Wednesday, July 25, 2007


HAMILTON, Ohio, Jul. 25, 2007 (PR Newswire delivered by Newstex) -- First Financial Bancorp (Nasdaq: FFBC) president and chief executive officer, Claude E. Davis, today announced second quarter 2007 earnings of $8,172,000 or 21 cents in diluted earnings per share, compared to $4,358,000 or 11 cents in diluted earnings per share for the second quarter 2006 and $8,435,000 or 22 cents in diluted earnings per share last quarter. First Financial also announced year-to-date earnings of $16,607,000 or 43 cents in diluted earnings per share, compared to $8,325,000 or 21 cents in diluted earnings per share for the same period in 2006.

Return on average assets for the second quarter 2007 was 1.00 percent compared to 0.51 percent for the same period in 2006 and 1.04 percent last quarter. Year-to-date return on average assets was 1.02 percent for 2007 compared to 0.48 percent for the same period in 2006. Return on average shareholders' equity was 11.61 percent for the second quarter 2007 compared to 5.90 percent for the comparable period in 2006 and 11.94 percent last quarter. Year-to-date return on average shareholders' equity was 11.78 percent for 2007 compared to 5.65 percent for the same period in 2006.

Unless otherwise noted, all amounts discussed in the remainder of the earnings release are pre-tax except income or loss from continuing operations, net income, and per-share data which is presented after-tax.

Summary and Outlook of Key Drivers

Net interest margin decreased to 3.97 percent in the second quarter 2007 from 4.11 percent for the second quarter 2006 and 4.12 percent for the linked- quarter (second quarter 2007 compared to first quarter 2007). Approximately 10 basis points of the first quarter 2007 net interest margin was due to the impact of an accrual of income to convert certain consumer loans from a cycle-date basis of income recognition to a calendar-month basis. The first quarter 2007 adjusted net interest margin, excluding the impact of this accrual, was 4.02 percent. The 2007 margin forecast remains within a range of 3.90 to 4.05 percent.

Noninterest income remained relatively stable on a comparative quarter basis. On a linked-quarter basis, excluding the effects of the first quarter 2007 gain on the sale of residential mortgage servicing rights of $1.1 million, noninterest income was positively impacted by increases in service charges on deposit accounts, trust and wealth management fees, and bankcard income. Management expects the full-year noninterest income annualized growth rate to be between zero and 5.0 percent from the 2006 adjusted, full-year baseline of approximately $59 million.

Noninterest expense was significantly impacted during 2006 by the transition costs associated with First Financial's execution of its Strategic Plan, resulting in a reduction in noninterest expense of $9.2 million in the second quarter 2007 from the prior year comparable quarter. Year-to-date noninterest expense was $60.7 million in 2007 compared to $77.6 million in 2006, a $16.9 million or 21.8 percent decrease. Management expects that the 2007 efficiency ratio will be between 65 and 67 percent, but remains committed to the long-term goal of 55 to 60 percent. These items will be discussed in more detail in the remainder of the earnings release.

Capital management efforts through share repurchases resulted in 252,000 shares repurchased in the second quarter 2007 at a cost of $3.8 million. On a year-to-date basis, First Financial has repurchased 496,000 shares at a cost of $7.7 million and a weighted average share repurchase price of $15.58. First Financial expects to repurchase approximately 1,000,000 shares in 2007.

Credit quality remained relatively stable as net charge-offs for the second quarter were an annualized 23 basis points, and management is projecting a net charge-off level of between 30 and 40 basis points for the full year. Nonperforming assets increased $3.0 million from the first quarter 2007 primarily due to the transfer of four commercial loan relationships to nonaccrual status. First Financial's allowance for loan and lease losses to period-end loans ratio was 1.10 percent, flat compared to the first quarter 2007. Year-to-date 2007 net charge-offs were an annualized 22 basis points of average loans compared to an annualized 40 basis points of average loans for the comparable period in 2006, excluding the second quarter 2006 impact from the transfer of approximately $38 million of loans to loans held for sale.


Updated 2007 guidance

Management is providing an update to its full-year earnings per share guidance and updated estimates on key drivers as follows:

2007 Original 2007 Updated Guidance Guidance Earnings Per Share $1.00 - $1.10 $0.90 - $0.95 Net Interest Margin 3.90% - 4.05% No Change Noninterest Income Annualized Growth 7% - 13% 0% - 5% Noninterest Expense $118 - $122 million No Change Net Charge-offs Average Loans 30 - 40 bp No Change Effective Tax Rate 33.0% No Change Return on Equity 13% - 15% 12% - 13% Efficiency 62% - 65% 65% - 67%
(The preceding overview of First Financial Bancorp's earnings is supplemented with the following detail:)
Current Period Operating Results NET INTEREST INCOME
Second Quarter 2007 vs. Second Quarter 2006

Net interest income for the second quarter 2007 was $29.6 million compared to $31.9 million in the second quarter 2006, a decrease of $2.3 million or 7.3 percent. This decrease is primarily due to a 4.1 percent net decline in the level of earning assets, resulting primarily from the third quarter 2006 sale of ten branches and their approximate $101 million of loans and $109 million of deposits.

Second Quarter 2007 vs. First Quarter 2007

Net interest income on a linked-quarter basis decreased from $30.4 million in the first quarter 2007 to $29.6 million in the second quarter 2007, an $802,000 or 2.6 percent decrease. Excluding the effect of the first quarter 2007 interest accrual noted earlier, linked-quarter net interest income remained flat primarily due to consistent earning asset levels and stability in the net interest margin.

Year-to-Date 2007 vs. Year-to-Date 2006

Year-to-date net interest income was $60.0 million in 2007 compared to $64.1 million in 2006, a $4.1 million or 6.5 percent decrease. This decrease is primarily due to a 5.9 percent net decline in the level of earning assets, resulting primarily from the balance sheet restructure completed in the first quarter 2006, the third quarter 2006 sale of ten branches and their associated loans and deposits, and continued effects of increased rates on deposits.

NET INTEREST MARGIN

Second Quarter 2007 vs. Second Quarter 2006

Second quarter 2007 net interest margin of 3.97 percent decreased 14 basis points from 4.11 percent for the second quarter 2006, reflecting the planned reduction in earning assets and an increase in deposit costs. On a tax equivalent basis, the second quarter 2007 net interest margin of 4.05 percent decreased 15 basis points from 4.20 percent for the second quarter 2006.

Second Quarter 2007 vs. First Quarter 2007

Linked-quarter net interest margin decreased 5 basis points from an adjusted 4.02 percent to 3.97 percent. The net interest margin remains relatively stable as the earning asset mix continues to shift from lower yielding indirect installment and conforming mortgage loans to higher yielding commercial and commercial real estate loans. These benefits were more than offset by the planned reduction in earning assets and a continued increase in deposit costs. On a tax-equivalent basis, the second quarter 2007 net interest margin was 4.05 percent as compared to an adjusted 4.10 percent for the first quarter 2007.

Year-to-Date 2007 vs. Year-to-Date 2006

Year-to-date net interest margin was 4.05 percent in 2007, 4.00 percent when adjusted for the year-to-date impact of the interest accrual noted earlier, compared to 4.07 percent in 2006, reflecting the planned reduction in earning assets and an increase in deposit costs. On a tax-equivalent year-to-date basis, net interest margin was an adjusted 4.08 percent in 2007 as compared to 4.16 percent in 2006.

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

First Financial has continued to expand its commercial lending sales force and market presence over the past year, which is reflected in the planned loan mix shift to higher yielding commercial loans. Period-end commercial, commercial real estate, and construction loans, excluding the effects of the branch and loan sales, increased from $1.34 billion in the second quarter 2006 to $1.55 billion in the second quarter 2007, an increase of approximately $207.3 million or 15.4 percent, as summarized below:
Annualized % Change % Change Compar- Linked- able- Period-end balances: 6/30/07 3/31/07 6/30/06 Qtr Qtr Commercial $747,292 $709,341 $646,662 21.4% 15.6% Real estate - commercial 676,679 647,126 640,869 18.3% 5.6% Real estate - construction 125,732 107,867 95,603 66.2% 31.5% Branch loan sale impact - - (37,437) - - Strategic loan sale impact - - (3,277) - - Total $1,549,703 $1,464,334 $1,342,420 23.3% 15.4%
During late 2005 and early 2006, management made the decisions to exit indirect installment lending, to no longer hold its retail mortgage loan originations on the balance sheet, and to utilize the sale of loans to strategically manage the company's asset mix, risk profile, and credit quality. Management estimates this has resulted in the cumulative reduction in loan balances as follows:
Indirect installment loan runoff $176,725 Retail mortgage loan runoff 133,631 Strategic loan sales 260,423 Total $570,779
Second Quarter 2007 vs. Second Quarter 2006

Average total loans for the second quarter 2007 decreased $83.8 million or 3.2 percent from the comparable period a year ago. Period-end commercial, commercial real estate, and construction loans, excluding the effects of the branch and loan sales, increased approximately $207.3 million or 15.4 percent from the second quarter 2006.

Second Quarter 2007 vs. First Quarter 2007

Average total loans for the second quarter 2007 increased $47.0 million or 7.6 percent on an annualized basis from the first quarter 2007, and average commercial, commercial real estate, and construction loans increased $86.9 million or 24.4 percent on an annualized basis from the first quarter 2007. Period-end commercial, commercial real estate, and construction loans increased approximately $85.4 million or 23.3 percent on an annualized basis from the first quarter 2007.

Year-to-Date 2007 vs. Year-to-Date 2006

Year-to-date 2007 average total loans decreased $98.5 million or 7.6 percent on an annualized basis from the comparable period in 2006; however, average commercial, commercial real estate, and construction loans increased $131.7 million or 19.7 percent on an annualized basis from the comparable period in 2006.

Investments

Securities available-for-sale were $313.6 million at June 30, 2007, compared to $326.6 million at June 30, 2006 and $325.8 million at March 31, 2007. The combined investment portfolio was 10.8 percent and 10.7 percent of total assets at June 30, 2007, and 2006, respectively, and 11.0 percent of total assets at March 31, 2007.

Deposits

In total, average deposit balances have remained relatively stable over the past year, excluding the branch and related deposit sale. Consumer preference for higher-yielding money market accounts rather than more traditional transaction accounts, and the aggressiveness in market pricing for both transaction and certificate of deposit accounts, has made deposit growth difficult and has resulted in significant shifts in deposit mix. First Financial continues to expand its product offerings, primarily in the interest- bearing checking and savings account categories, to address competitive pressures and consumer demand.

Second Quarter 2007 vs. Second Quarter 2006

Average deposits for the second quarter 2007 decreased $92.2 million or 3.2 percent from the comparable period a year ago. The decrease was primarily a result of the previously mentioned sale of branches in the third quarter 2006 which included $108.6 million of actual deposit balances.

Second Quarter 2007 vs. First Quarter 2007

Average deposits for the second quarter 2007 remained relatively flat compared to the first quarter 2007. Average interest-bearing deposits decreased $3.0 million or 50 basis points, and average noninterest-bearing deposits increased $3.5 million or 3.5 percent, both on an annualized basis from the first quarter 2007.

Year-to-Date 2007 vs. Year-to-Date 2006

Year-to-date 2007 average total deposits decreased $93.5 million or 6.4 percent on an annualized basis from the comparable period in 2006. The decrease was primarily a result of the previously mentioned sale of branches in the third quarter 2006.

NONINTEREST INCOME

Second Quarter 2007 vs. Second Quarter 2006

Second quarter 2007 noninterest income was $14.1 million, an increase of $303,000 or 2.2 percent from the second quarter 2006. This increase was primarily due to higher trust and wealth management fees and bankcard income offset by lower service charge income on deposit accounts primarily as a result of the third quarter 2006 branch sales.

Second Quarter 2007 vs. First Quarter 2007

On a linked-quarter basis, total noninterest income decreased $612,000 or 4.2 percent. Excluding the first quarter 2007 gain on the sale of residential mortgage servicing rights, total noninterest income increased 3.3 percent in the second quarter 2007. The second quarter 2007 included increases in service charge income on deposit accounts, trust and wealth management fees, and bankcard income totaling $1.1 million or 10.9 percent, which were more than offset by the $1.1 million first quarter 2007 gain on the sale of residential mortgage servicing rights and higher earnings from bank-owned life insurance.

Year-to-Date 2007 vs. Year-to-Date 2006

Year-to-date noninterest income was $28.9 million in 2007 compared to $26.8 million in 2006, a $2.1 million or 7.7 percent increase. This increase is primarily due to the gain on the sale of residential mortgage servicing rights in the first quarter 2007 and related lower amortization expense, the first quarter 2006 loss on sale of investment securities, higher trust and wealth management fees, bankcard income, and earnings from bank-owned life insurance. These increases were offset by lower service charge income on deposit accounts primarily as a result of the third quarter 2006 branch sales.

NONINTEREST EXPENSE

Second Quarter 2007 vs. Second Quarter 2006

Total noninterest expense decreased $9.2 million or 23.9 percent during the second quarter 2007 as compared to the second quarter 2006 primarily due to the following:
-- decreases in salaries and benefits of $6.0 million primarily due to the $2.5 million reduction in severance costs, $1.5 million reduction in salaries and other performance and incentive-based compensation, $831,000 reduction in pension and other retirement-related expenses, and $782,000 reduction in health care costs as a result of lower staffing levels -- decreases in data processing of $2.6 million primarily due to the $1.1 million in early termination fees on technology contracts incurred in the second quarter 2006 and the impact of First Financial's 2006 technology upgrade in which the company moved from an out-sourced to an in-house data processing environment -- decreases in professional services of $766,000 primarily due to 2006 costs associated with our branding initiative, branch staffing, and recruiting fees, combined with an overall reduction in outside consulting usage
Second Quarter 2007 vs. First Quarter 2007

On a linked-quarter basis, noninterest expense was $1.8 million or 5.7 percent less than the first quarter 2007. The decrease in noninterest expense was primarily due to decreased salaries and other performance and incentive- based compensation of $1.0 million and decreased severance costs of $805,000.

Year-to-Date 2007 vs. Year-to-Date 2006

Year-to-date noninterest expense was $60.7 million in 2007 compared to $77.6 million in 2006, a $16.9 million or 21.8 percent decrease. When the first six months of 2007 and 2006 are adjusted for the items shown below, noninterest expense decreased $9.4 million or 13.7 percent.
YTD 2Q07 YTD 2Q06 $ Change % Change Total noninterest expense $60,650 $77,561 $(16,911) (21.8)% Q1 items: Debt extinguishment prepayment penalty - (4,295) 4,295 - Losses on properties - (354) 354 - Severance (933) (155) (778) - Q1 items subtotal (933) (4,804) 3,871 - Q2 items: Technology contract early termination costs - (1,073) 1,073 - Losses on properties (58) (137) 79 - Severance (128) (2,601) 2,473 - Q2 items subtotal (186) (3,811) 3,625 - Adjusted total noninterest expense $59,531 $68,946 $(9,415) (13.7)%
The following items contributed to the adjusted $9.4 million decrease in noninterest expense from the first six months of 2006:
-- decreases in salaries and benefits of $5.5 million, excluding the year- to-date $1.7 million reduction in severance costs, primarily due to the $2.2 million reduction in salaries and other performance and incentive- based compensation, $1.8 million reduction in pension and other retirement-related expenses, and $828,000 reduction in health care costs -- decreases in data processing of $2.6 million, excluding the $1.1 million reduction in technology early termination fees, primarily due to the impact of First Financial's 2006 technology upgrade in which the company moved from an out-sourced to an in-house data processing environment -- decreases in professional services of $1.4 million primarily due to 2006 costs associated with our corporate reorganization, branding initiative, branch staffing, and recruiting fees, combined with an overall reduction in outside consulting usage
INCOME TAXES

Income tax expense was $4.0 million and $2.4 million for the three months ended June 30, 2007, and 2006, respectively. The effective tax rate for the second quarter 2007, and 2006, was 33.0 percent and 35.3 percent, respectively. Income tax expense was $8.2 million and $3.9 million for the six months ended June 30, 2007, and 2006, respectively. The effective tax rate for the six months ended June 30, 2007, and 2006, was 33.0 percent and 32.2 percent, respectively.

CREDIT QUALITY

Second Quarter 2007 vs. Second Quarter 2006

Second quarter 2007 net charge-offs were $1.4 million, an annualized 23 basis points of average loans, compared to second quarter 2006 net charge-offs of $2.6 million, an annualized 40 basis points of average loans, excluding the second quarter 2006 $8.3 million impact from the transfer of approximately $38 million of loans to loans held for sale. This lower level of net charge-offs in the second quarter 2007 is primarily due to lower commercial and commercial real estate loan charge-offs.

Total underperforming assets at the end of the second quarter 2007 of $17.2 million increased $1.4 million from $15.8 million at the end of the second quarter 2006 primarily due to higher commercial and commercial real estate nonaccrual loans. The ratio of nonperforming assets to ending loans increased from 58 basis points at the end of the second quarter 2006 to 67 basis points at the end of the second quarter 2007, partially driven by a reduction in total loans.

First Financial's allowance for loan and lease losses to period-end loans ratio was 1.10 percent, flat compared to the first quarter 2007. A large percentage of underperforming assets are secured by real estate and this collateral has been appropriately considered in establishing the allowance for loan and lease losses at June 30, 2007. It is management's belief that the second quarter 2007 allowance for loan and lease losses of $28.1 million is adequate to absorb probable credit losses inherent in the portfolio.

Second Quarter 2007 vs. First Quarter 2007

Second quarter 2007 net charge-offs were $1.4 million, an annualized 23 basis points of average loans, compared to first quarter 2007 net charge-offs of $1.3 million, an annualized 22 basis points of average loans.

Total underperforming assets increased $3.1 million from $14.1 million at the end of the first quarter 2007 to $17.2 million at the end of the second quarter 2007 primarily due to the transfer of four commercial loan relationships to nonaccrual status. The ratio of nonperforming assets to ending loans increased from 56 basis points at the end of the first quarter 2007 to 67 basis points at the end of the second quarter 2007.

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

Earnings Conference Call and Webcast

On July 25, 2007, First Financial will host an earnings conference call that will be webcast live at 1:00 p.m. EDT. The presenters will be Claude E. Davis, president and chief executive officer, and J. Franklin Hall, senior vice president and chief financial officer. Anyone may participate in the conference call by calling 1-877-407-8031 (no passcode needed) or by logging on to the company's website (www.bankatfirst.com) for a live audio webcast of the call. Click on the Investor Relations link and then on Webcast. Listeners should allow an extra five minutes to be connected to the call or webcast. The event will be archived on the company's website for one year. Questions regarding this information should be directed to the Media Contact, Cheryl Lipp, or the Analyst Contact, J. Franklin Hall.

This release should be read in conjunction with the consolidated financial statements, notes, and tables attached and in the First Financial Bancorp Annual Report on Form 10-K for the year ended December 31, 2006. Management's analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risk and uncertainties that may cause actual results to differ materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, the ability of the company to implement its Strategic Plan, the strength of the local economies in which operations are conducted, the effects of and changes in policies and laws of regulatory agencies, inflation, and interest rates. For further discussion of certain factors that may cause such forward-looking statements to differ materially from actual results, refer to the 2006 Form 10-K and other public documents filed with the SEC. These documents are available on our investor relations website at www.bankatfirst.com and on the SEC's website at www.sec.gov.
FIRST FINANCIAL BANCORP. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousand, except per share) (Unaudited) Three months ended, Jun. 30, Mar. 31, Dec. 31, 2007 2007 2006 RESULTS OF OPERATIONS Net interest income $29,601 $30,403 $30,104 Net income $8,172 $8,435 $827 Net earnings per common share - basic $0.21 $0.22 $0.02 Net earnings per common share - diluted $0.21 $0.22 $0.02 Dividends declared per common share $0.16 $0.16 $0.16 KEY FINANCIAL RATIOS Return on average assets 1.00% 1.04% 0.10% Return on average shareholders' equity 11.61% 11.94% 1.10% Return on average tangible shareholders' equity 12.95% 13.31% 1.24% Net interest margin 3.97% 4.12% 3.95% Net interest margin (fully tax equivalent) (1) 4.05% 4.20% 4.05% Average shareholders' equity to average assets 8.58% 8.68% 8.98% Tier 1 Ratio (2) 11.13% 11.57% 11.73% Total Capital Ratio (2) 12.18% 12.64% 12.81% Leverage Ratio (2) 9.04% 9.08% 9.02% AVERAGE BALANCE SHEET ITEMS Loans less unearned income (3) $2,530,638 $2,490,252 $2,497,389 Investment securities 364,050 367,407 381,985 Other earning assets 93,986 134,635 142,320 Total earning assets $2,988,674 $2,992,294 $3,021,694 Total assets $3,291,756 $3,299,346 $3,332,388 Noninterest-bearing deposits $405,179 $401,698 $418,009 Interest-bearing deposits 2,403,919 2,406,913 2,392,092 Total deposits $2,809,098 $2,808,611 $2,810,101 Borrowings $177,472 $181,613 $192,811 Shareholders' equity $282,354 $286,453 $299,320 CREDIT QUALITY RATIOS Allowance to ending loans 1.10% 1.10% 1.10% Allowance to nonperforming assets 165.06% 195.42% 208.01% Nonperforming assets to ending loans, plus OREO 0.67% 0.56% 0.53% Nonperforming assets to total assets 0.52% 0.42% 0.40% Net charge-offs to average loans (annualized) (4) 0.23% 0.22% 1.64% Three months ended, Sep. 30, Jun. 30, 2006 2006 RESULTS OF OPERATIONS Net interest income $30,823 $31,947 Net income $12,119 $4,358 Net earnings per common share - basic $0.31 $0.11 Net earnings per common share - diluted $0.31 $0.11 Dividends declared per common share $0.16 $0.16 KEY FINANCIAL RATIOS Return on average assets 1.40% 0.51% Return on average shareholders' equity 16.09% 5.90% Return on average tangible shareholders' equity 18.20% 6.70% Net interest margin 3.93% 4.11% Net interest margin (fully tax equivalent) (1) 4.01% 4.20% Average shareholders' equity to average assets 8.72% 8.64% Tier 1 Ratio (2) 11.89% 11.37% Total Capital Ratio (2) 13.14% 12.52% Leverage Ratio (2) 8.85% 8.72% AVERAGE BALANCE SHEET ITEMS Loans less unearned income (3) $2,580,005 $2,614,598 Investment securities 370,095 380,532 Other earning assets 158,940 122,413 Total earning assets $3,109,040 $3,117,543 Total assets $3,426,417 $3,428,839 Noninterest-bearing deposits $401,685 $424,227 Interest-bearing deposits 2,492,898 2,477,026 Total deposits $2,894,583 $2,901,253 Borrowings $200,856 $202,792 Shareholders' equity $298,909 $296,087 CREDIT QUALITY RATIOS Allowance to ending loans 1.27% 1.15% Allowance to nonperforming assets 143.94% 199.38% Nonperforming assets to ending loans, plus OREO 0.88% 0.58% Nonperforming assets to total assets 0.67% 0.44% Net charge-offs to average loans (annualized) (4) 0.17% 1.68% Six months ended Jun. 30, 2007 2006 RESULTS OF OPERATIONS Net interest income $60,004 $64,146 Net income $16,607 $8,325 Net earnings per common share - basic $0.43 $0.21 Net earnings per common share - diluted $0.43 $0.21 Dividends declared per common share $0.32 $0.32 KEY FINANCIAL RATIOS Return on average assets 1.02% 0.48% Return on average shareholders' equity 11.78% 5.65% Return on average tangible shareholders' equity 13.13% 6.40% Net interest margin 4.05% 4.07% Net interest margin (fully tax equivalent) (1) 4.12% 4.16% Average shareholders' equity to average assets 8.63% 8.53% Tier 1 Ratio (2) 11.13% 11.37% Total Capital Ratio (2) 12.18% 12.52% Leverage Ratio (2) 9.04% 8.72% AVERAGE BALANCE SHEET ITEMS Loans less unearned income (3) $2,510,557 $2,605,725 Investment securities 365,719 438,707 Other earning assets 114,198 131,910 Total earning assets $2,990,474 $3,176,342 Total assets $3,295,530 $3,486,803 Noninterest-bearing deposits $403,448 $420,664 Interest-bearing deposits 2,405,408 2,481,655 Total deposits $2,808,856 $2,902,319 Borrowings $179,531 $257,961 Shareholders' equity $284,391 $297,325 CREDIT QUALITY RATIOS Allowance to ending loans 1.10% 1.15% Allowance to nonperforming assets 165.06% 199.38% Nonperforming assets to ending loans, plus OREO 0.67% 0.58% Nonperforming assets to total assets 0.52% 0.44% Net charge-offs to average loans (annualized) (4) 0.22% 1.05% (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. (2) June 30, 2007 regulatory capital ratios are preliminary. (3) Includes loans held for sale. (4) December 31, 2006 and June 30, 2006 charge-offs include $4,375 and $8,356, respectively, in loans held for sale write-downs to the lower of cost or estimated fair value. FIRST FINANCIAL BANCORP. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) Three months ended, Six months ended, Jun. 30, Jun. 30, 2007 2006 % Change 2007 2006 % Change Interest income Loans, including fees $45,291 $44,386 2.0% $90,355 $87,243 3.6% Investment securities Taxable 3,762 3,798 (0.9%) 7,653 8,939 (14.4%) Tax-exempt 911 1,057 (13.8%) 1,820 2,161 (15.8%) Total investment securities interest 4,673 4,855 (3.7%) 9,473 11,100 (14.7%) Federal funds sold 1,241 1,500 (17.3%) 2,997 3,082 (2.8%) Total interest income 51,205 50,741 0.9% 102,825 101,425 1.4% Interest expense Deposits 19,409 16,554 17.2% 38,418 31,487 22.0% Short-term borrowings 984 892 10.3% 1,980 1,788 10.7% Long-term borrowings 542 709 (23.6%) 1,101 2,767 (60.2%) Subordinated debentures and capital securities 669 639 4.7% 1,322 1,237 6.9% Total interest expense 21,604 18,794 15.0% 42,821 37,279 14.9% Net interest income 29,601 31,947 (7.3%) 60,004 64,146 (6.5%) Provision for loan and lease losses 2,098 360 482.8% 3,454 1,112 210.6% Net interest income after provision for loan and lease losses 27,503 31,587 (12.9%) 56,550 63,034 (10.3%) Noninterest income Service charges on deposit accounts 5,296 5,431 (2.5%) 10,040 10,520 (4.6%) Trust and wealth management fees 4,526 4,139 9.4% 8,686 8,328 4.3% Bankcard income 1,424 1,165 22.2% 2,664 2,288 16.4% Net gains from sales of loans 184 259 (29.0%) 346 504 (31.3%) Gain on sale of mortgage servicing rights 0 0 N/M 1,061 0 N/M Losses on sales of investment securities 0 0 N/M 0 (476) N/M Other 2,702 2,835 (4.7%) 6,079 5,636 7.9% Total noninterest income 14,132 13,829 2.2% 28,876 26,800 7.7% Noninterest expenses Salaries and employee benefits 17,134 23,110 (25.9%) 36,095 43,327 (16.7%) Net occupancy 2,484 2,698 (7.9%) 5,291 5,537 (4.4%) Furniture and equipment 1,708 1,334 28.0% 3,335 2,814 18.5% Data processing 818 3,393 (75.9%) 1,663 5,337 (68.8%) Marketing 642 647 (0.8%) 1,511 1,330 13.6% Communication 798 642 24.3% 1,663 1,309 27.0% Professional services 1,063 1,829 (41.9%) 2,069 3,419 (39.5%) Debt extinguishment 0 0 N/M 0 4,295 N/M Other 4,793 5,031 (4.7%) 9,023 10,193 (11.5%) Total noninterest expenses 29,440 38,684 (23.9%) 60,650 77,561 (21.8%) Income before income taxes 12,195 6,732 81.1% 24,776 12,273 101.9% Income tax expense (benefit) 4,023 2,374 69.5% 8,169 3,948 106.9% Net income $8,172 $4,358 87.5% $16,607 $8,325 99.5% ADDITIONAL DATA Net earnings per common share - basic $0.21 $0.11 $0.43 $0.21 Net earnings per common share - diluted $0.21 $0.11 $0.43 $0.21 Dividends declared per common share $0.16 $0.16 $0.32 $0.32 Book value per common share $7.18 $7.37 $7.18 $7.37 Return on average assets 1.00% 0.51% 1.02% 0.48% Return on average shareholders' equity 11.61% 5.90% 11.78% 5.65% Interest income $51,205 $50,741 0.9% $102,825 $101,425 1.4% Tax equivalent adjustment 580 696 (16.7%) 1,156 1,357 (14.8%) Interest income - tax equivalent 51,785 51,437 0.7% 103,981 102,782 1.2% Interest expense 21,604 18,794 15.0% 42,821 37,279 14.9% Net interest income - tax equivalent $30,181 $32,643 (7.5%) $61,160 $65,503 (6.6%) Net interest margin 3.97% 4.11% 4.05% 4.07% Net interest margin (fully tax equivalent) (1) 4.05% 4.20% 4.12% 4.16% Full-time equivalent employees 1,158 1,365 1,158 1,365 (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) 2007 % Change Second First Year-to- Linked Quarter Quarter Date Qtr. Interest income Loans, including fees $45,291 $45,064 $90,355 0.5% Investment securities Taxable 3,762 3,891 7,653 (3.3%) Tax-exempt 911 909 1,820 0.2% Total investment securities interest 4,673 4,800 9,473 (2.6%) Federal funds sold 1,241 1,756 2,997 (29.3%) Total interest income 51,205 51,620 102,825 (0.8%) Interest expense Deposits 19,409 19,009 38,418 2.1% Short-term borrowings 984 996 1,980 (1.2%) Long-term borrowings 542 559 1,101 (3.0%) Subordinated debentures and capital securities 669 653 1,322 2.5% Total interest expense 21,604 21,217 42,821 1.8% Net interest income 29,601 30,403 60,004 (2.6%) Provision for loan and lease losses 2,098 1,356 3,454 54.7% Net interest income after provision for loan and lease losses 27,503 29,047 56,550 (5.3%) Noninterest income Service charges on deposit accounts 5,296 4,744 10,040 11.6% Trust and wealth management fees 4,526 4,160 8,686 8.8% Bankcard income 1,424 1,240 2,664 14.8% Net gains from sales of loans 184 162 346 13.6% Gain on sale of mortgage servicing rights 0 1,061 1,061 (100.0%) Other 2,702 3,377 6,079 (20.0%) Total noninterest income 14,132 14,744 28,876 (4.2%) Noninterest expenses Salaries and employee benefits 17,134 18,961 36,095 (9.6%) Net occupancy 2,484 2,807 5,291 (11.5%) Furniture and equipment 1,708 1,627 3,335 5.0% Data processing 818 845 1,663 (3.2%) Marketing 642 869 1,511 (26.1%) Communication 798 865 1,663 (7.7%) Professional services 1,063 1,006 2,069 5.7% Other 4,793 4,230 9,023 13.3% Total noninterest expenses 29,440 31,210 60,650 (5.7%) Income before income taxes 12,195 12,581 24,776 (3.1%) Income tax expense (benefit) 4,023 4,146 8,169 (3.0%) Net income $8,172 $8,435 $16,607 (3.1%) ADDITIONAL DATA Net earnings per common share - basic $0.21 $0.22 $0.43 Net earnings per common share - diluted $0.21 $0.22 $0.43 Dividends declared per common share $0.16 $0.16 $0.32 Book value per common share $7.18 $7.29 $7.18 Return on average assets 1.00% 1.04% 1.02% Return on average shareholders' equity 11.61% 11.94% 11.78% Interest income $51,205 $51,620 $102,825 (0.8%) Tax equivalent adjustment 580 576 1,156 0.7% Interest income - tax equivalent 51,785 52,196 103,981 (0.8%) Interest expense 21,604 21,217 42,821 1.8% Net interest income - tax equivalent $30,181 $30,979 $61,160 (2.6%) Net interest margin 3.97% 4.12% 4.05% Net interest margin (fully tax equivalent) (1) 4.05% 4.20% 4.12% Full-time equivalent employees 1,158 1,166 1,158 (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) 2006 Fourth Third Second First Full Quarter Quarter Quarter Quarter Year Interest income Loans, including fees $44,972 $45,484 $44,386 $42,857 $177,699 Investment securities Taxable 3,925 3,728 3,798 5,141 16,592 Tax-exempt 985 996 1,057 1,104 4,142 Total investment securities interest 4,910 4,724 4,855 6,245 20,734 Federal funds sold 1,894 2,116 1,500 1,582 7,092 Total interest income 51,776 52,324 50,741 50,684 205,525 Interest expense Deposits 19,349 19,176 16,554 14,933 70,012 Short-term borrowings 1,027 953 892 896 3,768 Long-term borrowings 609 686 709 2,058 4,062 Subordinated debentures and capital securities 687 686 639 598 2,610 Total interest expense 21,672 21,501 18,794 18,485 80,452 Net interest income 30,104 30,823 31,947 32,199 125,073 Provision for loan and lease losses 5,822 2,888 360 752 9,822 Net interest income after provision for loan and lease losses 24,282 27,935 31,587 31,447 115,251 Noninterest income Service charges on deposit accounts 5,766 5,672 5,431 5,089 21,958 Trust and wealth management fees 3,987 3,949 4,139 4,189 16,264 Bankcard income 1,126 1,023 1,165 1,123 4,437 Net gains from sales of loans 234 2,468 259 245 3,206 Gains on sales of branches 0 12,545 0 0 12,545 Losses on sales of investment securities 0 0 0 (476) (476) Other 1,791 2,623 2,835 2,801 10,050 Total noninterest income 12,904 28,280 13,829 12,971 67,984 Noninterest expenses Salaries and employee benefits 21,234 19,968 23,110 20,217 84,529 Net occupancy 2,699 2,802 2,698 2,839 11,038 Furniture and equipment 1,496 1,297 1,334 1,480 5,607 Data processing 1,574 3,058 3,393 1,944 9,969 Marketing 1,022 1,138 647 683 3,490 Communication 1,204 821 642 667 3,334 Professional services 2,074 2,342 1,829 1,590 7,835 Debt extinguishment 0 0 0 4,295 4,295 Other 6,466 5,759 5,031 5,162 22,418 Total noninterest expenses 37,769 37,185 38,684 38,877 152,515 Earnings before income taxes (583) 19,030 6,732 5,541 30,720 Income tax expense (benefit) (1,410) 6,911 2,374 1,574 9,449 Net earnings $827 $12,119 $4,358 $3,967 $21,271 ADDITIONAL DATA Net earnings per common share - basic $0.02 $0.31 $0.11 $0.10 $0.54 Net earnings per common share - diluted $0.02 $0.31 $0.11 $0.10 $0.54 Dividends declared per common share $0.16 $0.16 $0.16 $0.16 $0.64 Book value per common share $7.27 $7.58 $7.37 $7.50 $7.27 Return on average assets 0.10% 1.40% 0.51% 0.45% 0.62% Return on average shareholders' equity 1.10% 16.09% 5.90% 5.39% 7.13% Interest income $51,776 $52,324 $50,741 $50,684 $205,525 Tax equivalent adjustment 712 586 696 661 2,655 Interest income - tax equivalent 52,488 52,910 51,437 51,345 208,180 Interest expense 21,672 21,501 18,794 18,485 80,452 Net interest income - tax equivalent $30,816 $31,409 $32,643 $32,860 $127,728 Net interest margin 3.95% 3.93% 4.11% 4.04% 4.01% Net interest margin (fully tax equivalent) (1) 4.05% 4.01% 4.20% 4.12% 4.09% Full-time equivalent employees 1,214 1,226 1,365 1,467 1,214 (1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. N/M = Not meaningful. FIRST FINANCIAL BANCORP. CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) Jun. 30, Mar. 31, Dec. 31, 2007 2007 2006 ASSETS Cash and due from banks $87,808 $87,969 $119,407 Federal funds sold 55,000 159,200 102,000 Investment securities held-to- maturity 5,711 7,769 7,995 Investment securities available- for-sale 313,575 325,755 324,259 Other investments 33,969 33,969 33,969 Loans Commercial 747,292 709,341 673,445 Real estate - construction 125,732 107,867 101,688 Real estate - commercial 676,679 647,126 623,603 Real estate - retail 580,005 604,213 628,579 Installment 162,506 180,116 198,881 Home equity 235,734 228,660 228,128 Credit card 24,488 23,678 24,587 Lease financing 608 732 923 Total loans 2,553,044 2,501,733 2,479,834 Less Allowance for loan and lease losses 28,060 27,407 27,386 Net loans 2,524,984 2,474,326 2,452,448 Loans held for sale 0 0 8,824 Premises and equipment 79,079 79,553 79,609 Goodwill 28,261 28,261 28,261 Other intangibles 1,003 1,195 5,842 Accrued interest and other assets 143,277 129,991 138,985 Total Assets $3,272,667 $3,327,988 $3,301,599 LIABILITIES Deposits Interest-bearing $594,788 $627,996 $667,305 Savings 588,229 564,340 526,663 Time 1,211,182 1,218,823 1,179,852 Total interest-bearing deposits 2,394,199 2,411,159 2,373,820 Noninterest-bearing 399,260 420,521 424,138 Total deposits 2,793,459 2,831,680 2,797,958 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 31,700 39,998 57,201 Other 52,500 52,246 39,500 Total short-term borrowings 84,200 92,244 96,701 Federal Home Loan Bank long-term debt 59,021 60,298 63,762 Other long-term debt 30,930 30,930 30,930 Accrued interest and other liabilities 25,831 28,481 26,769 Total Liabilities 2,993,441 3,043,633 3,016,120 SHAREHOLDERS' EQUITY Common stock 390,545 393,091 392,736 Retained earnings 75,444 73,505 71,320 Accumulated comprehensive income (16,168) (13,121) (13,375) Treasury stock, at cost (170,595) (169,120) (165,202) Total Shareholders' Equity 279,226 284,355 285,479 Total Liabilities and Shareholders' Equity $3,272,667 $3,327,988 $3,301,599 % Change % Change Sep. 30, Jun. 30, Linked Compara- 2006 2006 Qtr. ble Qtr. ASSETS Cash and due from banks $117,067 $152,581 (0.2%) (42.5%) Federal funds sold 101,000 79,000 (65.5%) (30.4%) Investment securities held- to-maturity 8,059 8,571 (26.5%) (33.4%) Investment securities available-for-sale 329,225 326,633 (3.7%) (4.0%) Other investments 34,137 34,827 0.0% (2.5%) Loans Commercial 663,522 646,662 5.4% 15.6% Real estate - construction 92,434 95,603 16.6% 31.5% Real estate - commercial 625,535 640,869 4.6% 5.6% Real estate - retail 653,652 721,383 (4.0%) (19.6%) Installment 219,677 251,463 (9.8%) (35.4%) Home equity 231,741 226,974 3.1% 3.9% Credit card 23,083 22,563 3.4% 8.5% Lease financing 1,202 1,396 (16.9%) (56.4%) Total loans 2,510,846 2,606,913 2.1% (2.1%) Less Allowance for loan and lease losses 31,888 30,085 2.4% (6.7%) Net loans 2,478,958 2,576,828 2.0% (2.0%) Loans held for sale 0 30,747 N/M N/M Premises and equipment 78,820 78,707 (0.6%) 0.5% Goodwill 28,261 28,261 0.0% 0.0% Other intangibles 6,471 6,927 (16.1%) (85.5%) Accrued interest and other assets 125,084 132,303 10.2% 8.3% Total Assets $3,307,082 $3,455,385 (1.7%) (5.3%) LIABILITIES Deposits Interest-bearing $672,841 $701,412 (5.3%) (15.2%) Savings 523,884 549,732 4.2% 7.0% Time 1,198,059 1,243,896 (0.6%) (2.6%) Total interest-bearing deposits 2,394,784 2,495,040 (0.7%) (4.0%) Noninterest-bearing 381,937 433,372 (5.1%) (7.9%) Total deposits 2,776,721 2,928,412 (1.3%) (4.6%) Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 54,129 48,596 (20.7%) (34.8%) Other 39,000 36,500 0.5% 43.8% Total short-term borrowings 93,129 85,096 (8.7%) (1.1%) Federal Home Loan Bank long- term debt 68,197 82,025 (2.1%) (28.0%) Other long-term debt 30,930 30,930 0.0% 0.0% Accrued interest and other liabilities 38,580 36,688 (9.3%) (29.6%) Total Liabilities 3,007,557 3,163,151 (1.6%) (5.4%) SHAREHOLDERS' EQUITY Common stock 392,156 391,566 (0.6%) (0.3%) Retained earnings 76,783 70,997 2.6% 6.3% Accumulated comprehensive income (8,581) (11,875) 23.2% 36.2% Treasury stock, at cost (160,833) (158,454) 0.9% 7.7% Total Shareholders' Equity 299,525 292,234 (1.8%) (4.5%) Total Liabilities and Shareholders' Equity $3,307,082 $3,455,385 (1.7%) (5.3%) N/M = Not meaningful. FIRST FINANCIAL BANCORP. AVERAGE CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) Quarterly Averages Jun. 30, Mar. 31, Dec. 31, 2007 2007 2006 ASSETS Cash and due from banks $94,541 $94,384 $106,010 Federal funds sold 93,986 134,635 142,320 Investment securities 364,050 367,407 381,985 Loans Commercial 733,936 685,585 664,476 Real estate - construction 118,425 100,192 96,280 Real estate - commercial 657,959 637,642 623,632 Real estate - retail 592,811 616,892 649,638 Installment 170,748 189,397 209,053 Home equity 231,982 229,112 229,900 Credit card 23,944 23,809 23,247 Lease financing 671 830 1,067 Total loans 2,530,476 2,483,459 2,497,293 Less Allowance for loan and lease losses 27,482 27,770 30,894 Net loans 2,502,994 2,455,689 2,466,399 Loans held for sale 162 6,793 96 Premises and equipment 79,491 79,819 79,123 Goodwill 28,261 28,261 28,263 Other intangibles 1,096 5,464 6,261 Accrued interest and other assets 127,175 126,894 121,931 Total Assets $3,291,756 $3,299,346 $3,332,388 LIABILITIES Deposits Interest-bearing $606,320 $646,548 $669,076 Savings 578,357 545,101 526,550 Time 1,219,242 1,215,264 1,196,466 Total interest-bearing deposits 2,403,919 2,406,913 2,392,092 Noninterest-bearing 405,179 401,698 418,009 Total deposits 2,809,098 2,808,611 2,810,101 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 34,280 46,397 59,196 Other 52,849 42,136 35,648 Total short-term borrowings 87,129 88,533 94,844 Federal Home Loan Bank long-term debt 59,413 62,150 67,037 Other long-term debt 30,930 30,930 30,930 Total borrowed funds 177,472 181,613 192,811 Accrued interest and other liabilities 22,832 22,669 30,156 Total Liabilities 3,009,402 3,012,893 3,033,068 SHAREHOLDERS' EQUITY Common stock 391,536 392,908 392,931 Retained earnings 74,049 74,497 78,162 Accumulated comprehensive income (13,739) (13,725) (8,768) Treasury stock, at cost (169,492) (167,227) (163,005) Total Shareholders' Equity 282,354 286,453 299,320 Total Liabilities and Shareholders' Equity $3,291,756 $3,299,346 $3,332,388 Quarterly Averages Sep. 30, Jun. 30, 2006 2006 ASSETS Cash and due from banks $109,896 $115,406 Federal funds sold 158,940 122,413 Investment securities 370,095 380,532 Loans Commercial 642,378 626,912 Real estate - construction 94,135 83,719 Real estate - commercial 611,602 651,156 Real estate - retail 709,539 743,948 Installment 235,492 262,019 Home equity 229,583 222,878 Credit card 22,741 22,017 Lease financing 1,290 1,599 Total loans 2,546,760 2,614,248 Less Allowance for loan and lease losses 30,284 40,445 Net loans 2,516,476 2,573,803 Loans held for sale 33,245 350 Premises and equipment 78,798 76,150 Goodwill 28,260 28,261 Other intangibles 6,721 7,214 Accrued interest and other assets 123,986 124,710 Total Assets $3,426,417 $3,428,839 LIABILITIES Deposits Interest-bearing $724,253 $702,138 Savings 536,534 540,242 Time 1,232,111 1,234,646 Total interest-bearing deposits 2,492,898 2,477,026 Noninterest-bearing 401,685 424,227 Total deposits 2,894,583 2,901,253 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 53,958 49,563 Other 37,673 39,819 Total short-term borrowings 91,631 89,382 Federal Home Loan Bank long-term debt 78,295 82,480 Other long-term debt 30,930 30,930 Total borrowed funds 200,856 202,792 Accrued interest and other liabilities 32,069 28,707 Total Liabilities 3,127,508 3,132,752 SHAREHOLDERS' EQUITY Common stock 391,325 392,354 Retained earnings 77,487 73,237 Accumulated comprehensive income (10,708) (9,999) Treasury stock, at cost (159,195) (159,505) Total Shareholders' Equity 298,909 296,087 Total Liabilities and Shareholders' Equity $3,426,417 $3,428,839 Year-to-Date Averages Jun. 30, 2007 2006 ASSETS Cash and due from banks $94,463 $119,246 Federal funds sold 114,198 131,910 Investment securities 365,719 438,707 Loans Commercial 706,790 603,924 Real estate - construction 109,359 84,690 Real estate - commercial 650,961 646,795 Real estate - retail 604,785 753,100 Installment 180,021 274,531 Home equity 230,555 218,799 Credit card 23,877 21,883 Lease financing 750 1,827 Total loans 2,507,098 2,605,549 Less Allowance for loan and lease losses 27,625 41,418 Net loans 2,479,473 2,564,131 Loans held for sale 3,459 176 Premises and equipment 79,654 74,860 Goodwill 28,261 28,198 Other intangibles 3,268 7,457 Accrued interest and other assets 127,035 122,118 Total Assets $3,295,530 $3,486,803 LIABILITIES Deposits Interest-bearing $626,323 $714,351 Savings 561,821 528,985 Time 1,217,264 1,238,319 Total interest-bearing deposits 2,405,408 2,481,655 Noninterest-bearing 403,448 420,664 Total deposits 2,808,856 2,902,319 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 40,305 50,572 Other 47,522 42,804 Total short-term borrowings 87,827 93,376 Federal Home Loan Bank long-term debt 60,774 133,655 Other long-term debt 30,930 30,930 Total borrowed funds 179,531 257,961 Accrued interest and other liabilities 22,752 29,198 Total Liabilities 3,011,139 3,189,478 SHAREHOLDERS' EQUITY Common stock 392,218 392,509 Retained earnings 74,271 73,472 Accumulated comprehensive income (13,732) (8,776) Treasury stock, at cost (168,366) (159,880) Total Shareholders' Equity 284,391 297,325 Total Liabilities and Shareholders' Equity $3,295,530 $3,486,803 FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1) (Dollars in thousands) (Unaudited) Quarterly Averages Jun. 30, 2007 Balance Yield Earning assets Investment securities $364,050 5.15% Interest-bearing deposits with other banks Federal funds sold 93,986 5.30% Gross loans (2) 2,530,638 7.18% Total earning assets 2,988,674 6.87% Nonearning assets Allowance for loan losses (27,482) Cash and due from banks 94,541 Accrued interest and other assets 236,023 Total assets $3,291,756 Interest-bearing liabilities Total interest-bearing deposits $2,403,919 3.24% Borrowed funds Short-term borrowings 87,129 4.53% Federal Home Loan Bank long-term debt 59,413 3.66% Other long-term debt 30,930 8.68% Total borrowed funds 177,472 4.96% Total interest-bearing liabilities 2,581,391 3.36% Noninterest-bearing liabilities Noninterest bearing demand deposits 405,179 Other liabilities 22,832 Shareholders' equity 282,354 Total liabilities & shareholders' equity $3,291,756 Net interest income (1) $29,601 Net interest spread (1) 3.51% Net interest margin (1) 3.97% Quarterly Averages Mar. 31, 2007 Jun. 30, 2006 Balance Yield Balance Yield Earning assets Investment securities $367,407 5.30% $380,532 5.12% Interest-bearing deposits with other banks Federal funds sold 134,635 5.29% 122,413 4.91% Gross loans (2) 2,490,252 7.34% 2,614,598 6.81% Total earning assets 2,992,294 7.00% 3,117,543 6.53% Nonearning assets Allowance for loan losses (27,770) (40,445) Cash and due from banks 94,384 115,406 Accrued interest and other assets 240,438 236,335 Total assets $3,299,346 $3,428,839 Interest-bearing liabilities Total interest-bearing deposits $2,406,913 3.20% $2,477,026 2.68% Borrowed funds Short-term borrowings 88,533 4.56% 89,382 4.00% Federal Home Loan Bank long-term debt 62,150 3.65% 82,480 3.45% Other long-term debt 30,930 8.56% 30,930 8.29% Total borrowed funds 181,613 4.93% 202,792 4.43% Total interest-bearing liabilities 2,588,526 3.32% 2,679,818 2.81% Noninterest-bearing liabilities Noninterest bearing demand deposits 401,698 424,227 Other liabilities 22,669 28,707 Shareholders' equity 286,453 296,087 Total liabilities & shareholders' equity $3,299,346 $3,428,839 Net interest income (1) $30,403 $31,947 Net interest spread (1) 3.68% 3.72% Net interest margin (1) 4.12% 4.11% Year-to-Date Averages Jun. 30, 2007 Jun. 30, 2006 Balance Yield Balance Yield Earning assets Investment securities $365,719 5.22% $438,707 5.10% Interest-bearing deposits with other banks Federal funds sold 114,198 5.29% 131,910 4.71% Gross loans (2) 2,510,557 7.26% 2,605,725 6.75% Total earning assets 2,990,474 6.93% 3,176,342 6.44% Nonearning assets Allowance for loan losses (27,625) (41,418) Cash and due from banks 94,463 119,246 Accrued interest and other assets 238,218 232,633 Total assets $3,295,530 $3,486,803 Interest-bearing liabilities Total interest-bearing deposits $2,405,408 3.22% $2,481,655 2.56% Borrowed funds Short-term borrowings 87,827 4.55% 93,376 3.86% Federal Home Loan Bank long-term debt 60,774 3.65% 133,655 4.17% Other long-term debt 30,930 8.62% 30,930 8.06% Total borrowed funds 179,531 4.95% 257,961 4.53% Total interest-bearing liabilities 2,584,939 3.34% 2,739,616 2.74% Noninterest-bearing liabilities Noninterest bearing demand deposits 403,448 420,664 Other liabilities 22,752 29,198 Shareholders' equity 284,391 297,325 Total liabilities & shareholders' equity $3,295,530 $3,486,803 Net interest income (1) $60,004 $64,146 Net interest spread (1) 3.59% 3.70% Net interest margin (1) 4.05% 4.07% (1) Not tax equivalent. (2) Loans held for sale and nonaccrual loans are both included in gross loans. FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1) (Dollars in thousands) (Unaudited) Linked Qtr. Income Comparable Qtr. Income Variance Variance Rate Volume Total Rate Volume Total Earning assets Investment securities $(136) $9 $(127) $30 $(212) $(182) Interest-bearing deposits with other banks Federal funds sold 2 (517) (515) 116 (375) (259) Gross loans (2) (986) 1,213 227 2,408 (1,503) 905 Total earning assets (1,120) 705 (415) 2,554 (2,090) 464 Nonearning assets Allowance for loan losses Cash and due from banks Accrued interest and other assets Total assets Interest-bearing liabilities Total interest-bearing deposits $211 $189 $400 $3,445 $(590) $2,855 Borrowed funds Short-term borrowings (7) (5) (12) 117 (25) 92 Federal Home Loan Bank long-term debt 2 (19) (17) 43 (210) (167) Other long-term debt 9 7 16 30 - 30 Total borrowed funds 4 (17) (13) 190 (235) (45) Total interest- bearing liabilities 215 172 387 3,635 (825) 2,810 Noninterest-bearing liabilities Noninterest bearing demand deposits Other liabilities Shareholders' equity Total liabilities & shareholders' equity Net interest income (1) $(1,335) $533 $(802) $(1,081) $(1,265) $(2,346) Net interest spread (1) Net interest margin (1) Year-to-Date Income Variance Rate Volume Total Earning assets Investment securities $264 $(1,891) $(1,627) Interest-bearing deposits with other banks Federal funds sold 380 (465) (85) Gross loans (2) 6,537 (3,425) 3,112 Total earning assets 7,181 (5,781) 1,400 Nonearning assets Allowance for loan losses Cash and due from banks Accrued interest and other assets Total assets Interest-bearing liabilities Total interest-bearing deposits $8,149 $(1,218) $6,931 Borrowed funds Short-term borrowings 317 (125) 192 Federal Home Loan Bank long-term debt (346) (1,320) (1,666) Other long-term debt 85 - 85 Total borrowed funds 56 (1,445) (1,389) Total interest-bearing liabilities 8,205 (2,663) 5,542 Noninterest-bearing liabilities Noninterest bearing demand deposits Other liabilities Shareholders' equity Total liabilities & shareholders' equity Net interest income (1) $(1,024) $(3,118) $(4,142) Net interest spread (1) Net interest margin (1) (1) Not tax equivalent. (2) Loans held for sale and nonaccrual loans are both included in gross loans. FIRST FINANCIAL BANCORP. CREDIT QUALITY (Dollars in thousands) (Unaudited) Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, 2007 2007 2006 2006 2006 ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY Balance at beginning of period $27,407 $27,386 $31,888 $30,085 $40,656 Provision for loan losses 2,098 1,356 5,822 2,888 360 Gross charge-offs Commercial 920 746 5,675 1,238 3,521 Commercial real estate 176 146 1,099 119 5,818 Retail real estate 57 116 2,729 111 1,910 Installment 604 741 776 391 562 Home equity 149 139 331 78 11 All other 224 265 306 220 189 Total gross charge-offs (1) 2,130 2,153 10,916 2,157 12,011 Recoveries Commercial 246 269 206 458 476 Commercial real estate 48 58 20 129 57 Retail real estate 10 18 4 130 78 Installment 288 346 292 315 425 Home equity 25 76 1 0 0 All other 68 51 69 40 44 Total recoveries 685 818 592 1,072 1,080 Total net charge-offs 1,445 1,335 10,324 1,085 10,931 Ending allowance for loan losses $28,060 $27,407 $27,386 $31,888 $30,085 NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) (1) Commercial 0.37% 0.28% 3.27% 0.48% 1.95% Commercial real estate 0.08% 0.06% 0.69% (0.01%) 3.55% Retail real estate 0.03% 0.06% 1.66% (0.01%) 0.99% Installment 0.74% 0.85% 0.92% 0.13% 0.21% Home equity 0.21% 0.11% 0.57% 0.13% 0.02% All other 0.44% 0.70% 0.78% 0.60% 0.54% Total net charge-offs (1) 0.23% 0.22% 1.64% 0.17% 1.68% (1) December 31, 2006 and June 30, 2006 charge-offs include $4,375 and $8,356, respectively, in loans held for sale write-downs to the lower of cost or estimated fair market value. COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS Nonaccrual loans Commercial $6,812 $2,529 $2,610 $8,056 $4,301 Commercial real estate 4,140 4,947 4,102 4,487 3,107 Retail real estate 1,694 1,311 1,482 3,604 2,362 Installment 681 920 1,328 1,619 1,529 Home equity 1,048 1,038 698 854 831 All other 21 20 16 72 72 Total nonaccrual loans 14,396 10,765 10,236 18,692 12,202 Restructured loans 581 588 596 603 610 Total nonperforming loans 14,977 11,353 10,832 19,295 12,812 Other real estate owned (OREO) 2,023 2,672 2,334 2,859 2,277 Total nonperforming assets 17,000 14,025 13,166 22,154 15,089 Accruing loans past due 90 days or more 165 81 185 788 758 Total underperforming assets $17,165 $14,106 $13,351 $22,942 $15,847 CREDIT QUALITY RATIOS Allowance for loan and lease losses to Nonaccrual loans 194.92% 254.59% 267.55% 170.60% 246.56% Nonperforming assets 165.06% 195.42% 208.01% 143.94% 199.38% Total ending loans 1.10% 1.10% 1.10% 1.27% 1.15% Nonaccrual loans to total loans 0.56% 0.43% 0.41% 0.74% 0.47% Nonperforming assets to Ending loans, plus OREO 0.67% 0.56% 0.53% 0.88% 0.58% Total assets 0.52% 0.42% 0.40% 0.67% 0.44% FIRST FINANCIAL BANCORP. CAPITAL DATA (Dollars in thousands) (Unaudited) Jun. 30, Mar. 31, Dec. 31, Sep. 30, 2007 2007 2006 2006 PER COMMON SHARE Market Price High $15.72 $16.76 $17.50 $16.04 Low $14.43 $14.83 $15.52 $14.20 Close $14.99 $15.11 $16.61 $15.91 Average shares outstanding - basic 38,965,409 39,121,105 39,377,735 39,612,408 Average shares outstanding - diluted 38,967,061 39,135,637 39,395,456 39,619,786 Ending shares outstanding 38,883,083 39,001,843 39,245,407 39,507,716 REGULATORY CAPITAL Preliminary Tier 1 Capital $295,996 $298,020 $299,199 $300,551 Tier 1 Ratio 11.13% 11.57% 11.73% 11.89% Total Capital $324,056 $325,550 $326,779 $332,302 Total Capital Ratio 12.18% 12.64% 12.81% 13.14% Total Risk-Adjusted Assets $2,659,915 $2,575,218 $2,551,505 $2,528,102 Leverage Ratio 9.04% 9.08% 9.02% 8.85% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 8.53% 8.54% 8.65% 9.06% Ending tangible shareholders' equity to ending tangible assets 7.71% 7.73% 7.69% 8.09% Average shareholders' equity to average assets 8.58% 8.68% 8.98% 8.72% Average tangible shareholders' equity to average tangible assets 7.76% 7.86% 8.04% 7.79% REPURCHASE PROGRAM (1) Shares repurchased 252,000 244,000 252,000 152,000 Average share repurchase price $15.07 $16.11 $16.64 $15.59 Total cost of shares repurchased $3,797,343 $3,930,945 $4,192,464 $2,369,286 Six months ended, Jun. 30, Jun. 30, Jun. 30, 2006 2007 2006 PER COMMON SHARE Market Price High $16.68 $16.76 $18.32 Low $14.63 $14.43 $14.63 Close $14.91 $14.99 $14.91 Average shares outstanding - basic 39,605,631 39,042,827 39,582,995 Average shares outstanding - diluted 39,619,729 39,050,919 39,616,238 Ending shares outstanding 39,660,341 38,883,083 39,660,341 REGULATORY CAPITAL Preliminary Tier 1 Capital $296,334 $295,996 $296,334 Tier 1 Ratio 11.37% 11.13% 11.37% Total Capital $326,464 $324,056 $326,464 Total Capital Ratio 12.52% 12.18% 12.52% Total Risk-Adjusted Assets $2,606,871 $2,659,915 $2,606,871 Leverage Ratio 8.72% 9.04% 8.72% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 8.46% 8.53% 8.46% Ending tangible shareholders' equity to ending tangible assets 7.52% 7.71% 7.52% Average shareholders' equity to average assets 8.64% 8.63% 8.53% Average tangible shareholders' equity to average tangible assets 7.69% 7.81% 7.58% REPURCHASE PROGRAM (1) Shares repurchased 0 496,000 0 Average share repurchase price - $15.58 - Total cost of shares repurchased - $7,728,288 - (1) Represents share repurchases as part of publicly announced plans.
SOURCE First Financial Bancorp



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