First Financial Bancorp
Investor Presentation
November 13, 2008
2
Forward-Looking Statement Disclosure
Certain statements that 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 Securities and
Exchange Commission, in press releases, investor presentations, 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,” “intends,” and other similar expressions are
intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such
statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are
not limited to, management’s ability to effectively execute its business plan; the risk that the strength of the United States economy in
general and the strength of the local economies in which First Financial conducts operations may be different than expected resulting
in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on First
Financial’s loan portfolio and allowance for loan and lease losses; the ability of financial institutions to access sources of liquidity at a
reasonable cost; the effects of and changes in policies and laws of regulatory agencies; inflation, interest rates, market and monetary
fluctuations; technological changes; mergers and acquisitions; the 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 Securities and Exchange Commission; the costs and effects of litigation and of unexpected or adverse
outcomes in such litigation; and the success of First Financial at managing the risks involved in the foregoing.
Such forward-looking statements speak only as of the date on which 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 statement is made
to reflect the occurrence of unanticipated events.
3
Investment Highlights
Successfully executing strategic plan
Stable and strong credit quality
Nonperforming loans / total loans: 0.53%*
Capital management focus
Tangible equity / tangible assets: 7.13%*
Strong liquidity position
Expense management
YTD-2008 noninterest expense declined 4.5% to $85.3 million from
$89.4 million YTD-2007
YTD-2008 = January 1, 2008 – September 30, 2008
YTD-2007 = January 1, 2007 – September 30, 2007
Corporate Overview (09/30/08)
Total Assets: $3.5 billion
Total Loans: $2.7 billion
Total Deposits: $2.7 billion
80 retail branch locations serving 9 regional
markets in 53 communities in 3 states
1,052 FTEs
Trading Statistics
Nasdaq: FFBC
Shares Outstanding: 37.5 million
Market Capitalization (10/31/08) : $504 million
Average Daily Trading Volume (YTD-2008):
178,000 shares
* YTD-2008
Investor Presentation
Our History . . . . . . . . . . . . .
5
Our Business . . . . . . . . . . .
8
Our Operating Model . . . . .
13
Financial Information . . . . .
19
Credit . . . . . . . . . . . . . . . .
29
Building on Results . . . . . .
32
Leadership . . . . . . . . . . . .
38
Our History
6
First Financial Bank was founded in 1863
16 bank/thrift acquisitions from 1989 through 1999 resulted in multiple bank
charters and brand identities
Established Strategic (Rebuilding & Reorganization) Plan in March 2005
History
Consolidated and streamlined company to establish one charter and one brand
identity
Restructured credit process
Restructured balance sheet
Exited non-strategic, high risk and unprofitable businesses and product lines
Renewed focus on expenses and efficiency
Upgraded infrastructure (physical, processes, technology)
Expanded market presence and recruited sales teams in regional metropolitan
areas
Renewed focus on clients and sales growth
October 2008
January 2005
Reorganization Plan - Timeline
7
03
/
14
/
2005
Strategic Plan
Announced
06
/
30
/
2006
-
09
/
30
/
2006
Branding
08
/
13
/
2005
Charter Consolidation
02
/
16
/
2006
Balance Sheet
Restructuring
10
/
26
/
2006
Data Processing
Conversion
11
/
26
/
2005
Dayton Market
12
/
14
/
2005
Dutch Auction
11
/
14
/
2005
Capital Plan
11
/
10
/
2005
Mortgage Sale
07
/
20
/
2005
Cincinnati Market
Expansion
09
/
11
/
2005
Indirect Loan Sale
05
/
09
/
2006
Branch Plan
Announced
04
/
25
/
2006
Performance Improvement
Plan Announced
08
/
15
/
2006
Branch Sale
/
Closures
12
/
31
/
2006
Problem Loan
Sale
08
/
31
/
2006
Problem Loan
Sale
06
/
01
/
2007
Mortgage Servicing
to PHH Mortgage
10
/
05
/
2007
Merchant
Portfolio Sale
11
/
28
/
2007
Increased Dividend
December
2007
Completed
Rebuilding
&
Reorganization
portion of Strategic Plan
December
2007
Moved to new
Cincinnati
Headquarters
09
/
23
/
2005
Fidelity Sale
August
2008
Established Indianapolis
Commercial Team
Our Business
9
Business Strategy
Client “Intimate” Strategy
Strategic Focus: build long-term relationships with clients by
identifying and meeting their financial needs
Target clients
Individuals and small / mid-size private businesses located
within the regional markets we serve
Ohio, Indiana, Kentucky
Serving 9 regional markets / 53 communities
Each market is managed by experienced, local bankers
Markets are supported by centralized experts
Organic growth focus supplemented by strategic acquisitions
10
Butler / Warren County - Ohio
Northwest Indiana
Markets
Northern Ohio
Dayton / Middletown - Ohio
Cincinnati - Ohio
Northern Kentucky
North Central Indiana
South Central Indiana
Indianapolis - Indiana
11
Growth Plan
Primary focus and value creation is through organic growth in our key
regional markets
Acquisitions can advance market position and accelerate the timing of
market share compared with an organic growth only strategy
Pricing must be disciplined and favorable compared with the
longer-term organic growth only strategy
Ohio, Indiana and Kentucky where there is a strategic and
geographic fit
Size and growth potential to help achieve corporate financial
targets
12
Corporate Goals
Top-quartile performance for all stakeholders
Sustained and consistent excellence
Commitment to growth
Effective management of all risks
Our Operating Model
14
Business Units
Retail Banking
Commercial Banking
Wealth Management
15
Retail Banking
Strategic Focus
Retail consumer clients
Deposits
Select consumer lending
activities
80 retail branch locations
Serving 9 regional markets in 53 communities in 3 states
Managed locally by experienced local bankers
Supported centrally
16
Source: SNL Financial
Demographic Profile
Demographic Profile (First Financial Bancorp)
Data as of December 31, 2007
State
Market
Number of
FFBC
Branches
Total
Deposits in
Market ($000)
FFBC
Deposits in
Market ($000)
FFBC
Deposit
Market
Share (%)
2007 Total
Population
(Actual)
Population
Change
2000 - 2007
(%)
Projected
Population
Change
2007 - 2012
(%)
Median HH
Income 2007
($)
HH Income
Change
2000 - 2007
(%)
Projected HH
Income
Change
2007 - 2012
(%)
OH
Butler Warren
19
4,118,598
845,697
20.53
413,920
17.25
11.29
65,570
26.83
18.17
OH
Cincinnati
3
28,105,556
50,590
0.18
807,987
(4.41)
(3.18)
50,444
22.98
15.75
OH
Dayton Middletown
10
9,233,138
368,829
3.99
748,292
2.29
1.48
52,795
23.35
14.32
KY
Kentucky
3
1,904,991
106,108
5.57
115,147
33.91
22.45
72,465
35.36
20.28
IN
North Central Indiana
14
3,909,546
286,486
7.33
332,847
3.66
2.25
48,447
25.38
15.52
OH
Northern Ohio
16
5,121,394
510,858
9.97
345,264
(0.46)
(0.04)
48,995
22.06
14.62
IN
Northwest Indiana
7
6,884,171
481,892
7.00
501,095
3.41
2.44
53,867
28.36
17.85
IN
South Central Indiana
8
3,218,814
151,231
4.70
169,922
3.07
2.05
51,225
22.43
15.19
Totals
80
62,496,209
2,801,691
4.48
3,434,474
Weighted Average
3.64
2.36
53,716
24.84
16.02
17
Commercial Banking
Strategic Focus
Small / mid-size private businesses located within our
regional markets
Commercial & Industrial
Commercial Real Estate
Deposits / Cash Management
Sales Force
9 Market Presidents
44 Commercial Lenders
11 Treasury Management Representatives
18
Wealth Management
First Financial Wealth Resource Group
Strategic Focus
Target client has assets available for investment
exceeding $750,000
Maintain existing client base
Increase share of wallet of existing client base
Integration with retail and commercial banking clients
Generate referrals from existing client base
Add client relationship staff in targeted markets
Financial Information
20
Earning Assets
Yield presented is not tax-equivalent
YTD-2008 = January 1, 2008 – September 30, 2008
Yield 5.98%
Yield 6.86%
Yield 6.59%
43%
16%
15%
13%
23%
20%
17%
18%
15%
13%
57%
51%
0%
25%
50%
75%
100%
Average FY-2006
Average FY-2007
Average YTD-2008
Commercial Loans & Leases
Consumer Loans
Residential Mortgages
Investments
21
* December 31, 2005 through September 30, 2008
Gross loan CAGR* = 0.46% due to planned runoff in indirect loans and residential mortgages.
Loan Portfolio Strategy
(400,000)
(300,000)
(200,000)
(100,000)
100,000
200,000
300,000
400,000
500,000
600,000
Commercial Lending
Residential Mortgages
Indirect Installments
($000s)
Growth Since 2005*
40%
(45%)
(83%)
22
Liability Mix
YTD-2008 = January 1, 2008 – September 30, 2008
Yield 2.30%
Yield 2.92%
Yield 2.59%
13%
13%
13%
40%
40%
40%
40%
41%
39%
7%
6%
9%
0%
25%
50%
75%
100%
Average FY-2006
Average FY-2007
Average YTD-2008
Noninterest-Bearing Deposits
Interest-Bearing Deposits
Time Deposits
Borrowed Funds
23
Noninterest Income
YTD-2008 = January 1, 2008 – September 30, 2008
YTD-2008
Total Noninterest Income = $39.1 million
(excluding non-operating items)
35%
38%
2%
11%
-9%
23%
Trust & I/A fees
Total Service Charges on Deposits
Gain on Mortgage Loan Sales
Bankcard Interchange Income
FHLMC Loss
Other Misc. Income
24
Efficiency
YTD-2008 = January 1, 2008 – September 30, 2008
Efficiency Ratio
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
FY-2004
FY-2005
FY-2006
FY-2007
YTD-2008
Long Term Target = 55 to 60%
25
Staff Expense
Full-Time Equivalent Personnel
0
200
400
600
800
1,000
1,200
1,400
Jun-06
Sep-06
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
26
Capital
Excess capital of $80.8 million over regulatory “well-capitalized” levels
Can support growth of up to $640.9 million
Received preliminary approval to participate in the U.S. Treasury’s voluntary Capital
Purchase Program (CPP)
Approved for up to $80 million
Ratio
3Q-08
3Q-08 pro forma for
$80 million CPP
Target
Regulatory
"well-capitalized"
minimum
Tangible Equity to Tangible Assets
7.13%
9.22%
6.75% - 7.25%
N/A
Leverge Ratio
7.95%
10.03%
8.00% - 8.50%
5%
Total Risk-based Capital Ratio
10.89%
13.66%
11.50% - 12.00%
10%
27
Investment Portfolio
September 30, 2008
* Other includes $34 975,600 of regulatory stock
On-going review of various strategies to increase the size of the investment portfolio and its absolute level of
earnings, while balancing capital and liquidity targets.
Increased the size of the portfolio by approximately $68 million since June 30, 2008
Portfolio selection criteria avoids securities backed by sub-prime assets and those with material
geographical considerations
Base
% of
Book
Book
Book
09/30/2008
Gain/
Summary:
Total
Value
Yield
Price
Mark
(Loss)
Agency's
12.3%
$ 65,751,716
5.29
99.82
101.03
$ 790,236
CMO's (Agency)
6.0%
32,181,491
4.78
99.55
100.00
144,866
CMO's (Private)
0.0%
118,707
4.05
99.52
99.78
(63)
MBS's (Agency)
65.8%
350,387,005
5.03
100.65
100.55
(361,173)
Agency Preferred
0.0%
198,000
-
0.99
0.99
-
84.2%
448,636,919
5.04
100.41
100.54
573,867
Municipal
8.4%
44,671,273
7.18
99.31
100.53
545,841
Other *
7.4%
39,456,585
5.25
100.77
100.48
(112,256)
15.8%
84,127,858
6.28
99.99
100.51
433,585
100.0%
532,764,777
$
5.24
100.34
100.53
1,007,452
$
Net Unrealized Gain/(Loss)
(1,007,452)
$
Aggregate Gains
1,480,943
$
Aggregate Losses
473,491
$
Net Gain/(Loss) % of Book Value
0.19%
Subtotal
Subtotal
Total Investment Portfolio
28
Investment Portfolio
September 30, 2008
* Other includes regulatory stock
0.8%
Preferred
Agency
8.4%
Municipal
0.0%
(Private)
CMO's
12.3%
Agency's
6.0%
(Agency)
CMO's
7.4%
Other *
65.9%
MBS's (Agency)
Sector Allocation
Credit Quality
Investment Grade = A-rated securities
Other Investment Grade = B-rated securities
Not Rated
4.3%
Other Investment
Grade
0.0%
Investment Grade
95.6%
Non-Investment
Grade
0.1%
Credit
30
Current Credit Management System
Market-based
Centralized
Market level
31
Credit Quality
Credit quality metrics are within estimated range and remain stable
Highlights the success of the restructured credit organization
Reflects discipline of originating loans within existing footprint, strong underwriting
policies, and proactive management of resolution strategies for problem credits
3Q-08
2Q-08
1Q-08
2007
2006*
2005
2004
2003
Net Charge-Off Ratio
0.36%
0.40%
0.40%
0.24%
0.48%
0.30%
0.26%
0.69%
Nonperforming Loans /
Loans
0.53%
0.57%
0.58%
0.56%
0.44%
1.08%
0.70%
0.96%
Reserve Ratio
1.14%
1.11%
1.14%
1.12%
1.10%
1.62%
1.61%
1.71%
Reserves / Nonperforming
Loans
216.2%
192.5%
194.8%
197.9%
252.8%
149.8%
230.2%
177.9%
* Net of loan sale
Credit Quality Trends
Building on Results
33
Credit quality metrics consistent with expectations and within forecasted ranges
Capital exceeds regulatory “well-capitalized” levels
Reduced credit risk on the balance sheet with the securitization of $58.5 million in residential
mortgage loans into agency guaranteed, mortgage-backed securities collateralized by those
assets
Evaluating the merits of a sale-leaseback transactions involving certain retail bank locations
Received preliminary approval to participate in the U.S. Department of the Treasury’s voluntary
Capital Purchase Program up to $80 million
Net Interest Margin
YTD-2008 = 3.72% (3.79% fully tax equivalent)
Continued shift from consumer lending to commercial lending
Loan growth on plan
Deposits remain challenging
3Q-08 linked-quarter and year-over-year growth in noninterest bearing and transaction
deposits due to increased sales efforts
3Q-08 linked-quarter and year-over-year declines in total deposits due to planned runoff in
time deposits driven by disciplined pricing decisions
Well positioned for a rising rate environment
Building on Results
YTD-2008 = January 1, 2008 – September 30, 2008
34
Noninterest Income
Recorded YTD-2008 loss of $3.6 million related to FHLMC preferred stock holdings
Wealth Management
Investment advisory and trust fees, including assets under management impacted by lower
equity market values related to overall market declines
Noninterest Expense
YTD-2008 noninterest expense declined 4.5% to $85.3 million from $89.4 million YTD-2007
Continued area of emphasis
Excess capacity for planned growth
Commercial Banking
Profitable growth with disciplined underwriting and pricing
Commercial loan growth ~ end of period loans up 14% to $1.8 billion on September 30, 2008
from $1.6 billion on September 30, 2007
Growth in new and existing markets
Established commercial team in Indianapolis IN and expanded presence in Dayton OH market
Construction is underway on two new retail banking centers in Crown Point IN and Cincinnati OH
Building on Results
YTD-2008 = January 1, 2008 – September 30, 2008
YTD-2007 = January 1, 2007 – September 30, 2007
35
Keys to Success / Challenges
Keys to Success
Continued success in commercial lending
Continued management of credit quality
Continued focus on efficiency and expense management
Faster revenue growth
Challenges
Managing the current interest rate environment
Margin ~ asset sensitive balance sheet
Economic slowdown ~ pressure on credit quality
Deposit growth ~ competitive landscape
36
Full-Year 2008 Expectations
Loans
Low single-digit growth
Deposits
Mid-single-digit decline in total balances with transaction deposits increasing
at a low, single-digit rate, and time deposits declining at a faster pace
Net interest income is expected to stabilize
Net interest margin between 3.67% and 3.75% on a non-tax equivalent basis
Previous expectations for margin recovery have been tempered by recent
market interest rate declines
Full-year net charge-offs
30 to 40 basis points of average loans - likely toward the high end of this
range
Modest growth in noninterest income in selected areas
Minimal or no growth in noninterest expense
37
Investment Highlights
Successfully executing strategic plan
Stable and strong credit quality
Nonperforming loans / total loans: 0.53%*
Capital management focus
Tangible equity / tangible assets: 7.13%*
Strong liquidity position
Expense management
YTD-2008 noninterest expense declined 4.5% to $85.3 million from
$89.4 million YTD-2007
YTD-2008 = January 1, 2008 – September 30, 2008
YTD-2007 = January 1, 2007 – September 30, 2007
Corporate Overview (09/30/08)
Total Assets: $3.5 billion
Total Loans: $2.7 billion
Total Deposits: $2.7 billion
80 retail branch locations serving 9 regional
markets in 53 communities in 3 states
1,052 FTEs
Trading Statistics
Nasdaq: FFBC
Shares Outstanding: 37.5 million
Market Capitalization (10/31/08) : $504 million
Average Daily Trading Volume (YTD-2008):
178,000 shares
* YTD-2008
Leadership
39
Leadership
Claude E. Davis
President & Chief Executive Officer
Claude E. Davis joined the company as President, Chief Executive Officer, and a member of the Board of Directors in October
2004. Mr. Davis also serves as Chairman on the Board of Directors of First Financial Bank. Prior to joining the company, he was
Senior Vice President at Irwin Financial Corporation and Chairman of Irwin Union Bank and Trust (the company’s lead bank),
positions he held since May 2003. Earlier in his career, he served as President of Irwin Union Bank and Trust for seven years. Mr.
Davis began his career as a CPA with the public accounting firm Coopers & Lybrand.
C. Douglas Lefferson
Executive Vice President & Chief Operating Officer
C. Douglas Lefferson was appointed Executive Vice President and Chief Operating Officer in April 2005. Prior to his current
appointment, Mr. Lefferson served as Executive Vice President and Chief Financial Officer, a position he was appointed to in
December 2004, after having served as Senior Vice President and Chief Financial Officer since January 2002. Mr. Lefferson has
spent his entire career in the banking industry in various positions within First Financial Bancorp and First Financial Bank.
J. Franklin Hall
Executive Vice President & Chief Financial Officer
J. Franklin Hall was appointed Executive Vice President and Chief Financial Officer in April 2005. Prior to his current
appointment, Mr. Hall served as First Vice President, Controller, and Director of Finance. He joined First Financial in June 1999.
Prior to joining the company, he was with Firstar Bank, N.A. (now known as US Bancorp) in Cincinnati, Ohio. Mr. Hall is a CPA
and also worked in the audit division of Ernst & Young, LLP.
40
Gregory A. Gehlmann
Senior Vice President, General Counsel
Gregory A. Gehlmann joined the company in June 2005 as Senior Vice President and General Counsel. Mr. Gehlmann also
served as Chief Risk Officer for the company from July 2006 to July 2008. Prior to joining the company, he practiced law for 16
years in Washington, D.C. Mr. Gehlmann served as partner/counsel at Manatt, Phelps & Phillips, LLP, Washington, D.C., where
he was counsel to public and private companies, as well as investors, underwriters, directors, officers, and principals regarding
corporate securities, banking, and general business and transactional matters.
Samuel J. Munafo
Executive Vice President, Banking Markets
Samuel J. Munafo serves as Executive Vice President and is responsible for the company’s banking markets. Mr. Munafo served
as President and Chief Executive Officer of Community First Bank & Trust from 2001 until March 2005, when he became the
President of First Financial Bank. From 1998 to 2001, he served as President and Chief Executive Officer of Indiana Lawrence
Bank. Mr. Munafo has spent his entire career with various First Financial companies.
Richard Barbercheck
Senior Vice President & Chief Credit Officer
Richard Barbercheck joined the company in 2005 as Senior Vice President and Chief Credit Officer. Mr. Barbercheck oversees
risk management which includes commercial and consumer credit, regulatory and compliance, operational and market risk. Prior
to joining the company, he was with Irwin Financial Corporation in Columbus, Indiana, where he managed the credit risk
evaluation group. Earlier in his career his served as President of a small bank in Indiana from 1993 until 1998. Mr. Barbercheck
has a total of 24 years of banking experience, including commercial lending and credit administration.
Leadership
41
John Sabath
Senior Vice President & Chief Risk Officer
John Sabath joined the company in 2005 as Regulatory Risk Manager and was later promoted to Senior Risk Officer and First
Vice President. In August 2008, Mr. Sabbath was appointed Senior Vice President and Chief Risk Officer with responsibility for
management of the company’s risk management function which includes commercial and retail credit, compliance, operational,
market, strategic and reputation risk. Prior to joining the company, he was with Fifth Third Bank in the enterprise risk group.
Earlier in his career, Mr. Sabbath held positions at the Federal Reserve Bank of Cleveland, National City Bank and Star Bank
(now known as US Bancorp).
Michael Cassani
Senior Vice President & Chief Administrative Officer
Michael Cassani joined the company in August 2007 as Senior Vice President and Chief Administrative Officer, overseeing the
company’s Wealth Resource Group. Prior to joining the company, Mr. Cassani served as President of Fund Project Services,
Inc., a financial project management and consulting firm that he co-founded in 1998. Prior to that, he served as Mutual Funds
Product Manager at Fifth Third Bank, and as Institutional Investment Officer at Roulston and Company. Earlier in his career,
Mr. Cassani served as an Investment Representative at two different company’s located in the Chicago area.
Leadership
November 2008
About First Financial Bancorp
First Financial Bancorp is a Cincinnati, Ohio based bank holding company with
$3.5 billion in assets. Its banking subsidiary, First Financial Bank, N.A., founded
in 1863, provides retail and commercial banking products and services, and
investment and insurance products through its 80 retail banking locations in
Ohio, Kentucky and Indiana. The bank’s wealth management division, First
Financial Wealth Resource Group, provides investment management, traditional
trust, brokerage, private banking, and insurance services, and has approximately
$1.9 billion in assets under management. Additional information about the
company, including its products, services, and banking locations, is available at
www.bankatfirst.com.