145,716		—		248,451		14.2	%
MBS - variable rate	145,151		44,620		—		189,771		10.9	%
Municipal	9,030		34,811		—		43,841		2.5	%
Other tax-exempt	—		64,396				64,396		3.7	%
Corporate	—		68,601		—		68,601		3.9	%
Asset-backed securities	—		55,796				55,796		3.2	%
Other AFS securities	—		8,572		—		8,572		0.5	%
Regulatory stock and other	—		—		75,375		75,375		4.3	%
	$	716,214	$	952,039	$	75,375	$	1,743,628	100.0	%

The investment portfolio decreased $130.7 million, or 7.0%, during the first quarter as $54.8 million of purchases were offset by sales, amortizations and paydowns, driven partially by continued elevated prepayment activity. The Company sold $70.4 million of agency MBS and CMOs during the quarter in order to enhance liquidity and reduce prepayment and premium risks, recognizing a pre-tax gain of $1.5 million. As of March 31, 2013, the overall duration of the investment portfolio increased slightly to 3.1 years compared to 2.8 years as of December 31, 2012. The yield earned on the portfolio during the quarter declined 1 bp to 1.98% from 1.99% for the linked quarter. The net unrealized gain included in accumulated other comprehensive loss related to the securities AFS portfolio declined to $10.2 million as of March 31, 2013 as a result of activity during the quarter and market value changes.

DEPOSITS

Non-time deposit balances totaled $3.8 billion as of March 31, 2013, representing a decrease of $96.0 million, or 2.5%, compared to December 31, 2012. The decline was driven primarily by seasonal declines in commercial balances of $56.2 million and public fund balances of $77.7 million, offset by an increase of $49.7 million in consumer balances.

Time deposit balances decreased $38.5 million, or 3.6%, compared to the linked quarter due primarily to a net decline in consumer balances of $84.3 million, offset by an increase in public fund balances of $47.2 million.

The low interest rate environment continued to have a positive impact on the Company's deposit costs as the total cost of deposit funding declined to 32 bps for the quarter, a decrease of 6 bps compared to the prior quarter and 25 bps compared to the first quarter 2012.

CAPITAL MANAGEMENT

The following table presents First Financial's regulatory and other capital ratios as of March 31, 2013, December 31, 2012 and March 31, 2012.




Table VI
	As of
	March 31,			December 31,			March 31,			"Well-Capitalized"
	2013			2012			2012			Minimum

Leverage Ratio	10.00		%	10.25		%	9.94		%	5.00	%
Tier 1 Capital Ratio	15.87		%	16.32		%	17.18		%	6.00	%
Total Risk-Based Capital Ratio	17.15		%	17.60		%	18.45		%	10.00	%
Ending tangible shareholders' equity
to ending tangible assets	9.60		%	9.50		%	9.66		%	N/A
Ending tangible common shareholders'
equity to ending tangible assets	9.60		%	9.50		%	9.66		%	N/A

Tangible book value per share	$	10.33		$	10.47		$	10.41

Shareholders' equity decreased during the quarter due to the combined impact of share repurchases, a decrease in the unrealized gain related to securities classified as available-for-sale and declared dividends exceeding quarterly net income. The impact of share repurchases on common shares outstanding was substantially offset by restricted shares issued in connection with First Financial's long-term incentive plan. The Company's tangible common equity ratio increased during the quarter as the decline in period end tangible assets outweighed the decline in tangible equity. Regulatory capital ratios declined during the quarter due to increases in average tangible assets and risk-weighted assets and the decrease in shareholders' equity. Regulatory capital ratios as of March 31, 2013 are considered preliminary pending the filing of the Company's regulatory reports.

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 25, 2013 at 8:30 a.m. Eastern Time. Members of the public who would like to listen to the conference call should dial (888) 317-6016 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 317-6016 (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 10, 2013 at (877) 344-7529 (U.S. toll free) and +1 (412) 317-0088 (International); conference number 10027777. The webcast will be archived on the Investor Relations section of the Company's website through April 25, 2014.

Press Release and Additional Information on Website

This press release as well as supplemental information and any non-GAAP reconciliations 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 Statement

Certain statements contained in this 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;


▪	U.S. fiscal debt and budget matters;


▪	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, 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);


▪	the effect of the current low interest rate environment or changes in interest rates on our net interest margin and our loan originations and securities holdings;


▪	our ability to keep up with technological changes;


▪	failure or breach of our operational or security systems or infrastructure, or those of our third party vendors and other service providers;


▪	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, such as the risks and uncertainties associated with the Irwin Mortgage Corporation bankruptcy proceedings and other acquired subsidiaries;


▪	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 creditworthiness of our borrowers and lessees, collateral values, the value of investment securities and asset recovery values, including the value of the FDIC indemnification asset and related assets covered by FDIC loss sharing agreements;


▪	adverse changes in the securities, debt and/or derivatives 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;


▪	unpredictable natural or other disasters could have an adverse effect on us in that such events could materially disrupt our operations or our vendors' operations or willingness of our customers to access the financial services we offer;


▪	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, 2012, 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, 2013, the Company had $6.3 billion in assets, $3.9 billion in loans, $4.8 billion in deposits and $702 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 $2.6 billion in assets under management as of March 31, 2013. The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 113 banking centers. Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.

Contact Information

Investors/Analysts Media

Kenneth Lovik Jenny Keighley

Senior Vice President, Investor Relations and Assistant Vice President, Media Relations Manager

Corporate Development (513) 979-5852

(513) 979-5837 jennifer.keighley@bankatfirst.com

kenneth.lovik@bankatfirst.com

Selected Financial Information

March 31, 2013

(unaudited)



Contents	Page
Consolidated Financial Highlights	2
Consolidated Statements of Income	3
Consolidated Statements of Condition	4
Average Consolidated Statements of Condition	5
Net Interest Margin Rate / Volume Analysis	6
Credit Quality	7
Capital Adequacy	8
Supplemental Information on Covered Assets	9 - 11



FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)

	Three Months Ended
	Mar. 31,			Dec. 31,			Sep. 30,			June 30,			Mar. 31,
	2013			2012			2012			2012			2012
RESULTS OF OPERATIONS
Net income	$	13,824		$	16,265		$	16,242		$	17,802		$	16,994
Net earnings per share - basic	$	0.24		$	0.28		$	0.28		$	0.31		$	0.29
Net earnings per share - diluted	$	0.24		$	0.28		$	0.28		$	0.30		$	0.29
Dividends declared per share	$	0.28		$	0.28		$	0.30		$	0.29		$	0.31

KEY FINANCIAL RATIOS
Return on average assets	0.88		%	1.03		%	1.05		%	1.13		%	1.05		%
Return on average shareholders' equity	7.91		%	9.06		%	9.01		%	9.98		%	9.67		%
Return on average tangible shareholders' equity	9.24		%	10.58		%	10.53		%	11.68		%	11.37		%

Net interest margin	4.04		%	4.27		%	4.21		%	4.49		%	4.51		%
Net interest margin (fully tax equivalent) ⁽¹⁾	4.07		%	4.29		%	4.23		%	4.50		%	4.52		%

Ending shareholders' equity as a percent of ending assets	11.05		%	10.93		%	11.48		%	11.41		%	11.14		%
Ending tangible shareholders' equity as a percent of:
Ending tangible assets	9.60		%	9.50		%	9.99		%	9.91		%	9.66		%
Risk-weighted assets	15.05		%	15.57		%	16.16		%	16.39		%	16.42		%

Average shareholders' equity as a percent of average assets	11.09		%	11.35		%	11.62		%	11.32		%	10.91		%
Average tangible shareholders' equity as a percent of
average tangible assets	9.65		%	9.88		%	10.12		%	9.84		%	9.43		%

Book value per share	$	12.09		$	12.24		$	12.24		$	12.25		$	12.21
Tangible book value per share	$	10.33		$	10.47		$	10.47		$	10.47		$	10.41

Tier 1 Ratio ⁽²⁾	15.87		%	16.32		%	16.93		%	17.14		%	17.18		%
Total Capital Ratio ⁽²⁾	17.15		%	17.60		%	18.21		%	18.42		%	18.45		%
Leverage Ratio ⁽²⁾	10.00		%	10.25		%	10.54		%	10.21		%	9.94		%

AVERAGE BALANCE SHEET ITEMS
Loans ⁽³⁾	$	3,205,781		$	3,107,760		$	3,037,734		$	2,995,296		$	2,979,508
Covered loans and FDIC indemnification asset	840,190			920,102			1,002,622			1,100,014			1,179,670
Investment securities	1,838,783			1,746,961			1,606,313			1,713,503			1,664,643
Interest-bearing deposits with other banks	3,056			5,146			11,390			4,454			126,330
Total earning assets	$	5,887,810		$	5,779,969		$	5,658,059		$	5,813,267		$	5,950,151
Total assets	$	6,391,049		$	6,294,084		$	6,166,667		$	6,334,973		$	6,478,931
Noninterest-bearing deposits	$	1,049,943		$	1,112,072		$	1,052,421		$	1,044,405		$	931,347
Interest-bearing deposits	3,785,402			3,912,854			4,013,148			4,210,079			4,545,151
Total deposits	$	4,835,345		$	5,024,926		$	5,065,569		$	5,254,484		$	5,476,498
Borrowings	$	735,327		$	439,308		$	257,340		$	234,995		$	161,911
Shareholders' equity	$	708,862		$	714,373		$	716,797		$	717,111		$	706,547

CREDIT QUALITY RATIOS (excluding covered assets)
Allowance to ending loans	1.49		%	1.50		%	1.60		%	1.69		%	1.67		%
Allowance to nonaccrual loans	114.66		%	93.81		%	99.57		%	80.76		%	88.37		%
Allowance to nonperforming loans	62.57		%	62.95		%	66.45		%	61.25		%	59.82		%
Nonperforming loans to total loans	2.38		%	2.39		%	2.41		%	2.76		%	2.79		%
Nonperforming assets to ending loans, plus OREO	2.74		%	2.77		%	2.86		%	3.27		%	3.28		%
Nonperforming assets to total assets	1.40		%	1.36		%	1.41		%	1.57		%	1.52		%
Net charge-offs to average loans (annualized)	0.32		%	0.68		%	0.71		%	0.93		%	0.87		%

(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) March 31, 2013 regulatory capital ratios are preliminary.

(3) Includes loans held for sale.



FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)

	2013			2012
	First			Fourth			Third			Second			First			Full
	Quarter			Quarter			Quarter			Quarter			Quarter			Year
Interest income
Loans, including fees	$	56,025		$	60,389		$	59,536		$	63,390		$	66,436		$	249,751
Investment securities
Taxable	8,376			8,410			8,358			10,379			10,517			37,664
Tax-exempt	580			370			111			121			134			736
Total investment securities interest	8,956			8,780			8,469			10,500			10,651			38,400
Other earning assets	(1,472		)	(1,564		)	(1,700		)	(1,967		)	(1,990		)	(7,221		)
Total interest income	63,509			67,605			66,305			71,923			75,097			280,930

Interest expense
Deposits	3,860			4,798			5,730			6,381			7,716			24,625
Short-term borrowings	329			159			54			37			12			262
Long-term borrowings	654			672			675			675			680			2,702
Total interest expense	4,843			5,629			6,459			7,093			8,408			27,589
Net interest income	58,666			61,976			59,846			64,830			66,689			253,341
Provision for loan and lease losses - uncovered	3,041			3,882			3,613			8,364			3,258			19,117
Provision for loan and lease losses - covered	9,042			5,283			6,622			6,047			12,951			30,903
Net interest income after provision for loan and lease losses	46,583			52,811			49,611			50,419			50,480			203,321

Noninterest income
Service charges on deposit accounts	4,717			5,431			5,499			5,376			4,909			21,215
Trust and wealth management fees	3,950			3,409			3,374			3,377			3,791			13,951
Bankcard income	2,433			2,526			2,387			2,579			2,536			10,028
Net gains from sales of loans	706			1,179			1,319			1,132			940			4,570
FDIC loss sharing income	8,934			5,754			8,496			8,280			12,816			35,346
Accelerated discount on covered loans	1,935			2,455			3,798			3,764			3,645			13,662
Gain on sale of investment securities	1,536			1,011			2,617			0			0			3,628
Other	2,487			4,356			3,340			9,037			3,288			20,021
Total noninterest income	26,698			26,121			30,830			33,545			31,925			122,421

Noninterest expenses
Salaries and employee benefits	27,329			28,033			27,212			29,048			28,861			113,154
Net occupancy	6,165			5,122			5,153			5,025			5,382			20,682
Furniture and equipment	2,371			2,291			2,332			2,323			2,244			9,190
Data processing	2,469			2,526			2,334			2,076			1,901			8,837
Marketing	897			1,566			1,592			1,238			1,154			5,550
Communication	833			814			788			913			894			3,409
Professional services	1,803			1,667			1,304			2,151			2,147			7,269
State intangible tax	1,014			942			961			970			1,026			3,899
FDIC assessments	1,125			1,085			1,164			1,270			1,163			4,682
Loss (gain) - other real estate owned	502			569			1,372			313			996			3,250
Loss - covered other real estate owned	(157		)	(54		)	(25		)	1,233			1,292			2,446
Loss sharing expense	2,286			2,305			3,584			3,085			1,751			10,725
Other	6,469			6,608			7,515			7,814			6,967			28,904
Total noninterest expenses	53,106			53,474			55,286			57,459			55,778			221,997
Income before income taxes	20,175			25,458			25,155			26,505			26,627			103,745
Income tax expense	6,351			9,193			8,913			8,703			9,633			36,442
Net income	$	13,824		$	16,265		$	16,242		$	17,802		$	16,994		$	67,303

ADDITIONAL DATA
Net earnings per share - basic	$	0.24		$	0.28		$	0.28		$	0.31		$	0.29		$	1.16
Net earnings per share - diluted	$	0.24		$	0.28		$	0.28		$	0.30		$	0.29		$	1.14
Dividends declared per share	$	0.28		$	0.28		$	0.30		$	0.29		$	0.31		$	1.18

Return on average assets	0.88		%	1.03		%	1.05		%	1.13		%	1.05		%	1.07		%
Return on average shareholders' equity	7.91		%	9.06		%	9.01		%	9.98		%	9.67		%	9.43		%

Interest income	$	63,509		$	67,605		$	66,305		$	71,923		$	75,097		$	280,930
Tax equivalent adjustment	477			366			255			216			218			1,055
Interest income - tax equivalent	63,986			67,971			66,560			72,139			75,315			281,985
Interest expense	4,843			5,629			6,459			7,093			8,408			27,589
Net interest income - tax equivalent	$	59,143		$	62,342		$	60,101		$	65,046		$	66,907		$	254,396

Net interest margin	4.04		%	4.27		%	4.21		%	4.49		%	4.51		%	4.37		%
Net interest margin (fully tax equivalent)⁽¹⁾	4.07		%	4.29		%	4.23		%	4.50		%	4.52		%	4.39		%

Full-time equivalent employees	1,385			1,439			1,475			1,525			1,513

(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.



FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)

	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			% Change		% Change
	2013			2012			2012			2012			2012			Linked Qtr.		Comparable Qtr.
ASSETS
Cash and due from banks	$	106,249		$	134,502		$	154,181		$	126,392		$	125,949		(21.0	)%	(15.6	)%
Interest-bearing deposits with other banks	1,170			24,341			21,495			9,187			24,101			(95.2	)%	(95.1	)%
Investment securities available-for-sale	952,039			1,032,096			689,680			724,518			736,309			(7.8	)%	29.3	%
Investment securities held-to-maturity	716,214			770,755			822,319			873,538			917,758			(7.1	)%	(22.0	)%
Other investments	75,375			71,492			71,492			71,492			71,492			5.4	%	5.4	%
Loans held for sale	28,126			16,256			23,530			20,971			21,052			73.0	%	33.6	%
Loans
Commercial	892,381			861,033			834,858			823,890			831,101			3.6	%	7.4	%
Real estate - construction	87,542			73,517			91,897			86,173			104,305			19.1	%	(16.1	)%
Real estate - commercial	1,433,182			1,417,008			1,338,636			1,321,446			1,262,775			1.1	%	13.5	%
Real estate - residential	330,260			318,210			299,654			292,503			288,922			3.8	%	14.3	%
Installment	53,509			56,810			59,191			61,590			63,793			(5.8	)%	(16.1	)%
Home equity	365,943			367,500			368,876			365,413			359,711			(0.4	)%	1.7	%
Credit card	32,465			34,198			31,604			31,486			31,149			(5.1	)%	4.2	%
Lease financing	53,556			50,788			41,343			30,109			21,794			5.5	%	145.7	%
Total loans, excluding covered loans	3,248,838			3,179,064			3,066,059			3,012,610			2,963,550			2.2	%	9.6	%
Less
Allowance for loan and lease losses	48,306			47,777			49,192			50,952			49,437			1.1	%	(2.3	)%
Net loans - uncovered	3,200,532			3,131,287			3,016,867			2,961,658			2,914,113			2.2	%	9.8	%
Covered loans	687,798			748,116			825,515			903,862			986,619			(8.1	)%	(30.3	)%
Less
Allowance for loan and lease losses	45,496			45,190			48,895			48,327			46,156			0.7	%	(1.4	)%
Net loans - covered	642,302			702,926			776,620			855,535			940,463			(8.6	)%	(31.7	)%
Net loans	3,842,834			3,834,213			3,793,487			3,817,193			3,854,576			0.2	%	(0.3	)%
Premises and equipment	146,889			146,716			146,603			142,744			141,664			0.1	%	3.7	%
Goodwill	95,050			95,050			95,050			95,050			95,050			0.0	%	0.0	%
Other intangibles	7,078			7,648			8,327			9,195			10,193			(7.5	)%	(30.6	)%
FDIC indemnification asset	112,428			119,607			130,476			146,765			156,397			(6.0	)%	(28.1	)%
Accrued interest and other assets	265,565			244,372			278,447			245,632			262,027			8.7	%	1.4	%
Total Assets	$	6,349,017		$	6,497,048		$	6,235,087		$	6,282,677		$	6,416,568		(2.3	)%	(1.1	)%

LIABILITIES
Deposits
Interest-bearing demand	$	1,113,940		$	1,160,815		$	1,112,843		$	1,154,852		$	1,289,490		(4.0	)%	(13.6	)%
Savings	1,620,874			1,623,614			1,568,818			1,543,619			1,613,244			(0.2	)%	0.5	%
Time	1,030,124			1,068,637			1,199,296			1,331,758			1,491,132			(3.6	)%	(30.9	)%
Total interest-bearing deposits	3,764,938			3,853,066			3,880,957			4,030,229			4,393,866			(2.3	)%	(14.3	)%
Noninterest-bearing	1,056,409			1,102,774			1,063,654			1,071,520			1,007,049			(4.2	)%	4.9	%
Total deposits	4,821,347			4,955,840			4,944,611			5,101,749			5,400,915			(2.7	)%	(10.7	)%
Short-term borrowings
Federal funds purchased and securities sold
under agreements to repurchase	130,863			122,570			88,190			73,919			78,619			6.8	%	66.5	%
FHLB short-term borrowings	502,200			502,000			283,000			176,000			0			0.0	%	N/M
Total short-term borrowings	633,063			624,570			371,190			249,919			78,619			1.4	%	705.2	%
Long-term debt	74,498			75,202			75,521			75,120			75,745			(0.9	)%	(1.6	)%
Total borrowed funds	707,561			699,772			446,711			325,039			154,364			1.1	%	358.4	%
Accrued interest and other liabilities	118,495			131,011			127,799			139,101			146,596			(9.6	)%	(19.2	)%
Total Liabilities	5,647,403			5,786,623			5,519,121			5,565,889			5,701,875			(2.4	)%	(1.0	)%

SHAREHOLDERS' EQUITY
Common stock	575,514			579,293			578,129			576,929			575,675			(0.7	)%	0.0	%
Retained earnings	327,635			330,004			330,014			331,315			330,563			(0.7	)%	(0.9	)%
Accumulated other comprehensive loss	(21,475		)	(18,677		)	(18,855		)	(18,172		)	(18,687		)	15.0	%	14.9	%
Treasury stock, at cost	(180,060		)	(180,195		)	(173,322		)	(173,284		)	(172,858		)	(0.1	)%	4.2	%
Total Shareholders' Equity	701,614			710,425			715,966			716,788			714,693			(1.2	)%	(1.8	)%
Total Liabilities and Shareholders' Equity	$	6,349,017		$	6,497,048		$	6,235,087		$	6,282,677		$	6,416,568		(2.3	)%	(1.1	)%

N/M = Not meaningful.



FIRST FINANCIAL BANCORP.
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)

	Quarterly Averages
	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
	2013			2012			2012			2012			2012
ASSETS
Cash and due from banks	$	111,599		$	118,619		$	118,642		$	121,114		$	123,634
Interest-bearing deposits with other banks	3,056			5,146			11,390			4,454			126,330
Investment securities	1,838,783			1,746,961			1,606,313			1,713,503			1,664,643
Loans held for sale	21,096			18,054			26,035			19,554			19,722
Loans
Commercial	863,427			819,262			811,998			827,722			850,092
Real estate - construction	81,171			85,219			92,051			99,087			112,945
Real estate - commercial	1,411,769			1,373,781			1,322,369			1,279,869			1,235,613
Real estate - residential	323,768			307,580			293,423			290,335			287,749
Installment	54,684			58,283			60,691			62,846			65,302
Home equity	365,568			368,605			365,669			361,166			358,360
Credit card	33,300			32,954			31,977			31,383			31,201
Lease financing	50,998			44,022			33,521			23,334			18,524
Total loans, excluding covered loans	3,184,685			3,089,706			3,011,699			2,975,742			2,959,786
Less
Allowance for loan and lease losses	49,408			50,172			51,486			50,353			53,513
Net loans - uncovered	3,135,277			3,039,534			2,960,213			2,925,389			2,906,273
Covered loans	724,846			794,838			866,486			950,226			1,020,220
Less
Allowance for loan and lease losses	46,104			48,553			51,150			47,964			47,152
Net loans - covered	678,742			746,285			815,336			902,262			973,068
Net loans	3,814,019			3,785,819			3,775,549			3,827,651			3,879,341
Premises and equipment	147,355			148,047			145,214			143,261			140,377
Goodwill	95,050			95,050			95,050			95,050			95,050
Other intangibles	7,346			8,001			8,702			9,770			10,506
FDIC indemnification asset	115,344			125,264			136,136			149,788			159,450
Accrued interest and other assets	237,401			243,123			243,636			250,828			259,878
Total Assets	$	6,391,049		$	6,294,084		$	6,166,667		$	6,334,973		$	6,478,931

LIABILITIES
Deposits
Interest-bearing demand	$	1,112,664		$	1,145,800		$	1,164,111		$	1,192,868		$	1,285,196
Savings	1,618,239			1,640,427			1,588,708			1,610,411			1,682,507
Time	1,054,499			1,126,627			1,260,329			1,406,800			1,577,448
Total interest-bearing deposits	3,785,402			3,912,854			4,013,148			4,210,079			4,545,151
Noninterest-bearing	1,049,943			1,112,072			1,052,421			1,044,405			931,347
Total deposits	4,835,345			5,024,926			5,065,569			5,254,484			5,476,498
Short-term borrowings
Federal funds purchased and securities sold
under agreements to repurchase	134,709			100,087			81,147			80,715			85,891
Federal Home Loan Bank short-term borrowings	525,878			263,895			100,758			78,966			0
Total short-term borrowings	660,587			363,982			181,905			159,681			85,891
Long-term debt	74,740			75,326			75,435			75,314			76,020
Total borrowed funds	735,327			439,308			257,340			234,995			161,911
Accrued interest and other liabilities	111,515			115,477			126,961			128,383			133,975
Total Liabilities	5,682,187			5,579,711			5,449,870			5,617,862			5,772,384

SHAREHOLDERS' EQUITY
Common stock	578,452			578,691			577,547			576,276			578,514
Retained earnings	330,879			331,414			330,368			332,280			324,370
Accumulated other comprehensive loss	(19,576		)	(19,612		)	(17,756		)	(18,242		)	(20,344		)
Treasury stock, at cost	(180,893		)	(176,120		)	(173,362		)	(173,203		)	(175,993		)
Total Shareholders' Equity	708,862			714,373			716,797			717,111			706,547
Total Liabilities and Shareholders' Equity	$	6,391,049		$	6,294,084		$	6,166,667		$	6,334,973		$	6,478,931



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

	Quarterly Averages
	Mar. 31, 2013					Dec. 31, 2012					Mar. 31, 2012					Linked Qtr. Income Variance									Comparable Qtr. Income Variance
	Balance			Yield		Balance			Yield		Balance			Yield		Rate			Volume			Total			Rate			Volume			Total
Earning assets
Investment securities	$	1,838,783		1.98	%	$	1,746,961		1.99	%	$	1,664,643		2.57	%	$	(82	)	$	258		$	176		$	(2,453	)	$	758		$	(1,695	)
Interest-bearing deposits with other banks	3,056			0.53	%	5,146			0.54	%	126,330			0.28	%	0			(3		)	(3		)	78			(163		)	(85		)
Gross loans, including covered loans
and indemnification asset ⁽²⁾	4,045,971			5.47	%	4,027,862			5.79	%	4,159,178			6.21	%	(3,306		)	(963		)	(4,269		)	(7,659		)	(2,149		)	(9,808		)
Total earning assets	5,887,810			4.37	%	5,779,969			4.64	%	5,950,151			5.06	%	(3,388		)	(708		)	(4,096		)	(10,034		)	(1,554		)	(11,588		)

Nonearning assets
Allowance for loan and lease losses	(95,512		)			(98,725		)			(100,665		)
Cash and due from banks	111,599					118,619					123,634
Accrued interest and other assets	487,152					494,221					505,811
Total assets	$	6,391,049				$	6,294,084				$	6,478,931

Interest-bearing liabilities
Total interest-bearing deposits	$	3,785,402		0.41	%	$	3,912,854		0.49	%	$	4,545,151		0.68	%	(719		)	(219		)	(938		)	(3,030		)	(826		)	(3,856		)
Borrowed funds
Short-term borrowings	660,587			0.20	%	363,982			0.17	%	85,891			0.06	%	26			144			170			31			286			317
Long-term debt	74,740			3.55	%	75,326			3.54	%	76,020			3.59	%	2			(20		)	(18		)	(7		)	(19		)	(26		)
Total borrowed funds	735,327			0.54	%	439,308			0.75	%	161,911			1.71	%	28			124			152			24			267			291
Total interest-bearing liabilities	4,520,729			0.43	%	4,352,162			0.51	%	4,707,062			0.72	%	$	(691	)	$	(95	)	$	(786	)	$	(3,006	)	$	(559	)	$	(3,565	)

Noninterest-bearing liabilities
Noninterest-bearing demand deposits	1,049,943					1,112,072					931,347
Other liabilities	111,515					115,477					133,975
Shareholders' equity	708,862					714,373					706,547
Total liabilities & shareholders' equity	$	6,391,049				$	6,294,084				$	6,478,931

Net interest income ⁽¹⁾	$	58,666				$	61,976				$	66,689				$	(2,697	)	$	(613	)	$	(3,310	)	$	(7,028	)	$	(995	)	$	(8,023	)
Net interest spread ⁽¹⁾				3.94	%				4.13	%				4.34	%
Net interest margin ⁽¹⁾				4.04	%				4.27	%				4.51	%

⁽¹⁾ Not tax equivalent.

⁽²⁾ Loans held for sale and nonaccrual loans are both included in gross loans.

N/M = Not meaningful.



FIRST FINANCIAL BANCORP.
CREDIT QUALITY
(excluding covered assets)
(Dollars in thousands)
(Unaudited)

	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
	2013			2012			2012			2012			2012

ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY
Balance at beginning of period	$	47,777		$	49,192		$	50,952		$	49,437		$	52,576
Provision for uncovered loan and lease losses	3,041			3,882			3,613			8,364			3,258
Gross charge-offs
Commercial	781			657			1,340			1,129			1,186
Real estate - construction	0			0			180			717			1,787
Real estate - commercial	995			2,221			2,736			3,811			2,244
Real estate - residential	223			454			565			191			604
Installment	100			267			134			116			60
Home equity	701			1,722			380			915			644
Other	410			227			469			259			297
Total gross charge-offs	3,210			5,548			5,804			7,138			6,822
Recoveries
Commercial	319			71			202			48			72
Real estate - construction	136			0			0			0			0
Real estate - commercial	39			46			38			68			113
Real estate - residential	4			3			33			9			28
Installment	77			53			72			75			123
Home equity	52			32			31			28			24
Other	71			46			55			61			65
Total recoveries	698			251			431			289			425
Total net charge-offs	2,512			5,297			5,373			6,849			6,397
Ending allowance for uncovered loan and lease losses	$	48,306		$	47,777		$	49,192		$	50,952		$	49,437

NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED)
Commercial	0.22		%	0.28		%	0.56		%	0.53		%	0.53		%
Real estate - construction	(0.68		)%	0.00		%	0.78		%	2.91		%	6.36		%
Real estate - commercial	0.27		%	0.63		%	0.81		%	1.18		%	0.69		%
Real estate - residential	0.27		%	0.58		%	0.72		%	0.25		%	0.81		%
Installment	0.17		%	1.46		%	0.41		%	0.26		%	(0.39		)%
Home equity	0.72		%	1.82		%	0.38		%	0.99		%	0.70		%
Other	1.63		%	0.94		%	2.51		%	1.46		%	1.88		%
Total net charge-offs	0.32		%	0.68		%	0.71		%	0.93		%	0.87		%

COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS
Nonaccrual loans
Commercial	$	4,044		$	10,562		$	4,563		$	12,065		$	5,936
Real estate - construction	945			950			2,536			7,243			7,005
Real estate - commercial	30,311			31,002			33,961			36,116			35,581
Real estate - residential	4,371			5,045			5,563			5,069			5,131
Installment	211			376			284			319			377
Home equity	1,750			2,499			2,497			2,281			1,915
Lease financing	496			496			0			0			0
Nonaccrual loans	42,128			50,930			49,404			63,093			55,945
Troubled debt restructurings (TDRs)
Accruing	12,757			10,856			11,604			9,909			9,495
Nonaccrual	22,324			14,111			13,017			10,185			17,205
Total TDRs	35,081			24,967			24,621			20,094			26,700
Total nonperforming loans	77,209			75,897			74,025			83,187			82,645
Other real estate owned (OREO)	11,993			12,526			13,912			15,688			15,036
Total nonperforming assets	89,202			88,423			87,937			98,875			97,681
Accruing loans past due 90 days or more	157			212			108			143			203
Total underperforming assets	$	89,359		$	88,635		$	88,045		$	99,018		$	97,884
Total classified assets	$	130,436		$	129,040		$	133,382		$	145,621		$	154,684

CREDIT QUALITY RATIOS (excluding covered assets)
Allowance for loan and lease losses to
Nonaccrual loans	114.66		%	93.81		%	99.57		%	80.76		%	88.37		%
Nonaccrual loans plus nonaccrual TDRs	74.95		%	73.46		%	78.81		%	69.53		%	67.58		%
Nonperforming loans	62.57		%	62.95		%	66.45		%	61.25		%	59.82		%
Total ending loans	1.49		%	1.50		%	1.60		%	1.69		%	1.67		%
Nonperforming loans to total loans	2.38		%	2.39		%	2.41		%	2.76		%	2.79		%
Nonperforming assets to
Ending loans, plus OREO	2.74		%	2.77		%	2.86		%	3.27		%	3.28		%
Total assets	1.40		%	1.36		%	1.41		%	1.57		%	1.52		%
Nonperforming assets, excluding accruing TDRs to
Ending loans, plus OREO	2.34		%	2.43		%	2.48		%	2.94		%	2.96		%
Total assets	1.20		%	1.19		%	1.22		%	1.42		%	1.37		%



FIRST FINANCIAL BANCORP.
CAPITAL ADEQUACY
(Dollars in thousands, except per share data)
(Unaudited)

	Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
	2013			2012			2012			2012			2012
PER COMMON SHARE
Market Price
High	$	16.07		$	16.95		$	17.86		$	17.70		$	18.28
Low	$	14.46		$	13.90		$	15.58		$	14.88		$	16.11
Close	$	16.05		$	14.62		$	16.91		$	15.98		$	17.30

Average shares outstanding - basic	57,439,029			57,800,988			57,976,943			57,933,281			57,795,258
Average shares outstanding - diluted	58,283,467			58,670,666			58,940,179			58,958,279			58,881,043
Ending shares outstanding	58,028,923			58,046,235			58,510,916			58,513,393			58,539,458

REGULATORY CAPITAL	Preliminary
Tier 1 Capital	$	632,020		$	637,176		$	641,828		$	640,644		$	637,612
Tier 1 Ratio	15.87		%	16.32		%	16.93		%	17.14		%	17.18		%
Total Capital	$	682,974		$	686,961		$	690,312		$	688,401		$	684,838
Total Capital Ratio	17.15		%	17.60		%	18.21		%	18.42		%	18.45		%
Total Capital in excess of minimum
requirement	$	364,376		$	374,633		$	387,115		$	389,367		$	387,954
Total Risk-Weighted Assets	$	3,982,479		$	3,904,096		$	3,789,957		$	3,737,920		$	3,711,053
Leverage Ratio	10.00		%	10.25		%	10.54		%	10.21		%	9.94		%

OTHER CAPITAL RATIOS
Ending shareholders' equity to ending assets	11.05		%	10.93		%	11.48		%	11.41		%	11.14		%
Ending tangible shareholders' equity
to ending tangible assets	9.60		%	9.50		%	9.99		%	9.91		%	9.66		%
Average shareholders' equity to
average assets	11.09		%	11.35		%	11.62		%	11.32		%	10.91		%
Average tangible shareholders' equity
to average tangible assets	9.65		%	9.88		%	10.12		%	9.84		%	9.43		%

REPURCHASE PROGRAM (1)
Shares repurchased	249,000			460,500			0			0			0
Average share repurchase price	$	15.39		$	14.78		N/A			N/A			N/A
Total cost of shares repurchased	3,831			$	6,806		N/A			N/A			N/A

(1) Represents share repurchases as part of publicly announced plans.
N/A=Not applicable

SUPPLEMENTAL INFORMATION ON COVERED ASSETS

ACCELERATED DISCOUNT ON LOAN PREPAYMENTS AND DISPOSITIONS

During the first quarter 2013, First Financial recognized approximately $1.9 million in accelerated discount from covered loans, net of the corresponding adjustment on the FDIC indemnification asset. Accelerated discount is recognized when covered 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 through either 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. Accelerated discount recognized during the quarter resulted primarily from loan prepayments.

NET INTEREST MARGIN IMPACT

Net interest margin is affected by certain activity related to the covered 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. Impairment, as a result of a decrease in expected cash flows, is recognized as provision expense in the period it is measured and has no impact on net interest margin. Improvements in expected cash flows, in excess of any prior impairment, are recognized on a prospective basis through an upward adjustment to the yield earned on the portfolio. Impairment and improvement are both partially offset by the impact of changes in the value of the FDIC indemnification asset. Impairment is partially offset by an increase to the FDIC indemnification asset as a result of FDIC loss sharing income. Improvement, which is reflected as a higher yield, is partially offset by a lower yield earned on the FDIC indemnification asset until the next periodic valuation of the loans and the indemnification asset. The weighted average yield of the acquired loan portfolio may also be subject to change as loans with higher yields pay down more quickly or slowly than loans with lower yields.

The following table shows the estimated yield earned by the Company on its covered and uncovered loan portfolios and the FDIC indemnification asset for the three months ended March 31, 2013.




Table VII	For the Three Months Ended
	March 31, 2013
	Average
(Dollars in thousands)	Balance		Yield
Loans, excluding covered loans¹	$	3,205,781	4.6%
Covered loan portfolio accounted for under ASC Topic 310-30²	649,552		10.91%
Covered loan portfolio accounted for under ASC Topic 310-20 ³	75,294		12.15%
FDIC indemnification asset ²	115,344		(5.19)%
Total	$	4,045,971	5.47%


¹ Includes loans with loss share coverage removed
² Future yield adjustments subject to change based on required, periodic valuation procedures
³ Includes loans with revolving privileges which are scoped out of ASC Topic 310-30 and certain loans
which the Company elected to treat under the cost recovery method of accounting.

COVERED ASSETS

The following table presents the covered loan portfolio as of March 31, 2013, December 31, 2012 and March 31, 2012.




Table VIII
	As of
	March 31, 2013				December 31, 2012				March 31, 2012
			Percent				Percent				Percent
(Dollars in thousands)	Balance		of Total		Balance		of Total		Balance		of Total
Commercial	$	90,424	13.1	%	$	102,126	13.7	%	$	164,933	16.7	%
Real estate - construction	9,866		1.4	%	10,631		1.4	%	16,727		1.7	%
Real estate - commercial	425,950		61.9	%	465,555		62.2	%	609,141		61.7	%
Real estate - residential	95,991		14.0	%	100,694		13.5	%	115,428		11.7	%
Installment	7,640		1.1	%	8,674		1.2	%	12,079		1.2	%
Home equity	55,021		8.0	%	57,458		7.7	%	64,824		6.6	%
Other	2,906		0.4	%	2,978		0.4	%	3,487		0.4	%
Total	$	687,798	100.0	%	$	748,116	100.0	%	$	986,619	100.0	%

As of March 31, 2013, 17.5% of the Company's total loans were covered loans. During the first quarter 2013, the total balance of covered loans decreased $60.3 million, or 8.1%, compared to the prior quarter. As required under the loss sharing agreements, First Financial must file monthly certifications with the FDIC on single-family residential loans and quarterly certifications on all other loans. The payment of claims is subject to the FDIC's review for compliance with the loss sharing agreements and to date, all certifications have been filed in a timely manner and without significant issues.

Covered OREO increased $0.5 million, or 1.7%, during the first quarter to $29.3 million as of March 31, 2013 as additions of $6.7 million slightly exceeded resolutions and valuation adjustments of $6.2 million during the quarter.

ALLOWANCE FOR LOAN AND LEASE LOSSES - COVERED

Under the applicable accounting guidance, the allowance for loan losses related to covered loans is a result of impairment identified in ongoing valuation procedures and is generally recognized in the current period as provision expense. 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 following table presents activity in the allowance for loan losses related to covered loans for the three months ended March 31, 2013 and for the trailing three quarters.




Table IX

	As of or for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)	2013			2012			2012			2012
Balance at beginning of period	$	45,190		$	48,895		$	48,327		$	46,156
Provision for loan and lease losses - covered	9,042			5,283			6,622			6,047
Total gross charge-offs	(9,684		)	(9,568		)	(9,058		)	(5,163		)
Total recoveries	948			580			3,004			1,287
Total net charge-offs	(8,736		)	(8,988		)	(6,054		)	(3,876		)
Ending allowance for loan and lease losses - covered	$	45,496		$	45,190		$	48,895		$	48,327

As a percentage of total covered loans, the allowance for loan losses totaled 6.61% as of March 31, 2013 compared to 6.04% as of December 31, 2012.

Net charge-offs on covered loans during the first quarter 2013 were $8.7 million compared to $9.0 million for the fourth quarter 2012, a decrease of $0.3 million, or 2.8%. During the first quarter 2013, the Company recognized provision expense of $9.0 million, representing an increase of $3.8 million, or 71.2%, compared to the linked quarter. The difference between provision expense and net charge-offs primarily relates to the quarterly re-estimation of cash flow expectations required under ASC Topic 310-30. The net present value of expected cash flows is influenced by both the amount and timing of such cash flows.

In addition to the provision expense, the Company incurred loss sharing and covered asset expenses of $2.3 million, consisting primarily of credit expenses offset by $0.2 million of gains related to covered OREO. The receivable due from the FDIC under loss sharing agreements of $8.9 million related to total credit costs incurred was recognized as FDIC loss sharing income and a corresponding increase to the FDIC indemnification asset.

Attached files

FIRST FINANCIAL BANCORP /OH/ Reports

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