10-Q

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C.  20549

xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                                           June 30, 2011                                                   

OR

oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ____________________

Commission file number 0-12379

FIRST FINANCIAL BANCORP.

(Exact name of registrant as specified in its charter)

Ohio	31-1042001
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
201 East Fourth Street, Suite 1900 Cincinnati, Ohio	45202
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code   (877) 322-9530

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     x       No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes     x        No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of Exchange Act).

Yes  oNo   x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at August 4, 2011
Common stock, No par value	58,259,315

FIRST FINANCIAL BANCORP.

INDEX

	Page No.
Part I-FINANCIAL INFORMATION
Item 1-Financial Statements
Consolidated Balance Sheets - June 30, 2011 (unaudited) and December 31, 2010	1
Consolidated Statements of Income - Three and Six Months Ended June 30, 2011 and 2010 (unaudited)	2
Consolidated Statements of Cash Flows - Six Months Ended June 30, 2011 and 2010 (unaudited)	3
Consolidated Statements of Changes in Shareholders’ Equity - Six Months Ended June 30, 2011 and 2010 (unaudited)	4
Notes to Consolidated Financial Statements (unaudited)	5
Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3-Quantitative and Qualitative Disclosures about Market Risk	49
Item 4-Controls and Procedures	50
Part II-OTHER INFORMATION
Item 1-Legal Proceedings	51
Item 1A-Risk Factors	51
Item 2-Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 6-Exhibits	54
Signatures	55

PART I - FINANCIAL INFORMATION

ITEM I - FINANCIAL STATEMENTS

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	June 30, 2011			December 31, 2010
	(Unaudited)
ASSETS
Cash and due from banks	$	104,150		$	105,981
Interest-bearing deposits with other banks	147,108			176,952
Investment securities available-for-sale, at market value (cost $1,114,869 at June 30, 2011 and $904,546 at December 31, 2010)	1,134,114			919,110
Investment securities held-to-maturity (market value $3,226 at June 30, 2011 and $18,066 at December 31, 2010)	3,001			17,406
Other investments	71,492			78,689
Loans held for sale	8,824			29,292
Loans:
Commercial	798,552			800,253
Real estate-construction	142,682			163,543
Real estate-commercial	1,144,368			1,139,931
Real estate-residential	256,788			269,173
Installment	63,799			69,711
Home equity	344,457			341,310
Credit card	28,618			29,563
Lease financing	9,890			2,609
Total loans, excluding covered loans	2,789,154			2,816,093
Less:  Allowance for loan losses	53,671			57,235
Net loans - uncovered	2,735,483			2,758,858
Covered loans	1,242,730			1,481,493
Less:  Allowance for loan losses	51,044			16,493
Net loans – covered	1,191,686			1,465,000
Net loans	3,927,169			4,223,858
Premises and equipment	114,797			118,477
Goodwill	51,820			51,820
Other intangibles	4,847			5,604
FDIC indemnification asset	193,113			222,648
Accrued interest and other assets	281,172			300,388
TOTAL ASSETS	$	6,041,607		$	6,250,225
LIABILITIES
Deposits:
Interest-bearing	$	1,021,519		$	1,111,877
Savings	1,643,110			1,534,045
Time	1,581,603			1,794,843
Total interest-bearing deposits	4,246,232			4,440,765
Noninterest-bearing	728,178			705,484
Total deposits	4,974,410			5,146,249
Federal funds purchased and securities sold under agreements to repurchase	105,291			59,842
Long-term debt	102,255			128,880
Other long-term debt	0			20,620
Total borrowed funds	207,546			209,342
Accrued interest and other liabilities	137,889			197,240
TOTAL LIABILITIES	5,319,845			5,552,831
SHAREHOLDERS' EQUITY
Common stock - no par value
Authorized - 160,000,000 shares Issued - 68,730,731 shares in 2011 and 2010	577,856			580,097
Retained earnings	329,455			310,271
Accumulated other comprehensive loss	(7,902		)	(12,044		)
Treasury stock, at cost, 10,471,291 shares in 2011 and 10,665,754 shares in 2010	(177,647		)	(180,930		)
TOTAL SHAREHOLDERS' EQUITY	721,762			697,394
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	6,041,607		$	6,250,225

See notes to consolidated financial statements.

1

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three months ended					Six months ended
	June 30,					June 30,
	2011			2010		2011			2010
Interest income
Loans, including fees	$	71,929		$	74,944	$	145,945		$	154,282
Investment securities
Taxable	7,080			5,444		13,883			10,840
Tax-exempt	192			245		390			480
Total investment securities interest	7,272			5,689		14,273			11,320
Other earning assets	(1,384		)	5,305		(2,338		)	10,895
Total interest income	77,817			85,938		157,880			176,497
Interest expense
Deposits	10,767			15,308		22,167			30,956
Short-term borrowings	49			17		94			36
Long-term borrowings	937			2,556		2,026			5,113
Subordinated debentures and capital securities	197			319		391			634
Total interest expense	11,950			18,200		24,678			36,739
Net interest income	65,867			67,738		133,202			139,758
Provision for loan and lease losses - uncovered	5,756			6,158		6,403			17,536
Provision for loan and lease losses - covered	23,895			18,962		49,911			28,422
Net interest income after provision for loan losses	36,216			42,618		76,888			93,800
Noninterest income
Service charges on deposit accounts	4,883			5,855		9,493			11,466
Trust and wealth management fees	3,507			3,668		7,432			7,213
Bankcard income	2,328			2,102		4,483			4,070
Net gains from sales of loans	854			473		1,843			642
FDIC loss sharing income	21,643			15,170		45,078			22,738
Accelerated discount on covered loans	4,756			7,408		10,539			13,506
Loss on preferred securities	0			0		0			(30		)
Other	3,147			5,791		5,908			7,797
Total noninterest income	41,118			40,467		84,776			67,402
Noninterest expenses
Salaries and employee benefits	25,123			29,513		52,693			59,754
Net occupancy	4,493			5,340		11,353			13,462
Furniture and equipment	2,581			2,514		5,134			4,787
Data processing	1,453			1,136		2,691			2,368
Marketing	1,402			1,600		2,643			2,674
Communication	753			822		1,567			2,030
Professional services	3,095			2,446		5,322			4,189
State intangible tax	1,236			1,426		2,601			2,757
FDIC expense	1,152			1,907		3,273			3,917
Loss-Other real estate owned	163			138		3,485			608
Loss-Covered other real estate owned	2,621			70		5,733			70
Other	8,425			8,907		13,792			19,464
Total noninterest expenses	52,497			55,819		110,287			116,080
Income before income taxes	24,837			27,266		51,377			45,122
Income tax expense	8,864			9,492		18,197			15,750
Net income	15,973			17,774		33,180			29,372
Dividends on preferred stock	0			0		0			1,865
Net income available to common shareholders	$	15,973		$	17,774	$	33,180		$	27,507
Net earnings per common share - basic:	$	0.28		$	0.31	$	0.58		$	0.49
Net earnings per common share - diluted:	$	0.27		$	0.30	$	0.57		$	0.48
Cash dividends declared per share	$	0.12		$	0.10	$	0.24		$	0.20
Average basic shares outstanding	57,694,792			57,539,901		57,642,970			56,356,877
Average diluted shares outstanding	58,734,662			58,604,039		58,722,448			57,365,322

See notes to consolidated financial statements.

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FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollars in thousands)

	Six months ended
	June 30,
	2011			2010
Operating activities
Net income	$	33,180		$	29,372
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan and lease losses	56,314			45,958
Provision for depreciation and amortization	5,779			5,540
Stock-based compensation expense	1,805			1,322
Pension (income) expense	(700		)	950
Net amortization of premiums/accretion of discounts on investment securities	1,710			534
Income on trading securities	0			30
Originations of loans held for sale	(59,692		)	(47,612		)
Net gains from sales of loans held for sale	(1,843		)	(642		)
Proceeds from sales of loans held for sale	82,004			42,722
Deferred income taxes	(6,643		)	(3,459		)
Decrease in interest receivable	646			3,836
Increase in cash surrender value of life insurance	(629		)	(822		)
Decrease in prepaid expenses	3,291			1,205
Decrease in indemnification asset	29,535			36,792
(Decrease) increase in accrued expenses	(22,272		)	9,552
(Decrease) increase in interest payable	(1,124		)	2,599
Other	5,614			5,689
Net cash provided by operating activities	126,975			133,566
Investing activities
Proceeds from calls, paydowns and maturities of securities available-for-sale	198,811			72,683
Purchases of securities available-for-sale	(410,845		)	(100,395		)
Proceeds from calls, paydowns and maturities of securities held-to-maturity	11,665			567
Purchases of securities held-to-maturity	0			(51		)
Net decrease (increase) in interest-bearing deposits with other banks	29,844			(413,874		)
Net decrease in loans and leases, excluding covered loans	14,756			66,443
Net decrease in covered assets	198,782			192,366
Proceeds from disposal of other real estate owned	18,947			2,842
Purchases of premises and equipment	(4,613		)	(12,277		)
Net cash provided by (used in) investing activities	57,347			(191,696		)
Financing activities
Net decrease in total deposits	(171,839		)	(103,304		)
Net increase in short-term borrowings	45,449			869
Payments on long-term borrowings	(26,611		)	(16,881		)
Redemption of other long-term debt	(20,620		)	0
Cash dividends paid on common stock	(12,748		)	(10,925		)
Cash dividends paid on preferred stock	0			(1,100		)
Redemption of preferred stock	0			(80,000		)
Issuance of common stock, net of issuance costs	0			91,192
Proceeds from exercise of stock options	60			235
Excess tax benefit on share-based compensation	156			498
Net cash used in financing activities	(186,153		)	(119,416		)
Cash and cash equivalents:
Net decrease in cash and cash equivalents	(1,831		)	(177,546		)
Cash and cash equivalents at beginning of period	105,981			344,150
Cash and cash equivalents at end of period	$	104,150		$	166,604

See notes to consolidated financial statements.

3

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, dollars in thousands except per share data)

	Preferred Stock		Preferred Stock			Common Stock	Common Stock			Retained			Accumulated other comprehensive			Treasury stock
	Shares		Amount			Shares	Amount			earnings			income (loss)			Shares		Amount			Total
Balances at January 1, 2010	80,000		$	79,195		62,358,614	$	490,532		$	276,119		$	(10,487	)	(10,924,793	)	$	(185,401	)	$	649,958
Net income										29,372											29,372
Unrealized holding gains on securities available-for-sale arising during the period													3,153								3,153
Change in retirement obligation													824								824
Unrealized loss on derivatives-Prime Swap market value adj.													(239		)						(239		)
Unrealized loss on derivatives-Trust Preferred Swap market value adj.													(999		)						(999		)
Foreign Currency Exchange													(83		)						(83		)
Total comprehensive income																					32,028
Issuance of common stock						6,372,117	91,192														91,192
Preferred stock-CPP payoff	(80,000	)	(79,235		)																(79,235		)
Cash dividends declared :
Common stock at $0.20 per share										(11,582		)									(11,582		)
Preferred stock										(1,100		)									(1,100		)
Discount on preferred stock			40							(805		)									(765		)
Excess tax benefit on share-based compensation							498														498
Exercise of stock options, net of shares purchased							(1,551		)							75,446		1,383			(168		)
Restricted stock awards, net of forfeitures							(3,631		)							181,271		3,039			(592		)
Share-based compensation expense							1,322														1,322
Balances at June 30, 2010	0		$	0		68,730,731	$	578,362		$	292,004		$	(7,831	)	(10,668,076	)	$	(180,979	)	$	681,556
Balances at January 1, 2011	0		$	0		68,730,731	$	580,097		$	310,271		$	(12,044	)	(10,665,754	)	$	(180,930	)	$	697,394
Net income										33,180											33,180
Unrealized holding gains on securities available-for-sale arising during the period													2,913								2,913
Change in retirement obligation													529								529
Unrealized loss on derivatives-Trust Preferred Swap													391								391
Foreign Currency Exchange													309								309
Total comprehensive income																					37,322
Cash dividends declared :
Common stock at $0.24 per share										(13,996		)									(13,996		)
Excess tax benefit on share-based compensation							156														156
Exercise of stock options, net of shares purchased							(228		)							12,808		217			(11		)
Restricted stock awards, net of forfeitures							(3,974		)							181,655		3,066			(908		)
Share-based compensation expense							1,805														1,805
Balances at June 30, 2011	0		$	0		68,730,731	$	577,856		$	329,455		$	(7,902	)	(10,471,291	)	$	(177,647	)	$	721,762

See Notes to Consolidated Financial Statements.

4

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2011

(Unaudited)

The consolidated financial statements for interim periods are unaudited; however, in the opinion of the management of First Financial Bancorp. (First Financial), all material adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation have been included.

NOTE 1:  BASIS OF PRESENTATION

The consolidated financial statements of First Financial, a bank holding company, include the accounts of First Financial and its wholly-owned subsidiaries – First Financial Bank, N.A. and First Financial Capital Advisors LLC.  All intercompany transactions and accounts have been eliminated in consolidation.  Certain reclassifications of prior periods’ amounts have been made to conform to current period’s presentation and had no effect on previously reported net income amounts or financial condition.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.  Actual realized amounts could differ materially from those estimates.  These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and serve to update the First Financial Bancorp. Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2010.  These financial statements may not include all information and notes necessary to constitute a complete set of financial statements under GAAP applicable to annual periods and accordingly should be read in conjunction with the financial information contained in the Form 10-K.  Management believes these unaudited consolidated financial statements reflect all adjustments of a normal recurring nature which are necessary for a fair presentation of the results for the interim periods presented.  The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.  The Consolidated Balance Sheet as of December 31, 2010, has been derived from the audited financial statements in the company’s 2010 Form 10-K.

NOTE 2:  RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

In January 2010, the FASB issued an update (ASU 2010-06, Improving Disclosures about Fair Value Measurements) amending FASB ASC Topic 820-10, Fair Value Measurements and Disclosures, requiring disclosure of transfers in and out of the level 1 and 2 fair value measurement categories and activity in the level 3 fair value measurement category. Additionally, this update amends existing disclosure requirements on the level of disaggregation, inputs and valuation techniques. This update became effective for First Financial for all reporting periods beginning after December 15, 2009 with the exception of the disclosure requirements around activity in the level 3 fair value measurement category, which became effective for all reporting periods beginning after December 15, 2010. This update did not have a material impact on First Financial’s consolidated financial statements.

In December 2010, the FASB issued an update (ASU 2010-28, Intangibles - Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts) amending FASB ASC Topic 350-20, Goodwill.  This update modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts.  For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist.  The qualitative factors that should be considered are consistent with existing guidance which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This update became effective for First Financial’s interim reporting periods beginning after December 15, 2010 and did not have a material impact on First Financial’s consolidated financial statements.

In April 2011, the FASB issued an update (ASU No. 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring) clarifying the requirements of FASB ASC Topic 310-40, Troubled Debt Restructurings by Creditors.  This update provides additional guidance related to determining whether a creditor has granted a concession, including factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibits creditors from using the borrower’s effective rate test to evaluate whether a concession has been granted to the borrower, and adds factors for creditors to use in determining whether a borrower is experiencing financial

5

difficulties.  This update also ends the FASB’s deferral of the additional disclosure requirements around troubled debt restructurings included in ASU No. 2010-20, Disclosure about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.  The provisions of ASU No. 2011-02 become effective for the first interim and annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption.  While the provisions of ASU No. 2011-02 may increase the volume of loan restructurings determined to be troubled debt restructurings and will expand the Company's disclosures on troubled debt restructurings, First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

In April 2011, the FASB issued an update (ASU No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements), which simplified the accounting for arrangements such as repurchase and securities lending agreements. The collateral maintenance requirement will be eliminated from the assessment of effective control, which could result in more transactions being accounted for as secured borrowings rather than sales. The assessment of effective control will focus on a transferor's contractual rights and obligations, not the amount of collateral obtained to repurchase or redeem the transferred financial asset. Under the amended guidance, a transferor maintains effective control over transferred financial assets, and thus accounts for the transfer as a secured borrowing, if there is an agreement that both entitles and obligates the transferor to repurchase the financial assets before maturity and all of the conditions already described in FASB ASC Topic 860, Transfers and Servicing, are met. This revised guidance is applicable to new transactions and transactions that are modified on or after the first interim or annual period beginning after December 15, 2011.  First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

In May 2011, the FASB issued an update (ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs), whichexpands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value but whose fair value must be disclosed.  It also clarifies and expands upon existing requirements for fair value measurements of financial assets and liabilities as well as instruments classified in shareholders' equity.  The guidance is effective for interim and annual financial periods beginning after December 15, 2011.  First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

In June 2011, the FASB issued an update (ASU 2011-05, Presentation of Comprehensive Income), which revises the manner in which entities present comprehensive income in their financial statements. This update eliminates the option to present components of other comprehensive income (OCI) as part of the statement of changes in stockholders' equity.  The amendments to the existing standard require that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  Under either method, adjustments must be displayed for items that are reclassified from OCI to net income, in both net income and OCI.  The amendments to the existing standard do not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements.  Additionally, the standard does not affect the calculation or reporting of earnings per share.  This guidance is effective for interim and annual financial periods beginning after December 15, 2011 and is to be applied retrospectively, with early adoption permitted. First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

NOTE 3:  BUSINESS COMBINATIONS

On July 31, 2009, First Financial Bank, N.A. (First Financial Bank), a wholly owned subsidiary of First Financial Bancorp, entered into a purchase and assumption agreement (Peoples Agreement) with the Federal Deposit Insurance Corporation (FDIC), as receiver, pursuant to which First Financial acquired certain assets and assumed substantially all of the deposits and certain liabilities of Peoples Community Bank (Peoples).

On September 18, 2009, First Financial Bank, N.A, entered into separate purchase and assumption agreements (Irwin Agreements) with the FDIC, as receiver, pursuant to which First Financial acquired certain assets and assumed substantially all of the deposits and certain liabilities of Irwin Union Bank and Trust Company (Irwin Union Bank) and Irwin Union Bank, F.S.B. (Irwin FSB). Irwin Union Bank and Irwin FSB are collectively referred to herein as Irwin.

In connection with both the Peoples and Irwin acquisitions, First Financial Bank entered into loss sharing agreements with the FDIC that covers single family residential mortgage loans, commercial real estate and commercial and industrial loans, and other real estate acquired through foreclosure (OREO), all of which are referred to collectively as covered assets.

6

NOTE 4:  GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Assets and liabilities of acquired entities are recorded at their estimated fair values as of the acquisition.

Goodwill is not amortized, but is measured for impairment on an annual basis as of October 1 of each year or whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value.  First Financial performed its annual impairment test as of October 1, 2010, and no impairment was indicated.  As of June 30, 2011, no events or changes in circumstances indicated that the fair value of a reporting unit was below its carrying value.

Other intangible assets

Other intangible assets consist of mortgage servicing rights and core deposit intangibles.  Mortgage servicing rights are carried at their estimated fair value. Core deposit intangibles are recorded at their estimate fair value as of acquisition and are then amortized on an accelerated basis over their estimated useful lives. Core deposit intangibles have an estimated weighted average life of 9.4 years.

NOTE 5:  COMMITMENTS AND CONTINGENCIES

In the normal course of business, First Financial offers a variety of financial instruments with off-balance-sheet risk to its clients to aid them in meeting their requirements for liquidity and credit enhancement. These financial instruments include standby letters of credit and outstanding commitments to extend credit.  U.S. generally accepted accounting principles do not require these financial instruments to be recorded in the Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows.  Following is a discussion of these transactions.

First Financial’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for standby letters of credit, and outstanding commitments to extend credit, is represented by the contractual amounts of those instruments.  First Financial uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Letters of credit – These transactions are conditional commitments issued by First Financial to guarantee the performance of a client to a third party.  First Financial’s portfolio of standby letters of credit consists primarily of performance assurances made on behalf of clients who have a contractual commitment to produce or deliver goods or services.  The risk to First Financial arises from its obligation to make payment in the event of the clients’ contractual default to produce the contracted good or service to a third party.  First Financial has issued letters of credit (including standby letters of credit) aggregating $15.6 million and $17.6 million at June 30, 2011, and December 31, 2010, respectively.

Management conducts regular reviews of these instruments on an individual client basis and does not anticipate any material losses as a result of these letters of credit.

Loan commitments – Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the commitment.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  First Financial evaluates each client’s creditworthiness on an individual basis.  The amount of collateral obtained, if deemed necessary by First Financial upon extension of credit, is based on management’s credit evaluation of the counterparty.  The collateral held varies, but may include securities, real estate, inventory, plant, or equipment.  First Financial had commitments outstanding to extend credit totaling $1.1 billion at June 30, 2011, and $1.0 billion at December 31, 2010.

Contingencies/Litigation – We and our subsidiaries are from time to time engaged in various matters of litigation, other assertions of improper or fraudulent loan practices or lending violations, and other matters, and we have a number of unresolved claims pending. In addition, as part of the ordinary course of business, we and our subsidiaries are parties to litigation involving claims to the ownership of funds in particular accounts, the collection of delinquent accounts, challenges to security interests in collateral, and foreclosure interests, that is incidental to our regular business activities. While the ultimate liability with respect to these other litigation matters and claims cannot be determined at this time, we believe that damages, if any, and other amounts relating to pending matters are not likely to be material to our consolidated financial position or results of operations. Reserves are established for these various matters of litigation, when appropriate under FASB ASC Topic 450, Contingencies, based in part upon the advice of legal counsel.

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NOTE 6:  INVESTMENTS

The following is a summary of held-to-maturity and available-for-sale investment securities as of June 30, 2011.

	Held-to-Maturity								Available-for-Sale
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Market Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Market Value
Securities of U.S. government agencies and corporations	$	0	$	0	$	0	$	0	$	5,027	$	149	$	0		$	5,176
Mortgage-backed securities	103		2		0		105		1,087,462		19,311		(776		)	1,105,997
Obligations of state and other political subdivisions	2,898		223		0		3,121		12,187		173		(52		)	12,308
Other securities	0		0		0		0		10,193		441		(1		)	10,633
Total	$	3,001	$	225	$	0	$	3,226	$	1,114,869	$	20,074	$	(829	)	$	1,134,114

The following is a summary of held-to-maturity and available-for-sale investment securities as of December 31, 2010.

	Held-to-Maturity									Available-for-Sale
	Amortized		Unrealized		Unrealized			Market		Amortized		Unrealized		Unrealized			Market
(Dollars in thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Treasuries	$	13,959	$	390	$	(18	)	$	14,331	$	0	$	0	$	0		$	0
Securities of U.S. government agencies and corporations	0		0		0			0		105,028		957		0			105,985
Mortgage-backed securities	118		4		0			122		775,867		15,513		(2,630		)	788,750
Obligations of state and other political subdivisions	3,329		284		0			3,613		13,708		207		(91		)	13,824
Other securities	0		0		0			0		9,943		614		(6		)	10,551
Total	$	17,406	$	678	$	(18	)	$	18,066	$	904,546	$	17,291	$	(2,727	)	$	919,110

The following is a summary of investment securities by estimated maturity as of June 30, 2011.

	Held-to-Maturity				Available-for-Sale
	Amortized Cost		Market Value		Amortized Cost		Market Value
Due in one year or less	$	317	$	321	$	22,851	$	23,018
Due after one year through five years	1,606		1,696		846,587		861,471
Due after five years through ten years	220		253		185,129		188,286
Due after ten years	858		956		60,302		61,339
Total	$	3,001	$	3,226	$	1,114,869	$	1,134,114

The following tables present the age of gross unrealized losses and associated fair value by investment category.

	June 30, 2011
	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Mortgage-backed securities	$	281,769	$	(682	)	$	1,317	$	(94	)	$	283,086	$	(776	)
Obligations of state and other political subdivisions	0		0			2,232		(52		)	2,232		(52		)
Other securities	2,252		(1		)	17		0			2,269		(1		)
Total	$	284,021	$	(683	)	$	3,566	$	(146	)	$	287,587	$	(829	)

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	December 31, 2010
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss
U.S. Treasuries	$	2,334	$	(18	)	$	0	$	0		$	2,334	$	(18	)
Mortgage-backed securities	280,445		(2,538		)	1,336		(92		)	281,781		(2,630		)
Obligations of state and other political subdivisions	0		0			2,194		(91		)	2,194		(91		)
Other securities	2,217		(6		)	17		0			2,234		(6		)
Total	$	284,996	$	(2,562	)	$	3,547	$	(183	)	$	288,543	$	(2,745	)

Unrealized losses on debt securities are generally due to higher current market yields relative to the yields of the debt securities at their amortized cost.  Unrealized losses due to credit risk associated with the underlying collateral of the debt security, if any, are not material.  All securities with unrealized losses are reviewed quarterly to determine if any impairment is considered other than temporary, requiring a write-down to fair market value. First Financial considers the percentage loss on a security, duration of the loss, average life or duration of the security, credit rating of the security, as well as payment performance and the company’s intent and ability to hold the security to maturity when determining whether any impairment is other than temporary. At this time First Financial does not intend to sell, and it is not more likely than not that the Company will be required to sell debt security issues temporarily impaired prior to maturity or recovery of book value. First Financial had no other than temporary impairment charges for the six months ended June 30, 2011.

For further detail on the fair value of investment securities, see Note 15 – Fair Value Disclosures.

NOTE 7:  DERIVATIVES

The use of derivative instruments allows First Financial to meet the needs of its clients while managing the interest-rate risk associated with certain transactions.  First Financial’s board of directors has authorized the use of certain derivative products, including interest rate caps, floors, and swaps.  First Financial does not use derivatives for speculative purposes and currently does not have any derivatives that are not designated as hedges.

The following table summarizes the derivative financial instruments utilized by First Financial by the nature of the underlying asset or liability:

	Fair Value Hedges
(Dollars in thousands)	June 30, 2011		Deember 31, 2010
Instruments associated with loans:
Total notional value	$	703,286	$	578,959

While authorized to use a variety of derivative products, First Financial primarily utilizes interest rate swaps as a means to offer borrowers credit-based products that meet their needs and may from time to time utilize interest rate swaps to manage the macro interest rate risk profile of the Company. These agreements establish the basis on which interest rate payments are exchanged with counterparties and are referred to as the notional amount. As only interest rate payments are exchanged, cash requirements and credit risk are significantly less than the notional amount and the Company’s credit risk exposure is limited to the market value of the instrument.

First Financial manages this market value credit risk through counterparty credit policies. These policies require the Company to maintain a total derivative notional position of less than 35% of assets, total credit exposure of less than 3% of capital, and no single counterparty credit risk exposure greater than $20 million. The Company is currently well below all single counterparty and portfolio limits. At June 30, 2011, the Company had a total counterparty notional amount outstanding of approximately $361.8 million, spread among six counterparties, with an outstanding liability from these contracts of $18.9 million.

In connection with its use of derivative instruments, First Financial from time to time is required to post cash collateral with its counterparties to offset its market position.  Derivative collateral balances were $17.0 million, and $12.5 million at June 30, 2011, and December 31, 2010, respectively. First Financial classifies the derivative cash collateral outstanding with its

9

counterparties as an adjustment to the fair value of the derivative contracts within accrued interest and other liabilities in the Consolidated Balance Sheets.

The following table summarizes the derivative financial instruments utilized by First Financial and their balances:

		June 30, 2011							December 31, 2010
				Estimated Fair Value							Estimated Fair Value
(Dollars in thousands)	Balance Sheet Location	Notional Amount		Gain		Loss			Notional Amount		Gain		Loss
Fair Value Hedges
Pay fixed interest rate swaps with counterparty	Accrued interest and other liabilities	$	20,310	$	0	$	(2,108	)	$	21,301	$	0	$	(2,302	)
Matched interest rate swaps with borrower	Accrued interest and other assets	341,488		16,758		(29		)	278,829		14,843		(131		)
Matched interest rate swaps with counterparty	Accrued interest and other liabilities	341,488		29		(17,521		)	278,829		131		(15,502		)
Total		$	703,286	$	16,787	$	(19,658	)	$	578,959	$	14,974	$	(17,935	)

The following table details the derivative financial instruments, the average remaining maturities and the weighted-average interest rates being paid and received by First Financial at June 30, 2011:

							Weighted-Average Rate
(Dollars in thousands)	Notional Value		Average Maturity (years)	Fair Value			Receive		Pay
Asset conversion swaps
Pay fixed interest rate swaps with counterparty	$	20,310	4.4	$	(2,108	)	2.23	%	6.79	%
Receive fixed, matched interest rate swaps with borrower	341,488		4.4	16,729			5.87	%	2.93	%
Pay fixed, matched interest rate swaps with counterparty	341,488		4.4	(17,492		)	2.93	%	5.87	%
Total asset conversion swaps	$	703,286	4.4	$	(2,871	)	4.34	%	4.47	%
Total swap portfolio	$	703,286	4.4	$	(2,871	)	4.34	%	4.47	%

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation.  Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.  Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Fair Value Hedges - First Financial utilizes interest rate swaps as a means to offer commercial borrowers products that meet their needs, but are also designed to achieve First Financial’s desired interest rate risk profile at the time.  The fair value hedge agreements generally involve the net receipt by First Financial of floating-rate amounts in exchange for net payments by First Financial, through its loan clients, of fixed-rate amounts over the life of the agreements without an exchange of the underlying principal or notional amount.  This results in First Financial’s loan customers receiving fixed rate funding, while providing First Financial with a floating rate asset.  The net interest receivable or payable on the interest rate swaps is accrued and recognized as an adjustment to the interest income or interest expense of the hedged item.  The fair value of the interest rate swaps is included within accrued interest and other assets on the Consolidated Balance Sheets.  The corresponding fair-value adjustment is also included on the Consolidated Balance Sheets in the carrying value of the hedged item.  Derivative gains and losses not considered effective in hedging the change in fair value of the hedged item are recognized immediately in income.

The following table details the location and amounts recognized for fair value hedges:

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		Increase (decrease) to Interest Income
(Dollars in thousands)		Three Months Ended						Six Months Ended
Derivatives in fair value hedging relationships	Location of change in fair value derivative	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Interest Rate Contracts
Loans	Interest Income - Loans	$	(236	)	$	(251	)	$	(471	)	$	(511	)
Total		$	(236	)	$	(251	)	$	(471	)	$	(511	)

Cash Flow Hedges – First Financial may utilize interest rate swaps designated as cash flow hedges to manage the variability of cash flows, primarily net interest income, attributable to changes in interest rates.  The net interest receivable or payable on an interest rate swap designated as a cash flow hedge is accrued and recognized as an adjustment to interest income or interest expense.  The fair value of the interest rate swaps is included within accrued interest and other assets on the Consolidated Balance Sheets.  Changes in the fair value of the interest rate swaps are included in accumulated comprehensive income (loss).  Derivative gains and losses not considered effective in hedging the cash flows related to the underlying loans, if any, would be recognized immediately in income.

Effective March 30, 2009, First Financial executed a cash flow hedge utilizing an interest rate swap to hedge against interest rate volatility on $20.0 million of floating rate trust preferred securities based on the London Inter-Bank Offered Rate (LIBOR).  The interest rate swap involved the receipt by First Financial of variable-rate interest amounts in exchange for fixed-rate interest payments by First Financial for a period of 10 years. This interest rate swap effectively fixed the rate of interest on the floating rate trust preferred securities at 6.20% for the 10 year life of the swap.

First Financial terminated the $20.0 million trust preferred interest rate swap during the fourth quarter of 2010 in the course of its normal interest rate risk and balance sheet management activities.  Terminating the trust preferred interest rate swap resulted in a $0.6 million pre-tax loss that was included in accumulated comprehensive income (loss) on the Consolidated Balance Sheets. Due to the early redemption of the trust preferred securities, the remaining balance of the unrecognized loss of $0.6 million was recognized in noninterest expense in the second quarter of 2011. First Financial has no derivative instruments designated as cash flow hedges at June 30, 2011.

	Amount of gain or (loss) recognized in OCI on derivatives (effective portion)						Location of gain or (loss) reclassified from accumulated OCI into earnings (effective portion)	Amount of gain or (loss) reclassified from accumulated OCI into earnings  (effective portion)
(Dollars in thousands)	3 months ended			6 months ended				3 months ended			6 months ended
Derivatives in cash flow hedging relationships	June 30, 2010							June 30, 2010
Interest Rate Contracts
Other long-term debt	$	(796	)	$	(999	)	Interest Expense - Other long-term debt	$	(144	)	$	(286	)
Total	$	(796	)	$	(999	)	Total	$	(144	)	$	(286	)

NOTE 8:  LONG-TERM DEBT

Long-term debt on the Consolidated Balance Sheets consists of FHLB long-term advances and repurchase agreements utilizing investment securities pledged as collateral.  These instruments are primarily utilized to reduce overnight liquidity risk and to mitigate interest rate sensitivity on the balance sheet.  First Financial has $65.0 million in repurchase agreements which have remaining maturities of between two and five years and a weighted average rate of 3.50%.  Securities pledged as collateral in conjunction with the repurchase agreements are included within Investment securities available-for-sale on the Consolidated Balance Sheets.  First Financial assumed additional FHLB long-term advances in the Peoples and Irwin acquisitions of $63.5 million and $216.3 million, respectively.  During the third quarter of 2010, approximately $232 million of these advances were prepaid.  As of June 30, 2011, the remaining FHLB long-term advances assumed in the two transactions totaled $1.8 million, had remaining maturities of less than nine years and a weighted average effective yield of 3.90%.

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The following is a summary of long-term debt:

	June 30, 2011
(Dollars in thousands)	Amount		Average Rate
Federal Home Loan Bank	$	37,255	3.86	%
National Market Repurchase Agreement	65,000		3.50	%
Total long-term debt	$	102,255	3.63	%

NOTE 9:  OTHER LONG-TERM DEBT

Other long-term debt on the Consolidated Balance Sheets previously consisted of junior subordinated debentures owed to unconsolidated subsidiary trusts.  Capital securities were issued in the third quarter of 2003 by a statutory business trust, First Financial (OH) Statutory Trust II (Trust II). These debentures were eligible for early redemption by First Financial in September of 2008 and were redeemed on June 30, 2011.

The debentures qualified as Tier I capital under Federal Reserve Board guidelines, but had been limited to 25% of qualifying Tier I capital. After the early redemption, the Company has the capacity to issue approximately $171.5 million in additional qualifying debentures under these guidelines.

NOTE 10:  LOANS (excluding covered loans)

Commercial loans are made to all types of businesses for a variety of purposes. First Financial works with businesses to meet their shorter term working capital needs while also providing long-term financing for their business plans. Credit risk is managed through standardized loan policies, established and authorized credit limits, centralized portfolio management and the diversification of market area and industries. The overall strength of the borrower is evaluated through the credit underwriting process and includes a variety of analytical activities including the review of historical and projected cash flows, historical financial performance, financial strength of the principals and guarantors, and collateral values, where applicable.  First Financial also offers lease and equipment financing through a wholly-owned subsidiary of First Financial Bank, First Financial Equipment Finance LLC, (First Equipment Finance) primarily in its principal markets. First Equipment Finance delivers financing solutions to small and mid-size companies in various industries with significant diversity in the types of underlying equipment.

Commercial lending activities include equipment and leasehold improvement financing for franchisees, principally quick service and casual dining restaurants. The underwriting of these loans incorporates basic credit proficiencies combined with knowledge of select franchise concepts to measure the creditworthiness of proposed multi-unit borrowers. The focus is on a limited number of concepts that have sound economics, low closure rates, and brand awareness within specified local, regional, or national markets. Loan terms for equipment are generally up to 84 months fully amortizing and up to 180 months on real estate.

Commercial real estate loans are secured by a mortgage lien on the real property. The credit underwriting for both owner-occupied and investor income producing real estate loans includes detailed market analysis, historical and projected cash flow analysis, appropriate equity margins, assessment of lessees and lessors, type of real estate and other analysis. Risk of loss is managed by adherence to standard loan policies that establish certain levels of performance prior to the extension of a loan to the borrower. Market diversification within First Financial’s service area, as well as a diversification by industry, are other means by which the risk of loss is managed by First Financial.

The majority of residential real estate loans originated by the Bank conforms to secondary market underwriting standards and is sold within a short timeframe to unaffiliated third parties, including the future servicing rights to the loans. The credit underwriting standards adhere to a certain level of documentation, verifications, valuation, and overall credit performance of the borrower.

Consumer loans are primarily loans made to individuals. Types of loans include new and used vehicle loans, second mortgages on residential real estate, and unsecured loans. Risk elements in the consumer loan portfolio are primarily focused on the borrower’s cash flow and credit history, key indicators of the ability to repay. A certain level of security is provided through liens on automobile titles and second mortgage liens, where applicable. Economic conditions that affect consumers in First Financial’s markets have a direct impact on the credit quality of these loans. Higher levels of unemployment, lower levels of income growth and weaker economic growth are factors that may adversely impact consumer loan credit quality.

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Home equity lines of credit consist mainly of revolving lines of credit secured by residential real estate. Home equity lines of credit are generally governed by the same lending policies and subject to the same credit risk as described previously for residential real estate loans.

Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.

Loans are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. Generally, loans are placed in nonaccrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as, insufficient collateral value. The accrual of interest income is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful.

Loans placed in nonaccrual status, including restructured loans in nonaccrual status, are considered to be impaired. Information as to nonaccrual, restructured, and impaired loans was as follows:

(Dollars in thousands)	June 30, 2011			December 31, 2010
Principal balance
Nonaccrual loans
Commercial	$	9,811		$	13,729
Real estate-construction	13,237			12,921
Real estate-commercial	26,213			28,342
Real estate-residential	4,564			4,607
Installment	335			150
Home equity	2,376			2,553
Total nonaccrual loans	56,536			62,302
Restructured loans	17,482			17,613
Total	74,018			79,915
Less: restructured loans - accruing	(3,039		)	(3,508		)
Total impaired loans	$	70,979		$	76,407

	June 30, 2011
(Dollars in thousands)	Three Months Ended		Six Months Ended
Interest income effect
Gross amount of interest that would have been recorded under original terms	$	1,304	$	2,713
Interest included in income
Nonaccrual loans	105		250
Restructured loans	84		166
Total interest included in income	189		416
Net impact on interest income	$	1,115	$	2,297

Loans placed in nonaccrual status are considered to be impaired. In the commercial portfolio, management reviews all impaired loan relationships in excess of $250,000 to determine if a specific allowance based on the borrower’s overall financial condition, resources and payment record, support from guarantors, and the realizable value of any collateral is necessary.

Specific allowances are based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. Interest income for impaired loans is recorded on a cash basis during the period the loan is considered impaired after recovery of principal is reasonably assured.

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First Financial's investment in impaired loans was as follows:

	As of June 30, 2011
(Dollars in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized		Quarterly Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	6,706	$	8,146	$	0	$	7,858	$	27	$	15
Real estate - construction	5,638		12,238		0		5,494		1		0
Real estate - commercial	18,586		24,353		0		19,088		132		68
Real estate - residential	5,857		6,334		0		5,713		10		5
Installment	448		461		0		287		3		2
Home equity	2,375		2,483		0		2,444		4		2
Loans with an allowance recorded:
Commercial	3,112		4,590		1,528		3,299		0		0
Real estate - construction	13,908		16,481		4,387		14,327		88		35
Real estate - commercial	13,453		18,401		4,021		15,204		105		39
Real estate - residential	795		807		93		874		10		4
Installment	0		0		0		26		0		0
Home equity	101		101		2		67		1		1
Total:
Commercial	9,818		12,736		1,528		11,157		27		15
Real estate - construction	19,546		28,719		4,387		19,821		89		35
Real estate - commercial	32,039		42,754		4,021		34,292		237		107
Real estate - residential	6,652		7,141		93		6,587		20		9
Installment	448		461		0		313		3		2
Home equity	2,476		2,584		2		2,511		5		3
Total	$	70,979	$	94,395	$	10,031	$	74,681	$	381	$	171

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	As of December 31, 2010
(Dollars in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	9,375	$	12,008	$	0	$	7,432	$	228
Real estate - construction	4,925		8,458		0		9,935		98
Real estate - commercial	17,431		21,660		0		14,113		804
Real estate - residential	5,854		6,447		0		6,611		84
Installment	150		179		0		336		6
Home equity	2,553		3,345		0		2,188		74
Loans with an allowance recorded:
Commercial	4,354		6,090		2,017		10,423		77
Real estate - construction	14,407		18,261		3,716		11,063		378
Real estate - commercial	16,693		19,799		4,347		13,391		392
Real estate - residential	665		757		122		1,434		23
Total:
Commercial	13,729		18,098		2,017		17,855		305
Real estate - construction	19,332		26,719		3,716		20,998		476
Real estate - commercial	34,124		41,459		4,347		27,504		1,196
Real estate - residential	6,519		7,204		122		8,045		107
Installment	150		179		0		336		6
Home equity	2,553		3,345		0		2,188		74
Total	$	76,407	$	97,004	$	10,202	$	76,926	$	2,164

Loan delinquency, including nonaccrual loans, was as follows:

	As of June 30, 2011
	30 – 59 Days past due		60 – 89 Days past due		> 90 days past due		Total Past due		Current		Total		> 90 days past due and still accruing
Loans
Commercial	$	2,683	$	2,835	$	8,741	$	14,259	$	784,293	$	798,552	$	0
Real estate - construction	2,146		0		13,213		15,359		127,323		142,682		0
Real estate - commercial	10,260		2,008		15,523		27,791		1,116,577		1,144,368		0
Real estate - residential	5,644		1,901		5,306		12,851		243,937		256,788		0
Installment	214		98		181		493		63,306		63,799		0
Home equity	917		383		1,894		3,194		341,263		344,457		0
All other	340		218		149		707		37,801		38,508		149
Total	$	22,204	$	7,443	$	45,007	$	74,654	$	2,714,500	$	2,789,154	$	149

15

	As of December 31, 2010
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days past due and still accruing
Loans
Commercial	$	2,241	$	1,573	$	11,684	$	15,498	$	784,755	$	800,253	$	0
Real estate - construction	1,754		3,782		8,973		14,509		149,034		163,543		0
Real estate - commercial	3,202		3,979		16,435		23,616		1,116,315		1,139,931		0
Real estate - residential	7,671		1,930		5,127		14,728		254,445		269,173		0
Installment	456		48		120		624		69,087		69,711		0
Home equity	1,260		392		2,166		3,818		337,492		341,310		0
All other	366		176		370		912		31,260		32,172		370
Total	$	16,950	$	11,880	$	44,875	$	73,705	$	2,742,388	$	2,816,093	$	370

Commercial and consumer credit exposure by risk attribute was as follows:

	As of June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	739,569	$	108,989	$	989,787
Special Mention	30,334		2,708		57,711
Substandard	28,450		30,985		96,870
Doubtful	199		0		0
Total	$	798,552	$	142,682	$	1,144,368

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	250,136	$	63,351	$	341,981	$	38,508
Nonperforming	6,652		448		2,476		0
Total	$	256,788	$	63,799	$	344,457	$	38,508

	As of December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	731,932	$	115,988	$	979,023
Special Mention	36,453		4,829		63,618
Substandard	31,557		42,726		97,290
Doubtful	311		0		0
Total	$	800,253	$	163,543	$	1,139,931

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	262,654	$	69,561	$	338,757	$	32,172
Nonperforming	6,519		150		2,553		0
Total	$	269,173	$	69,711	$	341,310	$	32,172

16

Other real estate owned is comprised of properties acquired by the Bank through the loan foreclosure or repossession process, or any other resolution activity that results in partial or total satisfaction of problem loans. The acquired properties are recorded at the lower of cost, or fair value less estimated costs of disposal (net realizable value), upon acquisition. Losses arising at the time of acquisition of such properties are charged against the allowance for loan and lease losses. Subsequent write-downs in the carrying value of OREO properties are expensed as incurred. Improvements to the properties may be capitalized if the improvements contribute to the overall value of the property, but may not be capitalized in excess of the net realizable value of the property.

During the first six months of 2011, First Financial recognized a reduction in the estimated value of vacant land obtained from a commercial real estate developer of $3.1 million.  Changes in other real estate owned were as follows:

	Six Months Ended		Full Year
(Dollars in thousands)	June 30, 2011		December 31, 2010
Balance at beginning of period	$	17,907	$	4,145
Additions
Commercial	1,087		17,520
Residential	2,193		1,130
Total additions	3,280		18,650
Disposals
Commercial	304		2,315
Residential	1,052		1,674
Total disposals	1,356		3,989
Write-downs
Commercial	3,341		727
Residential	177		172
Total write-downs	3,518		899
Balance at end of period	$	16,313	$	17,907

NOTE 11:  LOANS (covered)

All loans acquired in the Peoples and Irwin acquisitions were covered by loss sharing agreements with the FDIC, whereby the FDIC reimburses First Financial for the majority of the losses incurred. Additionally, these loans were recorded at their estimated fair value as of the acquisition date.  Generally the determination of the fair value of the loans resulted in a significant write-down in the value of the loans, which was assigned to an accretable or nonaccretable difference, with the accretable difference to be recognized as interest income over the expected remaining term of the loan.

First Financial evaluates purchased loans for impairment in accordance with the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The cash flows expected to be collected on purchased loans are estimated based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments. Purchased loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected. First Financial is accounting for the majority of purchased loans under FASB ASC Topic 310-30 except loans with revolving privileges, which are outside the scope of this guidance, and loans for which cash flows could not be estimated, which are accounted for under the cost recovery method. Purchased impaired loans were not classified as nonperforming assets at June 30, 2011 as the loans are considered to be performing under FASB ASC Topic 310-30. Therefore, interest income, through accretion of the difference between the carrying value of the loans and the expected cash flows is being recognized on all purchased loans being accounted for under FASB ASC Topic 310-30.

17

The following table reflects the carrying value of all purchased impaired and nonimpaired loans:

	June 30, 2011						December 31, 2010
(Dollars in thousands)	Loans Accounted For Under FASB ASC Topic 310-30		Loans excluded from FASB ASC Topic 310-30 (1)		Total Purchased Loans		Loans Accounted For Under FASB ASC Topic 310-30		Loans Excluded From FASB ASC Topic 310-30 (1)		Total Purchased Loans
Commercial	$	234,024	$	17,729	$	251,753	$	295,600	$	38,439	$	334,039
Real estate - construction	40,811		0		40,811		42,743		0		42,743
Real estate - commercial	714,240		12,645		726,885		837,942		17,783		855,725
Real estate - residential	134,131		0		134,131		147,052		0		147,052
Installment	13,989		1,208		15,197		19,560		1,511		21,071
Home equity	6,289		62,375		68,664		7,241		66,454		73,695
Other covered loans	0		5,289		5,289		0		7,168		7,168
Total covered loans	$	1,143,484	$	99,246	$	1,242,730	$	1,350,138	$	131,355	$	1,481,493

(1) Includes loans with revolving privileges which are scoped out of FASB ASC Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method of accounting.

The outstanding balance of all purchased impaired and nonimpaired loans accounted for under FASB ASC Topic 310-30, including contractual principal, interest, fees, and penalties, was $1.9 billion and $2.2 billion as of June 30, 2011 and December 31, 2010, respectively.

Changes in the carrying amount of accretable yield for purchased impaired and nonimpaired loans accounted for under FASB ASC Topic 310-30 were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Balance at beginning of period (1)	$	461,290		$	573,381		$	509,945		$	623,669
Additions	0			0			0			0
Reclassification from non-accretable difference	11,229			0			33,206			0
Accretion	(31,818		)	(33,046		)	(66,279		)	(69,205		)
Other net activity (2)	(18,920		)	(25,899		)	(55,091		)	(40,028		)
Balance at end of period	$	421,781		$	514,436		$	421,781		$	514,436

 __________________________________________

(1)   Excludes loans with revolving privileges which are scoped out of FASB Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method.

(2)   Includes the impact of loan repayments and charge-offs.

First Financial reviewed its forecast of expected cash flows for loans accounted for under FASB ASC Topic 310-30 during the second quarter of 2011. The Company recognized improvement in the cash flow expectations related to certain loan pools resulting in the reclassification of $11.2 million from nonaccretable to accretable difference during the second quarter and $33.2 million for the six months ended June 30, 2011. These reclassifications resulted in yield adjustments on these loan pools on a prospective basis. There were no reclassifications from nonaccretable to accretable difference during the three and six months ended June 30, 2010. The Company also recognized declines in the cash flow expectations of certain loan pools. Any decline in expected cash flows for a pool of loans is considered impairment and recorded as provision expense, and a related allowance for loan and lease losses on covered loans, on a discounted basis during the period. There were also loan pools that were impaired in prior periods but improved during the second quarter.  This improvement was recorded as a recapture of prior period impairment which partially offset impairment recorded in the second quarter.  For further detail on impairment and provision expense related to loans accounted for under FASB ASC Topic 310-30, see "Covered Loans" under Note 11 - Allowance for Loan and Lease Losses.

18

Covered loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.

Covered loans accounted for under FASB ASC Topic 310-30 are classified as performing, even though they may be contractually past due, as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period covered loan loss provision or prospective yield adjustments.

Similar to uncovered loans, covered loans accounted for outside FASB ASC Topic 310-30 are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. Generally, these loans are placed in nonaccrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as, insufficient collateral value. The accrual of interest income is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful.

Information as to covered nonaccrual loans was as follows:

(Dollars in thousands)	June 30, 2011		December 31, 2010
Principal balance
Nonaccrual loans
Commercial	$	8,733	$	16,190
Real estate-commercial	2,883		2,074
Home equity	1,157		1,491
All other	10		0
Total	$	12,783	$	19,755

	Three Months Ended		Six Months Ended
(Dollars in thousands)	June 30, 2011		June 30, 2011
Interest income effect
Gross amount of interest that would have been recorded under original terms	$	961	$	2,019
Interest included in income	54		163
Net impact on interest income	$	907	$	1,856

First Financial’s investment in covered impaired loans, excluding loans accounted for under FASB ASC Topic 310-30, was as follows:

	As of June 30, 2011
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized		Quarterly Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	8,733	$	11,215	$	0	$	11,262	$	144	$	51
Real estate - commercial	2,883		3,634		0		2,183		2		0
Home equity	1,157		2,257		0		1,311		17		3
All other	10		10		0		7		0		0
Total	$	12,783	$	17,116	$	0	$	14,763	$	163	$	54

19

	As of December 31, 2010
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	16,190	$	18,346	$	0	$	12,324	$	316
Real estate - commercial	2,074		5,412		0		3,910		14
Installment	0		0		0		255		0
Home equity	1,491		3,137		0		1,597		68
Total	$	19,755	$	26,895	$	0	$	18,086	$	398

Covered loan delinquency, excluding loans accounted for under FASB ASC Topic 310-30, was as follows:

	As of June 30, 2011
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days  past due and still accruing
Loans
Commercial	$	1,346	$	1,875	$	5,189	$	8,410	$	9,319	$	17,729	$	0
Real estate - commercial	1,408		29		2,841		4,278		8,367		12,645		0
Installment	0		0		0		0		1,208		1,208		0
Home equity	1,353		1,086		1,103		3,542		58,833		62,375		0
All other	159		5		10		174		5,115		5,289		0
Total	$	4,266	$	2,995	$	9,143	$	16,404	$	82,842	$	99,246	$	0

	As of December 31, 2010
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days  past due and still accruing
Loans
Commercial	$	880	$	419	$	13,764	$	15,063	$	23,376	$	38,439	$	0
Real estate - commercial	225		62		1,896		2,183		15,600		17,783		0
Installment	0		0		0		0		1,511		1,511		0
Home equity	656		443		1,424		2,523		63,931		66,454		0
All other	87		10		9		106		7,062		7,168		9
Total	$	1,848	$	934	$	17,093	$	19,875	$	111,480	$	131,355	$	9

Covered commercial and consumer credit exposure by risk attribute was as follows:

	As of June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	159,323	$	7,453	$	384,580
Special Mention	28,341		13,019		79,563
Substandard	44,444		20,339		253,858
Doubtful	19,645		0		8,884
Total	$	251,753	$	40,811	$	726,885

20

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	134,131	$	15,197	$	67,507	$	5,289
Nonperforming	0		0		1,157		0
Total	$	134,131	$	15,197	$	68,664	$	5,289

	As of December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	225,088	$	14,021	$	476,140
Special Mention	35,768		5,743		106,057
Substandard	60,090		22,979		268,651
Doubtful	13,093		0		4,877
Total	$	334,039	$	42,743	$	855,725

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	147,052	$	21,071	$	72,204	$	7,168
Nonperforming	0		0		1,491		0
Total	$	147,052	$	21,071	$	73,695	$	7,168

Covered other real estate owned is comprised of properties acquired by the Bank through the loan foreclosure or, repossession process, or any other resolution activity that results in partial or total satisfaction of problem covered loans. These properties remain subject to loss share agreements whereby the FDIC reimburses First Financial for the majority of any losses incurred. The acquired properties are recorded at the lower of cost, or fair value less estimated costs of disposal (net realizable value), upon acquisition. Losses arising at the time of acquisition of such properties are charged against the allowance for loan and lease losses. Subsequent write-downs in the carrying value of covered OREO properties are expensed as incurred. Improvements to the properties may be capitalized if the improvements contribute to the overall value of the property, but may not be capitalized in excess of the net realizable value of the property.

Changes in covered other real estate owned were as follows:

	Six Months Ended		Full Year
(Dollars in thousands)	June 30, 2011		December 31, 2010
Balance at beginning of period	$	35,257	$	12,916
Additions
Commercial	21,732		22,237
Residential	1,825		9,827
Total additions	23,557		32,064
Disposals
Commercial	11,500		4,744
Residential	6,091		4,536
Total disposals	17,591		9,280
Write-downs
Commercial	3,524		414
Residential	1,012		29
Total write-downs	4,536		443
Balance at end of period	$	36,687	$	35,257

21

NOTE 12:  ALLOWANCE FOR LOAN AND LEASE LOSSES

Uncovered Loans

For each reporting period, management maintains the allowance at a level that it considers sufficient to absorb inherent risks in the loan portfolio. Management’s evaluation in establishing the adequacy of the allowance includes evaluation of the loan and lease portfolios, actual past loan and lease loss experience, known and inherent risks in the portfolio, adverse situations that may affect a specific borrower’s ability to repay (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, and other pertinent factors, such as periodic internal and external evaluations of delinquent, nonaccrual, and classified loans. The evaluation is inherently subjective as it requires utilizing material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans. The evaluation of these factors is the responsibility of the Allowance for Loan and Lease Losses Committee, which is comprised of senior officers from the risk management, credit administration, finance, and lending areas.

The allowance for commercial loans, including time and demand notes, tax-exempt loans, and commercial real estate loans begins with a process of estimating the probable losses inherent in the portfolio. The loss estimates for these commercial loans are established by category and based on First Financial’s internal system of credit risk ratings and historical loss data.

The estimate of losses inherent in the commercial portfolio may be adjusted for management’s estimate of probable losses on specific exposures dependent upon the values of the underlying collateral and/or the present value of expected future cash flows, as well as trends in delinquent and nonaccrual loans, prevailing economic conditions, changes in lending strategies, and other influencing factors.

In the commercial portfolio, certain loans, typically larger-balance non-homogeneous exposures, may have a specific allowance established based on the borrower’s overall financial condition, resources and payment record, support from guarantors, and the realizable value of any collateral.

The allowance for consumer loans which includes residential real estate, installment, home equity, credit card loans, and overdrafts, is established for each of the categories by estimating losses inherent in that particular category of consumer loans. The estimate of losses is primarily based on historical loss rates for the category, as well as trends in delinquent and nonaccrual loans, prevailing economic conditions, and other influencing factors. Consumer loans are evaluated as an asset type within a category (i.e., residential real estate, installment, etc.), as these loans are smaller with more homogeneous characteristics.

There were no material changes to First Financial’s accounting policies or methodology related to the allowance for loan and lease losses during the second quarter of 2011.

First Financial’s policy is to charge-off loans when, in management’s opinion, full collectibility of principal and interest based upon the contractual terms of the loan is unlikely.

Changes in the allowance for loan and lease losses for the previous five quarters are presented in the table that follows:

	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	June 30,			Mar. 31,			Dec. 31,			Sep. 30,			June 30,			2011			2010
Balance at beginning of period	$	53,645		$	57,235		$	57,249		$	57,811		$	56,642		$	57,235		$	59,311
Provision for loan losses	5,756			647			9,741			6,287			6,158			6,403			17,536
Loans charged off	(6,232		)	(4,601		)	(10,285		)	(8,124		)	(5,457		)	(10,833		)	(19,942		)
Recoveries	502			364			530			1,275			468			866			906
Balance at end of period	$	53,671		$	53,645		$	57,235		$	57,249		$	57,811		$	53,671		$	57,811
Allowance for loan and lease losses to total ending loans	1.92		%	1.93		%	2.03		%	2.07		%	2.07		%	1.92		%	2.07		%

Year-to-date changes in the allowance for loan and lease losses by loan category were as follows:

22

	Six Months Ended June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial		Residential			Installment			Home Equity		Other		Total
Allowance for loan and lease losses:
Balance at beginning of period	$	10,138	$	8,326	$	14,917	$	8,907		$	1,981		$	10,939	$	2,027	$	57,235
Provision for loan and lease losses	1,930		1,841		6,205		(4,356		)	(119		)	242		660		6,403
Gross charge-offs	815		2,403		4,880		514			249			1,185		787		10,833
Recoveries	322		27		73		38			180			37		189		866
Total net charge-offs	493		2,376		4,807		476			69			1,148		598		9,967
Ending allowance for loan and lease losses	$	11,575	$	7,791	$	16,315	$	4,075		$	1,793		$	10,033	$	2,089	$	53,671
Ending allowance on loans individually evaluated for impairment	$	1,528	$	4,387	$	4,021	$	93		$	0		$	2	$	0	$	10,031
Ending allowance on loans collectively evaluated for impairment	679		41		351		69			9			69		0		1,218
	$	2,207	$	4,428	$	4,372	$	162		$	9		$	71	$	0	$	11,249
Loans and Leases:
Ending balance of loans individually evaluated for impairment	$	7,423	$	19,377	$	28,537	$	2,088		$	113		$	101	$	0	$	57,639
Ending balance of loans collectively evaluated for impairment	2,395		169		3,502		4,564			335			2,375		0		13,340
	$	9,818	$	19,546	$	32,039	$	6,652		$	448		$	2,476	$	0	$	70,979

	Twelve Months Ended December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial		Residential		Installment		Home Equity		Other		Total
Allowance for loan and lease losses:
Balance at beginning of period	$	18,590	$	8,143	$	15,190	$	5,308	$	2,159	$	8,063	$	1,858	$	59,311
Provision for loan and lease losses	4,252		8,778		6,836		5,268		457		6,183		1,790		33,564
Gross charge-offs	13,324		8,619		8,191		1,693		1,154		3,499		1,871		38,351
Recoveries	620		24		1,082		24		519		192		250		2,711
Total net charge-offs	12,704		8,595		7,109		1,669		635		3,307		1,621		35,640
Ending allowance for loan and lease losses	$	10,138	$	8,326	$	14,917	$	8,907	$	1,981	$	10,939	$	2,027	$	57,235
Ending allowance on loans individually evaluated for impairment	$	2,017	$	3,716	$	4,347	$	122	$	0	$	0	$	0	$	10,202
Ending allowance on loans collectively evaluated for impairment	279		7		196		149		4		82		0		717
	$	2,296	$	3,723	$	4,543	$	271	$	4	$	82	$	0	$	10,919
Loans and Leases:
Ending balance of loans individually evaluated for impairment	$	12,175	$	19,294	$	31,260	$	1,912	$	0	$	0	$	0	$	64,641
Ending balance of loans collectively evaluated for impairment	1,554		38		2,864		4,607		150		2,553		0		11,766
	$	13,729	$	19,332	$	34,124	$	6,519	$	150	$	2,553	$	0	$	76,407

Covered Loans

In accordance with the accounting guidance for business combinations, there was no allowance brought forward on any of the acquired loans as any credit deterioration evident in the loans was included in the determination of the fair value of the loans at the acquisition date.

First Financial established an allowance for loan losses associated with covered loans during 2010 based on its valuation procedures performed during the period.  The Company continued to update its valuations related to loans covered under loss share agreements during the second quarter of 2011 and, as a result of impairment in certain loan pools, recognized total provision expense of $23.9 million and realized net charge-offs of $4.4 million during the quarter, resulting in an allowance for covered loan losses of $51.0 million as of June 30, 2011. For the first six months of 2011, the Company recognized total provision expense of $49.9 million and realized net charge-offs of $15.4 million.  Additionally, the Company recognized loss share expenses of $6.5 million for the first six months of 2011 and $3.4 million for the second quarter of 2011 primarily related to losses on covered OREO during the period.  The receivable due from the FDIC under loss share agreements related to the covered provision expense and losses on covered OREO of $45.1 million for the first six months of 2011 and $21.6 million for

23

the second quarter of 2011 was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset.

For the second quarter of 2010, First Financial recognized provision expense on covered loans of $19.0 million related to net charge-offs of $17.7 million during the period.  For the first six months of 2010, the Company recognized provision expense of $28.4 million related to net charge-offs of $27.1 million.  The related receivable due from the FDIC under loss share agreements related to these loans of $15.2 million and $22.7 million for the second quarter and first six months, respectively, was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset.  

Under the applicable accounting guidance, the allowance for loan losses related to covered loans as a result of impairment to loan pools arising from on-going valuation procedures is generally recognized in the current period as provision expense. Improvement in the credit outlook, however, is not recognized immediately but instead is reflected as an adjustment to the yield earned on the related loan pools on a prospective basis once any previously recorded impairment has been recaptured.  The timing inherent in this accounting treatment may result in earnings volatility in future periods.

The allowance for loan and lease losses on covered loans is presented in the table below:

	June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Commercial		Residential		Installment		Total
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	$	24,548	$	24,773	$	1,547	$	176	$	51,044
Ending allowance on acquired loans outside the scope of ASC 310-30	0		0		0		0		0
Ending allowance on covered loans	$	24,548	$	24,773	$	1,547	$	176	$	51,044

	December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Commercial		Residential		Installment		Total
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	$	8,787	$	7,213	$	232	$	261	$	16,493
Ending allowance on acquired loans outside the scope of ASC 310-30	0		0		0		0		0
Ending allowance on covered loans	$	8,787	$	7,213	$	232	$	261	$	16,493

Changes in the allowance for loan and lease losses on covered loans for the previous five quarters were as follows:

	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	Jun. 30			Mar. 31			Dec. 31			Sep. 30			Jun. 30			2011			2010
Balance at beginning of period	$	31,555		$	16,493		$	11,583		$	1,273		$	0		$	16,493		$	0
Provision for loan and lease losses	23,895			26,016			13,997			20,725			18,962			49,911			28,422
Loans charged-off	(7,456		)	(14,026		)	(9,351		)	(10,492		)	(17,689		)	(21,482		)	(27,149		)
Recoveries	3,050			3,072			264			77			0			6,122			0
Balance at end of period	$	51,044		$	31,555		$	16,493		$	11,583		$	1,273		$	51,044		$	1,273

NOTE 13:  INCOME TAXES

First Financial’s effective tax rate for the second quarter of 2011 was 35.7% compared to 34.8% for the second quarter of 2010. The 2011 year-to-date effective tax rate was 35.4% compared to 34.9% for 2010.

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At June 30, 2011, and December 31, 2010, First Financial had no unrecognized tax benefits recorded under FASB ASC Topic 740-10, Income Taxes.  First Financial does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months.

First Financial recognizes interest and penalties on income tax assessments or income tax refunds in the Consolidated Financial Statements as a component of noninterest expense.

First Financial and its subsidiaries are subject to U.S. federal income tax as well as state and local income tax in several jurisdictions.  Tax years prior to 2008 have been closed and are no longer subject to U.S. federal income tax examinations.

First Financial is no longer subject to state and local income tax examinations for years prior to 2007.  The Company’s 2007 state examination by the state of Indiana has closed with no material impact to the Company’s financial position as a result of the examinations.  Tax years 2007 through 2009 remain open to state and local examination in various jurisdictions.

First Financial was notified in the second quarter of 2011 that the Internal Revenue Service will commence a routine examination of its income tax return for the calendar year 2009. At this time, the company cannot make an assessment of the outcome of this examination.

NOTE 14:  EMPLOYEE BENEFIT PLANS

First Financial sponsors a non-contributory defined benefit pension plan covering substantially all employees and uses a December 31 measurement date for its defined benefit pension plan.

First Financial made cash contributions totaling $60.0 million to fund the pension plan in 2010.  First Financial does not expect to make a cash contribution to its pension plan in 2011.  As a result of the plan’s funding status and related actuarial projections for 2011, First Financial recorded income in the first six months of 2011 of $0.7 million, compared to expense of $1.0 million for the first six months of 2010. Likewise, First Financial recorded income in the second quarter of 2011 of $0.4 million compared to expense of $0.5 million for the same period in 2010.

The following table sets forth information concerning amounts recognized in First Financial’s Consolidated Balance Sheets and Consolidated Statements of Income.

	Three months ended						Six months ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Service cost	$	825		$	600		$	1,650		$	1,200
Interest cost	675			700			1,350			1,400
Expected return on assets	(2,275		)	(1,250		)	(4,550		)	(2,500		)
Amortization of prior service cost	(100		)	(100		)	(200		)	(200		)
Recognized net actuarial loss	525			525			1,050			1,050
Net periodic benefit (income) cost	$	(350	)	$	475		$	(700	)	$	950

Amounts recognized in accumulated other comprehensive income (loss):

	Three months ended						Six months ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Net actuarial loss	$	525		$	525		$	1,050		$	1,050
Net prior service credit	(100		)	(100		)	(200		)	(200		)
Deferred tax (liabilities) assets	(160		)	(158		)	(321		)	(26		)
Net amount recognized	$	265		$	267		$	529		$	824

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NOTE 15:  FAIR VALUE DISCLOSURES

Fair Value Measurement

The fair value framework as disclosed in the Fair Value Measurements and Disclosure Topic of the FASB Accounting Standards Codification (Fair Value Topic) includes a hierarchy which focuses on prioritizing the inputs used in valuation techniques.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), a lower priority to observable inputs other than quoted prices in active markets for identical assets and liabilities (Level 2), and the lowest priority to unobservable inputs (Level 3).  When determining the fair value measurements for assets and liabilities, First Financial looks to active markets to price identical assets or liabilities whenever possible and classifies such items in Level 1.  When identical assets and liabilities are not traded in active markets, First Financial looks to market observable data for similar assets and liabilities and classifies such items as Level 2.  Certain assets and liabilities are not actively traded in observable markets and First Financial must use alternative techniques, based on unobservable inputs, to determine the fair value and classifies such items as Level 3. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

The following methods, assumptions, and valuation techniques were used by First Financial to measure different financial assets and liabilities at fair value and in estimating its fair value disclosures for financial instruments.

Cash and short-term investments – The carrying amounts reported in the Consolidated Balance Sheets for cash and short-term investments, such as federal funds sold, approximated the fair value of those instruments.

Investment securities – Investment securities classified as trading and available-for-sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted market prices, when available (Level 1).  If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar investment securities.  Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2).  Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for the specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities.  Any investment securities not valued based upon the methods above are considered Level 3.

First Financial utilizes information provided by a third party investment securities portfolio manager in analyzing the investment securities portfolio in accordance with the fair value hierarchy of the Fair Value Topic.  The portfolio manager’s evaluation of investment security portfolio pricing is performed using a combination of prices and data from third party vendors, along with internally developed matrix pricing models and assistance from the provider’s internal fixed income analysts and trading desk.  The portfolio manager’s month-end pricing process includes a series of quality assurance activities where prices are compared to recent market conditions, previous evaluation prices, and between the various pricing services.  These processes produce a series of quality assurance reports on which price exceptions are identified, reviewed, and where appropriate, securities are repriced.  In the event of a materially different price, the portfolio manager will report the variance to the third party vendor as a “price challenge”, and review the pricing methodology in detail.  The results of the quality assurance process are incorporated into the selection of pricing providers by the portfolio manager.

Loans held for sale – Loans held for sale are carried at the lower of cost or market value.  These loans currently consist of one-to-four family residential real estate loans originated for sale to qualified third parties.  Fair value is based on the contractual price to be received from these third parties, which is not materially different than cost due to the short duration between origination and sale (Level 2).  As such, First Financial records any fair value adjustments on a nonrecurring basis.  Gains and losses on the sale of loans are recorded as net gains from sales of loans within noninterest income in the Consolidated Statements of Income.

Loans (excluding covered loans) – The fair value of commercial, commercial real estate, residential real estate, and consumer loans were estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or repricing frequency.  The carrying amount of accrued interest approximates its fair value.

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected.  Impaired loans are valued at the lower of cost or market for purposes of determining the appropriate amount of impairment to be allocated to the allowance for loan and lease losses.  Market value is measured based on the value of the collateral securing the loans.  Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable.  The vast majority of the collateral is real estate.  The value of real estate collateral is determined utilizing an

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income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the company (Level 2). The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable borrower financial statements if not considered significant.  Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports (Level 3).  Impaired loans allocated to the allowance for loan and lease losses are measured at fair value on a nonrecurring basis.  Any fair value adjustments are recorded in the period incurred as provision for loan and lease losses on the Consolidated Statements of Income.

Covered loans – Fair values for covered loans accounted for under FASB ASC 310-30 were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company's assessment of risk inherent in the cash flow estimates. Covered loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. First Financial estimated the cash flows expected to be collected on these loans based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments.

Fair values for covered loans accounted for outside of FASB ASC Topic 310-30 were estimated by discounting the estimated future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or repricing frequency. The carrying amount of accrued interest approximates its fair value.

These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Mortgage-servicing rights – The fair value of mortgage-servicing rights was determined through modeling the expected future cash flows.  The modeling included stratification by maturity and coupon rates on the underlying mortgage loans.  Certain assumptions were used in the valuation regarding prepayment speeds, discount rates, servicing costs, delinquency, cash balances, and foreclosure costs which were arrived at from third-party sources and internal records.

FDIC indemnification asset – The accounting for FDIC indemnification assets is closely related to the accounting for the underlying, indemnified assets. Fair value of the FDIC indemnification asset was estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. First Financial re-estimates the expected indemnification asset cash flows in conjunction with the periodic re-estimation of cash flows on covered loans accounted for under FASB ASC Topic 310-30. Improvements in cash flow expectations on covered loans generally result in a related decline in the expected indemnification cash flows while declines in cash flow expectations on covered loans generally result in an increase in expected indemnification cash flows.

The expected cash flows are discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Deposit liabilities – The fair value of demand deposits, savings accounts, and certain money-market deposits was the amount payable on demand at the reporting date.  The carrying amounts for variable-rate certificates of deposit approximated their fair values at the reporting date.  The fair value of fixed-rate certificates of deposit was estimated using a discounted cash flow calculation which applies the interest rates currently offered for deposits of similar remaining maturities.  The carrying amount of accrued interest approximated its fair value.

Borrowings – The carry amounts of federal funds purchased and securities sold under agreements to repurchase and other short-term borrowings approximated their fair values.  The fair value of long-term debt was estimated using a discounted cash flow calculation which utilizes the interest rates currently offered for borrowings of similar remaining maturities.  Third-party valuations were used for long-term debt with embedded options, such as call features.

Commitments to extend credit and standby letters of credit – Pricing of these financial instruments is based on the credit quality and relationship, fees, interest rates, probability of funding and compensating balance and other covenants or requirements.  Loan commitments generally have fixed expiration dates, are variable rate and contain termination and other clauses which provide for relief from funding in the event that there is a significant deterioration in the credit quality of the client.  Many loan commitments are expected to expire without being drawn upon.  The rates and terms of the commitments to extend credit and the standby letters of credit are competitive with those in First Financial’s market area.  The carrying amounts are reasonable estimates of the fair value of these financial instruments.  Carrying amounts, which are comprised of the

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unamortized fee income and, where necessary, reserves for any expected credit losses from these financial instruments, are immaterial.

Derivatives – First Financial utilizes interest rate swaps as a means to offer commercial borrowers products that meet their needs and also to achieve First Financial’s desired interest rate risk profile at the time.  The net interest receivable or payable is accrued and recognized as an adjustment to the interest income or interest expense of the hedged item.  First Financial utilizes third-party vendors for derivative valuation purposes.  These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves.  The discounted net present value calculated represents the cost to terminate the swap if First Financial should choose to do so on the applicable measurement date (Level 2).  Additionally, First Financial utilizes a vendor developed, proprietary model to value the credit risk component of both the derivative assets and liabilities.  The credit valuation adjustment is recorded as an adjustment to the fair value of the derivative asset or liability on the applicable measurement date (Level 3).

The estimated fair values of First Financial’s financial instruments were as follows:

	June 30, 2011				December 31, 2010
(Dollars in thousands)	Carrying value		Fair value		Carrying value		Fair value
Financial assets
Cash and short-term investments	$	251,258	$	251,258	$	282,933	$	282,933
Investment securities held-to-maturity	3,001		3,226		17,406		18,066
Investment securities available-for-sale	1,134,114		1,134,114		919,110		919,110
Other investments	71,492		71,492		78,689		78,689
Loans held for sale	8,824		8,824		29,292		29,292
Loans, excluding covered loans	2,735,483		2,720,921		2,758,858		2,720,080
Covered loans	1,191,686		1,215,537		1,465,000		1,477,631
Mortgage-servicing rights	1,201		1,212		1,502		1,502
FDIC indemnification asset	193,113		170,602		222,648		212,431
Accrued interest receivable	10,903		10,903		14,063		14,063
Derivative financial instruments	0		0		262		262
Financial liabilities
Deposits
Noninterest-bearing	$	728,178	$	728,178	$	705,484	$	705,484
Interest-bearing demand	1,021,519		1,021,519		1,111,877		1,111,877
Savings	1,643,110		1,643,110		1,534,045		1,534,045
Time	1,581,603		1,591,588		1,794,843		1,818,237
Total deposits	4,974,410		4,984,395		5,146,249		5,169,643
Short-term borrowings	105,291		105,291		59,842		59,842
Long-term debt	102,255		106,604		128,880		125,825
Other long-term debt	0		0		20,620		20,620
Accrued interest payable	4,392		4,392		5,516		5,516
Derivative financial instruments	2,871		2,871		3,223		3,223

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The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis at June 30, 2011:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3			Netting Adjustments (1)			Assets/Liabilities at Fair Value
Assets
Derivatives	$	0	$	17,550	$	(763	)	$	(16,787	)	$	0
Available-for-sale investment securities	145		1,133,969		0			0			1,134,114
Total	$	145	$	1,151,519	$	(763	)	$	(16,787	)	$	1,134,114
Liabilities
Derivatives	$	0	$	19,658	$	0		$	(16,787	)	$	2,871

(1) Amounts represent the impact of legally enforceable master netting arrangements that allow First Financial to settle positive and negative positions and also cash collateral held with the same counterparties.

Certain financial assets and liabilities are measured at fair value on a nonrecurring basis.  Adjustments to the fair market value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.  The following table summarizes financial assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2011:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Year-to-date Gains/(Losses)
Assets
Loans held for sale	$	0	$	8,824	$	0	$	0
Impaired loans (1)	156		18,046		323		0

⁽¹⁾ Amounts represent the fair value of collateral for impaired loans allocated to the allowance for loan and lease losses.  Fair values are determined using actual market prices (Level 1), independent third party valuations, discounted as appropriate (Level 2), and borrower records discounted as appropriate (Level 3).

NOTE 16:  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Shareholders’ equity is affected by transactions and valuations of asset and liability positions that require adjustments to accumulated other comprehensive income (loss).  The related tax effects allocated to other comprehensive income and accumulated other comprehensive income (loss) are as follows:

	June 30, 2011
	Transactions
(Dollars in thousands)	Pre-tax		Tax-effect			Net of tax		Balances Net of tax
Unrealized gain on securities available-for-sale	$	4,680	$	(1,767	)	$	2,913	$	11,977
Unrealized loss on derivatives	628		(237		)	391		0
Unfunded pension obligation	850		(321		)	529		(20,753		)
Foreign currency translation	309		0			309		874
Total	$	6,467	$	(2,325	)	$	4,142	$	(7,902	)

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	June 30, 2010
	Transactions
(Dollars in thousands)	Pre-tax			Tax-effect			Net of tax			Balances Net of tax
Unrealized gain on securities available-for-sale	$	5,226		$	(2,073	)	$	3,153		$	13,377
Unrealized loss on derivatives	(1,949		)	711			(1,238		)	(307		)
Unfunded pension obligation	850			(26		)	824			(20,937		)
Foreign currency translation	(83		)	0			(83		)	36
Total	$	4,044		$	(1,388	)	$	2,656		$	(7,831	)

NOTE 17:  EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended				Six months ended
	June 30,				June 30,
(Dollars in thousands, except per share data)	2011		2010		2011		2010
Numerator for basic and diluted earnings per share -income available to common shareholders:
Net income	$	15,973	$	17,774	$	33,180	$	29,372
Dividends on preferred stock	0		0		0		1,865
Income available to common shareholders	$	15,973	$	17,774	$	33,180	$	27,507
Denominator for basic earnings per share - weighted average shares	57,694,792		57,539,901		57,642,970		56,356,877
Effect of dilutive securities —
Employee stock awards	945,250		944,176		974,958		893,621
Warrants	94,620		119,962		104,520		114,824
Denominator for diluted earnings per share - adjusted weighted average shares	58,734,662		58,604,039		58,722,448		57,365,322
Earnings per share available to common shareholders
Basic	$	0.28	$	0.31	$	0.58	$	0.49
Diluted	$	0.27	$	0.30	$	0.57	$	0.48

Stock options and warrants, where the exercise price was greater than the average market price of the common shares, were not included in the computation of net income per diluted share as they would have been antidilutive.  These out-of-the-money options were 434,976 and 320,963 at June 30, 2011 and 2010, respectively.  The warrants to purchase 465,117 shares of common stock were outstanding as of June 30, 2011 and 2010.

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ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (MD&A)

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

(Unaudited)

SUMMARY

First Financial is a $6.0 billion bank holding company headquartered in Cincinnati, Ohio.  As of June 30, 2011 First Financial, through its subsidiaries, operated in Ohio, Indiana, and Kentucky.  These subsidiaries include a commercial bank, First Financial Bank, N.A. (Bank) with 102 banking centers and ATMs, and an investment advisory company, First Financial Capital Advisors LLC (Capital Advisors).  First Financial conducts three primary activities through its bank subsidiary: commercial banking, retail banking and wealth management.  First Financial expects to execute a dissolution strategy of Capital Advisors which should be completed later in 2011.  The Bank operates in 65 communities under the First Financial Bank name and provides credit based products, deposit accounts, corporate cash management support, and other services to commercial and retail clients.  The wealth management activities include a full range of services including trust services, brokerage, investment, and other related services.  Additionally, the Bank conducts specialty, franchise lending providing equipment and leasehold improvement financing for franchisees, in the quick service and casual dining restaurant sector, throughout the United States.  Loans to franchisees often include the financing of real estate as well as equipment.  The franchise portfolio is managed to a risk-appropriate level so as not to create an industry, geographic or franchisee concept concentration.

MARKET STRATEGY

First Financial serves a combination of metropolitan and non-metropolitan markets in Ohio, Indiana, and Kentucky through its full-service banking centers, while the franchise lending activity serves borrowers throughout the United States. First Financial’s market selection process includes a number of factors, but markets are primarily chosen for their potential for growth, and long-term profitability. First Financial’s goal is to develop a competitive advantage utilizing a local market focus; building long-term relationships with clients, helping them reach greater levels of success in their financial life and providing a superior level of service.  First Financial intends to continue to concentrate future growth plans and capital investments in its metropolitan markets.  Smaller markets have historically provided stable, low-cost funding sources to First Financial and remain an important part of its funding base.  First Financial believes its historical strength in these markets should enable it to retain or improve its market share.

During the first quarter of 2011, First Financial exited the four banking center locations comprising its Michigan geographic market as well as its single banking center in Louisville, Kentucky. First Financial decided to shift resources towards core markets such as Cincinnati and Dayton, Ohio and Indianapolis, Southern and Northwest Indiana that it believes will provide a higher level of potential overall growth while improving the efficiency of its operations.  The five banking centers in Michigan and Louisville were acquired during 2009 as part of First Financial’s Federal Deposit Insurance Corporation (FDIC)-assisted transactions under which the Company assumed the banking operations of Irwin Union Bank and Trust Company and Irwin Union Bank, F.S.B. (collectively, Irwin).

BUSINESS COMBINATIONS

During the second quarter of 2011, First Financial signed a purchase and assumption agreement to acquire all 16 of the retail banking branches of Liberty Savings Bank, FSB (Liberty) located in Ohio. The deposits associated with these branches totaled approximately $350 million as of March 31, 2011. Additionally, First Financial agreed to purchase a diversified portfolio of approximately $150 million of in-market performing loans as part of this transaction. The Liberty transaction is expected to close during the third quarter 2011 and is subject to regulatory approval and other customary closing conditions.

During the third quarter of 2009, through FDIC-assisted transactions, First Financial acquired the banking operations of Peoples Community Bank (Peoples) and Irwin. The acquisitions of the Peoples and Irwin franchises significantly expanded the First Financial footprint, opened new markets and strengthened the company through the generation of additional capital.

In connection with the Peoples and Irwin FDIC-assisted transactions, First Financial entered into loss sharing agreements with the FDIC. Under the terms of these agreements the FDIC reimburses First Financial for a percentage of losses with respect to certain loans (covered loans) and other real estate owned (covered OREO) (collectively, covered assets). These agreements provide for loss protection on single-family, residential loans for a period of ten years and First Financial is required to share any recoveries of previously charged-off amounts for the same time period, on the same pro-rata basis with the FDIC. All other loans are provided loss protection for a period of five years and recoveries of previously charged-off loans must be shared with the FDIC for a period of eight years, again on the same pro-rata basis. The FDIC's obligation to reimburse First Financial for

31

losses with respect to covered assets for all three assisted transactions began with the first dollar of loss incurred. Covered loans represent approximately 31% of First Financial’s loans at June 30, 2011.

First Financial must follow specific servicing and resolution procedures, as outlined in the loss share agreements, in order to receive reimbursement from the FDIC for losses on covered assets. The company has established separate and dedicated teams of legal, finance, credit and technology staff to execute and monitor all activity related to each agreement, including the required periodic reporting to the FDIC. First Financial services all covered assets with the same resolution practices and diligence as it does for the assets that are not subject to a loss share agreement.

Covered loans acquired from Peoples totaling $421.0 million in unpaid principal balances are subject to a stated loss threshold of $190.0 million whereby the FDIC will reimburse First Financial for 80% of covered asset losses up to $190.0 million, and 95% of losses beyond $190.0 million.

Covered loans acquired from Irwin Union Bank totaling $1.9 billion in unpaid principal balances are subject to a stated loss threshold of $526.0 million whereby the FDIC will reimburse First Financial for 80% of covered asset losses up to $526.0 million, and 95% of losses beyond $526.0 million.

Covered loans acquired from Irwin FSB totaling $368.1 million in unpaid principal balances are subject to a stated loss threshold of $110.0 million whereby the FDIC will reimburse First Financial for 80% of covered asset losses up to $110.0 million, and 95% of losses beyond $110.0 million.

Each acquisition was considered a business combination and accounted for under FASB ASC Topic 805, Business Combinations, FASB ASC Topic 820, Fair Value Measurements and Disclosures, FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and FASB ASC Topic 310-20, Receivables-Nonrefundable Fees and Costs.  All acquired assets and liabilities, including identifiable intangible assets, were recorded at their estimated fair values as of the date of acquisition. For a more detailed discussion of the transactions please see Note 3, Business Combinations.

OVERVIEW OF OPERATIONS

Reclassifications of prior periods’ amounts, if applicable, have been made to conform to current period’s presentation and had no effect on previously reported net income amounts or financial condition.

Second quarter 2011 net income and net income available to common shareholders, was $16.0 million, and earnings per diluted common share were $0.27.  This compares with first quarter 2011 net income and net income available to common shareholders of $17.2 million, and earnings per diluted common share of $0.29 and second quarter 2010 net income and net income available to common shareholders of $17.8 million and earnings per diluted common share of $0.30.

For the six month period ended June 30, 2011, net income and net income available to common shareholders, was $33.2 million, and earnings per diluted common share was $0.57. This compares to net income of $29.4 million, net income available to common shareholders of $27.5 million, and earnings per diluted common share of $0.48.

Return on average assets for the second quarter of 2011 was 1.03% compared to 1.08% for the comparable period in 2010 and 0.90% at December 31, 2010.  Return on average shareholders’ equity for the second quarter of 2011 was 9.05 % compared to 10.62% for the comparable period in 2010 and 8.14% at December 31, 2010.

A discussion of the first six months and second quarter of 2011 results of operations follows.

NET INTEREST INCOME

Net interest income, First Financial’s principal source of income, is the excess of interest received from earning assets over interest paid on interest-bearing liabilities.  For analytical purposes, net interest income is also presented in the table that follows, adjusted to a tax equivalent basis assuming a 35% marginal tax rate for interest earned on tax-exempt assets such as municipal loans and investments.  This is to recognize the income tax savings that facilitates a comparison between taxable and tax-exempt assets.  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 for both management and investors by allowing them to make peer comparisons.

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Net interest income	$	65,867		$	67,738		$	133,202		$	139,758
Tax equivalent adjustment	240			212			478			424
Net interest income - tax equivalent	$	66,107		$	67,950		$	133,680		$	140,182
Average earning assets	$	5,733,604		$	6,000,760		$	5,752,807		$	5,986,114
Net interest margin *	4.61		%	4.53		%	4.67		%	4.71		%
Net interest margin (fully tax equivalent) *	4.62		%	4.54		%	4.69		%	4.72		%

* Margins are calculated using annualized net interest income divided by average earning assets.

Net interest income for the second quarter of 2011 was $65.9 million, a decrease of $1.9 million from the second quarter of 2010 net interest income of $67.7 million and $1.5 million from the first quarter of 2011 net interest income of $67.3 million.  Net interest income on a fully tax-equivalent basis for the second quarter 2011 was $66.1 million as compared to $67.6 million for the first quarter 2011 and $68.0 million as compared to the year-over-year period.  Compared to the linked quarter (second quarter of 2011 compared to the first quarter of 2011), the decrease during the second quarter 2011 resulted from a decline in interest income earned on loans primarily driven by an 8.8% decrease in the balance of average covered loans outstanding. However, this decline was partially offset by an increase in interest earned on investments and lower interest expense on deposits. The decrease compared to the year-over-year quarter was primarily driven by the 27.3% decline in average covered loan balances and the reduced yield on the FDIC indemnification asset, offset partially by higher interest income from investments and lower funding costs as a result of the continued runoff of higher cost time deposits and the prepayment of $232 million of Federal Home Loan Bank (FHLB) advances during the third quarter 2010.

For the six month period ended June 30, 2011, net interest income was $133.2 million as compared to $139.8 million for the comparable period in 2010. Similar to the quarterly year-over-year items noted above, the decrease was driven by the decline in average covered loan balances and the reduced yield on the FDIC indemnification asset, offset partially by higher interest income from investments and lower funding costs.

Net interest margin was 4.61% for the second quarter 2011 as compared to 4.73% for the first quarter 2011 and 4.53% for the second quarter 2010.  Net interest margin continued to be negatively impacted by the combination of normal amortization and paydowns in the acquired loan portfolio. However, the Company continued to use a significant portion of its liquidity to purchase investment securities, totaling $249.8 million during the quarter, helping to offset the margin decline from lower loan balances. Net interest margin also benefited from the expected runoff of retail and brokered certificates of deposit as well as runoff in deposits related to the exited markets of Michigan and Louisville.

Net interest margin is affected by certain activity related to the acquired loan portfolio. The majority of these loans are accounted for under ASC Topic 310-30 and, as such, the Company is required to periodically update its forecast of expected cash flows from these loans. Impairment, as a result of a decrease in expected cash flows, is recognized in the period it is measured as provision expense and has no impact on net interest margin. Improvements in expected cash flows 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 and has no impact on net interest margin. 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 can also be subject to change as loans with higher yields pay down more quickly or slowly than loans with lower yields.

The Consolidated Average Balance Sheets and Net Interest Income Analysis that follows are presented on a GAAP basis.

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QUARTERLY CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS

	June 30, 2011							March 31, 2011							June 30, 2010
(Dollars in thousands)	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate
Earning assets
Investments:
Interest-bearing deposits with other banks	$	375,434		$	328	0.35	%	$	276,837		$	282	0.41	%	$	554,333		$	459	0.33	%
Investment securities	1,093,870			7,272		2.67	%	1,045,292			7,001		2.72	%	597,991			5,689		3.82	%
Gross loans including covered loans and  indemnification asset (1)	4,264,300			70,217		6.60	%	4,450,095			72,780		6.63	%	4,848,436			79,790		6.60	%
Total earning assets	5,733,604			77,817		5.44	%	5,772,224			80,063		5.63	%	6,000,760			85,938		5.74	%
Nonearning assets
Cash and due from banks	118,829							111,953							273,162
Allowance for loan and lease losses	(94,202		)					(83,155		)					(60,444		)
Premises and equipment	115,279							119,006							115,587
Other assets	346,244							346,380							291,956
Total assets	$	6,219,754						$	6,266,408						$	6,621,021
Interest-bearing liabilities
Deposits:
Interest-bearing	$	1,130,503		$	808	0.29	%	$	1,088,791		855		0.32	%	$	1,139,001		1,265		0.45	%
Savings	1,636,821			1,838		0.45	%	1,585,065			1,743		0.45	%	1,341,194			2,058		0.62	%
Time	1,634,779			8,121		1.99	%	1,757,668			8,802		2.03	%	2,090,776			11,985		2.30	%
Short-term borrowings	95,297			49		0.21	%	89,535			45		0.20	%	37,353			17		0.18	%
Long-term borrowings	122,899			1,134		3.70	%	140,552			1,283		3.70	%	410,592			2,875		2.81	%
Total interest-bearing liabilities	4,620,299			11,950		1.04	%	4,661,611			12,728		1.11	%	5,018,916			18,200		1.45	%
Noninterest-bearing liabilities and shareholders' equity
Noninterest-bearing demand	734,674							733,242							740,011
Other liabilities	157,031							176,493							191,043
Shareholders' equity	707,750							695,062							671,051
Total liabilities and shareholders' equity	$	6,219,754						$	6,266,408						$	6,621,021
Net interest income				$	65,867						$	67,335						$	67,738
Net interest spread						4.40	%						4.52	%						4.29	%
Contribution of noninterest-bearing sources of funds						0.21	%						0.21	%						0.24	%
Net interest margin (2)						4.61	%						4.73	%						4.53	%

⁽¹⁾  Nonaccrual loans and loans held for sale are included in average balances.

⁽²⁾  Because noninterest-bearing funding sources, demand deposits, other liabilities, and shareholders' equity also support earning assets, the net interest margin exceeds the interest spread.

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RATE/VOLUME ANALYSIS

The impact of changes in the volume of interest-earning assets and interest-bearing liabilities and interest rates on net interest income is illustrated in the following tables.

	Changes for the Three Months Ended June 30
	Linked Qtr. Income Variance									Comparable Qtr. Income Variance
(Dollars in thousands)	Rate			Volume			Total			Rate			Volume			Total
Earning assets
Investment securities	$	(128	)	$	399		$	271		$	(1,714	)	$	3,297		$	1,583
Other earning assets	(43		)	89			46			25			(156		)	(131		)
Gross loans (1)	(309		)	(2,254		)	(2,563		)	46			(9,619		)	(9,573		)
Total earning assets	(480		)	(1,766		)	(2,246		)	(1,643		)	(6,478		)	(8,121		)
Interest-bearing liabilities
Total interest-bearing deposits	$	(680	)	$	47		$	(633	)	$	(4,128	)	$	(413	)	$	(4,541	)
Borrowed funds
Short-term borrowings	1			3			4			2			30			32
Federal Home Loan Bank long-term debt	(5		)	(147		)	(152		)	1,009			(2,628		)	(1,619		)
Other long-term debt	3			0			3			(120		)	(2		)	(122		)
Total borrowed funds	(1		)	(144		)	(145		)	891			(2,600		)	(1,709		)
Total interest-bearing liabilities	(681		)	(97		)	(778		)	(3,237		)	(3,013		)	(6,250		)
Net interest income (2)	$	201		$	(1,669	)	$	(1,468	)	$	1,594		$	(3,465	)	$	(1,871	)

⁽¹⁾ Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans.

⁽²⁾ Not tax equivalent.

	Changes for the Six Months Ended June 30
	Year-to-Date Income Variance
(Dollars in thousands)	Rate			Volume			Total
Earning assets
Investment securities	$	(3,602	)	$	6,555		$	2,953
Other earning assets	87			(278		)	(191		)
Gross loans (1)	(2,472		)	(18,907		)	(21,379		)
Total earning assets	(5,987		)	(12,630		)	(18,617		)
Interest-bearing liabilities
Total interest-bearing deposits	$	(8,081	)	$	(708	)	$	(8,789	)
Borrowed funds
Short-term borrowings	3			55			58
Federal Home Loan Bank long-term debt	2,083			(5,170		)	(3,087		)
Other long-term debt	(241		)	(2		)	(243		)
Total borrowed funds	1,845			(5,117		)	(3,272		)
Total interest-bearing liabilities	(6,236		)	(5,825		)	(12,061		)
Net interest income	$	249		$	(6,805	)	$	(6,556	)

NONINTEREST INCOME

Second quarter 2011 noninterest income was $41.1 million, compared to $43.7 million in the first quarter of 2011 and $40.5 million in the second quarter of 2010.  The decrease on a linked basis was primarily due to decreased reimbursements due from the FDIC related to covered loans as well as decreased accelerated discount on covered loans. The increase from the

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comparable quarter in 2010 was due to increased reimbursements due from the FDIC on covered loans although offset by decreased accelerated discount on covered loans. When losses are incurred on covered loans, the Company recognizes those credit losses as provision expense, while losses incurred on covered OREO are recognized as other noninterest expense. Reimbursements due from the FDIC under loss share agreements related to these credit losses are recorded as noninterest income and were $21.6 million for the second quarter of 2011, $23.4 million for the first quarter of 2011, and $15.2 million for the second quarter of 2010.  The impact on earnings of this offsetting activity is the net effect of the credit losses and FDIC reimbursement, representing the Company’s proportionate share of the credit losses realized on covered loans.

While no material sales of covered loans occurred during the second quarter of 2011, covered loan activity continued to positively impact noninterest income due to loan sales and prepayments. Accelerated discount is recognized when acquired loans, which are recorded on the Company’s balance sheet at an amount less than the unpaid principal balance, prepay at an amount greater than their recorded book value. Prepayments can occur either through customer driven payments before the maturity date or loan sales.  The amount of discount attributable to the credit loss component of each loan varies and the recognized amount is offset by a related reduction in the FDIC indemnification asset. First Financial sold covered loans associated with the exited Michigan market during the first quarter of 2011 with a carrying value of $36.8 million.  These loans were sold at 100% of the unpaid principal balance and represented $3.1 million of the total accelerated discount for the quarter.

Excluding accelerated income and FDIC loss sharing income, noninterest income earned in the second quarter 2011 was $14.7 million as compared to $14.4 million in the first quarter 2011 and $17.9 million in the second quarter 2010. The increase compared to the linked quarter was primarily driven by higher service charges on deposits, bankcard income and client derivative fees; offset partially by lower gain on sale from residential mortgage originations and trust and wealth management fees. Additionally, the Company recognized a gain of $429,000 resulting from the sale of certain loans originated by its franchise finance unit that had a net book value of approximately $9.3 million. Consistent with a prior sale of franchise-related loans, the sale was conducted to lessen credit and geographic concentration risk within the franchise portfolio.

The decrease from the comparable quarter in 2010 was primarily related to lower service charges on deposits due to regulatory factors as well as $2.3 million of non-recurring income resulting from the settlement of certain initial cash items and valuations related to the 2009 FDIC acquisitions, partially offset by higher gain on sale of residential originations related to increased mortgage origination activity and increased bankcard income.

On a comparable basis, noninterest income for the six months ended June 30, 2011 was $84.8 million as compared to $67.4 million for the six months period ended June 30, 2010. The increase of $17.4 million, or 25.8%, was primarily attributable to increased FDIC loss sharing income of $22.3 million, offset by a decrease in accelerated discount on covered loans of $3.0 million as well as a decrease of $2.0 million in services charges on deposits.

Excluding accelerated income and FDIC loss sharing income, noninterest income for the six months ended June 30, 2011 was $29.2 million as compared to $31.2 million in the six months ended June 30, 2010. The $2.0 million decline was primarily related to lower service charges on deposits attributable to regulatory factors as well as a decline in other noninterest income due to $2.3 million of non-recurring income resulting from the settlement of certain initial cash items and valuations related to the 2009 FDIC acquisitions in the six months ended June 30, 2010. These declines were partially offset by higher gain on sale of loans related to increased mortgage origination activity and increased bankcard income during the period.

NONINTEREST EXPENSE

Second quarter 2011 noninterest expense was $52.5 million, compared with $57.8 million in the first quarter of 2011, and $55.8 million in the second quarter of 2010.

Compared to the same quarter in 2010, noninterest expense decreased $3.3 million or 6.0%. Salaries and employee benefits decreased $4.4 million from the comparable quarter in 2010, primarily a result of lower base salaries, incentive bonuses, and pension expense. Pension expense was lower due to plan contributions made in 2010.  Occupancy expense declined $0.8 million as a result of exiting certain banking centers in Michigan and Kentucky during the first quarter of 2011, while FDIC assessments declined $0.8 million related to lower assessment rates that became effective during the second quarter 2011. Professional services expense increased $0.6 million as a result of increased legal and consulting expenses, while other noninterest expenses increased $2.1 million primarily due to expenses associated with covered OREO.  Covered OREO expenses are partially reimbursed by the FDIC.

On a linked quarter basis, noninterest expense decreased $5.3 million or 9.2%.  This decrease was primarily related to a $2.4 million decrease in salaries and employee benefits, a $2.4 million decline in occupancy expense due to costs associated with the exit from certain banking centers in Michigan and Kentucky during the first quarter 2011, and a $1.0 million decline in FDIC

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assessments related to lower assessment rates that became effective during the second quarter 2011. These declines were partially offset by a $0.9 million increase in professional services related to increased legal and consulting expenses.

For the six months ended June 30, 2011, noninterest expense totaled $110.3 million compared to $116.1 million for the comparable year-over-year period. This decline in year-to-date noninterest expense was primarily due to lower salaries and employee benefits, occupancy expense, communication expense, and FDIC assessments as a result of the lower headcount and fewer banking centers.  These declines were partially offset by increases in professional services and OREO-related expenses.

INCOME TAXES

Income tax expense was $8.9 million and $9.5 million for the second quarters of 2011 and 2010, respectively. The effective tax rates for the second quarters of 2011 and 2010 were 35.7% and 34.8%, respectively. Income tax expense was $18.2 million and $15.8 million for the six months ended June 30, 2011 and 2010. The effective tax rates for the six months ended June 30, 2011, and 2010, were 35.4% and 34.9%, respectively.

The quarter and year-to-date increases in the effective tax rate were primarily due to a decline in tax-exempt investments and an increase in non-deductible executive compensation.

LOANS - Excluding covered loans

Loans, excluding covered loans, totaled $2.8 billion at June 30, 2011, representing a decrease of $26.9 million, or 1.0%, compared to December 31, 2010 and a decrease of $5.0 million, or 0.2%, compared to June 30, 2010.  Compared to December 31, 2010 the composition of the loan portfolio remained similar with slight net declines in commercial, real estate residential, and installment portfolios.  Loan demand remains a challenge in the Company’s strategic operating markets due to uncertainty in the economic environment.

Second quarter 2011 average loans excluding covered loans and loans held for sale, declined $16.7 million or 0.6% from the second quarter of 2010.  The decline in average loans excluding covered loans and loans held for sale was primarily related to a $63.3 million decline in average construction real estate loans and a $33.1 million decline in average residential real estate loans, partially offset by a $72.6 million increase in average commercial and commercial real estate loans.

LOANS - Covered

As of June 30, 2011, 30.8% of the Company’s total loans were covered loans.  As required under the loss-share agreements, First Financial must file monthly certifications with the FDIC on single-family residential loans and quarterly certifications on all other loans.  To date, all certifications have been filed in a timely manner and without significant issues.

Covered loans totaled $1.2 billion at June 30, 2011, representing a $238.8 million, or 16.1%, decline compared to December 31, 2010 and a $474.9 million, or a 27.6%, decline compared to June 30, 2010.  Compared to December 31, 2010 and the comparable quarter declines in covered loan balances were to be expected as there were no acquisitions of loans subject to loss share agreements during the periods.  The covered loan portfolio will continue to decline, through payoffs, loan sales, charge-offs, termination or expiration of loss share coverage, unless First Financial acquires additional loans subject to loss share agreements in the future.

INVESTMENTS

Investment securities totaled $1.2 billion as of June 30, 2011, $1.0 billion at December 31, 2010 and $607.5 million as of June 30, 2010.  The total investment portfolio represented 20.0% of total assets at June 30, 2011, 16.2% at December 31, 2010, and 9.2% at June 30, 2010.  Securities available-for-sale at June 30, 2011, totaled $1.1 billion, compared with $919.1 million at December 31, 2010, and $503.4 million at June 30, 2010.

The increase in the investment portfolio as compared to December 31, 2010 was due to the purchase of $249.8 million of agency mortgage backed securities, net of maturities, amortizations, and investments called prior to maturity.  The growth in the investment portfolio relative to both year end and the year-over-year quarter is primarily due to the investment of liquidity resulting from continued muted loan demand and deposit inflows.  The addition of short and long-term securities was executed in conjunction with the Company’s overall asset/liability structure and interest rate risk modeling activities, and, to a lesser extent, market and rate expectations.  As in past quarters, First Financial has avoided adding to its portfolio any particular securities that would materially increase credit risk or geographic concentration risk.  The Company does, however, include these risks in its total evaluation of current market opportunities that would enhance the overall performance of the portfolio.

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The Company has recorded, as a component of equity in accumulated other comprehensive income, an unrealized after-tax gain on the investment portfolio of approximately $12.0 million at June 30, 2011, compared with $9.1 million at December 31, 2010 and $13.4 million at June 30, 2010.

DEPOSITS AND FUNDING

Total deposits as of June 30, 2011 were $5.0 billion, a decrease of $171.8 million, or 3.3%, compared to December 31, 2010 and a $272.9 million, or 5.2%, decline from June 30, 2010.  The decrease over year end was driven by a $90.4 million decline in interest-bearing deposits and a $213.2 million decline in time deposits, partially offset by a $22.7 million increase in noninterest-bearing deposits and a $109.1 million increase in savings deposits.  The increase in transaction accounts as of June 30, 2011 compared to the balance as of December 31, 2010 reflects the continued benefits of First Financial’s deposit pricing strategy as outflows of time deposits and brokered deposits have been replaced with less expensive transaction-based and wholesale funding. The acquisition of low cost core deposits and customer relationships is central to the Company’s long term operating strategy despite the current strong liquidity position.

Second quarter 2011 average deposits declined $174.2 million, or 3.3%, from June 30, 2010.  The decline in average deposits was primarily related to a $456.0 million, or 21.8%, decline in average time deposits and a $8.5 million decrease in average interest-bearing checking balances partially offset by a $295.6 million increase in average savings account balances during the period.

Borrowed funds as of June 30, 2011 totaled $207.5 million, as compared to $209.3 million as of December 31, 2010. This decrease was primarily due to the redemption of the $20.6 million of floating rate trust preferred securities, offset by an increase in repurchase agreements opened in the second quarter.   Borrowed funds declined $236.1 million, or 53.2%, from $443.7 million as of June 30, 2010, primarily due to the prepayment of long-term FHLB advances acquired in the Peoples and Irwin transactions in the third quarter of 2010, as well as the redemption of the trust preferred securities previously mentioned.

RISK MANAGEMENT

Risk is an inherent part of First Financial’s business activities and the Company manages risks through a structured enterprise risk management (ERM) approach that routinely assesses the overall level of risk and identifies specific risks and the steps being taken to mitigate them. First Financial continues to enhance its risk management capabilities and has, over time, enhanced risk awareness as part of the culture of the Company.  First Financial has identified nine types of risk that it monitors in its ERM framework.  These risks include information technology, market, legal, strategic, reputation, credit, regulatory (compliance), operational and external/environmental.

For further discussion of these risks, see Risk Management on pages 19 – 25 of First Financial’s 2010 Annual Report and the information below.

CREDIT RISK

Credit risk represents the risk of loss due to failure of a customer or counterparty to meet its financial obligations in accordance with contractual terms. First Financial manages credit risk through its underwriting process, periodically reviewing and approving its credit exposures using Board of Directors approved credit policies and guidelines.  Due to the significant differences in the accounting for covered loans and the loss sharing agreements with the FDIC, management believes that asset quality measures excluding the covered loans are generally more meaningful.  Therefore, management has included asset quality measures that exclude covered loans in the table in this section.

Allowance for loan and lease losses (excluding covered loans)

Management maintains the allowance at a level that is considered sufficient to absorb inherent risks in the loan portfolio. Management’s evaluation in establishing the adequacy of the allowance includes evaluation of the loan and lease portfolios, past loan and lease loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, and other pertinent factors, such as periodic internal and external evaluations of delinquent, nonaccrual, and classified loans.  The evaluation is inherently subjective as it requires utilizing material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans.  The evaluation of these factors is the responsibility of the Allowance for Loan and Lease Losses Committee, which is comprised of senior officers from the risk management, credit administration, finance, and lending areas.

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As of the end of the second quarter 2011, the allowance for uncovered loan and lease losses was $53.7 million comparable to $57.2 million as of December 31, 2010 and $57.8 million as of June 30, 2010.  As a percentage of period-end loans, the allowance for loan and lease losses was 1.92% as of June 30, 2011 compared to 2.03% as of December 31, 2010 and 2.07% as of June 30, 2010.  The allowance for loan and lease losses as of June 30, 2011 reflects management’s estimate of credit risk inherent in the Company’s portfolio at that time.

Second quarter 2011 net charge-offs were $5.7 million, or 0.83% of average loans and leases, compared with $9.8 million, or 1.39%, at December 31, 2010 and $5.0 million, or 0.71%, for the comparable year-over-year quarter. There were no individually significant items included in net charge-offs during the second quarter 2011 and the total amount was driven primarily by activity in the commercial real estate and construction portfolios.

For the six months ended June 30, 2011, net charge-offs were $10.0 million, or 0.72% of average loans and leases, as compared to $19.0 million, or 1.36%, for the six months ended June 30, 2010.

Second quarter 2011 provision expense related to uncovered loans and leases was $5.8 million as compared to $0.6 million during the linked quarter and $6.2 million during the comparable year-over-year quarter.  As a percentage of net charge-offs, second quarter 2011 provision expense equaled 100.5% compared to 15.3% during the first quarter 2011 and 123.4% during the second quarter 2010.

For the six months ended June 30, 2011, provision expense related to uncovered loans and leases was $6.4 million as compared to $17.5 million for the same period in 2010. As a percentage of net charge-offs, year-to-date 2011 provision expense was 64.2% compared to 92.1% for the same period in 2010.

The table that follows indicates the activity in the allowance for loan losses, excluding covered loans, for the quarterly periods presented.

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	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	June 30			Mar. 31			Dec. 31			Sep. 30			June 30			2011			2010
ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY
Balance at beginning of period	$	53,645		$	57,235		$	57,249		$	57,811		$	56,642		$	57,235		$	59,311
Provision for loan losses	5,756			647			9,741			6,287			6,158			6,403			17,536
Gross charge-offs
Commercial	383			432			5,131			762			1,156			815			7,431
Real estate-construction	1,213			1,190			500			3,607			2,386			2,403			4,512
Real estate-commercial	2,791			2,089			1,887			2,013			359			4,880			4,291
Real estate-residential	406			108			196			717			246			514			780
Installment	177			72			231			205			304			249			718
Home equity	923			262			1,846			389			580			1,185			1,264
All other	339			448			494			431			426			787			946
Total gross charge-offs	6,232			4,601			10,285			8,124			5,457			10,833			19,942
Recoveries
Commercial	222			100			57			334			120			322			229
Real estate-construction	27			0			0			0			24			27			24
Real estate-commercial	38			35			243			728			99			73			111
Real estate-residential	29			9			6			11			4			38			7
Installment	82			98			116			116			127			180			287
Home equity	12			25			74			21			10			37			97
All other	92			97			34			65			84			189			151
Total recoveries	502			364			530			1,275			468			866			906
Total net charge-offs	5,730			4,237			9,755			6,849			4,989			9,967			19,036
Ending allowance for loan losses	$	53,671		$	53,645		$	57,235		$	57,249		$	57,811		$	53,671		$	57,811
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED)
Commercial	0.08		%	0.17		%	2.72		%	0.23		%	0.56		%	0.12		%	1.90		%
Real estate-construction	3.42		%	3.05		%	1.15		%	7.64		%	4.68		%	3.22		%	4.17		%
Real estate-commercial	0.97		%	0.73		%	0.56		%	0.45		%	0.09		%	0.85		%	0.77		%
Real estate-residential	0.56		%	0.15		%	0.27		%	0.95		%	0.32		%	0.35		%	0.51		%
Installment	0.58		%	(0.16		)%	0.64		%	0.49		%	0.92		%	0.21		%	1.11		%
Home equity	1.07		%	0.28		%	2.07		%	0.43		%	0.69		%	0.68		%	0.71		%
All other	2.68		%	4.09		%	6.26		%	5.05		%	4.89		%	3.36		%	5.67		%
Total net charge-offs	0.83		%	0.61		%	1.39		%	0.97		%	0.71		%	0.72		%	1.36		%

While First Financial is seeing isolated areas of improvement, overall weakness in both the commercial and consumer sectors continues to exist in its strategic markets.  Given the continued challenging environment, the Company intends to remain proactive in identifying and managing individual credit situations.

Allowance for loan and lease losses (covered loans)

Substantially all loans acquired in the 2009 Peoples and Irwin acquisitions were covered by loss sharing agreements with the FDIC, whereby the FDIC reimburses First Financial for the majority of the losses incurred.  These loans were recorded at their estimated fair value upon acquisition.  Generally the determination of the fair value of the loans resulted in a significant write-down in the value of the loans, which was assigned to an accretable or nonaccretable balance, with the accretable balance being recognized as interest income over the remaining term of the loan. In accordance with accounting for business combinations, there was no allowance brought forward on any of the acquired loans, as the credit losses evident in the loans were included in the determination of the fair value of the loans at the acquisition date and are generally represented by the nonaccretable

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balance.  The majority of the nonaccretable balance is expected to be received from the FDIC through the loss sharing agreements and is recorded as a separate indemnification asset from the covered loans and reflected on the Consolidated Balance Sheets.

The majority of covered loans are accounted for under FASB ASC Topic 310-30, whereby First Financial is required to periodically re-estimate the expected cash flows on the loans. For purposes of applying the guidance under FASB ASC Topic 310-30, First Financial grouped acquired loans into pools based on common risk characteristics. A decline in expected cash flows for a pool of loans is referred to as impairment and recorded as provision expense, and a related allowance for loan and lease losses on covered loans, on a discounted basis during the period.  Estimated reimbursements due from the FDIC under loss share agreements related to any declines in expected loan cash flows are recorded as noninterest income and an increase to the FDIC indemnification asset in the same period.  Improvement in expected cash flows for a pool of loans, once any previously recorded impairment is recaptured, is recognized prospectively as an adjustment to the yield on the loans in the pool and a related adjustment to the yield on the FDIC indemnification asset. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change. First Financial recognized provision expense related to impairment in the expected cash flows on certain covered loans, as well as enhanced yields reflecting improved cash flow expectations on other covered loans during the first half of 2011.

First Financial established an allowance for loan losses associated with covered loans during 2010 based on its valuation procedures performed during the period.  The Company continued to update its valuations related to loans covered under loss share agreements during the second quarter of 2011 and, as a result of impairment in certain loan pools, recognized total provision expense of $23.9 million and realized net charge-offs of $4.4 million during the quarter, resulting in an allowance for covered loan losses of $51.0 million as of June 30, 2011. For the first six months of 2011, the Company recognized total provision expense of $49.9 million and realized net charge-offs of $15.4 million.  Additionally, the Company recognized loss share expenses of $6.5 million for the first six months of 2011 and $3.4 million for the second quarter of 2011 primarily related to losses on covered OREO during the period.  The receivable due from the FDIC under loss share agreements related to the covered provision expense and losses on covered OREO of $45.1 million for the first six months of 2011 and $21.6 million for the second quarter of 2011 was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset.

For the second quarter of 2010, First Financial recognized provision expense on covered loans of $19.0 million and realized net charge-offs of $17.7 million during the period.  For the first six months of 2010, the Company recognized provision expense of $28.4 million and realized net charge-offs of $27.1 million.  The related receivable due from the FDIC under loss share agreements related to these loans of $15.2 million and $22.7 million for the second quarter and first six months, respectively, was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset. 

	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			2011			2010
Balance at beginning of period	$	31,555		$	16,493		$	11,583		$	1,273		$	0		$	16,493		$	0
Provision for loan and lease losses	23,895			26,016			13,997			20,725			18,962			49,911			28,422
Loans charged-off	(7,456		)	(14,026		)	(9,351		)	(10,492		)	(17,689		)	(21,482		)	(27,149		)
Recoveries	3,050			3,072			264			77			0			6,122			0
Ending allowance for covered loan losses	$	51,044		$	31,555		$	16,493		$	11,583		$	1,273		$	51,044		$	1,273

Nonperforming/Underperforming Assets (excluding covered assets)

Nonperforming loans totaled $74.0 million and nonperforming assets totaled $90.3 million as of June 30, 2011 compared with $79.9 million and $97.8 million, respectively, at December 31, 2010 and $79.4 million and $96.2 million, respectively, at June 30, 2010.  The decrease in nonperforming assets relative to December 31, 2010 was driven primarily by a reduction in nonaccrual and restructured loans, as well as a decrease in OREO.  The declines in nonaccrual and restructured loans primarily related to the commercial and commercial real estate portfolios and included the effect of net charge-off activity discussed above and other resolution strategies which more than offset additions during the quarter.

The second quarter 2011 allowance for loan and lease losses as a percent of nonaccrual loans was 94.9% compared with 91.9%

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at December 31, 2010, and 86.7% in the second quarter of 2010, and the allowance for loan and lease losses as a percent of nonperforming loans was 72.5% at June 30, 2011, compared with 71.6% at December 31, 2010, and 72.8% in the second quarter of 2010.

Total classified assets as of June 30, 2011 decreased to $184.8 million as compared to $202.1 million at December 31, 2010. Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.

Restructured Loans

Restructured loans decreased $131,000 during the second quarter 2011 from December 31, 2010 and increased $4.7 million from June 30, 2010.  The increase over the comparable quarter was due primarily to the restructuring of a single commercial relationship totaling $9.3 million, partially offset by the sale of a $4.9 million restructured loan, both during the fourth quarter of 2010.  Restructured loans remain on nonaccrual status until the borrower demonstrates the ability to comply with the modified terms.

Delinquent Loans

Loans 30-to-89 days past due totaled $26.8 million, or 0.96% of period end loans, as of June 30, 2011. This compares to $22.3 million, or 0.79%, as of December 31, 2010 and $21.8 million, or 0.78%, as of June 30, 2010. The increase compared to the December 31, 2010 resulted from increased delinquencies in the commercial and commercial real estate portfolios, offset by an improvement in residential real estate delinquencies.

Other Real Estate Owned

At June 30, 2011, OREO originating from uncovered loans was $16.3 million, compared with $17.9 million at December 31, 2010. The $1.6 million decline in OREO was primarily due to a $3.1 million reduction in value related to vacant land obtained from a commercial real estate developer partially offset by the additions of a single commercial property and a single residential property, totaling $1.6 million in the aggregate, during the period.

OREO originating from covered loans was $36.7 million at June 30, 2011, compared with $35.3 million at December 31, 2010.

The table that follows shows the categories that are included in nonperforming and underperforming assets, excluding covered assets, as of June 30, 2011, and the four previous quarters, as well as related credit quality ratios.

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	Quarter Ended
	2011						2010
(Dollars in thousands)	June 30			Mar. 31			Dec. 31			Sep. 30			June 30
Nonaccrual loans
Commercial	$	9,811		$	9,918		$	13,729		$	17,320		$	12,874
Real estate - construction	13,237			14,199			12,921			13,454			18,890
Real estate - commercial	26,213			30,846			28,342			27,945			28,272
Real estate - residential	4,564			4,419			4,607			4,801			4,571
Installment	335			262			150			279			267
Home equity	2,376			2,404			2,553			2,358			1,797
Total nonaccrual loans	56,536			62,048			62,302			66,157			66,671
Restructured loans	17,482			18,532			17,613			13,365			12,752
Total nonperforming loans	74,018			80,580			79,915			79,522			79,423
Other real estate owned (OREO)	16,313			14,953			17,907			18,305			16,818
Total nonperforming assets	90,331			95,533			97,822			97,827			96,241
Accruing loans past due 90 days or more	149			241			370			233			276
Total underperforming assets	$	90,480		$	95,774		$	98,192		$	98,060		$	96,517
Allowance for loan and lease losses to
Nonaccrual loans	94.93		%	86.46		%	91.87		%	86.54		%	86.71		%
Nonperforming loans	72.51		%	66.57		%	71.62		%	71.99		%	72.79		%
Total ending loans	1.92		%	1.93		%	2.03		%	2.07		%	2.07		%
Nonperforming loans to total loans	2.65		%	2.90		%	2.84		%	2.88		%	2.84		%
Nonperforming assets to
Ending loans, plus OREO	3.22		%	3.42		%	3.45		%	3.51		%	3.42		%
Total assets, including covered assets	1.50		%	1.51		%	1.57		%	1.59		%	1.46		%

MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, foreign exchange rates, and equity prices. The primary source of market risk for First Financial is interest-rate risk. Interest-rate risk is the risk to earnings and equity value arising from changes in market interest rates and arises in the normal course of business to the extent that there is a divergence between the amount of First Financial’s interest-earning assets and the amount of interest-bearing liabilities that are prepaid/withdrawn, re-price, or mature in specified periods. First Financial seeks to achieve consistent growth in net interest income and equity while managing volatility arising from shifts in market interest rates. First Financial’s board of directors establishes policy limits with respect to interest rate risk and changes in the economic value of equity. First Financial’s Asset and Liability Committee (ALCO) oversees market risk management, monitoring risk measures, limits, and policy guidelines for managing the amount of interest-rate risk and its effect on net interest income and capital.

Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities. Effective interest rate risk management begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk position given business activities, management objectives, market expectations and ALCO policy limits and guidelines.

Liquidity

Liquidity management is the process by which First Financial manages the continuing flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost.  These funding commitments include withdrawals by depositors, credit commitments to borrowers, shareholder dividends, expenses of its operations, and capital expenditures.  Liquidity is monitored and closely managed by ALCO, a group of senior officers from the lending, deposit gathering, finance, risk management, and treasury areas. It is ALCO’s responsibility to ensure First Financial has the necessary level of funds available for normal operations as well as maintain a contingency funding policy to ensure that liquidity stress events are quickly identified, and management plans are in place to respond.  This is accomplished through the use of policies which establish limits and require measurements to monitor liquidity trends, including modeling and management reporting that

43

identifies the amounts and costs of all available funding sources.  These sources are periodically tested for funding availability.

Liquidity is derived primarily from deposit growth, principal and interest payments on loans and investment securities, maturing loans and investment securities, access to wholesale funding sources, and collateralized borrowings.  First Financial’s most stable source of liability-funded liquidity for both long and short-term needs is deposit growth and retention of the core deposit base.  The deposit base is diversified among individuals, partnerships, corporations, public entities, and geographic markets.  This diversification helps First Financial minimize dependence on large concentrations of funding sources.

Capital expenditures, such as banking center expansions and technology investments, were $4.6 million and $12.3 million for the first six months of 2011 and 2010, respectively.  Management believes that First Financial has sufficient liquidity to fund its future capital expenditure commitments.

As of June 30, 2011, First Financial had pledged certain eligible residential and farm real estate loans, home equity lines of credit, as well as certain government and agency securities, totaling $1.1 billion as collateral for borrowings to the FHLB.  For ease of borrowing execution, First Financial utilizes a blanket collateral agreement with the FHLB.

From time to time, First Financial utilizes its short-term line of credit and longer-term advances from the FHLB as funding sources.  At both June 30, 2011 and December 31, 2010, the company had no short-term borrowings from the FHLB.  At June 30, 2011, and December 31, 2010, total long-term borrowings from the FHLB were $37.3 million and $63.9 million, respectively.  The total remaining borrowing capacity from the FHLB at June 30, 2011, was $238.8 million.

The principal source of asset-funded liquidity is marketable investment securities, particularly those of shorter maturities. The market value of investment securities classified as available-for-sale totaled $1.1 billion at June 30, 2011.  Securities classified as held-to-maturity that are maturing within a short period of time are also a source of liquidity and totaled $0.3 million at June 30, 2011.  In addition, other types of assets such as cash and due from banks, federal funds sold and securities purchased under agreements to resell, as well as loans maturing within one year, are sources of liquidity.

At June 30, 2011, in addition to liquidity on hand of $251.3 million, First Financial had unused and available overnight wholesale funding of approximately $2.1 billion (or approximately 34.9% of total assets) to fund any significant deposit runoff that may occur as a result of the repriced deposits and from the markets that the Company is exiting as well as general corporate requirements.

Certain restrictions exist regarding the ability of First Financial’s subsidiaries to transfer funds to First Financial in the form of cash dividends, loans, other assets, or advances.  The approval of the subsidiaries’ respective primary federal regulators is required for First Financial’s subsidiaries to pay dividends in excess of regulatory limitations.  Dividends paid to First Financial from its subsidiaries totaled $16.4 million for the first six months of 2011.  As of June 30, 2011, First Financial’s subsidiaries had retained earnings of $346.0 million of which $210.6 million was available for distribution to First Financial.  Additionally, First Financial had $100.5 million in cash as of June 30, 2011, which is approximately three times the Company’s annual base shareholder dividend (currently $0.48 per share) and operating expenses. Management is not aware of any other events or regulatory requirements that, if implemented, are likely to have a material effect on First Financial’s liquidity.

Until its prepayment during the second quarter 2011, First Financial made quarterly interest payments on its junior subordinated debenture owed to its unconsolidated subsidiary trust.  Interest expense related to this other long-term debt totaled $0.2 million for the three months ended June 30, 2011, and $0.3 million for the three months ended June 30, 2010. Interest expense was $0.4 million and $0.6 million for the six months ended June 30, 2011, and 2010, respectively. On June 30, 2011, the trust preferred security was redeemed. Therefore, there will be no future interest expense associated with the junior subordinated debenture.

During the first quarter of 2010, First Financial made a $1.1 million cash quarterly dividend payment to the U.S. Treasury on the 80,000 perpetual preferred securities, which carried a 5.0% dividend rate for the first five years and a 9.0% rate thereafter. On February 24, 2010, First Financial Bancorp redeemed all of the $80.0 million of senior preferred shares issued to the U.S. Treasury in December 2008 under its Capital Purchase Program (CPP). First Financial included in its computation of earnings per diluted common share the impact of a non-cash, deemed dividend of $0.8 million, representing the unaccreted preferred stock discount remaining on the transaction date. This one-time deemed dividend was in addition to the first quarter 2010 preferred cash dividends paid through the redemption date.

First Financial had no share repurchase activity under publicly announced plans in 2010 or 2011.

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CAPITAL

First Financial and its subsidiary, First Financial Bank, are subject to regulatory capital requirements administered by federal banking agencies.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet minimum capital requirements can initiate regulatory action.

Consolidated regulatory capital ratios at June 30, 2011, included the leverage ratio of 11.01%, Tier 1 ratio of 20.15%, and total capital ratio of 21.43%.  All regulatory capital ratios exceeded the amounts necessary to be classified as “well capitalized,” and total regulatory capital exceeded the “minimum” requirement by approximately $454.2 million, on a consolidated basis.  First Financial’s tangible common equity ratio increased to 11.11% for the second quarter 2011 as compared to 10.33% at December 31, 2010 quarter and 9.55% for the comparable year-over-year quarter.

Quantitative measures established by regulation to ensure capital adequacy require First Financial to maintain minimum amounts and ratios (as defined by the regulations and set forth in the following table) of Total and Tier 1 capital to risk-weighted assets and to average assets, respectively.  Management believes, as of June 30, 2011, that First Financial met all capital adequacy requirements to which it was subject.  At June 30, 2011, and December 31, 2010, regulatory notifications categorized First Financial as well-capitalized under the regulatory framework for prompt corrective action.  To be categorized as well-capitalized, First Financial must maintain minimum Total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table.  There have been no conditions or events since those notifications that management believes has changed the institution’s category.

First Financial’s Tier I capital is comprised of total shareholders’ equity and prior to June 30, 2011 included its junior subordinated debentures, less unrealized gains and losses on investment securities available-for-sale accounted for under FASB ASC Topic 320, Investments-Debt and Equity Securities, and any amounts resulting from the application of FASB ASC Topic 715, Compensation-Retirement Benefits, that is recorded within accumulated other comprehensive income (loss), intangible assets, and any valuation related to mortgage servicing rights.  Total risk-based capital consists of Tier I capital plus qualifying allowance for loan and lease losses and gross unrealized gains on equity securities.

For purposes of calculating the leverage ratio, average assets represents quarterly average assets less assets not qualifying for Total risk-based capital including intangibles and non-qualifying mortgage servicing rights and allowance for loan and lease losses.

On April 28, 2011, First Financial filed a shelf registration on Form S-3 with the Securities and Exchange Commission (SEC).  This shelf registration allows First Financial to raise capital from time to time through the sale of various types of securities, subject to approval by the Company’s board of directors.

The following table illustrates the actual and required capital amounts and ratios as of June 30, 2011, and the year ended December 31, 2010.

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	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2011
Total capital to risk-weighted assets
Consolidated	$	724,735	21.43	%	$	270,546	8.00	%	N/A		N/A
First Financial Bank	619,217		18.36	%	269,749		8.00	%	$	337,186	10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	681,492		20.15	%	135,273		4.00	%	N/A		N/A
First Financial Bank	568,752		16.87	%	134,874		4.00	%	202,312		6.00	%
Tier 1 capital to average assets
Consolidated	681,492		11.01	%	247,658		4.00	%	N/A		N/A
First Financial Bank	568,752		9.20	%	247,209		4.00	%	309,012		5.00	%

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount	Ratio
December 31, 2010
Total capital to risk-weighted assets
Consolidated	$	727,252	19.72	%	$	294,978	8.00	%	N/A	N/A
First Financial Bank	600,911		16.36	%	293,930		8.00	%	367,412	10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	680,145		18.45	%	147,489		4.00	%	N/A	N/A
First Financial Bank	546,726		14.88	%	146,965		4.00	%	220,447	6.00	%
Tier 1 capital to average assets
Consolidated	680,145		10.89	%	248,847		4.00	%	N/A	N/A
First Financial Bank	546,726		8.75	%	248,437		4.00	%	310,546	5.00	%

CRITICAL ACCOUNTING POLICIES

First Financial’s Consolidated Financial Statements are prepared based on the application of accounting policies.  These policies require the reliance on estimates and assumptions.  Changes in underlying factors, assumptions, or estimates in any of these areas could have a material impact on First Financial’s future financial condition and results of operations. In management’s opinion, some of these areas have a more significant impact than others on First Financial’s financial reporting.  For First Financial, these areas currently include accounting for the allowance for loan and lease losses, covered loans,  FDIC indemnification asset, goodwill, pension and income taxes.  These accounting policies are discussed in detail in Management’s Discussion and Analysis – Critical Accounting Policies on pages 27 – 28 of First Financial’s 2010 Annual Report.  There were no material changes to these accounting policies during the first half of 2011.

ACCOUNTING AND REGULATORY MATTERS

Note 2 to the Consolidated Financial Statements discusses new accounting standards adopted by First Financial during 2011 and the expected impact of accounting standards recently issued but not yet required to be adopted.  To the extent the adoption of new accounting standards materially affects financial condition, results of operations, or liquidity, the impacts are discussed

46

in the applicable section(s) of Management’s Discussion and Analysis and the Notes to the Consolidated Financial Statements.

FORWARD-LOOKING INFORMATION

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

• management’s ability to effectively execute its business plan;

• the risk that the strength of the United States economy in general and the strength of the local economies in which we conduct operations may continue to deteriorate resulting in, among other things, a further deterioration in credit quality or a reduced demand for credit, including the resultant effect on our loan portfolio, allowance for loan and lease losses and overall financial performance;

▪ the effects of the potential delay or failure of the U.S. federal government to pay its debts as they become due or make payments in the ordinary course;

• the ability of financial institutions to access sources of liquidity at a reasonable cost;

• the impact of recent upheaval in the financial markets and the effectiveness of domestic and international governmental actions taken in response, such as the U.S. Treasury’s TARP and the FDIC’s Temporary Liquidity Guarantee Program, and the effect of such governmental actions on us, our competitors and counterparties, financial markets generally and availability of credit specifically, and the U.S. and international economies, including potentially higher FDIC premiums arising from increased payments from FDIC insurance funds as a result of depository institution failures;

• the effect of and changes in policies and laws or regulatory agencies (notably the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act);

• inflation and possible changes in interest rates;

• our ability to keep up with technological changes;

• our ability to comply with the terms of loss sharing agreements with the FDIC;

• mergers and acquisitions, including costs or difficulties related to the integration of acquired companies and the wind-down of non-strategic operations that may be greater than expected, such as the previous activities of Irwin Union Bank & Trust Company and its former affiliates, including the risks and uncertainties associated with the Irwin Mortgage Corporation bankruptcy proceedings;

• the risk that exploring merger and acquisition opportunities may detract from management’s time and ability to successfully manage our company;

• expected cost savings in connection with the consolidation of recent acquisitions may not be fully realized or realized within the expected time frames, and deposit attrition, customer loss and revenue loss following completed acquisitions may be greater than expected;

• our ability to increase market share and control expenses;

• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as the Financial Accounting Standards Board and the SEC;

• adverse changes in the securities and debt markets;

• our success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services;

• monetary and fiscal policies of the Board of Governors of the Federal Reserve System (Federal Reserve) and the U.S. government and other governmental initiatives affecting the financial services industry;

• our ability to manage loan delinquency and charge-off rates and changes in estimation of the adequacy of the

47

allowance for loan losses; and

• the costs and effects of litigation and of unexpected or adverse outcomes in such litigation.

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.

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ITEM 3.          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, foreign exchange rates, and equity prices. The primary source of market risk for First Financial is interest-rate risk. Interest-rate risk is the risk to earnings and equity value arising from changes in market interest rates and arises in the normal course of business to the extent that there is a divergence between the amount of First Financial’s interest-earning assets and the amount of interest-bearing liabilities that are prepaid/withdrawn, re-price, or mature in specified periods. First Financial seeks to achieve consistent growth in net interest income and equity while managing volatility arising from shifts in market interest rates. First Financial’s board of directors establishes policy limits with respect to interest rate risk. First Financial’s Asset and Liability Committee (ALCO) oversees market risk management, monitoring risk measures, limits, and policy guidelines for managing the amount of interest-rate risk and its effect on net interest income and capital.

Interest-rate risk for First Financial’s Consolidated Balance Sheets consists of repricing, option, and basis risks.  Repricing risk results from differences in the maturity, or repricing, of interest-bearing assets and liabilities.  Option risk in financial instruments arises from embedded options such as loan prepayments, early withdrawal of Certificates of Deposits, and calls on investments and debt instruments that are primarily driven by third party or client behavior.  Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which subsequently result in a narrowing of the net interest margin.  Basis risk is also present in managed rate liabilities, such as interest-bearing checking accounts and savings accounts, where historical pricing relationships to market rates may change due to the level or directional change in market interest rates, or competitive pressures.

The interest rate risk position is measured and monitored using income simulation models and economic value of equity sensitivity analysis that capture both short-term and long-term interest rate risk exposure.  Income simulation involves forecasting net interest income under a variety of interest rate scenarios including instantaneous shocks.

Presented below is the estimated impact on First Financial’s net interest income as of June 30, 2011, assuming immediate, parallel shifts in interest rates:

	-200 basis points		-100 basis points		+100 basis points		+200 basis points
June 30, 2011	(10.54	)%	(3.47	)%	1.17	%	4.85	%

Modeling the sensitivity of net interest income and the economic value of equity to changes in market interest rates is highly dependent on numerous assumptions incorporated into the modeling process.  These assumptions are periodically reviewed in the context of balance sheet changes, product offerings, external economic factors and anticipated client behavior.  In the first quarter of 2011, First Financial completed an update to its core deposit product repricing and retention formulas, as well as average life estimates, used in its interest rate risk modeling.  The Company employed linear regression analysis in developing these updated components while utilizing an average of various predominant industry approaches to arrive at updated average life estimates.  Using these updated assumptions, First Financial’s projected results for earnings at risk and long-term economic value of equity indicate the Company remains in an asset sensitive position, which is consistent with results from the previous method employed.  Due to the current low interest rate environment, funding rates on deposit and wholesale funding instruments were not reduced below 0.0% in the down 200 and down 100 basis points scenarios.  The analysis provides a framework as to what our overall sensitivity is as of our most recent reported position.

Management strategies may impact future reporting periods, as our actual results may differ from simulated results due to the timing, magnitude, and frequency of interest rate changes, the difference between actual experience, and the characteristics assumed, as well as changes in market conditions.  Market based prepayment speeds are factored into the analysis for loan and securities portfolios.  Rate sensitivity for transactional deposit accounts is modeled based on both historical experience and external industry studies.

First Financial uses economic value of equity sensitivity analysis to understand the impact of changes in interest rates on long-term cash flows, income, and capital.  Economic value of equity is based on discounting the cash flows for all balance sheet instruments under different interest-rate scenarios.  Deposit premiums are based on external industry studies and utilizing historical experience.  Presented below is the change in First Financial’s economic value of equity position as of June 30, 2011, assuming immediate, parallel shifts in interest rates:

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	-200 basis points		-100 basis points		+100 basis points		+200 basis points
June 30, 2011	(14.07	)%	(4.76	)%	3.77	%	4.21	%

First Financial, utilizing interest rates primarily based upon external industry studies, models additional scenarios covering the next twelve months.  Based on these scenarios, First Financial has a relatively neutral rate risk position of a positive0.67% when compared to a base-case scenario with interest rates held constant.  Given its outlook for future interest rates, First Financial is managing its balance sheet with a bias toward asset sensitivity.

See also “Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations—Net Interest Income.”

ITEM 4.   CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rule 13a-15 of the Securities Exchange Act of 1934, that are designed to cause the material information required to be disclosed by First Financial in the reports it files or submits under the Securities Exchange Act of 1934 to be recorded, processed, summarized, and reported to the extent applicable within the time periods required by the Securities and Exchange Commission’s rules and forms.  In designing and evaluating the disclosure controls and procedures, management recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

As of the end of the period covered by this report, First Financial performed an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No changes were made to the Corporation’s internal control over financial reporting (as defined in Rule 13a-15 under the Securities Exchange Act of 1934) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

The following supplements the Company's response to the disclosure in response to Part I - Item 3.  Legal Proceedings of Form 10-K for the year ended December 31, 2010.

Recent Litigation

The Western and Southern Life Insurance Company and other plaintiffs filed a complaint on July 11, 2011 against numerous defendants, including DLJ Mortgage Capital, Inc., Credit Suisse Securities (USA) LLC, Credit Suisse First Boston Mortgage Securities Corp., Irwin Funding Corporation, IHE Funding Corporation II, First Horizon Home Loan Corporation, First Horizon Asset Securities, Inc. and Bank of America Securities LLC in the Hamilton County Court of Common Pleas, entitled The Western and Southern Life Insurance Company, et al., vs. DLJ Mortgage Capital, Inc., et. al (Case No. A1105352). Plaintiffs allege that they purchased residential mortgaged-backed securities (“MBS”) issued by numerous entities pursuant to various offering materials, including MBS involving former Irwin Union Bank-related entities in certain offerings between July 2006 and May 2007. Plaintiffs also assert claims against Credit Suisse Securities and others that underwrote MBS issued by third parties. Plaintiffs contend, among other allegations, that defendants made false and misleading statements regarding (i) the appraisal process for properties that served as collateral for the mortgage loans underlying the MBS; (ii) the underwriting practices by which those mortgage loans were originated; (iii) the credit ratings of the MBS; and (iv) the transfer and assignment of the mortgages to the trusts. Thus Plaintiffs allege the offering materials contained untrue statements and omissions of material facts in violation of the Ohio Securities Act. Plaintiffs also allege negligent misrepresentation and common law fraud against certain defendants.

Plaintiffs seek damages, including rescission and recovery of the consideration paid, monetary losses including loss of market value and loss of principal and interest payments, attorneys' fees and costs, prejudgment interest, and such other relief as the court deems proper. Plaintiffs allege they purchased certificates representing a total investment of approximately $276,000,000, of which approximately $20,430,000 is allegedly related to IHE Funding Corporation II (“IHE Funding”).  IHE Funding is a wholly-owned subsidiary of Irwin Home Equity Corporation (“IHE”). First Financial Bank acquired all of the stock of IHE and thus IHE Funding in connection with the acquisition of certain assets of Irwin Union Bank and Trust Company (“Irwin Union Bank”) from the FDIC as receiver in September 2009. Prior to September 2009, IHE ceased its involvement in the origination and/or securitization of home equity loans.

Because the litigation is in the early stages, it is not possible at this time to form a reasonable estimate of the portion of plaintiffs' claimed damages, if any, for which IHE Funding could be held legally responsible.  No reserves have been established for this litigation. First Financial Bank expects to make a claim with the FDIC as receiver for indemnification with respect to IHE Funding in this litigation.

Irwin Mortgage Corporation Bankruptcy

On July 8, 2011, Irwin Mortgage Corporation (“IMC”), a wholly-owned subsidiary of First Financial Bank, filed a voluntary bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Ohio (“Bankruptcy Court”), Case No. 11-57191.In its Declaration in Support of First Day Pleadings filed with the Bankruptcy Court (“Declaration”), IMC stated that it believes “[a] Chapter 11 filing (a) affords national jurisdiction to effectively and efficiently manage the numerous claims against IMC, many of which are pending in state and federal courts around the country; and (b) allows IMC to proceed as a debtor in possession with experienced and knowledgeable management to assist with the liquidation and the claims administration.” In addition, the Declaration sought the following, among other things, to assist in IMC's orderly liquidation: (i) an order rejecting the IMC lease of the premises in Fishers, Indiana, which the court granted at an expedited hearing on July 12, 2011; (ii) an extension of time to file schedules and statements, which the court granted without a hearing on July 15, 2011; (iii) an order approving IMC's case management procedures; and (iv) orders authorizing the retention and compensation of certain consultants, counsel and specialists to assist in the wind-down. The court established case management procedures on its own initiative on July 28, 2011, and at a hearing on August 3, 2011 the court indicated its intention to grant IMC's motions in connection with consultants, counsel and specialists.

The consolidated balance sheet and results of operations for the six months ended June 30, 2011 were deconsolidated from First Financial at the end of the second quarter 2011. It is anticipated that any previous or subsequent litigation involving IMC will no longer be reported in First Financial filings.

Item 1A. Risk Factors.

The following supplements the risk factors relating to First Financial as disclosed in response to Item 1A. to Part I of Form 10-K for the year ended December 31, 2010.

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Risks Related to the Acquisition of the Business and Assets of Peoples Community Bank, Irwin Union Bank and Trust Company and Irwin Union Bank, FSB.

Irwin Union Bank and Trust Company (“Irwin Union Bank”) and certain of its subsidiaries, notably IHE and IMC were and continue to be the subject of a number of claims and legal actions regarding their mortgage banking, mortgage and/or home equity lines of business activities that took place prior to September 18, 2009. These matters may require significant resources and management attention.

In connection with the acquisition of certain assets and assumption of certain liabilities of Irwin Union Bank by First Financial Bank from the FDIC as receiver for Irwin Union Bank, First Financial purchased all of the stock of most of the subsidiaries of Irwin Union Bank. The transaction is governed by a Purchase and Assumption Agreement by and among the FDIC, the FDIC as receiver, and First Financial Bank dated September 18, 2009, as amended (the “Purchase Agreement”). There are currently claims and litigation against Irwin Union Bank and certain former Irwin Union Bank subsidiaries for alleged actions taken by Irwin Union Bank and/or its subsidiaries prior to September 18, 2009.  Pursuant to the Purchase Agreement, litigation involving Irwin Union Bank's conduct prior to First Financial Bank's acquisition of its assets principally is the responsibility of the FDIC as receiver, and the FDIC as receiver has agreed to indemnify and hold harmless First Financial Bank for certain claims against Irwin Union Bank and its former subsidiaries for actions taken on or prior to September 18, 2009.

We have identified a number of claims (and are evaluating others) against which we believe we should be indemnified pursuant to Section 12 of the Purchase Agreement, and we have submitted and expect to continue to submit requests for indemnification to the FDIC as receiver. The process of seeking indemnification from the FDIC as receiver with respect to such litigation could be time-consuming and subject to dispute. Unless the FDIC as receiver assumes the defense of such claims, First Financial will have to expend considerable time and effort to defend the actions, subject to such indemnification. Further, until the FDIC as receiver has approved and reimbursed us for the claims for which we should be indemnified, we could be exposed to liabilities arising from the defense of such claims. Discussions are ongoing with the FDIC as receiver regarding indemnification with respect to certain actions taken by Irwin Union Bank and/or its subsidiaries prior to September 18, 2009. However, there can be no assurances that the FDIC as receiver will agree with our positions regarding indemnification.

Although we expect the FDIC as receiver to provide indemnification in connection with certain assets and liabilities pursuant to the Purchase Agreement, First Financial may discover aspects of the acquisition for which indemnification is not available. These might involve inconsistencies in standards, controls, procedures and policies of the acquired Irwin entities that could adversely affect First Financial's ability to achieve the anticipated benefits of the transaction and could distract management from implementing its strategic plan.

The Chapter 11 proceedings initiated by IMC involve various risks and uncertainties that could have a material effect on us.

In connection with the Purchase Agreement, First Financial acquired, among other things, all of the stock of IMC. Prior to the acquisition, the operations of subsidiary IMC had been in wind-down:  (a) in September 2006 a majority of its assets were sold, including the production and most of the headquarters operations; and (b) in January 2007 the bulk of IMC's portfolio of mortgage servicing rights as well as its servicing platform were sold to various purchasers. IMC continues to wind down, including its prior activities in the mortgage reinsurance business through its subsidiary, Irwin Reinsurance Corporation, a Vermont Corporation.

On July 8, 2011, IMC filed a voluntary bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code (see “Item 1. Legal Proceedings - Irwin Mortgage Corporation Bankruptcy”). The outcome of the Chapter 11 proceedings will depend on IMC's ability to reach acceptable agreement with creditors on the wind-down of IMC that is approved by the Bankruptcy Court, or alternatively if such wind-down would be confirmed by the Bankruptcy Court over the objection of any creditors or other parties in interest. We believe IMC also will be precluded from paying dividends to First Financial Bank and from making payments to any pre-petition creditors (including intercompany payables due and owing to First Financial or its subsidiaries) during the pendency of the Chapter 11 proceedings, without the Bankruptcy Court's approval. Furthermore, it is possible that in the Chapter 11 proceedings various claims may be asserted against First Financial, including allegations that we are liable for the pending litigation described in the immediately preceding risk factor, or other liabilities of IMC. We note, however, that to date, no such claims have been asserted or threatened against us, and we believe that First Financial and its subsidiaries have no responsibility for any liabilities of IMC. Accordingly, we cannot give any assurances as to the impact of the Chapter 11 proceedings on the financial condition, results of operations or future prospects of First Financial and its subsidiaries' businesses. We are also unable to predict the timing of any of the foregoing matters or the Chapter 11 proceedings themselves.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table shows the total number of shares repurchased in the second quarter of 2011.

Issuer Purchases of Equity Securities

	(a)	(b)		(c)	(d)
Period	Total Number Of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (2)	Maximum Number of Shares that may yet be purchased Under the Plans
April 1 to April 30, 2011
Share repurchase program	0	$	0.00	0	4,969,105
Director Fee Stock Plan	1,898	16.26		NA	NA
Stock Plans	31,387	16.57		NA	NA
May 1 to May 31, 2011
Share repurchase program	0	$	0.00	0	4,969,105
Director Fee Stock Plan	0	0.00		NA	NA
Stock Plans	21,524	16.53		NA	NA
June 1 to June 30, 2011
Share repurchase program	0	$	0.00	0	4,969,105
Director Fee Stock Plan	0	0.00		NA	NA
Stock Plans	2,575	15.82		NA	NA
Total
Share repurchase program	0	$	0.00	0
Director Fee Stock Plan	1,898	$	16.26	NA
Stock Plans	55,486	$	16.52	NA

(1) The number of shares purchased in column (a) and the average price paid per share in column (b) include the purchase of shares other than through publicly announced plans.  The shares purchased other than through publicly announced plans were purchased pursuant to First Financial’s Director Fee Stock Plan, 1999 Stock Option Plan for Non-Employee Directors, 1999 Stock Incentive Plan for Officers and Employees, 2009 Employee Stock Plan, and 2009 Non-Employee Director Stock Plan.  (The last four plans are referred to hereafter as the Stock Plans.)  The table shows the number of shares purchased pursuant to those plans and the average price paid per share.  The purchases for the Director Fee Stock Plan were made in open-market transactions.  Under the Stock Plans, shares were purchased from plan participants at the then current market value in satisfaction taxes owed for vested shares/options.

(2) First Financial has one remaining previously announced stock repurchase plan under which it is currently authorized to purchase shares of its common stock.  The plan has no expiration date.  The table that follows provides additional information regarding this plan.  No shares were repurchased under this plan in 2011.

Announcement Date	Total Shares Approved for Repurchase	Total Shares Repurchased Under the Plan	Expiration Date
1/25/2000	7,507,500	2,538,395	None

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Item 6.         Exhibits

(a)	Exhibits:
3.1		Amended Article FIFTH of the Amended and Restated Articles of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Current Report on From 8-K filed with the SEC on May 27, 2011 and incorporated herein by reference).
3.2		Amended Article II, Section 2.2 of the Regulations of the Registrant (filed as Exhibit 3.1 to the Registrant's Current Report on From 8-K filed with the SEC on May 27, 2011 and incorporated herein by reference).
10.1		Form of Agreement for Restricted Stock Award under the First Financial Bancorp. 2009 Employee Stock Plan (2011 grants).*
31.1		Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.
31.2		Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.
32.1		Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 furnished herewith.
101.1		Financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2011, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Shareholders' Equity, and (v) Notes to Consolidated Financial Statements, as blocks of text and in detail**.

First Financial will furnish, without charge, to a security holder upon request a copy of the documents and will furnish any other Exhibit upon payment of reproductions costs.  Unless as otherwise noted, documents incorporated by reference involve File No. 000-12379.

*    Compensatory plans or arrangements.

**    As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		FIRST FINANCIAL BANCORP.
		(Registrant)
/s/ J. Franklin Hall		/s/ Anthony M. Stollings
J. Franklin Hall		Anthony M. Stollings
Executive Vice President and		Senior Vice President, Chief Accounting
Chief Financial Officer		Officer, and Controller
Date	8/9/2011	Date	8/9/2011

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EX-10.1

EXHIBIT 10.1

AGREEMENT FOR RESTRICTED STOCK AWARD

This Agreement for Restricted Stock Award (the "Agreement") is between FIRST FINANCIAL BANCORP., an Ohio corporation (the "Corporation"), and       who, as of      , 2011 which is the date of this Agreement, is an employee of       (the "Grantee"):

WHEREAS, the Corporation established the 2009 Employee Stock Plan (the "Plan") and a Committee of the Board of Directors of the Corporation designated in the Plan (the "Committee") approved the execution of this Agreement containing the Restricted Stock Award to the Grantee upon the terms and conditions hereinafter set forth:

NOW THEREFORE, in consideration of the mutual obligations contained herein, it is hereby agreed:

1. Award of Restricted Stock. The Corporation hereby awards to Grantee as of the date of this Agreement       shares of restricted Common Stock of the Corporation ("Common Stock"), without par value, in consideration of services to be rendered.

2. Restrictions on Transfer. The shares of restricted Common Stock so received by the Grantee and any additional shares attributable thereto received by the Grantee as a result of any stock dividend, recapitalization, merger, reorganization or similar event are subject to the restrictions set forth herein and may not be sold, assigned, transferred, pledged or otherwise encumbered during the Restriction Period, except as permitted hereby.

3. Restriction Period. The Restriction Period as used in this Agreement shall mean the period that begins as of the date of this Agreement and ends with respect to the restricted Common Stock granted under this Agreement as of the applicable anniversary date(s) of the date of this Agreement (the "Anniversary Dates") as set forth in Schedule 3. The ending of the Restriction Period also may be referred to in this Agreement as the vesting of the restricted Common Stock or as when the Common Stock vests.

Notwithstanding the foregoing or anything in this Agreement to the contrary, if the Committee determines that there has been a Change in Control (as such term is defined in the Plan), the Restriction Period ends with respect to such shares of restricted Common Stock, effective as of the date of such Change in Control (as determined by the Committee).

The Committee may, at the time of the granting to the Grantee of the restricted Common Stock or at any time thereafter, reduce or terminate the Restriction Period otherwise applicable to all or any portion of the restricted Common Stock.

Schedule 3

Shares of Common Stock

Anniversary DateFirst Eligible to Vest on

Groupof this AgreementIndicated Anniversary Date

A1st anniversary date33.33%

B2nd anniversary date33.33%

C3rd anniversary date33.34%

.

4.Forfeiture Provision. Notwithstanding any other provision of this Agreement, Grantee hereby agrees that if his or her employment with the Corporation or a Subsidiary is terminated for any reason, voluntarily or involuntarily, whether by retirement, death, disability, resignation or dismissal for cause or otherwise, and such termination is prior to the ending of the Restriction Period applicable to any shares of the restricted

1

Common Stock, the Grantee's ownership and all related rights with respect to all shares of Common Stock for which the Restriction Period has not ended as of the date that the termination of employment occurs will be forfeited automatically as of the date that such termination of employment occurs, and the Corporation automatically will become the sole owner of such shares as of such date.

A transfer of the Grantee's employment between Subsidiaries or between any Subsidiary and the Corporation will not be considered a termination of employment for purposes of this Agreement. Notwithstanding the foregoing, a Grantee's employment will be considered terminated for purposes of this Agreement as of the date that the Grantee's employing Subsidiary ceases to be a Subsidiary for any reason, unless prior to or as of such date the Grantee's employment is transferred to the Corporation or to a remaining Subsidiary.

5.Stock Certificates.

(a) Upon award of the restricted Common Stock to the Grantee, one or more stock certificates which evidence such shares of restricted Common Stock will be issued by the Corporation for the benefit of the Grantee. Each such stock certificate will be deposited with and held by the Corporation or its agent. Any such certificate for restricted Common Stock of the Corporation resulting from any stock dividend, recapitalization, merger, reorganization or similar event will also be deposited with and held by the Corporation or its agent. All such stock certificates and Common Stock evidenced thereby will be subject to the forfeiture provisions, limitations on transferability and all other restrictions herein contained. The Grantee hereby agrees to deposit with the Corporation stock powers endorsed by the Grantee in blank and in such number as requested by the Corporation.

(b) All stock certificates for shares of restricted Common Stock issued during the Restriction Period will bear the following legend:

"The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the First Financial Bancorp. 2009 Employee Stock Plan and an Agreement for Restricted Stock. Copies of such Plan and Agreement are on file at the offices of First Financial Bancorp., Cincinnati, Ohio."

(c) Subject to Section 5(d) below, with regard to any shares of restricted Common Stock which cease to be subject to restrictions pursuant to Section 3, the Corporation will, within sixty (60) days of the date such shares cease to be subject to restrictions, transfer Common Stock for such shares free of all restrictions set forth in the Plan and this Agreement to the Grantee or the Grantee's designee, or in the event of such Grantee's death subsequent to expiration of the Restriction Period, to the Grantee's legal representative, heir or legatee.

(d) By accepting shares of restricted Common Stock, the Grantee agrees not to sell shares at a time when applicable laws or the Corporation's rules prohibit a sale. This restriction shall apply as long as the Grantee is an employee, consultant or director of the Corporation or a Subsidiary. Upon receipt of nonforfeitable shares subject to this Agreement, the Grantee agrees, if requested by the Corporation, to hold such shares for investment and not with a view of resale or distribution to the public, and if requested by the Corporation, the Grantee must deliver to the Corporation a written statement satisfactory to the Corporation to that effect. The Committee may refuse to deliver (via certificate or such other method as the Committee determines) any shares to Grantee for which Grantee refused to provide an appropriate statement.

6.Shareholder's Rights. Subject to the terms of this Agreement, during the Restriction Period:

(a) The Grantee will have, with respect to the restricted Common Stock, the right to vote all shares of the restricted Common Stock received under or as a result of this Agreement, including shares which are subject to the restrictions on transfer in Section 2 and to the forfeiture provisions in Section 4 of this Agreement.

(b) The Grantee shall not be paid any dividends with respect to the restricted Common Stock until each Restricted Period ends. At the time of vesting, the Grantee shall receive a cash payment equal to the aggregate dividends (without interest) that the Grantee would have received if the Grantee had owned all the shares in which the Grantee had vested for the period beginning on the date of grant of those

2

shares, and ending on the date of vesting. By way of example, when the Restricted Period ends for Group B awards, Grantee will be entitled to two years of accumulated dividends from the date of grant to the 2^nd anniversary date. No dividends shall be paid to the Grantee with respect to any shares of restricted Common Stock that are forfeited by the Grantee.

(c) Dividends payable in Common Stock with respect to the restricted Common Stock during the Restriction Period will be held subject to the vesting of the underlying restricted Common Stock and then automatically paid in the form of Common Stock to the Grantee.

7.Regulatory Compliance. The issue of shares of restricted Common Stock and Common Stock will be subject to full compliance with all then-applicable requirements of law and the requirements of the exchange upon which Common Stock may be traded, as set forth in the Plan. Furthermore, the Corporation shall have the right to refuse to issue or transfer any shares under this Agreement if the Corporation, acting in its absolute discretion determines that the issuance or transfer of such Common Stock might violate any applicable law or regulation.

8.Withholding Tax. The Grantee agrees that, in the event that the award and receipt of the restricted Common Stock or the expiration of restrictions thereon results in the Grantee's realization of income which for federal, state or local income tax purposes is, in the opinion of counsel for the Corporation, subject to withholding of tax at source by the Grantee's employer, the Grantee will pay to such Grantee's employer an amount equal to such withholding tax or make arrangements satisfactory to the Corporation regarding the payment of such tax (or such employer on behalf of the Corporation may withhold such amount from Grantee's salary or from dividends paid by the Corporation on shares of the restricted Common Stock or any other compensation payable to the Grantee). Alternatively, if the Grantee makes a proper Code Section 83(b) election, the Grantee must notify the Corporation in accordance with the requirements of Code Section 83(b) and promptly pay the Corporation the applicable federal, state and local withholding taxes due with respect to the shares of restricted Common Stock subject to the election.

9.Investment Representation. The Grantee represents and agrees that if he or she is awarded and receives the restricted Common Stock at a time when there is not in effect under the Securities Act of 1933 a registration statement pertaining to the shares and there is not available for delivery a prospectus meeting the requirements of Section 10(A)(3) of said Act, (i) he or she will accept and receive such shares for the purpose of investment and not with a view to their resale or distribution, (ii) that upon such award and receipt, he or she will furnish to the Corporation an investment letter in form and substance satisfactory to the Corporation, (iii) prior to selling or offering for sale any such shares, he or she will furnish the Corporation with an opinion of counsel satisfactory to the Corporation to the effect that such sale may lawfully be made and will furnish the Corporation with such certificates as to factual matters as the Corporation may reasonably request, and (iv) that certificates representing such shares may be marked with an appropriate legend describing such conditions precedent to sale or transfer.

10.Federal Income Tax Election. The Grantee hereby acknowledges receipt of advice that, pursuant to current federal income tax laws, (i) he or she has thirty (30) days in which to elect to be taxed in the current taxable year on the fair market value of the restricted Common Stock in accordance with the provisions of Internal Revenue Code Section 83(b), and (ii) if no such election is made, the taxable event will occur upon expiration of restrictions on transfer at termination of the Restriction Period and the tax will be measured by the fair market value of the restricted Common Stock on the date of the taxable event.

11.Adjustments. If, after the date of this Agreement, the Common Stock of the Corporation is, as a result of a merger, reorganization, consolidation, recapitalization, reclassification, split-up, spin-off, separation, liquidation, stock dividend, stock split, reverse stock split, property dividend, share repurchase, share combination, share exchange, issuance of warrants, rights or debentures or other change in corporate structure of the Corporation, increased or decreased or changed into or exchanged for a different number or kind of shares of stock or other securities of the Corporation or of another corporation, then:

(a) there automatically will be substituted for each share of restricted Common Stock for which the Restriction Period has not ended granted under the Agreement the number and kind of shares of stock or other securities into which each outstanding share is changed or for which each such share is

3

exchanged; and

(b) the Corporation will make such other adjustments to the securities subject to provisions of the Plan and this Agreement as may be appropriate and equitable; provided, however, that the number of shares of restricted Common Stock will always be a whole number.

12.Non-solicitation.This Section 12 shall apply to all Grantee's not subject to an employment agreement with the Corporation or any Affiliated Companies.

(a) Non-solicitation of Clients. During the Grantee's employment with the Corporation or any Affiliated Companies (as defined below) and for a period of one year after Grantee is no longer employed by any Affiliated Companies, Grantee shall not, directly or indirectly, whether individually or as a shareholder or other owner, partner, member, director, officer, employee, independent contractor, creditor or agent of any person (other than for the Corporation or any Affiliated Companies):

(1) Solicit (as defined below) any person or entity located anywhere in the geographic area consisting of the states of the United States in which any of the Affiliated Companies operate banking offices at any time during Grantee's employment with the Corporation or any Affiliated Companies for the provision of any commercial banking, retail banking, mortgage lending, or any similar lending or banking services;

(2) Solicit or attempt in any manner to persuade any client or customer of any Affiliated Companies to cease to do business, to refrain from doing business or to reduce the amount of business which any client or customer has customarily done or contemplates doing with any of the Affiliated Companies; or

(3) interfere with or damage (or attempt to interfere with or damage) any relationship between any Affiliated Company and any client or customer.

(b) Non-solicitation of Employees; No Hire. During the Grantee's employment with the Corporation or any Affiliated Companies and for a period of one year after Grantee is no longer employed by the Corporation or any Affiliated Companies, Grantee shall not, directly or indirectly, whether individually or as a shareholder or other owner, partner, member, director, officer, employee, independent contractor, creditor or agent of any person (other than for any Affiliated Company):

(4) Solicit any employee, officer, director, agent or independent contractor of any Affiliated Company to terminate his or her relationship with, or otherwise refrain from rendering services to, any Affiliated Company, or otherwise interfere or attempt to interfere in any way with any Affiliated Company's relationship with any of its employees, officers, directors, agents or independent contractors; or

(5) employ or engage any person who, at any time within the two‑year period immediately preceding such employment or engagement, was an employee, officer or director of any Affiliated Company.

(c) Defined Terms. For purposes of this Agreement, the following terms shall have the meaning set forth below:

(6) “Affiliated Companies” shall mean the Corporation, all of its subsidiaries, and any other entities controlled by, controlling, or under common control with the Corporation, including any successors thereof, except that, following the consummation of a Change in Control, for purposes of §§ 12(a) and 12(b), Affiliated Companies shall be limited to the Corporation and it subsidiaries as of immediately prior to the consummation of such Change in Control.

(7) “Change in Control” has the meaning given such term in the Corporation's 2009 Employee Stock Plan, as in effect on the Effective Date.

(8) “Confidential Information” shall mean all trade secrets, proprietary data, and other confidential information of or relating to any Affiliated Company, including without limitation financial information, information relating to business operations, services, promotional practices, and relationships with customers, suppliers, employees, independent contractors, or other parties, and any information which any Affiliated Company is obligated to treat as

4

confidential pursuant to any course of dealing or any agreement to which it is a party or otherwise bound, provided that Confidential Information shall not include information that is or becomes available to the general public and did not become so available through any breach of this Agreement by Grantee or Grantee's breach of a duty owed to the Corporation.

(9) “Solicit” shall mean any direct or indirect communication of any kind whatsoever, regardless of by whom initiated, inviting, advising, persuading, encouraging or requesting any person or entity, in any manner, to take or refrain from taking any action; provided, however, that the term “Solicit” shall not include general advertisements by an entity with which Grantee is associated or other communications in any media not targeted specifically at any specific individual described in § 12(b) or 12(c).

(d) Enforcement; Remedies; Blue Pencil. Grantee acknowledges that: (1) the various covenants, restrictions, and obligations set forth in this § 12 are separate and independent obligations, and may be enforced separately or in any combination; (2) the provisions of this § 12 are fundamental and essential for the protection of the Corporation's and the Affiliated Companies' legitimate business and proprietary interests, and the Affiliated Companies (other than the Corporation) are intended third-party beneficiaries of such provisions; (3) such provisions are reasonable and appropriate in all respects and impose no undue hardship on Grantee; and (4) in the event of any violation by Grantee of any of such provisions, the Corporation and, if applicable, the Affiliated Companies, will suffer irreparable harm and their remedies at law may be inadequate. In the event of any violation or attempted violation of any provision of this § 12 by Grantee, the Corporation and the Affiliated Companies, or any of them, as the case may be, shall be entitled to a temporary restraining order, temporary and permanent injunctions, specific performance, and other equitable relief, without any showing of irreparable harm or damage or the posting of any bond, in addition to any other rights or remedies that may then be available to them, including, without limitation, money damages and the cessation of the. If any of the covenants set forth in this § 12 is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such covenant shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and the remaining such covenants shall not be affected thereby.

1. Notices. Each notice relating to this Agreement must be in writing and delivered in person or by registered mail to the Corporation at its office, 201 East Fourth Street, Suite 1900, Cincinnati, Ohio 45202, attention of the Secretary, or at such other place as the Corporation has designated by notice. All notices to the Grantee or other person or persons succeeding to his or her interest will be delivered to the Grantee or such other person or persons at the Grantee's address below specified or such other address as specified in a notice filed with the Corporation.

2. Determinations of the Corporation Final. Any dispute or disagreement which arises under, as a result of, or in any way relates to the interpretation or construction of this Agreement will be determined by the Board of Directors of the Corporation or by a committee appointed by the Board of Directors of the Corporation (or any successor corporation). The Grantee hereby agrees to accept any such determination as final, binding and conclusive for all purposes.

3. Successors. All rights under this Agreement are personal to the Grantee and are not transferable except that in the event of the Grantee's death, such rights are transferable to the Grantee's legal representatives, heirs or legatees. This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns.

4. Obligations of the Corporation. The liability of the Corporation under the Plan and this Agreement is limited to the obligations set forth therein. No term or provision of the Plan or this Agreement will be construed to impose any liability on the Corporation in favor of the Grantee with respect to any loss, cost or expense which the Grantee may incur in connection with or arising out of any transaction in connection therewith.

5

5. No Employment Rights. Nothing in the Plan or this Agreement or any related material shall give the Grantee the right to continue in the employment of the Corporation or any subsidiary of the Corporation or adversely affect the right of the Corporation or any subsidiary of the Corporation to terminate the Grantee's employment with or without cause at any time.

6. Governing Law. This Agreement will be governed by and interpreted in accordance with the laws of the State of Ohio.

7. Plan. The Plan will control if there is any conflict between the Plan and this Agreement and on any matters that are not contained in this Agreement. A copy of the Plan has been provided to the Grantee and is incorporated by reference and made a part of this Agreement. Capitalized terms used but not specifically defined in this Agreement will have the definitions given to them in the Plan.

8. Entire Agreement. This Agreement and the Plan supersede any other agreement, whether written or oral, that may have been made or entered into by the Corporation and/or any of its subsidiaries and the Grantee relating to the shares of restricted Common Stock that are granted under this Agreement. This Agreement and the Plan constitute the entire agreement by the parties with respect to such matters, and there are no agreements or commitments except as set forth herein and in the Plan.

9. Captions; Counterparts. The captions in this Agreement are for convenience only and will not be considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed in any number of counterparts, each of which will constitute one and the same instrument.

IN WITNESS WHEREOF, this Agreement for Restricted Stock Award has been executed and dated by the parties hereto as of the day and year first above written.

FIRST FINANCIAL BANCORP.

By: _______________________________________

Claude E. Davis

Title: President & CEO

_______________________________________

Signature of Grantee

6

I hereby direct that all cash dividends to which I am entitled on my shares of restricted Common Stock under the foregoing Agreement as well as all notices and other written communications in connection with such shares be mailed to me at the following address:

____________________________________________

Name of Grantee

____________________________________________

Street Address

____________________________________________

City, State, and Zip Code

____________________________________________

Social Security Number

____________________________________________

Signature of Grantee

RSA2009-ESP (2011 Awards)

7

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Claude E. Davis, President and Chief Executive Officer of First Financial Bancorp., certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Financial Bancorp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	8/9/2011	/s/ Claude E. Davis
		Claude E. Davis President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, J. Franklin Hall, Executive Vice President and Chief Financial Officer of First Financial Bancorp., certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Financial Bancorp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	8/9/2011	/s/ J. Franklin Hall
		J. Franklin Hall Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORT BY CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Form 10-Q for the quarterly period ended June 30, 2011, of First Financial Bancorp. (the “Company”), as filed with the Securities and Exchange Commission on August 9, 2011 (the “Report”), I, Claude E. Davis, President and Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Claude E. Davis

Claude E. Davis

President and Chief Executive Officer

August 9, 2011

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PERIODIC FINANCIAL REPORT BY CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Form 10-Q for the quarterly period ended June 30, 2011, of First Financial Bancorp. (the “Company”), as filed with the Securities and Exchange Commission on August 9, 2011 (the “Report”), I, J. Franklin Hall, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ J. Franklin Hall

J. Franklin Hall

Executive Vice President and Chief Financial Officer

August 9, 2011

XML



LOANS (excluding covered loans) - Additional Information (Detail) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Non Covered Loans | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Write down of other real estate owned	$ 3,341,000	$ 727,000
Non Covered Loans | Commercial | Commercial Real Estate Developer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Write down of other real estate owned	3,100,000
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Minimum loans reviewed to determine if a specific allowance is necessary	250,000
Commercial | Franchise Operations | Equipment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan terms for franchisees, principally quick service and casual dining restaurants	84
Commercial | Franchise Operations | Leasehold Improvements
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan terms for franchisees, principally quick service and casual dining restaurants	180
Non Covered Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Write down of other real estate owned	$ 3,518,000	$ 899,000

XML



CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data	Jun. 30, 2011	Dec. 31, 2010
Investment securities available-for-sale, cost	$ 1,114,869	$ 904,546
Investment securities held-to-maturity, market value	$ 3,226	$ 18,066
Common stock, no par value	$ 0	$ 0
Common stock, Authorized	160,000,000	160,000,000
Common stock, Issued	68,730,731	68,730,731
Treasury stock, shares	10,471,291	10,665,754

XML



CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Interest income
Loans, including fees	$ 71,929	$ 74,944	$ 145,945	$ 154,282
Investment securities
Taxable	7,080	5,444	13,883	10,840
Tax-exempt	192	245	390	480
Total investment securities interest	7,272	5,689	14,273	11,320
Other earning assets	(1,384)	5,305	(2,338)	10,895
Total interest income	77,817	85,938	157,880	176,497
Interest expense
Deposits	10,767	15,308	22,167	30,956
Short-term borrowings	49	17	94	36
Long-term borrowings	937	2,556	2,026	5,113
Subordinated debentures and capital securities	197	319	391	634
Total interest expense	11,950	18,200	24,678	36,739
Net interest income	65,867	67,738	133,202	139,758
Provision for loan and lease losses - uncovered	5,756	6,158	6,403	17,536
Provision for loan and lease losses - covered	23,895	18,962	49,911	28,422
Net interest income after provision for loan losses	36,216	42,618	76,888	93,800
Noninterest income
Service charges on deposit accounts	4,883	5,855	9,493	11,466
Trust and wealth management fees	3,507	3,668	7,432	7,213
Bankcard income	2,328	2,102	4,483	4,070
Net gains from sales of loans	854	473	1,843	642
FDIC loss sharing income	21,643	15,170	45,078	22,738
Accelerated discount on covered loans	4,756	7,408	10,539	13,506
Loss on preferred securities	0	0	0	(30)
Other	3,147	5,791	5,908	7,797
Total noninterest income	41,118	40,467	84,776	67,402
Noninterest expenses
Salaries and employee benefits	25,123	29,513	52,693	59,754
Net occupancy	4,493	5,340	11,353	13,462
Furniture and equipment	2,581	2,514	5,134	4,787
Data processing	1,453	1,136	2,691	2,368
Marketing	1,402	1,600	2,643	2,674
Communication	753	822	1,567	2,030
Professional services	3,095	2,446	5,322	4,189
State intangible tax	1,236	1,426	2,601	2,757
FDIC expense	1,152	1,907	3,273	3,917
Loss-Other real estate owned	163	138	3,485	608
Loss-Covered other real estate owned	2,621	70	5,733	70
Other	8,425	8,907	13,792	19,464
Total noninterest expenses	52,497	55,819	110,287	116,080
Income before income taxes	24,837	27,266	51,377	45,122
Income tax expense	8,864	9,492	18,197	15,750
Net income	15,973	17,774	33,180	29,372
Dividends on preferred stock	0	0	0	1,865
Net income available to common shareholders	$ 15,973	$ 17,774	$ 33,180	$ 27,507
Net earnings per common share - basic:	$ 0.28	$ 0.31	$ 0.58	$ 0.49
Net earnings per common share - diluted:	$ 0.27	$ 0.30	$ 0.57	$ 0.48
Cash dividends declared per share	$ 0.12	$ 0.10	$ 0.24	$ 0.20
Average basic shares outstanding	57,694,792	57,539,901	57,642,970	56,356,877
Average diluted shares outstanding	58,734,662	58,604,039	58,722,448	57,365,322

XML



Employee Benefit Plan Amounts Recognized in the Consolidated Balance Sheets and Consolidated Statements of Income (Detail) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Schedule of Net Periodic Benefit Costs and Assumptions for Defined Benefit Postretirement Plans [Line Items]
Service cost	$ 825	$ 600	$ 1,650	$ 1,200
Interest cost	675	700	1,350	1,400
Expected return on assets	(2,275)	(1,250)	(4,550)	(2,500)
Amortization of prior service cost	(100)	(100)	(200)	(200)
Recognized net actuarial loss	525	525	1,050	1,050
Net periodic benefit (income) cost	$ (350)	$ 475	$ (700)	$ 950

XML



Loan Delinquency, including Nonaccrual Loans (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	$ 2,789,154	$ 2,816,093
Non Covered Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	22,204	16,950
60 - 89 days past due	7,443	11,880
> 90 days past due	45,007	44,875
Total Past due	74,654	73,705
Current	2,714,500	2,742,388
Total	2,789,154	2,816,093
> 90 days past due and still accruing	149	370
Non Covered Loans | Real estate-construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	2,146	1,754
60 - 89 days past due	0	3,782
> 90 days past due	13,213	8,973
Total Past due	15,359	14,509
Current	127,323	149,034
Total	142,682	163,543
> 90 days past due and still accruing	0	0
Non Covered Loans | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	2,683	2,241
60 - 89 days past due	2,835	1,573
> 90 days past due	8,741	11,684
Total Past due	14,259	15,498
Current	784,293	784,755
Total	798,552	800,253
> 90 days past due and still accruing	0	0
Non Covered Loans | Real estate-commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	10,260	3,202
60 - 89 days past due	2,008	3,979
> 90 days past due	15,523	16,435
Total Past due	27,791	23,616
Current	1,116,577	1,116,315
Total	1,144,368	1,139,931
> 90 days past due and still accruing	0	0
Non Covered Loans | Real estate-residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	5,644	7,671
60 - 89 days past due	1,901	1,930
> 90 days past due	5,306	5,127
Total Past due	12,851	14,728
Current	243,937	254,445
Total	256,788	269,173
> 90 days past due and still accruing	0	0
Non Covered Loans | Installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	214	456
60 - 89 days past due	98	48
> 90 days past due	181	120
Total Past due	493	624
Current	63,306	69,087
Total	63,799	69,711
> 90 days past due and still accruing	0	0
Non Covered Loans | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	917	1,260
60 - 89 days past due	383	392
> 90 days past due	1,894	2,166
Total Past due	3,194	3,818
Current	341,263	337,492
Total	344,457	341,310
> 90 days past due and still accruing	0	0
Non Covered Loans | All other
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	340	366
60 - 89 days past due	218	176
> 90 days past due	149	370
Total Past due	707	912
Current	37,801	31,260
Total	38,508	32,172
> 90 days past due and still accruing	$ 149	$ 370

XML



ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2011

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 16:  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Shareholders’ equity is affected by transactions and valuations of asset and liability positions that require adjustments to accumulated other comprehensive income (loss).  The related tax effects allocated to other comprehensive income and accumulated other comprehensive income (loss) are as follows:

	June 30, 2011
	Transactions
(Dollars in thousands)	Pre-tax		Tax-effect			Net of tax		Balances Net of tax
Unrealized gain on securities available-for-sale	$	4,680	$	(1,767	)	$	2,913	$	11,977
Unrealized loss on derivatives		628		(237	)		391		0
Unfunded pension obligation		850		(321	)		529		(20,753	)
Foreign currency translation		309		0			309		874
Total	$	6,467	$	(2,325	)	$	4,142	$	(7,902	)

	June 30, 2010
	Transactions
(Dollars in thousands)	Pre-tax			Tax-effect			Net of tax			Balances Net of tax
Unrealized gain on securities available-for-sale	$	5,226		$	(2,073	)	$	3,153		$	13,377
Unrealized loss on derivatives		(1,949	)		711			(1,238	)		(307	)
Unfunded pension obligation		850			(26	)		824			(20,937	)
Foreign currency translation		(83	)		0			(83	)		36
Total	$	4,044		$	(1,388	)	$	2,656		$	(7,831	)

XML



Document and Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 04, 2011
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Trading Symbol	FFBC
Entity Registrant Name	FIRST FINANCIAL BANCORP /OH/
Entity Central Index Key	0000708955
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		58,259,315

XML



Summary of Long-Term Debt (Detail) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Amount
Federal Home Loan Bank	$ 37,255,000
National Market Repurchase Agreement	65,000,000
Total long-term debt	$ 102,255,000	$ 128,880,000
Average Rate
Federal Home Loan Bank	3.86%
National Market Repurchase Agreement	3.50%
Total long-term debt	3.63%

XML



INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2011

Summary of Held-To-Maturity and Available-For-Sale Investment Securities

The following is a summary of held-to-maturity and available-for-sale investment securities as of June 30, 2011.

	Held-to-Maturity								Available-for-Sale
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Market Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Market Value
Securities of U.S. government agencies and corporations	$	0	$	0	$	0	$	0	$	5,027	$	149	$	0		$	5,176
Mortgage-backed securities		103		2		0		105		1,087,462		19,311		(776	)		1,105,997
Obligations of state and other political subdivisions		2,898		223		0		3,121		12,187		173		(52	)		12,308
Other securities		0		0		0		0		10,193		441		(1	)		10,633
Total	$	3,001	$	225	$	0	$	3,226	$	1,114,869	$	20,074	$	(829	)	$	1,134,114

The following is a summary of held-to-maturity and available-for-sale investment securities as of December 31, 2010.

	Held-to-Maturity									Available-for-Sale
	Amortized		Unrealized		Unrealized			Market		Amortized		Unrealized		Unrealized			Market
(Dollars in thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Treasuries	$	13,959	$	390	$	(18	)	$	14,331	$	0	$	0	$	0		$	0
Securities of U.S. government agencies and corporations		0		0		0			0		105,028		957		0			105,985
Mortgage-backed securities		118		4		0			122		775,867		15,513		(2,630	)		788,750
Obligations of state and other political subdivisions		3,329		284		0			3,613		13,708		207		(91	)		13,824
Other securities		0		0		0			0		9,943		614		(6	)		10,551
Total	$	17,406	$	678	$	(18	)	$	18,066	$	904,546	$	17,291	$	(2,727	)	$	919,110

Summary of Investment Securities by Estimated Maturity

The following is a summary of investment securities by estimated maturity as of June 30, 2011.

	Held-to-Maturity				Available-for-Sale
	Amortized Cost		Market Value		Amortized Cost		Market Value
Due in one year or less	$	317	$	321	$	22,851	$	23,018
Due after one year through five years		1,606		1,696		846,587		861,471
Due after five years through ten years		220		253		185,129		188,286
Due after ten years		858		956		60,302		61,339
Total	$	3,001	$	3,226	$	1,114,869	$	1,134,114

Age of Gross Unrealized Losses and Associated Fair Value by Investment Category

The following tables present the age of gross unrealized losses and associated fair value by investment category.

	June 30, 2011
	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Mortgage-backed securities	$	281,769	$	(682	)	$	1,317	$	(94	)	$	283,086	$	(776	)
Obligations of state and other political subdivisions		0		0			2,232		(52	)		2,232		(52	)
Other securities		2,252		(1	)		17		0			2,269		(1	)
Total	$	284,021	$	(683	)	$	3,566	$	(146	)	$	287,587	$	(829	)

	December 31, 2010
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss
U.S. Treasuries	$	2,334	$	(18	)	$	0	$	0		$	2,334	$	(18	)
Mortgage-backed securities		280,445		(2,538	)		1,336		(92	)		281,781		(2,630	)
Obligations of state and other political subdivisions		0		0			2,194		(91	)		2,194		(91	)
Other securities		2,217		(6	)		17		0			2,234		(6	)
Total	$	284,996	$	(2,562	)	$	3,547	$	(183	)	$	288,543	$	(2,745	)

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LONG-TERM DEBT - Additional Information (Detail) (USD $)	3 Months Ended
	Sep. 30, 2010	Jun. 30, 2011	Jun. 30, 2011 Minimum Year	Jun. 30, 2011 Maximum Year	Jul. 31, 2009 Peoples Agreement	Sep. 18, 2009 Irwin Agreements	Jun. 30, 2011 Business Combinations
Debt Disclosure [Line Items]
Repurchase agreements with a one-time call feature at the time of execution		$ 65,000,000
Weighted average rate on repurchase agreements		3.50%
Prepayments of FHLB long-term advances	232,000,000
Weighted average effective yield on assumed FHLB long-term advances		3.90%
Remaining maturities on repurchase agreements			2	5
FHLB long-term advances		$ 37,255,000			$ 63,500,000	$ 216,300,000	$ 1,800,000
Remaining maturities on assumed FHLB long-term advances				9

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Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Numerator for basic and diluted earnings per share -income available to common shareholders:
Net income	$ 15,973	$ 17,774	$ 33,180	$ 29,372
Dividends on preferred stock	0	0	0	1,865
Income available to common shareholders	$ 15,973	$ 17,774	$ 33,180	$ 27,507
Denominator for basic earnings per share - weighted average shares	57,694,792	57,539,901	57,642,970	56,356,877
Effect of dilutive securities -
Employee stock awards	945,250	944,176	974,958	893,621
Warrants	94,620	119,962	104,520	114,824
Denominator for diluted earnings per share - adjusted weighted average shares	58,734,662	58,604,039	58,722,448	57,365,322
Earnings per share available to common shareholders
Basic	$ 0.28	$ 0.31	$ 0.58	$ 0.49
Diluted	$ 0.27	$ 0.30	$ 0.57	$ 0.48

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2011

COMMITMENTS AND CONTINGENCIES

NOTE 5:  COMMITMENTS AND CONTINGENCIES

In the normal course of business, First Financial offers a variety of financial instruments with off-balance-sheet risk to its clients to aid them in meeting their requirements for liquidity and credit enhancement. These financial instruments include standby letters of credit and outstanding commitments to extend credit.  U.S. generally accepted accounting principles do not require these financial instruments to be recorded in the Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows.  Following is a discussion of these transactions.

First Financial’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for standby letters of credit, and outstanding commitments to extend credit, is represented by the contractual amounts of those instruments.  First Financial uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Letters of credit – These transactions are conditional commitments issued by First Financial to guarantee the performance of a client to a third party.  First Financial’s portfolio of standby letters of credit consists primarily of performance assurances made on behalf of clients who have a contractual commitment to produce or deliver goods or services.  The risk to First Financial arises from its obligation to make payment in the event of the clients’ contractual default to produce the contracted good or service to a third party.  First Financial has issued letters of credit (including standby letters of credit) aggregating $15.6 million and $17.6 million at June 30, 2011, and December 31, 2010, respectively.

Management conducts regular reviews of these instruments on an individual client basis and does not anticipate any material losses as a result of these letters of credit.

Loan commitments – Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the commitment.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  First Financial evaluates each client’s creditworthiness on an individual basis.  The amount of collateral obtained, if deemed necessary by First Financial upon extension of credit, is based on management’s credit evaluation of the counterparty.  The collateral held varies, but may include securities, real estate, inventory, plant, or equipment.  First Financial had commitments outstanding to extend credit totaling $1.1 billion at June 30, 2011, and $1.0 billion at December 31, 2010.

Contingencies/Litigation – We and our subsidiaries are from time to time engaged in various matters of litigation, other assertions of improper or fraudulent loan practices or lending violations, and other matters, and we have a number of unresolved claims pending. In addition, as part of the ordinary course of business, we and our subsidiaries are parties to litigation involving claims to the ownership of funds in particular accounts, the collection of delinquent accounts, challenges to security interests in collateral, and foreclosure interests, that is incidental to our regular business activities. While the ultimate liability with respect to these other litigation matters and claims cannot be determined at this time, we believe that damages, if any, and other amounts relating to pending matters are not likely to be material to our consolidated financial position or results of operations. Reserves are established for these various matters of litigation, when appropriate under FASB ASC Topic 450, Contingencies, based in part upon the advice of legal counsel.

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DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2011

Summary of Derivative Financial Instruments by Nature of Underlying Asset or Liability

The following table summarizes the derivative financial instruments utilized by First Financial by the nature of the underlying asset or liability:

	Fair Value Hedges
(Dollars in thousands)	June 30, 2011		Deember 31, 2010
Instruments associated with loans:
Total notional value	$	703,286	$	578,959

Summary of Derivative Financial Instruments and Balances

The following table summarizes the derivative financial instruments utilized by First Financial and their balances:

		June 30, 2011							December 31, 2010
				Estimated Fair Value							Estimated Fair Value
(Dollars in thousands)	Balance Sheet Location	Notional Amount		Gain		Loss			Notional Amount		Gain		Loss
Fair Value Hedges
Pay fixed interest rate swaps with counterparty	Accrued interest and other liabilities	$	20,310	$	0	$	(2,108	)	$	21,301	$	0	$	(2,302	)
Matched interest rate swaps with borrower	Accrued interest and other assets		341,488		16,758		(29	)		278,829		14,843		(131	)
Matched interest rate swaps with counterparty	Accrued interest and other liabilities		341,488		29		(17,521	)		278,829		131		(15,502	)
Total		$	703,286	$	16,787	$	(19,658	)	$	578,959	$	14,974	$	(17,935	)

Derivative Financial Instruments, Average Remaining Maturity and the Weighted-Average Interest Rates being Paid and Received

The following table details the derivative financial instruments, the average remaining maturities and the weighted-average interest rates being paid and received by First Financial at June 30, 2011:

								Weighted-Average Rate
(Dollars in thousands)	Notional Value		Average Maturity (years)		Fair Value			Receive			Pay
Asset conversion swaps
Pay fixed interest rate swaps with counterparty	$	20,310		4.4	$	(2,108	)		2.23	%		6.79	%
Receive fixed, matched interest rate swaps with borrower		341,488		4.4		16,729			5.87	%		2.93	%
Pay fixed, matched interest rate swaps with counterparty		341,488		4.4		(17,492	)		2.93	%		5.87	%
Total asset conversion swaps	$	703,286		4.4	$	(2,871	)		4.34	%		4.47	%
Total swap portfolio	$	703,286		4.4	$	(2,871	)		4.34	%		4.47	%

Location and Amounts Recognized for Fair Value Hedges

The following table details the location and amounts recognized for fair value hedges:

		Increase (decrease) to Interest Income
(Dollars in thousands)		Three Months Ended						Six Months Ended
Derivatives in fair value hedging relationships	Location of change in fair value derivative	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Interest Rate Contracts
Loans	Interest Income - Loans	$	(236	)	$	(251	)	$	(471	)	$	(511	)
Total		$	(236	)	$	(251	)	$	(471	)	$	(511	)

Gains or Losses on Cash Flow Hedges

	Amount of gain or (loss) recognized in OCI on derivatives (effective portion)							Amount of gain or (loss) reclassified from accumulated OCI into earnings (effective portion)
(Dollars in thousands)	3 months ended			6 months ended			Location of gain or (loss) reclassified from accumulated OCI into	3 months ended			6 months ended
Derivatives in cash flow hedging relationships	June 30, 2010						earnings (effective portion)	June 30, 2010
Interest Rate Contracts
Other long-term debt	$	(796	)	$	(999	)	Interest Expense - Other long-term debt	$	(144	)	$	(286	)
Total	$	(796	)	$	(999	)	Total	$	(144	)	$	(286	)

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Summary of Derivative Financial Instruments and Balances (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Derivatives, Fair Value [Line Items]
Notional Amount	$ 703,286	$ 578,959
Estimate Fair Value Gain	16,787	14,974
Estimate Fair Value Loss	(19,658)	(17,935)
Fair Value Hedges
Derivatives, Fair Value [Line Items]
Notional Amount	703,286	578,959
Fair Value Hedges | Pay fixed interest rate swaps with counterparty | Accrued interest and other liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	20,310	21,301
Estimate Fair Value Gain	0	0
Estimate Fair Value Loss	(2,108)	(2,302)
Fair Value Hedges | Matched interest rate swaps | Accrued interest and other liabilities
Derivatives, Fair Value [Line Items]
Notional Amount	341,488	278,829
Estimate Fair Value Gain	29	131
Estimate Fair Value Loss	(17,521)	(15,502)
Fair Value Hedges | Matched interest rate swaps | Accrued interest and other assets
Derivatives, Fair Value [Line Items]
Notional Amount	341,488	278,829
Estimate Fair Value Gain	16,758	14,843
Estimate Fair Value Loss	(29)	(131)
Pay fixed interest rate swaps with counterparty
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,310

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Summary of Held-To-Maturity and Available-For-Sale Investment Securities (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Investment Holdings [Line Items]
Held-to-Maturity Amortized Cost	$ 3,001	$ 17,406
Held-to-Maturity Unrealized Gains	225	678
Held-to-Maturity Unrealized Losses	0	(18)
Held-to-Maturity Market Value	3,226	18,066
Available-for-Sale Amortized Cost	1,114,869	904,546
Available-for-Sale Unrealized Gains	20,074	17,291
Available-for-Sale Unrealized Losses	(829)	(2,727)
Available-for-Sale Market Value	1,134,114	919,110
U.S. Treasuries
Investment Holdings [Line Items]
Held-to-Maturity Amortized Cost		13,959
Held-to-Maturity Unrealized Gains		390
Held-to-Maturity Unrealized Losses		(18)
Held-to-Maturity Market Value		14,331
Available-for-Sale Amortized Cost		0
Available-for-Sale Unrealized Gains		0
Available-for-Sale Unrealized Losses		0
Available-for-Sale Market Value		0
Securities of U.S. government agencies and corporations
Investment Holdings [Line Items]
Held-to-Maturity Amortized Cost	0	0
Held-to-Maturity Unrealized Gains	0	0
Held-to-Maturity Unrealized Losses	0	0
Held-to-Maturity Market Value	0	0
Available-for-Sale Amortized Cost	5,027	105,028
Available-for-Sale Unrealized Gains	149	957
Available-for-Sale Unrealized Losses	0	0
Available-for-Sale Market Value	5,176	105,985
Mortgage-backed securities
Investment Holdings [Line Items]
Held-to-Maturity Amortized Cost	103	118
Held-to-Maturity Unrealized Gains	2	4
Held-to-Maturity Unrealized Losses	0	0
Held-to-Maturity Market Value	105	122
Available-for-Sale Amortized Cost	1,087,462	775,867
Available-for-Sale Unrealized Gains	19,311	15,513
Available-for-Sale Unrealized Losses	(776)	(2,630)
Available-for-Sale Market Value	1,105,997	788,750
Obligations of state and other political subdivisions
Investment Holdings [Line Items]
Held-to-Maturity Amortized Cost	2,898	3,329
Held-to-Maturity Unrealized Gains	223	284
Held-to-Maturity Unrealized Losses	0	0
Held-to-Maturity Market Value	3,121	3,613
Available-for-Sale Amortized Cost	12,187	13,708
Available-for-Sale Unrealized Gains	173	207
Available-for-Sale Unrealized Losses	(52)	(91)
Available-for-Sale Market Value	12,308	13,824
Other securities
Investment Holdings [Line Items]
Held-to-Maturity Amortized Cost	0	0
Held-to-Maturity Unrealized Gains	0	0
Held-to-Maturity Unrealized Losses	0	0
Held-to-Maturity Market Value	0	0
Available-for-Sale Amortized Cost	10,193	9,943
Available-for-Sale Unrealized Gains	441	614
Available-for-Sale Unrealized Losses	(1)	(6)
Available-for-Sale Market Value	$ 10,633	$ 10,551

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets, Goodwill, Policy

Goodwill

Assets and liabilities of acquired entities are recorded at their estimated fair values as of the acquisition.

Goodwill is not amortized, but is measured for impairment on an annual basis as of October 1 of each year or whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value.  First Financial performed its annual impairment test as of October 1, 2010, and no impairment was indicated.  As of June 30, 2011, no events or changes in circumstances indicated that the fair value of a reporting unit was below its carrying value.

Goodwill and Intangible Assets, Intangible Assets, Policy

Other intangible assets

Other intangible assets consist of mortgage servicing rights and core deposit intangibles.  Mortgage servicing rights are carried at their estimated fair value.  Core deposit intangibles are recorded at their estimate fair value as of acquisition and are then amortized on an accelerated basis over their estimated useful lives.  Core deposit intangibles have an estimated weighted average life of 9.4 years.

Commitments and Contingencies, Policy

In the normal course of business, First Financial offers a variety of financial instruments with off-balance-sheet risk to its clients to aid them in meeting their requirements for liquidity and credit enhancement. These financial instruments include standby letters of credit and outstanding commitments to extend credit.  U.S. generally accepted accounting principles do not require these financial instruments to be recorded in the Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows.  Following is a discussion of these transactions.

First Financial’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for standby letters of credit, and outstanding commitments to extend credit, is represented by the contractual amounts of those instruments.  First Financial uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Certain Loans and Debt Securities Acquired in Transfer, Recognizing Interest Income on Impaired Loans, Policy

All loans acquired in the Peoples and Irwin acquisitions were covered by loss sharing agreements with the FDIC, whereby the FDIC reimburses First Financial for the majority of the losses incurred. Additionally, these loans were recorded at their estimated fair value as of the acquisition date.  Generally the determination of the fair value of the loans resulted in a significant write-down in the value of the loans, which was assigned to an accretable or nonaccretable difference, with the accretable difference to be recognized as interest income over the expected remaining term of the loan.

First Financial evaluates purchased loans for impairment in accordance with the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The cash flows expected to be collected on purchased loans are estimated based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments. Purchased loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected. First Financial is accounting for the majority of purchased loans under FASB ASC Topic 310-30 except loans with revolving privileges, which are outside the scope of this guidance, and loans for which cash flows could not be estimated, which are accounted for under the cost recovery method. Purchased impaired loans were not classified as nonperforming assets at June 30, 2011 as the loans are considered to be performing under FASB ASC Topic 310-30. Therefore, interest income, through accretion of the difference between the carrying value of the loans and the expected cash flows is being recognized on all purchased loans being accounted for under FASB ASC Topic 310-30.

Fair Value of Financial Instruments, Policy

Fair Value Measurement

The fair value framework as disclosed in the Fair Value Measurements and Disclosure Topic of the FASB Accounting Standards Codification (Fair Value Topic) includes a hierarchy which focuses on prioritizing the inputs used in valuation techniques.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), a lower priority to observable inputs other than quoted prices in active markets for identical assets and liabilities (Level 2), and the lowest priority to unobservable inputs (Level 3).  When determining the fair value measurements for assets and liabilities, First Financial looks to active markets to price identical assets or liabilities whenever possible and classifies such items in Level 1.  When identical assets and liabilities are not traded in active markets, First Financial looks to market observable data for similar assets and liabilities and classifies such items as Level 2.  Certain assets and liabilities are not actively traded in observable markets and First Financial must use alternative techniques, based on unobservable inputs, to determine the fair value and classifies such items as Level 3. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

The following methods, assumptions, and valuation techniques were used by First Financial to measure different financial assets and liabilities at fair value and in estimating its fair value disclosures for financial instruments.

Cash and short-term investments – The carrying amounts reported in the Consolidated Balance Sheets for cash and short-term investments, such as federal funds sold, approximated the fair value of those instruments.

Investment securities – Investment securities classified as trading and available-for-sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted market prices, when available (Level 1).  If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar investment securities.  Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2).  Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for the specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities.  Any investment securities not valued based upon the methods above are considered Level 3.

First Financial utilizes information provided by a third party investment securities portfolio manager in analyzing the investment securities portfolio in accordance with the fair value hierarchy of the Fair Value Topic.  The portfolio manager’s evaluation of investment security portfolio pricing is performed using a combination of prices and data from third party vendors, along with internally developed matrix pricing models and assistance from the provider’s internal fixed income analysts and trading desk.  The portfolio manager’s month-end pricing process includes a series of quality assurance activities where prices are compared to recent market conditions, previous evaluation prices, and between the various pricing services.  These processes produce a series of quality assurance reports on which price exceptions are identified, reviewed, and where appropriate, securities are repriced.  In the event of a materially different price, the portfolio manager will report the variance to the third party vendor as a “price challenge”, and review the pricing methodology in detail.  The results of the quality assurance process are incorporated into the selection of pricing providers by the portfolio manager.

Loans held for sale – Loans held for sale are carried at the lower of cost or market value.  These loans currently consist of one-to-four family residential real estate loans originated for sale to qualified third parties.  Fair value is based on the contractual price to be received from these third parties, which is not materially different than cost due to the short duration between origination and sale (Level 2).  As such, First Financial records any fair value adjustments on a nonrecurring basis.  Gains and losses on the sale of loans are recorded as net gains from sales of loans within noninterest income in the Consolidated Statements of Income.

Loans (excluding covered loans) – The fair value of commercial, commercial real estate, residential real estate, and consumer loans were estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or repricing frequency.  The carrying amount of accrued interest approximates its fair value.

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected.  Impaired loans are valued at the lower of cost or market for purposes of determining the appropriate amount of impairment to be allocated to the allowance for loan and lease losses.  Market value is measured based on the value of the collateral securing the loans.  Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable.  The vast majority of the collateral is real estate.  The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the company (Level 2). The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable borrower financial statements if not considered significant.  Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports (Level 3).  Impaired loans allocated to the allowance for loan and lease losses are measured at fair value on a nonrecurring basis.  Any fair value adjustments are recorded in the period incurred as provision for loan and lease losses on the Consolidated Statements of Income.

Covered loans – Fair values for covered loans accounted for under FASB ASC 310-30 were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company's assessment of risk inherent in the cash flow estimates. Covered loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. First Financial estimated the cash flows expected to be collected on these loans based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments.

Fair values for covered loans accounted for outside of FASB ASC Topic 310-30 were estimated by discounting the estimated future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or repricing frequency. The carrying amount of accrued interest approximates its fair value.

These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Mortgage-servicing rights – The fair value of mortgage-servicing rights was determined through modeling the expected future cash flows.  The modeling included stratification by maturity and coupon rates on the underlying mortgage loans.  Certain assumptions were used in the valuation regarding prepayment speeds, discount rates, servicing costs, delinquency, cash balances, and foreclosure costs which were arrived at from third-party sources and internal records.

FDIC indemnification asset – The accounting for FDIC indemnification assets is closely related to the accounting for the underlying, indemnified assets. Fair value of the FDIC indemnification asset was estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. First Financial re-estimates the expected indemnification asset cash flows in conjunction with the periodic re-estimation of cash flows on covered loans accounted for under FASB ASC Topic 310-30. Improvements in cash flow expectations on covered loans generally result in a related decline in the expected indemnification cash flows while declines in cash flow expectations on covered loans generally result in an increase in expected indemnification cash flows.

The expected cash flows are discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Deposit liabilities – The fair value of demand deposits, savings accounts, and certain money-market deposits was the amount payable on demand at the reporting date.  The carrying amounts for variable-rate certificates of deposit approximated their fair values at the reporting date.  The fair value of fixed-rate certificates of deposit was estimated using a discounted cash flow calculation which applies the interest rates currently offered for deposits of similar remaining maturities.  The carrying amount of accrued interest approximated its fair value.

Borrowings – The carry amounts of federal funds purchased and securities sold under agreements to repurchase and other short-term borrowings approximated their fair values.  The fair value of long-term debt was estimated using a discounted cash flow calculation which utilizes the interest rates currently offered for borrowings of similar remaining maturities.  Third-party valuations were used for long-term debt with embedded options, such as call features.

Commitments to extend credit and standby letters of credit – Pricing of these financial instruments is based on the credit quality and relationship, fees, interest rates, probability of funding and compensating balance and other covenants or requirements.  Loan commitments generally have fixed expiration dates, are variable rate and contain termination and other clauses which provide for relief from funding in the event that there is a significant deterioration in the credit quality of the client.  Many loan commitments are expected to expire without being drawn upon.  The rates and terms of the commitments to extend credit and the standby letters of credit are competitive with those in First Financial’s market area.  The carrying amounts are reasonable estimates of the fair value of these financial instruments.  Carrying amounts, which are comprised of the unamortized fee income and, where necessary, reserves for any expected credit losses from these financial instruments, are immaterial.

Derivatives – First Financial utilizes interest rate swaps as a means to offer commercial borrowers products that meet their needs and also to achieve First Financial’s desired interest rate risk profile at the time.  The net interest receivable or payable is accrued and recognized as an adjustment to the interest income or interest expense of the hedged item.  First Financial utilizes third-party vendors for derivative valuation purposes.  These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves.  The discounted net present value calculated represents the cost to terminate the swap if First Financial should choose to do so on the applicable measurement date (Level 2).  Additionally, First Financial utilizes a vendor developed, proprietary model to value the credit risk component of both the derivative assets and liabilities.  The credit valuation adjustment is recorded as an adjustment to the fair value of the derivative asset or liability on the applicable measurement date (Level 3).

Fair Value Hedges

Derivatives, Methods of Accounting, Hedging Derivatives

Fair Value Hedges - First Financial utilizes interest rate swaps as a means to offer commercial borrowers products that meet their needs, but are also designed to achieve First Financial’s desired interest rate risk profile at the time.  The fair value hedge agreements generally involve the net receipt by First Financial of floating-rate amounts in exchange for net payments by First Financial, through its loan clients, of fixed-rate amounts over the life of the agreements without an exchange of the underlying principal or notional amount.  This results in First Financial’s loan customers receiving fixed rate funding, while providing First Financial with a floating rate asset.  The net interest receivable or payable on the interest rate swaps is accrued and recognized as an adjustment to the interest income or interest expense of the hedged item.  The fair value of the interest rate swaps is included within accrued interest and other assets on the Consolidated Balance Sheets.  The corresponding fair-value adjustment is also included on the Consolidated Balance Sheets in the carrying value of the hedged item.  Derivative gains and losses not considered effective in hedging the change in fair value of the hedged item are recognized immediately in income.

Cash Flow Hedges

Derivatives, Methods of Accounting, Hedging Derivatives

Cash Flow Hedges – First Financial may utilize interest rate swaps designated as cash flow hedges to manage the variability of cash flows, primarily net interest income, attributable to changes in interest rates.  The net interest receivable or payable on an interest rate swap designated as a cash flow hedge is accrued and recognized as an adjustment to interest income or interest expense.  The fair value of the interest rate swaps is included within accrued interest and other assets on the Consolidated Balance Sheets.  Changes in the fair value of the interest rate swaps are included in accumulated comprehensive income (loss).  Derivative gains and losses not considered effective in hedging the cash flows related to the underlying loans, if any, would be recognized immediately in income.

Non Covered Loans

Loans and Leases Receivable, Nonaccrual Loan and Lease Status, Policy

Loans are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. Generally, loans are placed in nonaccrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as, insufficient collateral value. The accrual of interest income is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful.

Impaired Financing Receivable, Policy

Loans placed in nonaccrual status are considered to be impaired. In the commercial portfolio, management reviews all impaired loan relationships in excess of $250,000 to determine if a specific allowance based on the borrower’s overall financial condition, resources and payment record, support from guarantors, and the realizable value of any collateral is necessary.

Specific allowances are based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. Interest income for impaired loans is recorded on a cash basis during the period the loan is considered impaired after recovery of principal is reasonably assured.

Loans and Leases Receivable, Real Estate Acquired Through Foreclosure, Policy

Other real estate owned is comprised of properties acquired by the Bank through the loan foreclosure or repossession process, or any other resolution activity that results in partial or total satisfaction of problem loans. The acquired properties are recorded at the lower of cost, or fair value less estimated costs of disposal (net realizable value), upon acquisition. Losses arising at the time of acquisition of such properties are charged against the allowance for loan and lease losses. Subsequent write-downs in the carrying value of OREO properties are expensed as incurred. Improvements to the properties may be capitalized if the improvements contribute to the overall value of the property, but may not be capitalized in excess of the net realizable value of the property.

Loans and Leases Receivable, Allowance for Loan Losses Policy

For each reporting period, management maintains the allowance at a level that it considers sufficient to absorb inherent risks in the loan portfolio. Management’s evaluation in establishing the adequacy of the allowance includes evaluation of the loan and lease portfolios, actual past loan and lease loss experience, known and inherent risks in the portfolio, adverse situations that may affect a specific borrower’s ability to repay (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, and other pertinent factors, such as periodic internal and external evaluations of delinquent, nonaccrual, and classified loans. The evaluation is inherently subjective as it requires utilizing material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans. The evaluation of these factors is the responsibility of the Allowance for Loan and Lease Losses Committee, which is comprised of senior officers from the risk management, credit administration, finance, and lending areas.

The allowance for commercial loans, including time and demand notes, tax-exempt loans, and commercial real estate loans begins with a process of estimating the probable losses inherent in the portfolio. The loss estimates for these commercial loans are established by category and based on First Financial’s internal system of credit risk ratings and historical loss data.

The estimate of losses inherent in the commercial portfolio may be adjusted for management’s estimate of probable losses on specific exposures dependent upon the values of the underlying collateral and/or the present value of expected future cash flows, as well as trends in delinquent and nonaccrual loans, prevailing economic conditions, changes in lending strategies, and other influencing factors.

In the commercial portfolio, certain loans, typically larger-balance non-homogeneous exposures, may have a specific allowance established based on the borrower’s overall financial condition, resources and payment record, support from guarantors, and the realizable value of any collateral.

The allowance for consumer loans which includes residential real estate, installment, home equity, credit card loans, and overdrafts, is established for each of the categories by estimating losses inherent in that particular category of consumer loans. The estimate of losses is primarily based on historical loss rates for the category, as well as trends in delinquent and nonaccrual loans, prevailing economic conditions, and other influencing factors. Consumer loans are evaluated as an asset type within a category (i.e., residential real estate, installment, etc.), as these loans are smaller with more homogeneous characteristics.

There were no material changes to First Financial’s accounting policies or methodology related to the allowance for loan and lease losses during the second quarter of 2011.

First Financial’s policy is to charge-off loans when, in management’s opinion, full collectibility of principal and interest based upon the contractual terms of the loan is unlikely.

Covered Loans

Loans and Leases Receivable, Real Estate Acquired Through Foreclosure, Policy

Covered other real estate owned is comprised of properties acquired by the Bank through the loan foreclosure or, repossession process, or any other resolution activity that results in partial or total satisfaction of problem covered loans. These properties remain subject to loss share agreements whereby the FDIC reimburses First Financial for the majority of any losses incurred. The acquired properties are recorded at the lower of cost, or fair value less estimated costs of disposal (net realizable value), upon acquisition. Losses arising at the time of acquisition of such properties are charged against the allowance for loan and lease losses. Subsequent write-downs in the carrying value of covered OREO properties are expensed as incurred.  Improvements to the properties may be capitalized if the improvements contribute to the overall value of the property, but may not be capitalized in excess of the net realizable value of the property.

Loans and Leases Receivable, Allowance for Loan Losses Policy

Under the applicable accounting guidance, the allowance for loan losses related to covered loans as a result of impairment to loan pools arising from on-going valuation procedures is generally recognized in the current period as provision expense. Improvement in the credit outlook, however, is not recognized immediately but instead is reflected as an adjustment to the yield earned on the related loan pools on a prospective basis once any previously recorded impairment has been recaptured.  The timing inherent in this accounting treatment may result in earnings volatility in future periods.

Covered Loans | Loans Accounted for Under FASB ASC Topic 310-30

Loans and Leases Receivable, Nonperforming Loan and Lease, Policy

Covered loans accounted for under FASB ASC Topic 310-30 are classified as performing, even though they may be contractually past due, as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period covered loan loss provision or prospective yield adjustments.

Covered Loans | Loans Excluded from FASB ASC Topic 310-30

Loans and Leases Receivable, Nonaccrual Loan and Lease Status, Policy

Similar to uncovered loans, covered loans accounted for outside FASB ASC Topic 310-30 are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. Generally, these loans are placed in nonaccrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as, insufficient collateral value. The accrual of interest income is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful.

Credit Risk

Derivatives, Methods of Accounting, Hedging Derivatives

First Financial manages this market value credit risk through counterparty credit policies. These policies require the Company to maintain a total derivative notional position of less than 35% of assets, total credit exposure of less than 3% of capital, and no single counterparty credit risk exposure greater than $20 million.

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LOANS (excluding covered loans)

6 Months Ended

Jun. 30, 2011

LOANS (excluding covered loans)

NOTE 10:  LOANS (excluding covered loans)

Commercial loans are made to all types of businesses for a variety of purposes. First Financial works with businesses to meet their shorter term working capital needs while also providing long-term financing for their business plans. Credit risk is managed through standardized loan policies, established and authorized credit limits, centralized portfolio management and the diversification of market area and industries. The overall strength of the borrower is evaluated through the credit underwriting process and includes a variety of analytical activities including the review of historical and projected cash flows, historical financial performance, financial strength of the principals and guarantors, and collateral values, where applicable.  First Financial also offers lease and equipment financing through a wholly-owned subsidiary of First Financial Bank, First Financial Equipment Finance LLC, (First Equipment Finance) primarily in its principal markets. First Equipment Finance delivers financing solutions to small and mid-size companies in various industries with significant diversity in the types of underlying equipment.

Commercial lending activities include equipment and leasehold improvement financing for franchisees, principally quick service and casual dining restaurants. The underwriting of these loans incorporates basic credit proficiencies combined with knowledge of select franchise concepts to measure the creditworthiness of proposed multi-unit borrowers. The focus is on a limited number of concepts that have sound economics, low closure rates, and brand awareness within specified local, regional, or national markets. Loan terms for equipment are generally up to 84 months fully amortizing and up to 180 months on real estate.

Commercial real estate loans are secured by a mortgage lien on the real property. The credit underwriting for both owner-occupied and investor income producing real estate loans includes detailed market analysis, historical and projected cash flow analysis, appropriate equity margins, assessment of lessees and lessors, type of real estate and other analysis. Risk of loss is managed by adherence to standard loan policies that establish certain levels of performance prior to the extension of a loan to the borrower. Market diversification within First Financial’s service area, as well as a diversification by industry, are other means by which the risk of loss is managed by First Financial.

The majority of residential real estate loans originated by the Bank conforms to secondary market underwriting standards and is sold within a short timeframe to unaffiliated third parties, including the future servicing rights to the loans. The credit underwriting standards adhere to a certain level of documentation, verifications, valuation, and overall credit performance of the borrower.

Consumer loans are primarily loans made to individuals. Types of loans include new and used vehicle loans, second mortgages on residential real estate, and unsecured loans. Risk elements in the consumer loan portfolio are primarily focused on the borrower’s cash flow and credit history, key indicators of the ability to repay. A certain level of security is provided through liens on automobile titles and second mortgage liens, where applicable. Economic conditions that affect consumers in First Financial’s markets have a direct impact on the credit quality of these loans. Higher levels of unemployment, lower levels of income growth and weaker economic growth are factors that may adversely impact consumer loan credit quality.

Home equity lines of credit consist mainly of revolving lines of credit secured by residential real estate. Home equity lines of credit are generally governed by the same lending policies and subject to the same credit risk as described previously for residential real estate loans.

Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.

Loans are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. Generally, loans are placed in nonaccrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as, insufficient collateral value. The accrual of interest income is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful.

Loans placed in nonaccrual status, including restructured loans in nonaccrual status, are considered to be impaired.  Information as to nonaccrual, restructured, and impaired loans was as follows:

(Dollars in thousands)	June 30, 2011			December 31, 2010
Principal balance
Nonaccrual loans
Commercial	$	9,811		$	13,729
Real estate-construction		13,237			12,921
Real estate-commercial		26,213			28,342
Real estate-residential		4,564			4,607
Installment		335			150
Home equity		2,376			2,553
Total nonaccrual loans		56,536			62,302
Restructured loans		17,482			17,613
Total		74,018			79,915
Less: restructured loans -  accruing		(3,039	)		(3,508	)
Total impaired loans	$	70,979		$	76,407

	June 30, 2011
(Dollars in thousands)	Three Months Ended		Six Months Ended
Interest income effect
Gross amount of interest that would have been recorded under original terms	$	1,304	$	2,713
Interest included in income
Nonaccrual loans		105		250
Restructured loans		84		166
Total interest included in income		189		416
Net impact on interest income	$	1,115	$	2,297

Loans placed in nonaccrual status are considered to be impaired. In the commercial portfolio, management reviews all impaired loan relationships in excess of $250,000 to determine if a specific allowance based on the borrower’s overall financial condition, resources and payment record, support from guarantors, and the realizable value of any collateral is necessary.

Specific allowances are based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. Interest income for impaired loans is recorded on a cash basis during the period the loan is considered impaired after recovery of principal is reasonably assured.

First Financial's investment in impaired loans was as follows:

	As of June 30, 2011
(Dollars in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized		Quarterly Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	6,706	$	8,146	$	0	$	7,858	$	27	$	15
Real estate - construction		5,638		12,238		0		5,494		1		0
Real estate - commercial		18,586		24,353		0		19,088		132		68
Real estate - residential		5,857		6,334		0		5,713		10		5
Installment		448		461		0		287		3		2
Home equity		2,375		2,483		0		2,444		4		2
Loans with an allowance recorded:
Commercial		3,112		4,590		1,528		3,299		0		0
Real estate - construction		13,908		16,481		4,387		14,327		88		35
Real estate - commercial		13,453		18,401		4,021		15,204		105		39
Real estate - residential		795		807		93		874		10		4
Installment		0		0		0		26		0		0
Home equity		101		101		2		67		1		1
Total:
Commercial		9,818		12,736		1,528		11,157		27		15
Real estate - construction		19,546		28,719		4,387		19,821		89		35
Real estate - commercial		32,039		42,754		4,021		34,292		237		107
Real estate - residential		6,652		7,141		93		6,587		20		9
Installment		448		461		0		313		3		2
Home equity		2,476		2,584		2		2,511		5		3
Total	$	70,979	$	94,395	$	10,031	$	74,681	$	381	$	171

	As of December 31, 2010
(Dollars in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	9,375	$	12,008	$	0	$	7,432	$	228
Real estate - construction		4,925		8,458		0		9,935		98
Real estate - commercial		17,431		21,660		0		14,113		804
Real estate - residential		5,854		6,447		0		6,611		84
Installment		150		179		0		336		6
Home equity		2,553		3,345		0		2,188		74
Loans with an allowance recorded:
Commercial		4,354		6,090		2,017		10,423		77
Real estate - construction		14,407		18,261		3,716		11,063		378
Real estate - commercial		16,693		19,799		4,347		13,391		392
Real estate - residential		665		757		122		1,434		23
Total:
Commercial		13,729		18,098		2,017		17,855		305
Real estate - construction		19,332		26,719		3,716		20,998		476
Real estate - commercial		34,124		41,459		4,347		27,504		1,196
Real estate - residential		6,519		7,204		122		8,045		107
Installment		150		179		0		336		6
Home equity		2,553		3,345		0		2,188		74
Total	$	76,407	$	97,004	$	10,202	$	76,926	$	2,164

Loan delinquency, including nonaccrual loans, was as follows:

	As of June 30, 2011
	30 – 59 Days past due		60 – 89 Days past due		> 90 days past due		Total Past due		Current		Total		> 90 days past due and still accruing
Loans
Commercial	$	2,683	$	2,835	$	8,741	$	14,259	$	784,293	$	798,552	$	0
Real estate - construction		2,146		0		13,213		15,359		127,323		142,682		0
Real estate - commercial		10,260		2,008		15,523		27,791		1,116,577		1,144,368		0
Real estate - residential		5,644		1,901		5,306		12,851		243,937		256,788		0
Installment		214		98		181		493		63,306		63,799		0
Home equity		917		383		1,894		3,194		341,263		344,457		0
All other		340		218		149		707		37,801		38,508		149
Total	$	22,204	$	7,443	$	45,007	$	74,654	$	2,714,500	$	2,789,154	$	149

	As of December 31, 2010
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days past due and still accruing
Loans
Commercial	$	2,241	$	1,573	$	11,684	$	15,498	$	784,755	$	800,253	$	0
Real estate - construction		1,754		3,782		8,973		14,509		149,034		163,543		0
Real estate - commercial		3,202		3,979		16,435		23,616		1,116,315		1,139,931		0
Real estate - residential		7,671		1,930		5,127		14,728		254,445		269,173		0
Installment		456		48		120		624		69,087		69,711		0
Home equity		1,260		392		2,166		3,818		337,492		341,310		0
All other		366		176		370		912		31,260		32,172		370
Total	$	16,950	$	11,880	$	44,875	$	73,705	$	2,742,388	$	2,816,093	$	370

Commercial and consumer credit exposure by risk attribute was as follows:

	As of June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	739,569	$	108,989	$	989,787
Special Mention		30,334		2,708		57,711
Substandard		28,450		30,985		96,870
Doubtful		199		0		0
Total	$	798,552	$	142,682	$	1,144,368

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	250,136	$	63,351	$	341,981	$	38,508
Nonperforming		6,652		448		2,476		0
Total	$	256,788	$	63,799	$	344,457	$	38,508

	As of December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	731,932	$	115,988	$	979,023
Special Mention		36,453		4,829		63,618
Substandard		31,557		42,726		97,290
Doubtful		311		0		0
Total	$	800,253	$	163,543	$	1,139,931

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	262,654	$	69,561	$	338,757	$	32,172
Nonperforming		6,519		150		2,553		0
Total	$	269,173	$	69,711	$	341,310	$	32,172

Other real estate owned is comprised of properties acquired by the Bank through the loan foreclosure or repossession process, or any other resolution activity that results in partial or total satisfaction of problem loans. The acquired properties are recorded at the lower of cost, or fair value less estimated costs of disposal (net realizable value), upon acquisition. Losses arising at the time of acquisition of such properties are charged against the allowance for loan and lease losses. Subsequent write-downs in the carrying value of OREO properties are expensed as incurred. Improvements to the properties may be capitalized if the improvements contribute to the overall value of the property, but may not be capitalized in excess of the net realizable value of the property.

During the first six months of 2011, First Financial recognized a reduction in the estimated value of vacant land obtained from a commercial real estate developer of $3.1 million.  Changes in other real estate owned were as follows:

	Six Months Ended		Full Year
(Dollars in thousands)	June 30, 2011		December 31, 2010
Balance at beginning of period	$	17,907	$	4,145
Additions
Commercial		1,087		17,520
Residential		2,193		1,130
Total additions		3,280		18,650
Disposals
Commercial		304		2,315
Residential		1,052		1,674
Total disposals		1,356		3,989
Write-downs
Commercial		3,341		727
Residential		177		172
Total write-downs		3,518		899
Balance at end of period	$	16,313	$	17,907

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2011

BASIS OF PRESENTATION

NOTE 1:  BASIS OF PRESENTATION

The consolidated financial statements of First Financial, a bank holding company, include the accounts of First Financial and its wholly-owned subsidiaries – First Financial Bank, N.A. and First Financial Capital Advisors LLC.  All intercompany transactions and accounts have been eliminated in consolidation.  Certain reclassifications of prior periods’ amounts have been made to conform to current period’s presentation and had no effect on previously reported net income amounts or financial condition.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.  Actual realized amounts could differ materially from those estimates.  These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and serve to update the First Financial Bancorp. Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2010.  These financial statements may not include all information and notes necessary to constitute a complete set of financial statements under GAAP applicable to annual periods and accordingly should be read in conjunction with the financial information contained in the Form 10-K.  Management believes these unaudited consolidated financial statements reflect all adjustments of a normal recurring nature which are necessary for a fair presentation of the results for the interim periods presented.  The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.  The Consolidated Balance Sheet as of December 31, 2010, has been derived from the audited financial statements in the company’s 2010 Form 10-K.

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EARNINGS PER COMMON SHARE (Tables)

6 Months Ended

Jun. 30, 2011

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended				Six months ended
	June 30,				June 30,
(Dollars in thousands, except per share data)	2011		2010		2011		2010
Numerator for basic and diluted earnings per share -income available to common shareholders:
Net income	$	15,973	$	17,774	$	33,180	$	29,372
Dividends on preferred stock		0		0		0		1,865
Income available to common shareholders	$	15,973	$	17,774	$	33,180	$	27,507
Denominator for basic earnings per share - weighted average shares		57,694,792		57,539,901		57,642,970		56,356,877
Effect of dilutive securities —
Employee stock awards		945,250		944,176		974,958		893,621
Warrants		94,620		119,962		104,520		114,824
Denominator for diluted earnings per share - adjusted weighted average shares		58,734,662		58,604,039		58,722,448		57,365,322
Earnings per share available to common shareholders
Basic	$	0.28	$	0.31	$	0.58	$	0.49
Diluted	$	0.27	$	0.30	$	0.57	$	0.48

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DERIVATIVES

6 Months Ended

Jun. 30, 2011

DERIVATIVES

NOTE 7:  DERIVATIVES

The use of derivative instruments allows First Financial to meet the needs of its clients while managing the interest-rate risk associated with certain transactions.  First Financial’s board of directors has authorized the use of certain derivative products, including interest rate caps, floors, and swaps.  First Financial does not use derivatives for speculative purposes and currently does not have any derivatives that are not designated as hedges.

The following table summarizes the derivative financial instruments utilized by First Financial by the nature of the underlying asset or liability:

	Fair Value Hedges
(Dollars in thousands)	June 30, 2011		Deember 31, 2010
Instruments associated with loans:
Total notional value	$	703,286	$	578,959

While authorized to use a variety of derivative products, First Financial primarily utilizes interest rate swaps as a means to offer borrowers credit-based products that meet their needs and may from time to time utilize interest rate swaps to manage the macro interest rate risk profile of the Company. These agreements establish the basis on which interest rate payments are exchanged with counterparties and are referred to as the notional amount. As only interest rate payments are exchanged, cash requirements and credit risk are significantly less than the notional amount and the Company’s credit risk exposure is limited to the market value of the instrument.

First Financial manages this market value credit risk through counterparty credit policies. These policies require the Company to maintain a total derivative notional position of less than 35% of assets, total credit exposure of less than 3% of capital, and no single counterparty credit risk exposure greater than $20 million. The Company is currently well below all single counterparty and portfolio limits. At June 30, 2011, the Company had a total counterparty notional amount outstanding of approximately $361.8 million, spread among six counterparties, with an outstanding liability from these contracts of $18.9 million.

In connection with its use of derivative instruments, First Financial from time to time is required to post cash collateral with its counterparties to offset its market position.  Derivative collateral balances were $17.0 million, and $12.5 million at June 30, 2011,  and December 31, 2010, respectively. First Financial classifies the derivative cash collateral outstanding with its counterparties as an adjustment to the fair value of the derivative contracts within accrued interest and other liabilities in the Consolidated Balance Sheets.

The following table summarizes the derivative financial instruments utilized by First Financial and their balances:

		June 30, 2011							December 31, 2010
				Estimated Fair Value							Estimated Fair Value
(Dollars in thousands)	Balance Sheet Location	Notional Amount		Gain		Loss			Notional Amount		Gain		Loss
Fair Value Hedges
Pay fixed interest rate swaps with counterparty	Accrued interest and other liabilities	$	20,310	$	0	$	(2,108	)	$	21,301	$	0	$	(2,302	)
Matched interest rate swaps with borrower	Accrued interest and other assets		341,488		16,758		(29	)		278,829		14,843		(131	)
Matched interest rate swaps with counterparty	Accrued interest and other liabilities		341,488		29		(17,521	)		278,829		131		(15,502	)
Total		$	703,286	$	16,787	$	(19,658	)	$	578,959	$	14,974	$	(17,935	)

The following table details the derivative financial instruments, the average remaining maturities and the weighted-average interest rates being paid and received by First Financial at June 30, 2011:

								Weighted-Average Rate
(Dollars in thousands)	Notional Value		Average Maturity (years)		Fair Value			Receive			Pay
Asset conversion swaps
Pay fixed interest rate swaps with counterparty	$	20,310		4.4	$	(2,108	)		2.23	%		6.79	%
Receive fixed, matched interest rate swaps with borrower		341,488		4.4		16,729			5.87	%		2.93	%
Pay fixed, matched interest rate swaps with counterparty		341,488		4.4		(17,492	)		2.93	%		5.87	%
Total asset conversion swaps	$	703,286		4.4	$	(2,871	)		4.34	%		4.47	%
Total swap portfolio	$	703,286		4.4	$	(2,871	)		4.34	%		4.47	%

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation.  Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.  Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Fair Value Hedges - First Financial utilizes interest rate swaps as a means to offer commercial borrowers products that meet their needs, but are also designed to achieve First Financial’s desired interest rate risk profile at the time.  The fair value hedge agreements generally involve the net receipt by First Financial of floating-rate amounts in exchange for net payments by First Financial, through its loan clients, of fixed-rate amounts over the life of the agreements without an exchange of the underlying principal or notional amount.  This results in First Financial’s loan customers receiving fixed rate funding, while providing First Financial with a floating rate asset.  The net interest receivable or payable on the interest rate swaps is accrued and recognized as an adjustment to the interest income or interest expense of the hedged item.  The fair value of the interest rate swaps is included within accrued interest and other assets on the Consolidated Balance Sheets.  The corresponding fair-value adjustment is also included on the Consolidated Balance Sheets in the carrying value of the hedged item.  Derivative gains and losses not considered effective in hedging the change in fair value of the hedged item are recognized immediately in income.

The following table details the location and amounts recognized for fair value hedges:

		Increase (decrease) to Interest Income
(Dollars in thousands)		Three Months Ended						Six Months Ended
Derivatives in fair value hedging relationships	Location of change in fair value derivative	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Interest Rate Contracts
Loans	Interest Income - Loans	$	(236	)	$	(251	)	$	(471	)	$	(511	)
Total		$	(236	)	$	(251	)	$	(471	)	$	(511	)

Cash Flow Hedges – First Financial may utilize interest rate swaps designated as cash flow hedges to manage the variability of cash flows, primarily net interest income, attributable to changes in interest rates.  The net interest receivable or payable on an interest rate swap designated as a cash flow hedge is accrued and recognized as an adjustment to interest income or interest expense.  The fair value of the interest rate swaps is included within accrued interest and other assets on the Consolidated Balance Sheets.  Changes in the fair value of the interest rate swaps are included in accumulated comprehensive income (loss).  Derivative gains and losses not considered effective in hedging the cash flows related to the underlying loans, if any, would be recognized immediately in income.

Effective March 30, 2009, First Financial executed a cash flow hedge utilizing an interest rate swap to hedge against interest rate volatility on $20.0 million of floating rate trust preferred securities based on the London Inter-Bank Offered Rate (LIBOR).  The interest rate swap involved the receipt by First Financial of variable-rate interest amounts in exchange for fixed-rate interest payments by First Financial for a period of 10 years.  This interest rate swap effectively fixed the rate of interest on the floating rate trust preferred securities at 6.20% for the 10 year life of the swap.

First Financial terminated the $20.0 million trust preferred interest rate swap during the fourth quarter of 2010 in the course of its normal interest rate risk and balance sheet management activities.  Terminating the trust preferred interest rate swap resulted in a $0.6 million pre-tax loss that was included in accumulated comprehensive income (loss) on the Consolidated Balance Sheets.  Due to the early redemption of the trust preferred securities, the remaining balance of the unrecognized loss of $0.6 million was recognized in noninterest expense in the second quarter of 2011.  First Financial has no derivative instruments designated as cash flow hedges at June 30, 2011.

	Amount of gain or (loss) recognized in OCI on derivatives (effective portion)							Amount of gain or (loss) reclassified from accumulated OCI into earnings (effective portion)
(Dollars in thousands)	3 months ended			6 months ended			Location of gain or (loss) reclassified from accumulated OCI into	3 months ended			6 months ended
Derivatives in cash flow hedging relationships	June 30, 2010						earnings (effective portion)	June 30, 2010
Interest Rate Contracts
Other long-term debt	$	(796	)	$	(999	)	Interest Expense - Other long-term debt	$	(144	)	$	(286	)
Total	$	(796	)	$	(999	)	Total	$	(144	)	$	(286	)

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ALLOWANCE FOR LOAN AND LEASE LOSSES

6 Months Ended

Jun. 30, 2011

ALLOWANCE FOR LOAN AND LEASE LOSSES

NOTE 12:  ALLOWANCE FOR LOAN AND LEASE LOSSES

Uncovered Loans

For each reporting period, management maintains the allowance at a level that it considers sufficient to absorb inherent risks in the loan portfolio. Management’s evaluation in establishing the adequacy of the allowance includes evaluation of the loan and lease portfolios, actual past loan and lease loss experience, known and inherent risks in the portfolio, adverse situations that may affect a specific borrower’s ability to repay (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, and other pertinent factors, such as periodic internal and external evaluations of delinquent, nonaccrual, and classified loans. The evaluation is inherently subjective as it requires utilizing material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans. The evaluation of these factors is the responsibility of the Allowance for Loan and Lease Losses Committee, which is comprised of senior officers from the risk management, credit administration, finance, and lending areas.

The allowance for commercial loans, including time and demand notes, tax-exempt loans, and commercial real estate loans begins with a process of estimating the probable losses inherent in the portfolio. The loss estimates for these commercial loans are established by category and based on First Financial’s internal system of credit risk ratings and historical loss data.

The estimate of losses inherent in the commercial portfolio may be adjusted for management’s estimate of probable losses on specific exposures dependent upon the values of the underlying collateral and/or the present value of expected future cash flows, as well as trends in delinquent and nonaccrual loans, prevailing economic conditions, changes in lending strategies, and other influencing factors.

In the commercial portfolio, certain loans, typically larger-balance non-homogeneous exposures, may have a specific allowance established based on the borrower’s overall financial condition, resources and payment record, support from guarantors, and the realizable value of any collateral.

The allowance for consumer loans which includes residential real estate, installment, home equity, credit card loans, and overdrafts, is established for each of the categories by estimating losses inherent in that particular category of consumer loans. The estimate of losses is primarily based on historical loss rates for the category, as well as trends in delinquent and nonaccrual loans, prevailing economic conditions, and other influencing factors. Consumer loans are evaluated as an asset type within a category (i.e., residential real estate, installment, etc.), as these loans are smaller with more homogeneous characteristics.

There were no material changes to First Financial’s accounting policies or methodology related to the allowance for loan and lease losses during the second quarter of 2011.

First Financial’s policy is to charge-off loans when, in management’s opinion, full collectibility of principal and interest based upon the contractual terms of the loan is unlikely.

Changes in the allowance for loan and lease losses for the previous five quarters are presented in the table that follows:

	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	June 30,			Mar. 31,			Dec. 31,			Sep. 30,			June 30,			2011			2010
Balance at beginning of period	$	53,645		$	57,235		$	57,249		$	57,811		$	56,642		$	57,235		$	59,311
Provision for loan losses		5,756			647			9,741			6,287			6,158			6,403			17,536
Loans charged off		(6,232	)		(4,601	)		(10,285	)		(8,124	)		(5,457	)		(10,833	)		(19,942	)
Recoveries		502			364			530			1,275			468			866			906
Balance at end of period	$	53,671		$	53,645		$	57,235		$	57,249		$	57,811		$	53,671		$	57,811
Allowance for loan and lease losses to total ending loans		1.92	%		1.93	%		2.03	%		2.07	%		2.07	%		1.92	%		2.07	%

Year-to-date changes in the allowance for loan and lease losses by loan category were as follows:

	Six Months Ended June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial		Residential			Installment			Home Equity		Other		Total
Allowance for loan and lease losses:
Balance at beginning of period	$	10,138	$	8,326	$	14,917	$	8,907		$	1,981		$	10,939	$	2,027	$	57,235
Provision for loan and lease losses		1,930		1,841		6,205		(4,356	)		(119	)		242		660		6,403
Gross charge-offs		815		2,403		4,880		514			249			1,185		787		10,833
Recoveries		322		27		73		38			180			37		189		866
Total net charge-offs		493		2,376		4,807		476			69			1,148		598		9,967
Ending allowance for loan and lease losses	$	11,575	$	7,791	$	16,315	$	4,075		$	1,793		$	10,033	$	2,089	$	53,671
Ending allowance on loans individually evaluated for impairment	$	1,528	$	4,387	$	4,021	$	93		$	0		$	2	$	0	$	10,031
Ending allowance on loans collectively evaluated for impairment		679		41		351		69			9			69		0		1,218
	$	2,207	$	4,428	$	4,372	$	162		$	9		$	71	$	0	$	11,249
Loans and Leases:
Ending balance of loans individually evaluated for impairment	$	7,423	$	19,377	$	28,537	$	2,088		$	113		$	101	$	0	$	57,639
Ending balance of loans collectively evaluated for impairment		2,395		169		3,502		4,564			335			2,375		0		13,340
	$	9,818	$	19,546	$	32,039	$	6,652		$	448		$	2,476	$	0	$	70,979

	Twelve Months Ended December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial		Residential		Installment		Home Equity		Other		Total
Allowance for loan and lease losses:
Balance at beginning of period	$	18,590	$	8,143	$	15,190	$	5,308	$	2,159	$	8,063	$	1,858	$	59,311
Provision for loan and lease losses		4,252		8,778		6,836		5,268		457		6,183		1,790		33,564
Gross charge-offs		13,324		8,619		8,191		1,693		1,154		3,499		1,871		38,351
Recoveries		620		24		1,082		24		519		192		250		2,711
Total net charge-offs		12,704		8,595		7,109		1,669		635		3,307		1,621		35,640
Ending allowance for loan and lease losses	$	10,138	$	8,326	$	14,917	$	8,907	$	1,981	$	10,939	$	2,027	$	57,235
Ending allowance on loans individually evaluated for impairment	$	2,017	$	3,716	$	4,347	$	122	$	0	$	0	$	0	$	10,202
Ending allowance on loans collectively evaluated for impairment		279		7		196		149		4		82		0		717
	$	2,296	$	3,723	$	4,543	$	271	$	4	$	82	$	0	$	10,919
Loans and Leases:
Ending balance of loans individually evaluated for impairment	$	12,175	$	19,294	$	31,260	$	1,912	$	0	$	0	$	0	$	64,641
Ending balance of loans collectively evaluated for impairment		1,554		38		2,864		4,607		150		2,553		0		11,766
	$	13,729	$	19,332	$	34,124	$	6,519	$	150	$	2,553	$	0	$	76,407

Covered Loans

In accordance with the accounting guidance for business combinations, there was no allowance brought forward on any of the acquired loans as any credit deterioration evident in the loans was included in the determination of the fair value of the loans at the acquisition date.

First Financial established an allowance for loan losses associated with covered loans during 2010 based on its valuation procedures performed during the period.  The Company continued to update its valuations related to loans covered under loss share agreements during the second quarter of 2011 and, as a result of impairment in certain loan pools, recognized total provision expense of $23.9 million and realized net charge-offs of $4.4 million during the quarter, resulting in an allowance for covered loan losses of $51.0 million as of June 30, 2011.  For the first six months of 2011, the Company recognized total provision expense of $49.9 million and realized net charge-offs of $15.4 million.  Additionally, the Company recognized loss share expenses of $6.5 million for the first six months of 2011 and $3.4 million for the second quarter of 2011 primarily related to losses on covered OREO during the period.  The receivable due from the FDIC under loss share agreements related to the covered provision expense and losses on covered OREO of  $45.1 million for the first six months of 2011 and $21.6 million for the second quarter of 2011 was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset.

For the second quarter of 2010, First Financial recognized provision expense on covered loans of $19.0 million related to net charge-offs of $17.7 million during the period.  For the first six months of 2010, the Company recognized provision expense of $28.4 million related to net charge-offs of $27.1 million.  The related receivable due from the FDIC under loss share agreements related to these loans of $15.2 million and $22.7 million for the second quarter and first six months, respectively, was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset.  

Under the applicable accounting guidance, the allowance for loan losses related to covered loans as a result of impairment to loan pools arising from on-going valuation procedures is generally recognized in the current period as provision expense. Improvement in the credit outlook, however, is not recognized immediately but instead is reflected as an adjustment to the yield earned on the related loan pools on a prospective basis once any previously recorded impairment has been recaptured.  The timing inherent in this accounting treatment may result in earnings volatility in future periods.

The allowance for loan and lease losses on covered loans is presented in the table below:

	June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Commercial		Residential		Installment		Total
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	$	24,548	$	24,773	$	1,547	$	176	$	51,044
Ending allowance on acquired loans outside the scope of ASC 310-30		0		0		0		0		0
Ending allowance on covered loans	$	24,548	$	24,773	$	1,547	$	176	$	51,044

	December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Commercial		Residential		Installment		Total
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	$	8,787	$	7,213	$	232	$	261	$	16,493
Ending allowance on acquired loans outside the scope of ASC 310-30		0		0		0		0		0
Ending allowance on covered loans	$	8,787	$	7,213	$	232	$	261	$	16,493

Changes in the allowance for loan and lease losses on covered loans for the previous five quarters were as follows:

	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	Jun. 30			Mar. 31			Dec. 31			Sep. 30			Jun. 30			2011			2010
Balance at beginning of period	$	31,555		$	16,493		$	11,583		$	1,273		$	0		$	16,493		$	0
Provision for loan and lease losses		23,895			26,016			13,997			20,725			18,962			49,911			28,422
Loans charged-off		(7,456	)		(14,026	)		(9,351	)		(10,492	)		(17,689	)		(21,482	)		(27,149	)
Recoveries		3,050			3,072			264			77			0			6,122			0
Balance at end of period	$	51,044		$	31,555		$	16,493		$	11,583		$	1,273		$	51,044		$	1,273

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Estimated Fair Values of Financial Instruments (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Financial assets
Investment securities held-to-maturity	$ 3,001	$ 17,406
Other investments	71,492	78,689
Loans, excluding covered loans	2,735,483	2,758,858
Covered loans	1,191,686	1,465,000
FDIC indemnification asset	193,113	222,648
Derivative financial instruments	16,787	14,974
Deposits
Noninterest-bearing	728,178	705,484
Savings	1,643,110	1,534,045
Time	1,581,603	1,794,843
Total deposits	4,974,410	5,146,249
Short-term borrowings	105,291	59,842
Other long-term debt	0	20,620
Carrying value
Financial assets
Cash and short-term investments	251,258	282,933
Investment securities held-to-maturity	3,001	17,406
Investment securities available-for-sale	1,134,114	919,110
Other investments	71,492	78,689
Loans held for sale	8,824	29,292
Loans, excluding covered loans	2,735,483	2,758,858
Covered loans	1,191,686	1,465,000
Mortgage-servicing rights	1,201	1,502
FDIC indemnification asset	193,113	222,648
Accrued interest receivable	10,903	14,063
Derivative financial instruments	0	262
Deposits
Noninterest-bearing	728,178	705,484
Interest-bearing demand	1,021,519	1,111,877
Savings	1,643,110	1,534,045
Time	1,581,603	1,794,843
Total deposits	4,974,410	5,146,249
Short-term borrowings	105,291	59,842
Long-term debt	102,255	128,880
Other long-term debt	0	20,620
Accrued interest payable	4,392	5,516
Derivative financial instruments	2,871	3,223
Fair value
Financial assets
Cash and short-term investments	251,258	282,933
Investment securities held-to-maturity	3,226	18,066
Investment securities available-for-sale	1,134,114	919,110
Other investments	71,492	78,689
Loans held for sale	8,824	29,292
Loans, excluding covered loans	2,720,921	2,720,080
Covered loans	1,215,537	1,477,631
Mortgage-servicing rights	1,212	1,502
FDIC indemnification asset	170,602	212,431
Accrued interest receivable	10,903	14,063
Derivative financial instruments	0	262
Deposits
Noninterest-bearing	728,178	705,484
Interest-bearing demand	1,021,519	1,111,877
Savings	1,643,110	1,534,045
Time	1,591,588	1,818,237
Total deposits	4,984,395	5,169,643
Short-term borrowings	105,291	59,842
Long-term debt	106,604	125,825
Other long-term debt	0	20,620
Accrued interest payable	4,392	5,516
Derivative financial instruments	$ 2,871	$ 3,223

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LONG-TERM DEBT

6 Months Ended

Jun. 30, 2011

LONG-TERM DEBT

NOTE 8:  LONG-TERM DEBT

Long-term debt on the Consolidated Balance Sheets consists of FHLB long-term advances and repurchase agreements utilizing investment securities pledged as collateral.  These instruments are primarily utilized to reduce overnight liquidity risk and to mitigate interest rate sensitivity on the balance sheet.  First Financial has $65.0 million in repurchase agreements which have remaining maturities of between two and five years and a weighted average rate of 3.50%.  Securities pledged as collateral in conjunction with the repurchase agreements are included within Investment securities available-for-sale on the Consolidated Balance Sheets.  First Financial assumed additional FHLB long-term advances in the Peoples and Irwin acquisitions of $63.5 million and $216.3 million, respectively.  During the third quarter of 2010, approximately $232 million of these advances were prepaid.  As of June 30, 2011, the remaining FHLB long-term advances assumed in the two transactions totaled $1.8 million, had remaining maturities of less than nine years and a weighted average effective yield of 3.90%.

The following is a summary of long-term debt:

	June 30, 2011
(Dollars in thousands)	Amount		Average Rate
Federal Home Loan Bank	$	37,255		3.86	%
National Market Repurchase Agreement		65,000		3.50	%
Total long-term debt	$	102,255		3.63	%

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EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2011

Employee Benefit Plan Amounts Recognized in the Consolidated Balance Sheets and Consolidated Statements of Income

The following table sets forth information concerning amounts recognized in First Financial’s Consolidated Balance Sheets and Consolidated Statements of Income.

	Three months ended						Six months ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Service cost	$	825		$	600		$	1,650		$	1,200
Interest cost		675			700			1,350			1,400
Expected return on assets		(2,275	)		(1,250	)		(4,550	)		(2,500	)
Amortization of prior service cost		(100	)		(100	)		(200	)		(200	)
Recognized net actuarial loss		525			525			1,050			1,050
Net periodic benefit (income) cost	$	(350	)	$	475		$	(700	)	$	950

Employee Benefit Plan Amounts Recognized in Accumulated Other Comprehensive Income (Loss)

Amounts recognized in accumulated other comprehensive income (loss):

	Three months ended						Six months ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Net actuarial loss	$	525		$	525		$	1,050		$	1,050
Net prior service credit		(100	)		(100	)		(200	)		(200	)
Deferred tax (liabilities) assets		(160	)		(158	)		(321	)		(26	)
Net amount recognized	$	265		$	267		$	529		$	824

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INVESTMENTS

6 Months Ended

Jun. 30, 2011

INVESTMENTS

NOTE 6:  INVESTMENTS

The following is a summary of held-to-maturity and available-for-sale investment securities as of June 30, 2011.

	Held-to-Maturity								Available-for-Sale
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Market Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Market Value
Securities of U.S. government agencies and corporations	$	0	$	0	$	0	$	0	$	5,027	$	149	$	0		$	5,176
Mortgage-backed securities		103		2		0		105		1,087,462		19,311		(776	)		1,105,997
Obligations of state and other political subdivisions		2,898		223		0		3,121		12,187		173		(52	)		12,308
Other securities		0		0		0		0		10,193		441		(1	)		10,633
Total	$	3,001	$	225	$	0	$	3,226	$	1,114,869	$	20,074	$	(829	)	$	1,134,114

The following is a summary of held-to-maturity and available-for-sale investment securities as of December 31, 2010.

	Held-to-Maturity									Available-for-Sale
	Amortized		Unrealized		Unrealized			Market		Amortized		Unrealized		Unrealized			Market
(Dollars in thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Treasuries	$	13,959	$	390	$	(18	)	$	14,331	$	0	$	0	$	0		$	0
Securities of U.S. government agencies and corporations		0		0		0			0		105,028		957		0			105,985
Mortgage-backed securities		118		4		0			122		775,867		15,513		(2,630	)		788,750
Obligations of state and other political subdivisions		3,329		284		0			3,613		13,708		207		(91	)		13,824
Other securities		0		0		0			0		9,943		614		(6	)		10,551
Total	$	17,406	$	678	$	(18	)	$	18,066	$	904,546	$	17,291	$	(2,727	)	$	919,110

The following is a summary of investment securities by estimated maturity as of June 30, 2011.

	Held-to-Maturity				Available-for-Sale
	Amortized Cost		Market Value		Amortized Cost		Market Value
Due in one year or less	$	317	$	321	$	22,851	$	23,018
Due after one year through five years		1,606		1,696		846,587		861,471
Due after five years through ten years		220		253		185,129		188,286
Due after ten years		858		956		60,302		61,339
Total	$	3,001	$	3,226	$	1,114,869	$	1,134,114

The following tables present the age of gross unrealized losses and associated fair value by investment category.

	June 30, 2011
	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Mortgage-backed securities	$	281,769	$	(682	)	$	1,317	$	(94	)	$	283,086	$	(776	)
Obligations of state and other political subdivisions		0		0			2,232		(52	)		2,232		(52	)
Other securities		2,252		(1	)		17		0			2,269		(1	)
Total	$	284,021	$	(683	)	$	3,566	$	(146	)	$	287,587	$	(829	)

	December 31, 2010
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss
U.S. Treasuries	$	2,334	$	(18	)	$	0	$	0		$	2,334	$	(18	)
Mortgage-backed securities		280,445		(2,538	)		1,336		(92	)		281,781		(2,630	)
Obligations of state and other political subdivisions		0		0			2,194		(91	)		2,194		(91	)
Other securities		2,217		(6	)		17		0			2,234		(6	)
Total	$	284,996	$	(2,562	)	$	3,547	$	(183	)	$	288,543	$	(2,745	)

Unrealized losses on debt securities are generally due to higher current market yields relative to the yields of the debt securities at their amortized cost.  Unrealized losses due to credit risk associated with the underlying collateral of the debt security, if any, are not material.  All securities with unrealized losses are reviewed quarterly to determine if any impairment is considered other than temporary, requiring a write-down to fair market value. First Financial considers the percentage loss on a security, duration of the loss, average life or duration of the security, credit rating of the security, as well as payment performance and the company’s intent and ability to hold the security to maturity when determining whether any impairment is other than temporary. At this time First Financial does not intend to sell, and it is not more likely than not that the Company will be required to sell debt security issues temporarily impaired prior to maturity or recovery of book value. First Financial had no other than temporary impairment charges for the six months ended June 30, 2011.

For further detail on the fair value of investment securities, see Note 15 – Fair Value Disclosures.

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Investment in Impaired Loans (Detail) (Non Covered Loans, USD $) In Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 70,979	$ 70,979	$ 76,407
Contractual Principal Balance	94,395	94,395	97,004
Related Allowance	10,031	10,031	10,202
Average Recorded Investment		74,681	76,926
Interest Income Recognized	171	381	2,164
Real estate-construction
Financing Receivable, Impaired [Line Items]
Recorded Investment	19,546	19,546	19,332
Contractual Principal Balance	28,719	28,719	26,719
Related Allowance	4,387	4,387	3,716
Average Recorded Investment		19,821	20,998
Interest Income Recognized	35	89	476
Real estate-construction | Loans with no related allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	5,638	5,638	4,925
Contractual Principal Balance	12,238	12,238	8,458
Related Allowance	0	0	0
Average Recorded Investment		5,494	9,935
Interest Income Recognized	0	1	98
Real estate-construction | Loans with an allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	13,908	13,908	14,407
Contractual Principal Balance	16,481	16,481	18,261
Related Allowance	4,387	4,387	3,716
Average Recorded Investment		14,327	11,063
Interest Income Recognized	35	88	378
Commercial
Financing Receivable, Impaired [Line Items]
Recorded Investment	9,818	9,818	13,729
Contractual Principal Balance	12,736	12,736	18,098
Related Allowance	1,528	1,528	2,017
Average Recorded Investment		11,157	17,855
Interest Income Recognized	15	27	305
Commercial | Loans with no related allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	6,706	6,706	9,375
Contractual Principal Balance	8,146	8,146	12,008
Related Allowance	0	0	0
Average Recorded Investment		7,858	7,432
Interest Income Recognized	15	27	228
Commercial | Loans with an allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	3,112	3,112	4,354
Contractual Principal Balance	4,590	4,590	6,090
Related Allowance	1,528	1,528	2,017
Average Recorded Investment		3,299	10,423
Interest Income Recognized	0	0	77
Real estate-commercial
Financing Receivable, Impaired [Line Items]
Recorded Investment	32,039	32,039	34,124
Contractual Principal Balance	42,754	42,754	41,459
Related Allowance	4,021	4,021	4,347
Average Recorded Investment		34,292	27,504
Interest Income Recognized	107	237	1,196
Real estate-commercial | Loans with no related allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	18,586	18,586	17,431
Contractual Principal Balance	24,353	24,353	21,660
Related Allowance	0	0	0
Average Recorded Investment		19,088	14,113
Interest Income Recognized	68	132	804
Real estate-commercial | Loans with an allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	13,453	13,453	16,693
Contractual Principal Balance	18,401	18,401	19,799
Related Allowance	4,021	4,021	4,347
Average Recorded Investment		15,204	13,391
Interest Income Recognized	39	105	392
Real estate-residential
Financing Receivable, Impaired [Line Items]
Recorded Investment	6,652	6,652	6,519
Contractual Principal Balance	7,141	7,141	7,204
Related Allowance	93	93	122
Average Recorded Investment		6,587	8,045
Interest Income Recognized	9	20	107
Real estate-residential | Loans with no related allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	5,857	5,857	5,854
Contractual Principal Balance	6,334	6,334	6,447
Related Allowance	0	0	0
Average Recorded Investment		5,713	6,611
Interest Income Recognized	5	10	84
Real estate-residential | Loans with an allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	795	795	665
Contractual Principal Balance	807	807	757
Related Allowance	93	93	122
Average Recorded Investment		874	1,434
Interest Income Recognized	4	10	23
Installment
Financing Receivable, Impaired [Line Items]
Recorded Investment	448	448	150
Contractual Principal Balance	461	461	179
Related Allowance	0	0	0
Average Recorded Investment		313	336
Interest Income Recognized	2	3	6
Installment | Loans with no related allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	448	448	150
Contractual Principal Balance	461	461	179
Related Allowance	0	0	0
Average Recorded Investment		287	336
Interest Income Recognized	2	3	6
Installment | Loans with an allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	0	0
Contractual Principal Balance	0	0
Related Allowance	0	0
Average Recorded Investment		26
Interest Income Recognized	0	0
Home equity
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,476	2,476	2,553
Contractual Principal Balance	2,584	2,584	3,345
Related Allowance	2	2	0
Average Recorded Investment		2,511	2,188
Interest Income Recognized	3	5	74
Home equity | Loans with no related allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,375	2,375	2,553
Contractual Principal Balance	2,483	2,483	3,345
Related Allowance	0	0	0
Average Recorded Investment		2,444	2,188
Interest Income Recognized	2	4	74
Home equity | Loans with an allowance recorded
Financing Receivable, Impaired [Line Items]
Recorded Investment	101	101
Contractual Principal Balance	101	101
Related Allowance	2	2
Average Recorded Investment		67
Interest Income Recognized	$ 1	$ 1

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) In Thousands, except Share data	Total	Preferred Stock	Common Stock	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock
Beginning Balances at Dec. 31, 2009	$ 649,958	$ 79,195	$ 490,532	$ 276,119	$ (10,487)	$ (185,401)
Beginning Balances (in shares) at Dec. 31, 2009		80,000	62,358,614			(10,924,793)
Net income	29,372			29,372
Unrealized holding gains (losses) on securities available-for-sale arising during the period	3,153				3,153
Change in retirement obligation	824				824
Unrealized loss on derivatives-Prime Swap market value adj.	(239)				(239)
Unrealized loss on derivatives-Trust Preferred Swap market value adj.	(999)				(999)
Foreign Currency Exchange	(83)				(83)
Total comprehensive income	32,028
Issuance of common stock (in shares)			6,372,117
Issuance of common stock	91,192		91,192
Preferred stock-CPP payoff (in shares)		(80,000)
Preferred stock-CPP payoff	(79,235)	(79,235)
Cash dividends declared :
Common stock at $0.24 per share in 2011 and $0.20 per share in 2010	(11,582)			(11,582)
Preferred stock	(1,100)			(1,100)
Discount on preferred stock	(765)	40		(805)
Excess tax benefit on share-based compensation	498		498
Exercise of stock options, net of shares purchased (in shares)						75,446
Exercise of stock options, net of shares purchased	(168)		(1,551)			1,383
Restricted stock awards, net of forfeitures (in shares)						181,271
Restricted stock awards, net of forfeitures	(592)		(3,631)			3,039
Share-based compensation expense	1,322		1,322
Ending Balances at Jun. 30, 2010	681,556	0	578,362	292,004	(7,831)	(180,979)
Ending Balances (in shares) at Jun. 30, 2010		0	68,730,731			(10,668,076)
Beginning Balances at Dec. 31, 2010	697,394	0	580,097	310,271	(12,044)	(180,930)
Beginning Balances (in shares) at Dec. 31, 2010		0	68,730,731			(10,665,754)
Net income	33,180			33,180
Unrealized holding gains (losses) on securities available-for-sale arising during the period	2,913				2,913
Change in retirement obligation	529				529
Unrealized loss on derivatives-Trust Preferred Swap market value adj.	391				391
Foreign Currency Exchange	309				309
Total comprehensive income	37,322
Cash dividends declared :
Common stock at $0.24 per share in 2011 and $0.20 per share in 2010	(13,996)			(13,996)
Excess tax benefit on share-based compensation	156		156
Exercise of stock options, net of shares purchased (in shares)						12,808
Exercise of stock options, net of shares purchased	(11)		(228)			217
Restricted stock awards, net of forfeitures (in shares)						181,655
Restricted stock awards, net of forfeitures	(908)		(3,974)			3,066
Share-based compensation expense	1,805		1,805
Ending Balances at Jun. 30, 2011	$ 721,762	$ 0	$ 577,856	$ 329,455	$ (7,902)	$ (177,647)
Ending Balances (in shares) at Jun. 30, 2011		0	68,730,731			(10,471,291)

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RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

6 Months Ended

Jun. 30, 2011

RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

NOTE 2:  RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

In January 2010, the FASB issued an update (ASU 2010-06, Improving Disclosures about Fair Value Measurements) amending FASB ASC Topic 820-10, Fair Value Measurements and Disclosures, requiring disclosure of transfers in and out of the level 1 and 2 fair value measurement categories and activity in the level 3 fair value measurement category. Additionally, this update amends existing disclosure requirements on the level of disaggregation, inputs and valuation techniques. This update became effective for First Financial for all reporting periods beginning after December 15, 2009 with the exception of the disclosure requirements around activity in the level 3 fair value measurement category, which became effective for all reporting periods beginning after December 15, 2010. This update did not have a material impact on First Financial’s consolidated financial statements.

In December 2010, the FASB issued an update (ASU 2010-28, Intangibles - Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts) amending FASB ASC Topic 350-20, Goodwill.  This update modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts.  For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist.  The qualitative factors that should be considered are consistent with existing guidance which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This update became effective for First Financial’s interim reporting periods beginning after December 15, 2010 and did not have a material impact on First Financial’s consolidated financial statements.

In April 2011, the FASB issued an update (ASU No. 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring) clarifying the requirements of FASB ASC Topic 310-40, Troubled Debt Restructurings by Creditors.  This update provides additional guidance related to determining whether a creditor has granted a concession, including factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibits creditors from using the borrower’s effective rate test to evaluate whether a concession has been granted to the borrower, and adds factors for creditors to use in determining whether a borrower is experiencing financial difficulties.  This update also ends the FASB’s deferral of the additional disclosure requirements around troubled debt restructurings included in ASU No. 2010-20, Disclosure about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.  The provisions of ASU No. 2011-02 become effective for the first interim and annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption.  While the provisions of ASU No. 2011-02 may increase the volume of loan restructurings determined to be troubled debt restructurings and will expand the Company's disclosures on troubled debt restructurings, First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

In April 2011, the FASB issued an update (ASU No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements), which simplified the accounting for arrangements such as repurchase and securities lending agreements.  The collateral maintenance requirement will be eliminated from the assessment of effective control, which could result in more transactions being accounted for as secured borrowings rather than sales.  The assessment of effective control will focus on a transferor's contractual rights and obligations, not the amount of collateral obtained to repurchase or redeem the transferred financial asset.  Under the amended guidance, a transferor maintains effective control over transferred financial assets, and thus accounts for the transfer as a secured borrowing, if there is an agreement that both entitles and obligates the transferor to repurchase the financial assets before maturity and all of the conditions already described in FASB ASC Topic 860, Transfers and Servicing, are met.  This revised guidance is applicable to new transactions and transactions that are modified on or after the first interim or annual period beginning after December 15, 2011.  First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

In May 2011, the FASB issued an update (ASU No. 2011-04, Fair Value Measurement (Topic 820):  Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs), whichexpands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair value hierarchy of items that are not measured at fair value but whose fair value must be disclosed.  It also clarifies and expands upon existing requirements for fair value measurements of financial assets and liabilities as well as instruments classified in shareholders' equity.  The guidance is effective for interim and annual financial periods beginning after December 15, 2011.  First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

In June 2011, the FASB issued an update (ASU 2011-05, Presentation of Comprehensive Income), which revises the manner in which entities present comprehensive income in their financial statements.  This update eliminates the option to present components of other comprehensive income (OCI) as part of the statement of changes in stockholders' equity.  The amendments to the existing standard require that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  Under either method, adjustments must be displayed for items that are reclassified from OCI to net income, in both net income and OCI.  The amendments to the existing standard do not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements.  Additionally, the standard does not affect the calculation or reporting of earnings per share.  This guidance is effective for interim and annual financial periods beginning after December 15, 2011 and is to be applied retrospectively, with early adoption permitted.  First Financial does not anticipate this update will have a material impact on its consolidated financial statements.

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Age of Gross Unrealized Losses and Associated Fair Value by Investment Category (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Investments, Unrealized Loss Position [Line Items]
Less than 12 Months Fair Value	$ 284,021	$ 284,996
Less than 12 Months Unrealized Loss	(683)	(2,562)
12 Months or More Fair Value	3,566	3,547
12 Months or More Unrealized Loss	(146)	(183)
Total Fair Value	287,587	288,543
Total Unrealized Loss	(829)	(2,745)
U.S. Treasuries
Investments, Unrealized Loss Position [Line Items]
Less than 12 Months Fair Value		2,334
Less than 12 Months Unrealized Loss		(18)
12 Months or More Fair Value		0
12 Months or More Unrealized Loss		0
Total Fair Value		2,334
Total Unrealized Loss		(18)
Mortgage-backed securities
Investments, Unrealized Loss Position [Line Items]
Less than 12 Months Fair Value	281,769	280,445
Less than 12 Months Unrealized Loss	(682)	(2,538)
12 Months or More Fair Value	1,317	1,336
12 Months or More Unrealized Loss	(94)	(92)
Total Fair Value	283,086	281,781
Total Unrealized Loss	(776)	(2,630)
Obligations of state and other political subdivisions
Investments, Unrealized Loss Position [Line Items]
Less than 12 Months Fair Value	0	0
Less than 12 Months Unrealized Loss	0	0
12 Months or More Fair Value	2,232	2,194
12 Months or More Unrealized Loss	(52)	(91)
Total Fair Value	2,232	2,194
Total Unrealized Loss	(52)	(91)
Other securities
Investments, Unrealized Loss Position [Line Items]
Less than 12 Months Fair Value	2,252	2,217
Less than 12 Months Unrealized Loss	(1)	(6)
12 Months or More Fair Value	17	17
12 Months or More Unrealized Loss	0	0
Total Fair Value	2,269	2,234
Total Unrealized Loss	$ (1)	$ (6)

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ALLOWANCE FOR LOAN AND LEASE LOSSES (Tables)

6 Months Ended

Jun. 30, 2011

Non Covered Loans

Changes in the Allowance for Loan and Lease Losses for the Previous Five Quarters

Changes in the allowance for loan and lease losses for the previous five quarters are presented in the table that follows:

	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	June 30,			Mar. 31,			Dec. 31,			Sep. 30,			June 30,			2011			2010
Balance at beginning of period	$	53,645		$	57,235		$	57,249		$	57,811		$	56,642		$	57,235		$	59,311
Provision for loan losses		5,756			647			9,741			6,287			6,158			6,403			17,536
Loans charged off		(6,232	)		(4,601	)		(10,285	)		(8,124	)		(5,457	)		(10,833	)		(19,942	)
Recoveries		502			364			530			1,275			468			866			906
Balance at end of period	$	53,671		$	53,645		$	57,235		$	57,249		$	57,811		$	53,671		$	57,811
Allowance for loan and lease losses to total ending loans		1.92	%		1.93	%		2.03	%		2.07	%		2.07	%		1.92	%		2.07	%

Allowance for Loan and Lease Losses by Classification

Year-to-date changes in the allowance for loan and lease losses by loan category were as follows:

	Six Months Ended June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial		Residential			Installment			Home Equity		Other		Total
Allowance for loan and lease losses:
Balance at beginning of period	$	10,138	$	8,326	$	14,917	$	8,907		$	1,981		$	10,939	$	2,027	$	57,235
Provision for loan and lease losses		1,930		1,841		6,205		(4,356	)		(119	)		242		660		6,403
Gross charge-offs		815		2,403		4,880		514			249			1,185		787		10,833
Recoveries		322		27		73		38			180			37		189		866
Total net charge-offs		493		2,376		4,807		476			69			1,148		598		9,967
Ending allowance for loan and lease losses	$	11,575	$	7,791	$	16,315	$	4,075		$	1,793		$	10,033	$	2,089	$	53,671
Ending allowance on loans individually evaluated for impairment	$	1,528	$	4,387	$	4,021	$	93		$	0		$	2	$	0	$	10,031
Ending allowance on loans collectively evaluated for impairment		679		41		351		69			9			69		0		1,218
	$	2,207	$	4,428	$	4,372	$	162		$	9		$	71	$	0	$	11,249
Loans and Leases:
Ending balance of loans individually evaluated for impairment	$	7,423	$	19,377	$	28,537	$	2,088		$	113		$	101	$	0	$	57,639
Ending balance of loans collectively evaluated for impairment		2,395		169		3,502		4,564			335			2,375		0		13,340
	$	9,818	$	19,546	$	32,039	$	6,652		$	448		$	2,476	$	0	$	70,979

	Twelve Months Ended December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial		Residential		Installment		Home Equity		Other		Total
Allowance for loan and lease losses:
Balance at beginning of period	$	18,590	$	8,143	$	15,190	$	5,308	$	2,159	$	8,063	$	1,858	$	59,311
Provision for loan and lease losses		4,252		8,778		6,836		5,268		457		6,183		1,790		33,564
Gross charge-offs		13,324		8,619		8,191		1,693		1,154		3,499		1,871		38,351
Recoveries		620		24		1,082		24		519		192		250		2,711
Total net charge-offs		12,704		8,595		7,109		1,669		635		3,307		1,621		35,640
Ending allowance for loan and lease losses	$	10,138	$	8,326	$	14,917	$	8,907	$	1,981	$	10,939	$	2,027	$	57,235
Ending allowance on loans individually evaluated for impairment	$	2,017	$	3,716	$	4,347	$	122	$	0	$	0	$	0	$	10,202
Ending allowance on loans collectively evaluated for impairment		279		7		196		149		4		82		0		717
	$	2,296	$	3,723	$	4,543	$	271	$	4	$	82	$	0	$	10,919
Loans and Leases:
Ending balance of loans individually evaluated for impairment	$	12,175	$	19,294	$	31,260	$	1,912	$	0	$	0	$	0	$	64,641
Ending balance of loans collectively evaluated for impairment		1,554		38		2,864		4,607		150		2,553		0		11,766
	$	13,729	$	19,332	$	34,124	$	6,519	$	150	$	2,553	$	0	$	76,407

Covered Loans

Changes in the Allowance for Loan and Lease Losses for the Previous Five Quarters

Changes in the allowance for loan and lease losses on covered loans for the previous five quarters were as follows:

	Three Months Ended															Six Months Ended
	2011						2010									June 30,
(Dollars in thousands)	Jun. 30			Mar. 31			Dec. 31			Sep. 30			Jun. 30			2011			2010
Balance at beginning of period	$	31,555		$	16,493		$	11,583		$	1,273		$	0		$	16,493		$	0
Provision for loan and lease losses		23,895			26,016			13,997			20,725			18,962			49,911			28,422
Loans charged-off		(7,456	)		(14,026	)		(9,351	)		(10,492	)		(17,689	)		(21,482	)		(27,149	)
Recoveries		3,050			3,072			264			77			0			6,122			0
Balance at end of period	$	51,044		$	31,555		$	16,493		$	11,583		$	1,273		$	51,044		$	1,273

Allowance for Loan and Lease Losses by Classification

The allowance for loan and lease losses on covered loans is presented in the table below:

	June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Commercial		Residential		Installment		Total
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	$	24,548	$	24,773	$	1,547	$	176	$	51,044
Ending allowance on acquired loans outside the scope of ASC 310-30		0		0		0		0		0
Ending allowance on covered loans	$	24,548	$	24,773	$	1,547	$	176	$	51,044

	December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Commercial		Residential		Installment		Total
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	$	8,787	$	7,213	$	232	$	261	$	16,493
Ending allowance on acquired loans outside the scope of ASC 310-30		0		0		0		0		0
Ending allowance on covered loans	$	8,787	$	7,213	$	232	$	261	$	16,493

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Carrying Amount of Accretable Yield for Purchased Impaired and Nonimpaired Loans (Detail) (Covered Loans, USD $) In Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2011		Jun. 30, 2010
Covered Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at beginning of period	$ 461,290	[1]	$ 573,381	[1]	$ 509,945	[1]	$ 623,669	[1]
Additions	0		0		0		0
Reclassification from non-accretable difference	11,229		0		33,206		0
Accretion	(31,818)		(33,046)		(66,279)		(69,205)
Other net activity	(18,920)	[2]	(25,899)	[2]	(55,091)	[2]	(40,028)	[2]
Balance at end of period	$ 421,781		$ 514,436		$ 421,781		$ 514,436

[1] Excludes loans with revolving privileges which are scoped out of FASB Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method.

[2] Includes the impact of loan repayments and charge-offs.

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Investment in Covered Impaired Loans, excluding Loans Accounted for under FASB ASC Topic 310-30 (Detail) (Covered Loans, Loans Excluded from FASB ASC Topic 310-30, Loans with no related allowance recorded, USD $) In Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 12,783	$ 12,783	$ 19,755
Unpaid Principal Balance	17,116	17,116	26,895
Related Allowance	0	0	0
Average Recorded Investment		14,763	18,086
Interest Income Recognized	54	163	398
Commercial
Financing Receivable, Impaired [Line Items]
Recorded Investment	8,733	8,733	16,190
Unpaid Principal Balance	11,215	11,215	18,346
Related Allowance	0	0	0
Average Recorded Investment		11,262	12,324
Interest Income Recognized	51	144	316
Real estate-commercial
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,883	2,883	2,074
Unpaid Principal Balance	3,634	3,634	5,412
Related Allowance	0	0	0
Average Recorded Investment		2,183	3,910
Interest Income Recognized	0	2	14
Installment
Financing Receivable, Impaired [Line Items]
Recorded Investment			0
Unpaid Principal Balance			0
Related Allowance			0
Average Recorded Investment			255
Interest Income Recognized			0
Home equity
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,157	1,157	1,491
Unpaid Principal Balance	2,257	2,257	3,137
Related Allowance	0	0	0
Average Recorded Investment		1,311	1,597
Interest Income Recognized	3	17	68
All other
Financing Receivable, Impaired [Line Items]
Recorded Investment	10	10
Unpaid Principal Balance	10	10
Related Allowance	0	0
Average Recorded Investment		7
Interest Income Recognized	$ 0	$ 0

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Nonaccrual, Restructured and Impaired Loans (Detail) (Non Covered Loans, USD $) In Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	$ 56,536	$ 56,536	$ 62,302
Restructured loans	17,482	17,482	17,613
Total	74,018	74,018	79,915
Less: restructured loans - accruing	(3,039)	(3,039)	(3,508)
Total impaired loans	70,979	70,979	76,407
Interest income effect
Gross amount of interest that would have been recorded under original terms	1,304	2,713
Interest included in income
Nonaccrual loans	105	250
Restructured loans	84	166
Total interest included in income	189	416
Net impact on interest income	1,115	2,297
Real estate-construction
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	13,237	13,237	12,921
Commercial
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	9,811	9,811	13,729
Real estate-commercial
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	26,213	26,213	28,342
Real estate-residential
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	4,564	4,564	4,607
Installment
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	335	335	150
Home equity
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	$ 2,376	$ 2,376	$ 2,553

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Changes in the Allowance for Loan and Lease Losses for the Previous Five Quarters (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended					6 Months Ended		12 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	$ 53,645	$ 57,235	$ 57,249	$ 57,811	$ 56,642	$ 57,235	$ 59,311	$ 59,311
Provision for loan and lease losses - uncovered	5,756	647	9,741	6,287	6,158	6,403	17,536	33,564
Loans charged off	(6,232)	(4,601)	(10,285)	(8,124)	(5,457)	(10,833)	(19,942)	(38,351)
Recoveries	502	364	530	1,275	468	866	906	2,711
Balance at end of period	$ 53,671	$ 53,645	$ 57,235	$ 57,249	$ 57,811	$ 53,671	$ 57,811	$ 57,235
Allowance for loan and lease losses to total ending loans	1.92%	1.93%	2.03%	2.07%	2.07%	1.92%	2.07%	2.03%

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BUSINESS COMBINATIONS

6 Months Ended

Jun. 30, 2011

BUSINESS COMBINATIONS

NOTE 3:  BUSINESS COMBINATIONS

On July 31, 2009, First Financial Bank, N.A. (First Financial Bank), a wholly owned subsidiary of First Financial Bancorp, entered into a purchase and assumption agreement (Peoples Agreement) with the Federal Deposit Insurance Corporation (FDIC), as receiver, pursuant to which First Financial acquired certain assets and assumed substantially all of the deposits and certain liabilities of Peoples Community Bank (Peoples).

On September 18, 2009, First Financial Bank, N.A, entered into separate purchase and assumption agreements (Irwin Agreements) with the FDIC, as receiver, pursuant to which First Financial acquired certain assets and assumed substantially all of the deposits and certain liabilities of Irwin Union Bank and Trust Company (Irwin Union Bank) and Irwin Union Bank, F.S.B. (Irwin FSB). Irwin Union Bank and Irwin FSB are collectively referred to herein as Irwin.

In connection with both the Peoples and Irwin acquisitions, First Financial Bank entered into loss sharing agreements with the FDIC that covers single family residential mortgage loans, commercial real estate and commercial and industrial loans, and other real estate acquired through foreclosure (OREO), all of which are referred to collectively as covered assets.

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Related Tax Effects Allocated to Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Transactions Pre-tax
Unrealized gain on securities available-for-sale			$ 4,680	$ 5,226
Unrealized loss on derivatives			628	(1,949)
Unfunded pension obligation			850	850
Foreign currency translation			309	(83)
Total			6,467	4,044
Transactions Tax-effect
Unrealized gain on securities available-for-sale			(1,767)	(2,073)
Unrealized loss on derivatives			(237)	711
Deferred tax (liabilities) assets	(160)	(158)	(321)	(26)
Foreign currency translation			0	0
Total			(2,325)	(1,388)
Transactions Net of tax
Unrealized gain on securities available-for-sale			2,913	3,153
Unrealized loss on derivatives			391	(1,238)
Unfunded pension obligation	265	267	529	824
Foreign currency translation			309	(83)
Total			4,142	2,656
Balances Net of tax
Unrealized gain on securities available-for-sale	11,977	13,377	11,977	13,377
Unrealized loss on derivatives	0	(307)	0	(307)
Unfunded pension obligation	(20,753)	(20,937)	(20,753)	(20,937)
Foreign currency translation	874	36	874	36
Total	$ (7,902)	$ (7,831)	$ (7,902)	$ (7,831)	$ (12,044)

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DERIVATIVES - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 30, 2009	Jun. 30, 2011 Entity	Dec. 31, 2010	Jun. 30, 2011 Entity
Derivative Instruments and Hedging Activities Disclosure [Line Items]
Maximum derivative notional position as a percentage of assets		35.00%		35.00%
Maximum credit exposure as a percentage of capital		3.00%		3.00%
Maximum single counterparty credit risk exposure				$ 20
Total counterparty notional amount outstanding		361.8		361.8
Number of counterparties		6		6
Outstanding liability from counterparty contracts		18.9		18.9
Cash collateral posted with derivative counterparties		17.0	12.5	17.0
Trust preferred swap entered	20.0
Period of swap	10 years
Effective fixed derivative interest rate		6.20%		6.20%
Swap terminated			20.0
Pre-tax loss included in accumulated other comprehensive income (loss)			(0.6)
Recognition of loss		$ 0.6

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LONG-TERM DEBT (Tables)

6 Months Ended

Jun. 30, 2011

Summary of Long-Term Debt

The following is a summary of long-term debt:

	June 30, 2011
(Dollars in thousands)	Amount		Average Rate
Federal Home Loan Bank	$	37,255		3.86	%
National Market Repurchase Agreement		65,000		3.50	%
Total long-term debt	$	102,255		3.63	%

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ALLOWANCE FOR LOAN AND LEASE LOSSES - Additional Information (Detail) (USD $)	3 Months Ended					6 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009
Financing Receivable, Allowance for Credit Losses [Line Items]
Provision for loan and lease losses	$ 23,895,000	$ 26,016,000	$ 13,997,000	$ 20,725,000	$ 18,962,000	$ 49,911,000	$ 28,422,000
Net charge-offs	4,400,000				17,700,000	15,400,000	27,100,000
FDIC loss sharing income	21,643,000				15,170,000	45,078,000	22,738,000
Allowance for covered loan losses	51,044,000	31,555,000	16,493,000	11,583,000	1,273,000	51,044,000	1,273,000	0	0
Covered Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Loss share expenses primarily related to losses on covered OREO	$ 3,400,000					$ 6,500,000

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EARNINGS PER COMMON SHARE - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Antidilutive Stock Options
Earnings Per Share Disclosure [Line Items]
Stock options and warrants with an exercise price greater than the average market price of the common shares not included in the computation of net income per diluted share	434,976	320,963
Antidilutive Warrants
Earnings Per Share Disclosure [Line Items]
Stock options and warrants with an exercise price greater than the average market price of the common shares not included in the computation of net income per diluted share	465,117	465,117

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Covered Commercial and Consumer Credit Exposure by Risk Attribute (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Recorded Investment [Line Items]
Covered loans	$ 1,242,730	$ 1,481,493
Commercial
Financing Receivable, Recorded Investment [Line Items]
Covered loans	251,753	334,039
Commercial | Pass
Financing Receivable, Recorded Investment [Line Items]
Covered loans	159,323	225,088
Commercial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Covered loans	28,341	35,768
Commercial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Covered loans	44,444	60,090
Commercial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Covered loans	19,645	13,093
Real estate-construction
Financing Receivable, Recorded Investment [Line Items]
Covered loans	40,811	42,743
Real estate-construction | Pass
Financing Receivable, Recorded Investment [Line Items]
Covered loans	7,453	14,021
Real estate-construction | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Covered loans	13,019	5,743
Real estate-construction | Substandard
Financing Receivable, Recorded Investment [Line Items]
Covered loans	20,339	22,979
Real estate-construction | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Covered loans	0	0
Real estate-commercial
Financing Receivable, Recorded Investment [Line Items]
Covered loans	726,885	855,725
Real estate-commercial | Pass
Financing Receivable, Recorded Investment [Line Items]
Covered loans	384,580	476,140
Real estate-commercial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Covered loans	79,563	106,057
Real estate-commercial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Covered loans	253,858	268,651
Real estate-commercial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Covered loans	8,884	4,877
Real estate-residential
Financing Receivable, Recorded Investment [Line Items]
Covered loans	134,131	147,052
Real estate-residential | Performing
Financing Receivable, Recorded Investment [Line Items]
Covered loans	134,131	147,052
Real estate-residential | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Covered loans	0	0
Installment
Financing Receivable, Recorded Investment [Line Items]
Covered loans	15,197	21,071
Installment | Performing
Financing Receivable, Recorded Investment [Line Items]
Covered loans	15,197	21,071
Installment | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Covered loans	0	0
Home equity
Financing Receivable, Recorded Investment [Line Items]
Covered loans	68,664	73,695
Home equity | Performing
Financing Receivable, Recorded Investment [Line Items]
Covered loans	67,507	72,204
Home equity | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Covered loans	1,157	1,491
All other
Financing Receivable, Recorded Investment [Line Items]
Covered loans	5,289	7,168
All other | Performing
Financing Receivable, Recorded Investment [Line Items]
Covered loans	5,289	7,168
All other | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Covered loans	$ 0	$ 0

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FAIR VALUE DISCLOSURES (Tables)

6 Months Ended

Jun. 30, 2011

Estimated Fair Values of Financial Instruments

The estimated fair values of First Financial’s financial instruments were as follows:

	June 30, 2011				December 31, 2010
(Dollars in thousands)	Carrying value		Fair value		Carrying value		Fair value
Financial assets
Cash and short-term investments	$	251,258	$	251,258	$	282,933	$	282,933
Investment securities held-to-maturity		3,001		3,226		17,406		18,066
Investment securities available-for-sale		1,134,114		1,134,114		919,110		919,110
Other investments		71,492		71,492		78,689		78,689
Loans held for sale		8,824		8,824		29,292		29,292
Loans, excluding covered loans		2,735,483		2,720,921		2,758,858		2,720,080
Covered loans		1,191,686		1,215,537		1,465,000		1,477,631
Mortgage-servicing rights		1,201		1,212		1,502		1,502
FDIC indemnification asset		193,113		170,602		222,648		212,431
Accrued interest receivable		10,903		10,903		14,063		14,063
Derivative financial instruments		0		0		262		262
Financial liabilities
Deposits
Noninterest-bearing	$	728,178	$	728,178	$	705,484	$	705,484
Interest-bearing demand		1,021,519		1,021,519		1,111,877		1,111,877
Savings		1,643,110		1,643,110		1,534,045		1,534,045
Time		1,581,603		1,591,588		1,794,843		1,818,237
Total deposits		4,974,410		4,984,395		5,146,249		5,169,643
Short-term borrowings		105,291		105,291		59,842		59,842
Long-term debt		102,255		106,604		128,880		125,825
Other long-term debt		0		0		20,620		20,620
Accrued interest payable		4,392		4,392		5,516		5,516
Derivative financial instruments		2,871		2,871		3,223		3,223

Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis at June 30, 2011:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3			Netting Adjustments (1)			Assets/Liabilities at Fair Value
Assets
Derivatives	$	0	$	17,550	$	(763	)	$	(16,787	)	$	0
Available-for-sale investment securities		145		1,133,969		0			0			1,134,114
Total	$	145	$	1,151,519	$	(763	)	$	(16,787	)	$	1,134,114
Liabilities
Derivatives	$	0	$	19,658	$	0		$	(16,787	)	$	2,871

(1) Amounts represent the impact of legally enforceable master netting arrangements that allow First Financial to settle positive and negative positions and also cash collateral held with the same counterparties.

Summary of Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table summarizes financial assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2011:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Year-to-date Gains/(Losses)
Assets
Loans held for sale	$	0	$	8,824	$	0	$	0
Impaired loans (1)		156		18,046		323		0

(1) Amounts represent the fair value of collateral for impaired loans allocated to the allowance for loan and lease losses.  Fair values are determined using actual market prices (Level 1), independent third party valuations, discounted as appropriate (Level 2), and borrower records discounted as appropriate (Level 3).

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Summary of Derivative Financial Instruments by Nature of Underlying Asset or Liability (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Derivative [Line Items]
Notional Amount	$ 703,286	$ 578,959
Fair Value Hedges
Derivative [Line Items]
Notional Amount	$ 703,286	$ 578,959

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LOANS (covered) (Tables) (Covered Loans)

6 Months Ended

Jun. 30, 2011

Carrying Value of Purchased Impaired and Nonimpaired Loans

The following table reflects the carrying value of all purchased impaired and nonimpaired loans:

	June 30, 2011						December 31, 2010
(Dollars in thousands)	Loans Accounted For Under FASB ASC Topic 310-30		Loans excluded from FASB ASC Topic 310-30 (1)		Total Purchased Loans		Loans Accounted For Under FASB ASC Topic 310-30		Loans Excluded From FASB ASC Topic 310-30 (1)		Total Purchased Loans
Commercial	$	234,024	$	17,729	$	251,753	$	295,600	$	38,439	$	334,039
Real estate - construction		40,811		0		40,811		42,743		0		42,743
Real estate - commercial		714,240		12,645		726,885		837,942		17,783		855,725
Real estate - residential		134,131		0		134,131		147,052		0		147,052
Installment		13,989		1,208		15,197		19,560		1,511		21,071
Home equity		6,289		62,375		68,664		7,241		66,454		73,695
Other covered loans		0		5,289		5,289		0		7,168		7,168
Total covered loans	$	1,143,484	$	99,246	$	1,242,730	$	1,350,138	$	131,355	$	1,481,493

(1) Includes loans with revolving privileges which are scoped out of FASB ASC Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method of accounting.

Carrying Amount of Accretable Yield for Purchased Impaired and Nonimpaired Loans

Changes in the carrying amount of accretable yield for purchased impaired and nonimpaired loans accounted for under FASB ASC Topic 310-30 were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Balance at beginning of period (1)	$	461,290		$	573,381		$	509,945		$	623,669
Additions		0			0			0			0
Reclassification from non-accretable difference		11,229			0			33,206			0
Accretion		(31,818	)		(33,046	)		(66,279	)		(69,205	)
Other net activity (2)		(18,920	)		(25,899	)		(55,091	)		(40,028	)
Balance at end of period	$	421,781		$	514,436		$	421,781		$	514,436

(1)   Excludes loans with revolving privileges which are scoped out of FASB Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method.

(2)   Includes the impact of loan repayments and charge-offs.

Covered Nonaccrual Loans

Information as to covered nonaccrual loans was as follows:

(Dollars in thousands)	June 30, 2011		December 31, 2010
Principal balance
Nonaccrual loans
Commercial	$	8,733	$	16,190
Real estate-commercial		2,883		2,074
Home equity		1,157		1,491
All other		10		0
Total	$	12,783	$	19,755

	Three Months Ended		Six Months Ended
(Dollars in thousands)	June 30, 2011		June 30, 2011
Interest income effect
Gross amount of interest that would have been recorded under original terms	$	961	$	2,019
Interest included in income		54		163
Net impact on interest income	$	907	$	1,856

Commercial and Consumer Credit Exposure by Risk Attribute

Covered commercial and consumer credit exposure by risk attribute was as follows:

	As of June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	159,323	$	7,453	$	384,580
Special Mention		28,341		13,019		79,563
Substandard		44,444		20,339		253,858
Doubtful		19,645		0		8,884
Total	$	251,753	$	40,811	$	726,885

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	134,131	$	15,197	$	67,507	$	5,289
Nonperforming		0		0		1,157		0
Total	$	134,131	$	15,197	$	68,664	$	5,289

	As of December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	225,088	$	14,021	$	476,140
Special Mention		35,768		5,743		106,057
Substandard		60,090		22,979		268,651
Doubtful		13,093		0		4,877
Total	$	334,039	$	42,743	$	855,725

(Dollars in thousands)	Real EstateResidential		Installment		HomeEquity		Other
Performing	$	147,052	$	21,071	$	72,204	$	7,168
Nonperforming		0		0		1,491		0
Total	$	147,052	$	21,071	$	73,695	$	7,168

Changes in Other Real Estate Owned

Changes in covered other real estate owned were as follows:

	Six Months Ended		Full Year
(Dollars in thousands)	June 30, 2011		December 31, 2010
Balance at beginning of period	$	35,257	$	12,916
Additions
Commercial		21,732		22,237
Residential		1,825		9,827
Total additions		23,557		32,064
Disposals
Commercial		11,500		4,744
Residential		6,091		4,536
Total disposals		17,591		9,280
Write-downs
Commercial		3,524		414
Residential		1,012		29
Total write-downs		4,536		443
Balance at end of period	$	36,687	$	35,257

Loans Excluded from FASB ASC Topic 310-30

Investment in Impaired Loans

First Financial’s investment in covered impaired loans, excluding loans accounted for under FASB ASC Topic 310-30, was as follows:

	As of June 30, 2011
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized		Quarterly Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	8,733	$	11,215	$	0	$	11,262	$	144	$	51
Real estate - commercial		2,883		3,634		0		2,183		2		0
Home equity		1,157		2,257		0		1,311		17		3
All other		10		10		0		7		0		0
Total	$	12,783	$	17,116	$	0	$	14,763	$	163	$	54

	As of December 31, 2010
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	16,190	$	18,346	$	0	$	12,324	$	316
Real estate - commercial		2,074		5,412		0		3,910		14
Installment		0		0		0		255		0
Home equity		1,491		3,137		0		1,597		68
Total	$	19,755	$	26,895	$	0	$	18,086	$	398

Loan Delinquency, including Nonaccrual Loans

Covered loan delinquency, excluding loans accounted for under FASB ASC Topic 310-30, was as follows:

	As of June 30, 2011
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days  past due and still accruing
Loans
Commercial	$	1,346	$	1,875	$	5,189	$	8,410	$	9,319	$	17,729	$	0
Real estate - commercial		1,408		29		2,841		4,278		8,367		12,645		0
Installment		0		0		0		0		1,208		1,208		0
Home equity		1,353		1,086		1,103		3,542		58,833		62,375		0
All other		159		5		10		174		5,115		5,289		0
Total	$	4,266	$	2,995	$	9,143	$	16,404	$	82,842	$	99,246	$	0

	As of December 31, 2010
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days  past due and still accruing
Loans
Commercial	$	880	$	419	$	13,764	$	15,063	$	23,376	$	38,439	$	0
Real estate - commercial		225		62		1,896		2,183		15,600		17,783		0
Installment		0		0		0		0		1,511		1,511		0
Home equity		656		443		1,424		2,523		63,931		66,454		0
All other		87		10		9		106		7,062		7,168		9
Total	$	1,848	$	934	$	17,093	$	19,875	$	111,480	$	131,355	$	9

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LOANS (covered)

6 Months Ended

Jun. 30, 2011

LOANS (covered)

NOTE 11:  LOANS (covered)

All loans acquired in the Peoples and Irwin acquisitions were covered by loss sharing agreements with the FDIC, whereby the FDIC reimburses First Financial for the majority of the losses incurred. Additionally, these loans were recorded at their estimated fair value as of the acquisition date.  Generally the determination of the fair value of the loans resulted in a significant write-down in the value of the loans, which was assigned to an accretable or nonaccretable difference, with the accretable difference to be recognized as interest income over the expected remaining term of the loan.

First Financial evaluates purchased loans for impairment in accordance with the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The cash flows expected to be collected on purchased loans are estimated based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments. Purchased loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected. First Financial is accounting for the majority of purchased loans under FASB ASC Topic 310-30 except loans with revolving privileges, which are outside the scope of this guidance, and loans for which cash flows could not be estimated, which are accounted for under the cost recovery method. Purchased impaired loans were not classified as nonperforming assets at June 30, 2011 as the loans are considered to be performing under FASB ASC Topic 310-30. Therefore, interest income, through accretion of the difference between the carrying value of the loans and the expected cash flows is being recognized on all purchased loans being accounted for under FASB ASC Topic 310-30.

The following table reflects the carrying value of all purchased impaired and nonimpaired loans:

	June 30, 2011						December 31, 2010
(Dollars in thousands)	Loans Accounted For Under FASB ASC Topic 310-30		Loans excluded from FASB ASC Topic 310-30 (1)		Total Purchased Loans		Loans Accounted For Under FASB ASC Topic 310-30		Loans Excluded From FASB ASC Topic 310-30 (1)		Total Purchased Loans
Commercial	$	234,024	$	17,729	$	251,753	$	295,600	$	38,439	$	334,039
Real estate - construction		40,811		0		40,811		42,743		0		42,743
Real estate - commercial		714,240		12,645		726,885		837,942		17,783		855,725
Real estate - residential		134,131		0		134,131		147,052		0		147,052
Installment		13,989		1,208		15,197		19,560		1,511		21,071
Home equity		6,289		62,375		68,664		7,241		66,454		73,695
Other covered loans		0		5,289		5,289		0		7,168		7,168
Total covered loans	$	1,143,484	$	99,246	$	1,242,730	$	1,350,138	$	131,355	$	1,481,493

(1) Includes loans with revolving privileges which are scoped out of FASB ASC Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method of accounting.

The outstanding balance of all purchased impaired and nonimpaired loans accounted for under FASB ASC Topic 310-30, including contractual principal, interest, fees, and penalties, was $1.9 billion and $2.2 billion as of June 30, 2011 and December 31, 2010, respectively.

Changes in the carrying amount of accretable yield for purchased impaired and nonimpaired loans accounted for under FASB ASC Topic 310-30 were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Balance at beginning of period (1)	$	461,290		$	573,381		$	509,945		$	623,669
Additions		0			0			0			0
Reclassification from non-accretable difference		11,229			0			33,206			0
Accretion		(31,818	)		(33,046	)		(66,279	)		(69,205	)
Other net activity (2)		(18,920	)		(25,899	)		(55,091	)		(40,028	)
Balance at end of period	$	421,781		$	514,436		$	421,781		$	514,436

(1)   Excludes loans with revolving privileges which are scoped out of FASB Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method.

(2)   Includes the impact of loan repayments and charge-offs.

First Financial reviewed its forecast of expected cash flows for loans accounted for under FASB ASC Topic 310-30 during the second quarter of 2011. The Company recognized improvement in the cash flow expectations related to certain loan pools resulting in the reclassification of $11.2 million from nonaccretable to accretable difference during the second quarter and $33.2 million for the six months ended June 30, 2011. These reclassifications resulted in yield adjustments on these loan pools on a prospective basis. There were no reclassifications from nonaccretable to accretable difference during the three and six months ended June 30, 2010. The Company also recognized declines in the cash flow expectations of certain loan pools. Any decline in expected cash flows for a pool of loans is considered impairment and recorded as provision expense, and a related allowance for loan and lease losses on covered loans, on a discounted basis during the period. There were also loan pools that were impaired in prior periods but improved during the second quarter.  This improvement was recorded as a recapture of prior period impairment which partially offset impairment recorded in the second quarter.  For further detail on impairment and provision expense related to loans accounted for under FASB ASC Topic 310-30, see "Covered Loans" under Note 11 - Allowance for Loan and Lease Losses.

Covered loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.

Covered loans accounted for under FASB ASC Topic 310-30 are classified as performing, even though they may be contractually past due, as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period covered loan loss provision or prospective yield adjustments.

Similar to uncovered loans, covered loans accounted for outside FASB ASC Topic 310-30 are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. Generally, these loans are placed in nonaccrual status due to the continued failure to adhere to contractual payment terms by the borrower coupled with other pertinent factors, such as, insufficient collateral value. The accrual of interest income is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful.

Information as to covered nonaccrual loans was as follows:

(Dollars in thousands)	June 30, 2011		December 31, 2010
Principal balance
Nonaccrual loans
Commercial	$	8,733	$	16,190
Real estate-commercial		2,883		2,074
Home equity		1,157		1,491
All other		10		0
Total	$	12,783	$	19,755

	Three Months Ended		Six Months Ended
(Dollars in thousands)	June 30, 2011		June 30, 2011
Interest income effect
Gross amount of interest that would have been recorded under original terms	$	961	$	2,019
Interest included in income		54		163
Net impact on interest income	$	907	$	1,856

First Financial’s investment in covered impaired loans, excluding loans accounted for under FASB ASC Topic 310-30, was as follows:

	As of June 30, 2011
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized		Quarterly Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	8,733	$	11,215	$	0	$	11,262	$	144	$	51
Real estate - commercial		2,883		3,634		0		2,183		2		0
Home equity		1,157		2,257		0		1,311		17		3
All other		10		10		0		7		0		0
Total	$	12,783	$	17,116	$	0	$	14,763	$	163	$	54

	As of December 31, 2010
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	16,190	$	18,346	$	0	$	12,324	$	316
Real estate - commercial		2,074		5,412		0		3,910		14
Installment		0		0		0		255		0
Home equity		1,491		3,137		0		1,597		68
Total	$	19,755	$	26,895	$	0	$	18,086	$	398

Covered loan delinquency, excluding loans accounted for under FASB ASC Topic 310-30, was as follows:

	As of June 30, 2011
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days  past due and still accruing
Loans
Commercial	$	1,346	$	1,875	$	5,189	$	8,410	$	9,319	$	17,729	$	0
Real estate - commercial		1,408		29		2,841		4,278		8,367		12,645		0
Installment		0		0		0		0		1,208		1,208		0
Home equity		1,353		1,086		1,103		3,542		58,833		62,375		0
All other		159		5		10		174		5,115		5,289		0
Total	$	4,266	$	2,995	$	9,143	$	16,404	$	82,842	$	99,246	$	0

	As of December 31, 2010
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days  past due and still accruing
Loans
Commercial	$	880	$	419	$	13,764	$	15,063	$	23,376	$	38,439	$	0
Real estate - commercial		225		62		1,896		2,183		15,600		17,783		0
Installment		0		0		0		0		1,511		1,511		0
Home equity		656		443		1,424		2,523		63,931		66,454		0
All other		87		10		9		106		7,062		7,168		9
Total	$	1,848	$	934	$	17,093	$	19,875	$	111,480	$	131,355	$	9

Covered commercial and consumer credit exposure by risk attribute was as follows:

	As of June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	159,323	$	7,453	$	384,580
Special Mention		28,341		13,019		79,563
Substandard		44,444		20,339		253,858
Doubtful		19,645		0		8,884
Total	$	251,753	$	40,811	$	726,885

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	134,131	$	15,197	$	67,507	$	5,289
Nonperforming		0		0		1,157		0
Total	$	134,131	$	15,197	$	68,664	$	5,289

	As of December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	225,088	$	14,021	$	476,140
Special Mention		35,768		5,743		106,057
Substandard		60,090		22,979		268,651
Doubtful		13,093		0		4,877
Total	$	334,039	$	42,743	$	855,725

(Dollars in thousands)	Real EstateResidential		Installment		HomeEquity		Other
Performing	$	147,052	$	21,071	$	72,204	$	7,168
Nonperforming		0		0		1,491		0
Total	$	147,052	$	21,071	$	73,695	$	7,168

Covered other real estate owned is comprised of properties acquired by the Bank through the loan foreclosure or, repossession process, or any other resolution activity that results in partial or total satisfaction of problem covered loans. These properties remain subject to loss share agreements whereby the FDIC reimburses First Financial for the majority of any losses incurred. The acquired properties are recorded at the lower of cost, or fair value less estimated costs of disposal (net realizable value), upon acquisition. Losses arising at the time of acquisition of such properties are charged against the allowance for loan and lease losses. Subsequent write-downs in the carrying value of covered OREO properties are expensed as incurred.  Improvements to the properties may be capitalized if the improvements contribute to the overall value of the property, but may not be capitalized in excess of the net realizable value of the property.

Changes in covered other real estate owned were as follows:

	Six Months Ended		Full Year
(Dollars in thousands)	June 30, 2011		December 31, 2010
Balance at beginning of period	$	35,257	$	12,916
Additions
Commercial		21,732		22,237
Residential		1,825		9,827
Total additions		23,557		32,064
Disposals
Commercial		11,500		4,744
Residential		6,091		4,536
Total disposals		17,591		9,280
Write-downs
Commercial		3,524		414
Residential		1,012		29
Total write-downs		4,536		443
Balance at end of period	$	36,687	$	35,257

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Carrying Value of Purchased Impaired and Nonimpaired Loans (Detail) (USD $) In Thousands	Jun. 30, 2011		Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	$ 1,242,730		$ 1,481,493
Loans Accounted for Under FASB ASC Topic 310-30
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	1,143,484		1,350,138
Loans Accounted for Under FASB ASC Topic 310-30 | Real estate-construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	40,811		42,743
Loans Accounted for Under FASB ASC Topic 310-30 | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	234,024		295,600
Loans Accounted for Under FASB ASC Topic 310-30 | Real estate-commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	714,240		837,942
Loans Accounted for Under FASB ASC Topic 310-30 | Real estate-residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	134,131		147,052
Loans Accounted for Under FASB ASC Topic 310-30 | Installment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	13,989		19,560
Loans Accounted for Under FASB ASC Topic 310-30 | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	6,289		7,241
Loans Accounted for Under FASB ASC Topic 310-30 | All other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	0		0
Loans Excluded from FASB ASC Topic 310-30
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	99,246	[1]	131,355	[1]
Loans Excluded from FASB ASC Topic 310-30 | Real estate-construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	0	[1]	0	[1]
Loans Excluded from FASB ASC Topic 310-30 | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	17,729	[1]	38,439	[1]
Loans Excluded from FASB ASC Topic 310-30 | Real estate-commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	12,645	[1]	17,783	[1]
Loans Excluded from FASB ASC Topic 310-30 | Real estate-residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	0	[1]	0	[1]
Loans Excluded from FASB ASC Topic 310-30 | Installment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	1,208	[1]	1,511	[1]
Loans Excluded from FASB ASC Topic 310-30 | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	62,375	[1]	66,454	[1]
Loans Excluded from FASB ASC Topic 310-30 | All other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	5,289	[1]	7,168	[1]
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	251,753		334,039
Real estate-construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	40,811		42,743
Real estate-commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	726,885		855,725
Real estate-residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	134,131		147,052
Installment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	15,197		21,071
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	68,664		73,695
All other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Purchased Loans	$ 5,289		$ 7,168

[1] Includes loans with revolving privileges which are scoped out of FASB ASC Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method of accounting.

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Summary of Financial Assets and Liabilities Measure at Fair Value on a Recurring Basis (Detail) (USD $) In Thousands	Jun. 30, 2011		Dec. 31, 2010
Assets
Derivatives	$ 16,787		$ 14,974
Fair Value, Measurements, Recurring
Assets
Derivatives	0
Available-for-sale investment securities	1,134,114
Total	1,134,114
Liabilities
Derivatives	2,871
Fair Value, Measurements, Recurring | Fair Value Measurements Using Level 1
Assets
Derivatives	0
Available-for-sale investment securities	145
Total	145
Liabilities
Derivatives	0
Fair Value, Measurements, Recurring | Fair Value Measurements Using Level 2
Assets
Derivatives	17,550
Available-for-sale investment securities	1,133,969
Total	1,151,519
Liabilities
Derivatives	19,658
Fair Value, Measurements, Recurring | Fair Value Measurements Using Level 3
Assets
Derivatives	(763)
Available-for-sale investment securities	0
Total	(763)
Liabilities
Derivatives	0
Fair Value, Measurements, Recurring | Netting Adjustments
Assets
Derivatives	(16,787)	[1]
Available-for-sale investment securities	0	[1]
Total	(16,787)	[1]
Liabilities
Derivatives	$ (16,787)	[1]

[1] Amounts represent the impact of legally enforceable master netting arrangements that allow First Financial to settle positive and negative positions and also cash collateral held with the same counterparties.

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Covered Loan Delinquency, excluding Loans Accounted for under FASB ASC Topic 310-30 (Detail) (USD $) In Thousands	Jun. 30, 2011		Dec. 31, 2010
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	$ 1,242,730		$ 1,481,493
Covered Loans | Loans Excluded from FASB ASC Topic 310-30
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	4,266		1,848
60 - 89 days past due	2,995		934
> 90 days past due	9,143		17,093
Total Past due	16,404		19,875
Current	82,842		111,480
Total	99,246		131,355
> 90 days past due and still accruing	0		9
Covered Loans | Loans Excluded from FASB ASC Topic 310-30 | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	1,346		880
60 - 89 days past due	1,875		419
> 90 days past due	5,189		13,764
Total Past due	8,410		15,063
Current	9,319		23,376
Total	17,729		38,439
> 90 days past due and still accruing	0		0
Covered Loans | Loans Excluded from FASB ASC Topic 310-30 | Real estate-commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	1,408		225
60 - 89 days past due	29		62
> 90 days past due	2,841		1,896
Total Past due	4,278		2,183
Current	8,367		15,600
Total	12,645		17,783
> 90 days past due and still accruing	0		0
Covered Loans | Loans Excluded from FASB ASC Topic 310-30 | Installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	0		0
60 - 89 days past due	0		0
> 90 days past due	0		0
Total Past due	0		0
Current	1,208		1,511
Total	1,208		1,511
> 90 days past due and still accruing	0		0
Covered Loans | Loans Excluded from FASB ASC Topic 310-30 | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	1,353		656
60 - 89 days past due	1,086		443
> 90 days past due	1,103		1,424
Total Past due	3,542		2,523
Current	58,833		63,931
Total	62,375		66,454
> 90 days past due and still accruing	0		0
Covered Loans | Loans Excluded from FASB ASC Topic 310-30 | All other
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 days past due	159		87
60 - 89 days past due	5		10
> 90 days past due	10		9
Total Past due	174		106
Current	5,115		7,062
Total	5,289		7,168
> 90 days past due and still accruing	0		9
Loans Excluded from FASB ASC Topic 310-30 | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	17,729	[1]	38,439	[1]
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	251,753		334,039
Loans Excluded from FASB ASC Topic 310-30 | Real estate-commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	12,645	[1]	17,783	[1]
Real estate-commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	726,885		855,725
Loans Excluded from FASB ASC Topic 310-30 | Installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1,208	[1]	1,511	[1]
Installment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	15,197		21,071
Loans Excluded from FASB ASC Topic 310-30 | Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	62,375	[1]	66,454	[1]
Home equity
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	68,664		73,695
Loans Excluded from FASB ASC Topic 310-30 | All other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	5,289	[1]	7,168	[1]
All other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	5,289		7,168
Loans Excluded from FASB ASC Topic 310-30
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	$ 99,246	[1]	$ 131,355	[1]

[1] Includes loans with revolving privileges which are scoped out of FASB ASC Topic 310-30 and certain loans which First Financial elected to treat under the cost recovery method of accounting.

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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2011

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 4:  GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Assets and liabilities of acquired entities are recorded at their estimated fair values as of the acquisition.

Goodwill is not amortized, but is measured for impairment on an annual basis as of October 1 of each year or whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value.  First Financial performed its annual impairment test as of October 1, 2010, and no impairment was indicated.  As of June 30, 2011, no events or changes in circumstances indicated that the fair value of a reporting unit was below its carrying value.

Other intangible assets

Other intangible assets consist of mortgage servicing rights and core deposit intangibles.  Mortgage servicing rights are carried at their estimated fair value.  Core deposit intangibles are recorded at their estimate fair value as of acquisition and are then amortized on an accelerated basis over their estimated useful lives.  Core deposit intangibles have an estimated weighted average life of 9.4 years.

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EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2011

EMPLOYEE BENEFIT PLANS

NOTE 14:  EMPLOYEE BENEFIT PLANS

First Financial sponsors a non-contributory defined benefit pension plan covering substantially all employees and uses a December 31 measurement date for its defined benefit pension plan.

First Financial made cash contributions totaling $60.0 million to fund the pension plan in 2010.  First Financial does not expect to make a cash contribution to its pension plan in 2011.  As a result of the plan’s funding status and related actuarial projections for 2011, First Financial recorded income in the first six months of 2011 of $0.7 million, compared to expense of $1.0 million for the first six months of 2010.  Likewise, First Financial recorded income in the second quarter of 2011 of $0.4 million compared to expense of $0.5 million for the same period in 2010.

The following table sets forth information concerning amounts recognized in First Financial’s Consolidated Balance Sheets and Consolidated Statements of Income.

	Three months ended						Six months ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Service cost	$	825		$	600		$	1,650		$	1,200
Interest cost		675			700			1,350			1,400
Expected return on assets		(2,275	)		(1,250	)		(4,550	)		(2,500	)
Amortization of prior service cost		(100	)		(100	)		(200	)		(200	)
Recognized net actuarial loss		525			525			1,050			1,050
Net periodic benefit (income) cost	$	(350	)	$	475		$	(700	)	$	950

Amounts recognized in accumulated other comprehensive income (loss):

	Three months ended						Six months ended
	June 30,						June 30,
(Dollars in thousands)	2011			2010			2011			2010
Net actuarial loss	$	525		$	525		$	1,050		$	1,050
Net prior service credit		(100	)		(100	)		(200	)		(200	)
Deferred tax (liabilities) assets		(160	)		(158	)		(321	)		(26	)
Net amount recognized	$	265		$	267		$	529		$	824

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Changes in the Allowance for Loan and Lease Losses (Detail) (USD $) In Thousands	3 Months Ended					6 Months Ended		12 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Allowance for loan and lease losses:
Balance at beginning of period	$ 53,645	$ 57,235	$ 57,249	$ 57,811	$ 56,642	$ 57,235	$ 59,311	$ 59,311
Provision for loan and lease losses	5,756	647	9,741	6,287	6,158	6,403	17,536	33,564
Gross charge-offs	6,232	4,601	10,285	8,124	5,457	10,833	19,942	38,351
Recoveries	502	364	530	1,275	468	866	906	2,711
Total net charge-offs						9,967		35,640
Balance at end of period	53,671	53,645	57,235	57,249	57,811	53,671	57,811	57,235
Non Covered Loans | Commercial
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	1,528		2,017			1,528		2,017
Ending allowance on loans collectively evaluated for impairment	679		279			679		279
Impaired Financing Receivable, Related Allowance	2,207		2,296			2,207		2,296
Loans and Leases:
Ending balance of loans individually evaluated for impairment	7,423		12,175			7,423		12,175
Ending balance of loans collectively evaluated for impairment	2,395		1,554			2,395		1,554
Recorded Investment	9,818		13,729			9,818		13,729
Commercial
Allowance for loan and lease losses:
Balance at beginning of period		10,138				10,138	18,590	18,590
Provision for loan and lease losses						1,930		4,252
Gross charge-offs						815		13,324
Recoveries						322		620
Total net charge-offs						493		12,704
Balance at end of period	11,575		10,138			11,575		10,138
Non Covered Loans | Real estate-construction
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	4,387		3,716			4,387		3,716
Ending allowance on loans collectively evaluated for impairment	41		7			41		7
Impaired Financing Receivable, Related Allowance	4,428		3,723			4,428		3,723
Loans and Leases:
Ending balance of loans individually evaluated for impairment	19,377		19,294			19,377		19,294
Ending balance of loans collectively evaluated for impairment	169		38			169		38
Recorded Investment	19,546		19,332			19,546		19,332
Real estate-construction
Allowance for loan and lease losses:
Balance at beginning of period		8,326				8,326	8,143	8,143
Provision for loan and lease losses						1,841		8,778
Gross charge-offs						2,403		8,619
Recoveries						27		24
Total net charge-offs						2,376		8,595
Balance at end of period	7,791		8,326			7,791		8,326
Non Covered Loans | Real estate-commercial
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	4,021		4,347			4,021		4,347
Ending allowance on loans collectively evaluated for impairment	351		196			351		196
Impaired Financing Receivable, Related Allowance	4,372		4,543			4,372		4,543
Loans and Leases:
Ending balance of loans individually evaluated for impairment	28,537		31,260			28,537		31,260
Ending balance of loans collectively evaluated for impairment	3,502		2,864			3,502		2,864
Recorded Investment	32,039		34,124			32,039		34,124
Real estate-commercial
Allowance for loan and lease losses:
Balance at beginning of period		14,917				14,917	15,190	15,190
Provision for loan and lease losses						6,205		6,836
Gross charge-offs						4,880		8,191
Recoveries						73		1,082
Total net charge-offs						4,807		7,109
Balance at end of period	16,315		14,917			16,315		14,917
Non Covered Loans | Real estate-residential
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	93		122			93		122
Ending allowance on loans collectively evaluated for impairment	69		149			69		149
Impaired Financing Receivable, Related Allowance	162		271			162		271
Loans and Leases:
Ending balance of loans individually evaluated for impairment	2,088		1,912			2,088		1,912
Ending balance of loans collectively evaluated for impairment	4,564		4,607			4,564		4,607
Recorded Investment	6,652		6,519			6,652		6,519
Real estate-residential
Allowance for loan and lease losses:
Balance at beginning of period		8,907				8,907	5,308	5,308
Provision for loan and lease losses						(4,356)		5,268
Gross charge-offs						514		1,693
Recoveries						38		24
Total net charge-offs						476		1,669
Balance at end of period	4,075		8,907			4,075		8,907
Non Covered Loans | Installment
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	0		0			0		0
Ending allowance on loans collectively evaluated for impairment	9		4			9		4
Impaired Financing Receivable, Related Allowance	9		4			9		4
Loans and Leases:
Ending balance of loans individually evaluated for impairment	113		0			113		0
Ending balance of loans collectively evaluated for impairment	335		150			335		150
Recorded Investment	448		150			448		150
Installment
Allowance for loan and lease losses:
Balance at beginning of period		1,981				1,981	2,159	2,159
Provision for loan and lease losses						(119)		457
Gross charge-offs						249		1,154
Recoveries						180		519
Total net charge-offs						69		635
Balance at end of period	1,793		1,981			1,793		1,981
Non Covered Loans | Home equity
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	2		0			2		0
Ending allowance on loans collectively evaluated for impairment	69		82			69		82
Impaired Financing Receivable, Related Allowance	71		82			71		82
Loans and Leases:
Ending balance of loans individually evaluated for impairment	101		0			101		0
Ending balance of loans collectively evaluated for impairment	2,375		2,553			2,375		2,553
Recorded Investment	2,476		2,553			2,476		2,553
Home equity
Allowance for loan and lease losses:
Balance at beginning of period		10,939				10,939	8,063	8,063
Provision for loan and lease losses						242		6,183
Gross charge-offs						1,185		3,499
Recoveries						37		192
Total net charge-offs						1,148		3,307
Balance at end of period	10,033		10,939			10,033		10,939
Non Covered Loans | All other
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	0		0			0		0
Ending allowance on loans collectively evaluated for impairment	0		0			0		0
Impaired Financing Receivable, Related Allowance	0		0			0		0
Loans and Leases:
Ending balance of loans individually evaluated for impairment	0		0			0		0
Ending balance of loans collectively evaluated for impairment	0		0			0		0
Recorded Investment	0		0			0		0
All other
Allowance for loan and lease losses:
Balance at beginning of period		2,027				2,027	1,858	1,858
Provision for loan and lease losses						660		1,790
Gross charge-offs						787		1,871
Recoveries						189		250
Total net charge-offs						598		1,621
Balance at end of period	2,089		2,027			2,089		2,027
Non Covered Loans
Allowance for loan and lease losses:
Ending allowance on loans individually evaluated for impairment	10,031		10,202			10,031		10,202
Ending allowance on loans collectively evaluated for impairment	1,218		717			1,218		717
Impaired Financing Receivable, Related Allowance	11,249		10,919			11,249		10,919
Loans and Leases:
Ending balance of loans individually evaluated for impairment	57,639		64,641			57,639		64,641
Ending balance of loans collectively evaluated for impairment	13,340		11,766			13,340		11,766
Recorded Investment	$ 70,979		$ 76,407			$ 70,979		$ 76,407

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Changes in Covered Other Real Estate Owned (Detail) (Covered Loans, USD $) In Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at beginning of period	$ 35,257	$ 12,916
Additions	23,557	32,064
Disposals	17,591	9,280
Write-downs	4,536	443
Balance at end of period	36,687	35,257
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Additions	1,825	9,827
Disposals	6,091	4,536
Write-downs	1,012	29
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Additions	21,732	22,237
Disposals	11,500	4,744
Write-downs	$ 3,524	$ 414

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Summary of Investment Securities by Estimated Maturity (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Held-to-Maturity Amortized Cost
Due in one year or less	$ 317
Due after one year through five years	1,606
Due after five years through ten years	220
Due after ten years	858
Total	3,001	17,406
Held-to-Maturity Market Value
Due in one year or less	321
Due after one year through five years	1,696
Due after five years through ten years	253
Due after ten years	956
Held-to-Maturity Market Value	3,226	18,066
Available-for-Sale Amortized Cost
Due in one year or less	22,851
Due after one year through five years	846,587
Due after five years through ten years	185,129
Due after ten years	60,302
Total	1,114,869	904,546
Available-for-Sale Market Value
Due in one year or less	23,018
Due after one year through five years	861,471
Due after five years through ten years	188,286
Due after ten years	61,339
Available-for-Sale Market Value	$ 1,134,114	$ 919,110

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EMPLOYEE BENEFIT PLANS - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Cash contributions to fund the pension plan					$ 60,000,000
Expected contribution to pension plan in 2011	0		0
Pension (income) expense	$ (350,000)	$ 475,000	$ (700,000)	$ 950,000

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LOANS (excluding covered loans) (Tables) (Non Covered Loans)

6 Months Ended

Jun. 30, 2011

Non Covered Loans

Nonaccrual, Restructured and Impaired Loans

Loans placed in nonaccrual status, including restructured loans in nonaccrual status, are considered to be impaired.  Information as to nonaccrual, restructured, and impaired loans was as follows:

(Dollars in thousands)	June 30, 2011			December 31, 2010
Principal balance
Nonaccrual loans
Commercial	$	9,811		$	13,729
Real estate-construction		13,237			12,921
Real estate-commercial		26,213			28,342
Real estate-residential		4,564			4,607
Installment		335			150
Home equity		2,376			2,553
Total nonaccrual loans		56,536			62,302
Restructured loans		17,482			17,613
Total		74,018			79,915
Less: restructured loans -  accruing		(3,039	)		(3,508	)
Total impaired loans	$	70,979		$	76,407

	June 30, 2011
(Dollars in thousands)	Three Months Ended		Six Months Ended
Interest income effect
Gross amount of interest that would have been recorded under original terms	$	1,304	$	2,713
Interest included in income
Nonaccrual loans		105		250
Restructured loans		84		166
Total interest included in income		189		416
Net impact on interest income	$	1,115	$	2,297

Investment in Impaired Loans

First Financial's investment in impaired loans was as follows:

	As of June 30, 2011
(Dollars in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		YTD Interest Income Recognized		Quarterly Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	6,706	$	8,146	$	0	$	7,858	$	27	$	15
Real estate - construction		5,638		12,238		0		5,494		1		0
Real estate - commercial		18,586		24,353		0		19,088		132		68
Real estate - residential		5,857		6,334		0		5,713		10		5
Installment		448		461		0		287		3		2
Home equity		2,375		2,483		0		2,444		4		2
Loans with an allowance recorded:
Commercial		3,112		4,590		1,528		3,299		0		0
Real estate - construction		13,908		16,481		4,387		14,327		88		35
Real estate - commercial		13,453		18,401		4,021		15,204		105		39
Real estate - residential		795		807		93		874		10		4
Installment		0		0		0		26		0		0
Home equity		101		101		2		67		1		1
Total:
Commercial		9,818		12,736		1,528		11,157		27		15
Real estate - construction		19,546		28,719		4,387		19,821		89		35
Real estate - commercial		32,039		42,754		4,021		34,292		237		107
Real estate - residential		6,652		7,141		93		6,587		20		9
Installment		448		461		0		313		3		2
Home equity		2,476		2,584		2		2,511		5		3
Total	$	70,979	$	94,395	$	10,031	$	74,681	$	381	$	171

	As of December 31, 2010
(Dollars in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Loans with no related allowance recorded:
Commercial	$	9,375	$	12,008	$	0	$	7,432	$	228
Real estate - construction		4,925		8,458		0		9,935		98
Real estate - commercial		17,431		21,660		0		14,113		804
Real estate - residential		5,854		6,447		0		6,611		84
Installment		150		179		0		336		6
Home equity		2,553		3,345		0		2,188		74
Loans with an allowance recorded:
Commercial		4,354		6,090		2,017		10,423		77
Real estate - construction		14,407		18,261		3,716		11,063		378
Real estate - commercial		16,693		19,799		4,347		13,391		392
Real estate - residential		665		757		122		1,434		23
Total:
Commercial		13,729		18,098		2,017		17,855		305
Real estate - construction		19,332		26,719		3,716		20,998		476
Real estate - commercial		34,124		41,459		4,347		27,504		1,196
Real estate - residential		6,519		7,204		122		8,045		107
Installment		150		179		0		336		6
Home equity		2,553		3,345		0		2,188		74
Total	$	76,407	$	97,004	$	10,202	$	76,926	$	2,164

Loan Delinquency, including Nonaccrual Loans

Loan delinquency, including nonaccrual loans, was as follows:

	As of June 30, 2011
	30 – 59 Days past due		60 – 89 Days past due		> 90 days past due		Total Past due		Current		Total		> 90 days past due and still accruing
Loans
Commercial	$	2,683	$	2,835	$	8,741	$	14,259	$	784,293	$	798,552	$	0
Real estate - construction		2,146		0		13,213		15,359		127,323		142,682		0
Real estate - commercial		10,260		2,008		15,523		27,791		1,116,577		1,144,368		0
Real estate - residential		5,644		1,901		5,306		12,851		243,937		256,788		0
Installment		214		98		181		493		63,306		63,799		0
Home equity		917		383		1,894		3,194		341,263		344,457		0
All other		340		218		149		707		37,801		38,508		149
Total	$	22,204	$	7,443	$	45,007	$	74,654	$	2,714,500	$	2,789,154	$	149

	As of December 31, 2010
	30 - 59 days past due		60 - 89 days past due		> 90 days past due		Total past due		Current		Total		> 90 days past due and still accruing
Loans
Commercial	$	2,241	$	1,573	$	11,684	$	15,498	$	784,755	$	800,253	$	0
Real estate - construction		1,754		3,782		8,973		14,509		149,034		163,543		0
Real estate - commercial		3,202		3,979		16,435		23,616		1,116,315		1,139,931		0
Real estate - residential		7,671		1,930		5,127		14,728		254,445		269,173		0
Installment		456		48		120		624		69,087		69,711		0
Home equity		1,260		392		2,166		3,818		337,492		341,310		0
All other		366		176		370		912		31,260		32,172		370
Total	$	16,950	$	11,880	$	44,875	$	73,705	$	2,742,388	$	2,816,093	$	370

Commercial and Consumer Credit Exposure by Risk Attribute

Commercial and consumer credit exposure by risk attribute was as follows:

	As of June 30, 2011
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	739,569	$	108,989	$	989,787
Special Mention		30,334		2,708		57,711
Substandard		28,450		30,985		96,870
Doubtful		199		0		0
Total	$	798,552	$	142,682	$	1,144,368

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	250,136	$	63,351	$	341,981	$	38,508
Nonperforming		6,652		448		2,476		0
Total	$	256,788	$	63,799	$	344,457	$	38,508

	As of December 31, 2010
			Real Estate
(Dollars in thousands)	Commercial		Construction		Commercial
Pass	$	731,932	$	115,988	$	979,023
Special Mention		36,453		4,829		63,618
Substandard		31,557		42,726		97,290
Doubtful		311		0		0
Total	$	800,253	$	163,543	$	1,139,931

(Dollars in thousands)	Real Estate Residential		Installment		Home Equity		Other
Performing	$	262,654	$	69,561	$	338,757	$	32,172
Nonperforming		6,519		150		2,553		0
Total	$	269,173	$	69,711	$	341,310	$	32,172

Changes in Other Real Estate Owned

Changes in other real estate owned were as follows:

	Six Months Ended		Full Year
(Dollars in thousands)	June 30, 2011		December 31, 2010
Balance at beginning of period	$	17,907	$	4,145
Additions
Commercial		1,087		17,520
Residential		2,193		1,130
Total additions		3,280		18,650
Disposals
Commercial		304		2,315
Residential		1,052		1,674
Total disposals		1,356		3,989
Write-downs
Commercial		3,341		727
Residential		177		172
Total write-downs		3,518		899
Balance at end of period	$	16,313	$	17,907

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating activities
Net income	$ 33,180	$ 29,372
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan and lease losses	56,314	45,958
Provision for depreciation and amortization	5,779	5,540
Stock-based compensation expense	1,805	1,322
Pension (income) expense	(700)	950
Net amortization of premiums/accretion of discounts on investment securities	1,710	534
Income on trading securities	0	30
Originations of loans held for sale	(59,692)	(47,612)
Net gains from sales of loans held for sale	(1,843)	(642)
Proceeds from sales of loans held for sale	82,004	42,722
Deferred income taxes	(6,643)	(3,459)
Decrease in interest receivable	646	3,836
Increase in cash surrender value of life insurance	(629)	(822)
Decrease in prepaid expenses	3,291	1,205
Decrease in indemnification asset	29,535	36,792
(Decrease) increase in accrued expenses	(22,272)	9,552
(Decrease) increase in interest payable	(1,124)	2,599
Other	5,614	5,689
Net cash provided by operating activities	126,975	133,566
Investing activities
Proceeds from calls, paydowns and maturities of securities available-for-sale	198,811	72,683
Purchases of securities available-for-sale	(410,845)	(100,395)
Proceeds from calls, paydowns and maturities of securities held-to-maturity	11,665	567
Purchases of securities held-to-maturity	0	(51)
Net decrease (increase) in interest-bearing deposits with other banks	29,844	(413,874)
Net decrease in loans and leases, excluding covered loans	14,756	66,443
Net decrease in covered assets	198,782	192,366
Proceeds from disposal of other real estate owned	18,947	2,842
Purchases of premises and equipment	(4,613)	(12,277)
Net cash provided by (used in) investing activities	57,347	(191,696)
Financing activities
Net decrease in total deposits	(171,839)	(103,304)
Net increase in short-term borrowings	45,449	869
Payments on long-term borrowings	(26,611)	(16,881)
Redemption of other long-term debt	(20,620)	0
Cash dividends paid on common stock	(12,748)	(10,925)
Cash dividends paid on preferred stock	0	(1,100)
Redemption of preferred stock	0	(80,000)
Issuance of common stock, net of issuance costs	0	91,192
Proceeds from exercise of stock options	60	235
Excess tax benefit on share-based compensation	156	498
Net cash used in financing activities	(186,153)	(119,416)
Cash and cash equivalents:
Net decrease in cash and cash equivalents	(1,831)	(177,546)
Cash and cash equivalents at beginning of period	105,981	344,150
Cash and cash equivalents at end of period	$ 104,150	$ 166,604

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FAIR VALUE DISCLOSURES

6 Months Ended

Jun. 30, 2011

FAIR VALUE DISCLOSURES

NOTE 15:  FAIR VALUE DISCLOSURES

Fair Value Measurement

The fair value framework as disclosed in the Fair Value Measurements and Disclosure Topic of the FASB Accounting Standards Codification (Fair Value Topic) includes a hierarchy which focuses on prioritizing the inputs used in valuation techniques.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), a lower priority to observable inputs other than quoted prices in active markets for identical assets and liabilities (Level 2), and the lowest priority to unobservable inputs (Level 3).  When determining the fair value measurements for assets and liabilities, First Financial looks to active markets to price identical assets or liabilities whenever possible and classifies such items in Level 1.  When identical assets and liabilities are not traded in active markets, First Financial looks to market observable data for similar assets and liabilities and classifies such items as Level 2.  Certain assets and liabilities are not actively traded in observable markets and First Financial must use alternative techniques, based on unobservable inputs, to determine the fair value and classifies such items as Level 3. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

The following methods, assumptions, and valuation techniques were used by First Financial to measure different financial assets and liabilities at fair value and in estimating its fair value disclosures for financial instruments.

Cash and short-term investments – The carrying amounts reported in the Consolidated Balance Sheets for cash and short-term investments, such as federal funds sold, approximated the fair value of those instruments.

Investment securities – Investment securities classified as trading and available-for-sale are recorded at fair value on a recurring basis.  Fair value measurement is based upon quoted market prices, when available (Level 1).  If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar investment securities.  Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar investment securities (Level 2).  Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities without relying exclusively on quoted prices for the specific investment securities but rather relying on the investment securities’ relationship to other benchmark quoted investment securities.  Any investment securities not valued based upon the methods above are considered Level 3.

First Financial utilizes information provided by a third party investment securities portfolio manager in analyzing the investment securities portfolio in accordance with the fair value hierarchy of the Fair Value Topic.  The portfolio manager’s evaluation of investment security portfolio pricing is performed using a combination of prices and data from third party vendors, along with internally developed matrix pricing models and assistance from the provider’s internal fixed income analysts and trading desk.  The portfolio manager’s month-end pricing process includes a series of quality assurance activities where prices are compared to recent market conditions, previous evaluation prices, and between the various pricing services.  These processes produce a series of quality assurance reports on which price exceptions are identified, reviewed, and where appropriate, securities are repriced.  In the event of a materially different price, the portfolio manager will report the variance to the third party vendor as a “price challenge”, and review the pricing methodology in detail.  The results of the quality assurance process are incorporated into the selection of pricing providers by the portfolio manager.

Loans held for sale – Loans held for sale are carried at the lower of cost or market value.  These loans currently consist of one-to-four family residential real estate loans originated for sale to qualified third parties.  Fair value is based on the contractual price to be received from these third parties, which is not materially different than cost due to the short duration between origination and sale (Level 2).  As such, First Financial records any fair value adjustments on a nonrecurring basis.  Gains and losses on the sale of loans are recorded as net gains from sales of loans within noninterest income in the Consolidated Statements of Income.

Loans (excluding covered loans) – The fair value of commercial, commercial real estate, residential real estate, and consumer loans were estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or repricing frequency.  The carrying amount of accrued interest approximates its fair value.

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected.  Impaired loans are valued at the lower of cost or market for purposes of determining the appropriate amount of impairment to be allocated to the allowance for loan and lease losses.  Market value is measured based on the value of the collateral securing the loans.  Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable.  The vast majority of the collateral is real estate.  The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the company (Level 2). The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable borrower financial statements if not considered significant.  Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports (Level 3).  Impaired loans allocated to the allowance for loan and lease losses are measured at fair value on a nonrecurring basis.  Any fair value adjustments are recorded in the period incurred as provision for loan and lease losses on the Consolidated Statements of Income.

Covered loans – Fair values for covered loans accounted for under FASB ASC 310-30 were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company's assessment of risk inherent in the cash flow estimates. Covered loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. First Financial estimated the cash flows expected to be collected on these loans based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments.

Fair values for covered loans accounted for outside of FASB ASC Topic 310-30 were estimated by discounting the estimated future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or repricing frequency. The carrying amount of accrued interest approximates its fair value.

These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Mortgage-servicing rights – The fair value of mortgage-servicing rights was determined through modeling the expected future cash flows.  The modeling included stratification by maturity and coupon rates on the underlying mortgage loans.  Certain assumptions were used in the valuation regarding prepayment speeds, discount rates, servicing costs, delinquency, cash balances, and foreclosure costs which were arrived at from third-party sources and internal records.

FDIC indemnification asset – The accounting for FDIC indemnification assets is closely related to the accounting for the underlying, indemnified assets. Fair value of the FDIC indemnification asset was estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. First Financial re-estimates the expected indemnification asset cash flows in conjunction with the periodic re-estimation of cash flows on covered loans accounted for under FASB ASC Topic 310-30. Improvements in cash flow expectations on covered loans generally result in a related decline in the expected indemnification cash flows while declines in cash flow expectations on covered loans generally result in an increase in expected indemnification cash flows.

The expected cash flows are discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC. These cash flow evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change.

Deposit liabilities – The fair value of demand deposits, savings accounts, and certain money-market deposits was the amount payable on demand at the reporting date.  The carrying amounts for variable-rate certificates of deposit approximated their fair values at the reporting date.  The fair value of fixed-rate certificates of deposit was estimated using a discounted cash flow calculation which applies the interest rates currently offered for deposits of similar remaining maturities.  The carrying amount of accrued interest approximated its fair value.

Borrowings – The carry amounts of federal funds purchased and securities sold under agreements to repurchase and other short-term borrowings approximated their fair values.  The fair value of long-term debt was estimated using a discounted cash flow calculation which utilizes the interest rates currently offered for borrowings of similar remaining maturities.  Third-party valuations were used for long-term debt with embedded options, such as call features.

Commitments to extend credit and standby letters of credit – Pricing of these financial instruments is based on the credit quality and relationship, fees, interest rates, probability of funding and compensating balance and other covenants or requirements.  Loan commitments generally have fixed expiration dates, are variable rate and contain termination and other clauses which provide for relief from funding in the event that there is a significant deterioration in the credit quality of the client.  Many loan commitments are expected to expire without being drawn upon.  The rates and terms of the commitments to extend credit and the standby letters of credit are competitive with those in First Financial’s market area.  The carrying amounts are reasonable estimates of the fair value of these financial instruments.  Carrying amounts, which are comprised of the unamortized fee income and, where necessary, reserves for any expected credit losses from these financial instruments, are immaterial.

Derivatives – First Financial utilizes interest rate swaps as a means to offer commercial borrowers products that meet their needs and also to achieve First Financial’s desired interest rate risk profile at the time.  The net interest receivable or payable is accrued and recognized as an adjustment to the interest income or interest expense of the hedged item.  First Financial utilizes third-party vendors for derivative valuation purposes.  These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves.  The discounted net present value calculated represents the cost to terminate the swap if First Financial should choose to do so on the applicable measurement date (Level 2).  Additionally, First Financial utilizes a vendor developed, proprietary model to value the credit risk component of both the derivative assets and liabilities.  The credit valuation adjustment is recorded as an adjustment to the fair value of the derivative asset or liability on the applicable measurement date (Level 3).

The estimated fair values of First Financial’s financial instruments were as follows:

	June 30, 2011				December 31, 2010
(Dollars in thousands)	Carrying value		Fair value		Carrying value		Fair value
Financial assets
Cash and short-term investments	$	251,258	$	251,258	$	282,933	$	282,933
Investment securities held-to-maturity		3,001		3,226		17,406		18,066
Investment securities available-for-sale		1,134,114		1,134,114		919,110		919,110
Other investments		71,492		71,492		78,689		78,689
Loans held for sale		8,824		8,824		29,292		29,292
Loans, excluding covered loans		2,735,483		2,720,921		2,758,858		2,720,080
Covered loans		1,191,686		1,215,537		1,465,000		1,477,631
Mortgage-servicing rights		1,201		1,212		1,502		1,502
FDIC indemnification asset		193,113		170,602		222,648		212,431
Accrued interest receivable		10,903		10,903		14,063		14,063
Derivative financial instruments		0		0		262		262
Financial liabilities
Deposits
Noninterest-bearing	$	728,178	$	728,178	$	705,484	$	705,484
Interest-bearing demand		1,021,519		1,021,519		1,111,877		1,111,877
Savings		1,643,110		1,643,110		1,534,045		1,534,045
Time		1,581,603		1,591,588		1,794,843		1,818,237
Total deposits		4,974,410		4,984,395		5,146,249		5,169,643
Short-term borrowings		105,291		105,291		59,842		59,842
Long-term debt		102,255		106,604		128,880		125,825
Other long-term debt		0		0		20,620		20,620
Accrued interest payable		4,392		4,392		5,516		5,516
Derivative financial instruments		2,871		2,871		3,223		3,223

The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis at June 30, 2011:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3			Netting Adjustments (1)			Assets/Liabilities at Fair Value
Assets
Derivatives	$	0	$	17,550	$	(763	)	$	(16,787	)	$	0
Available-for-sale investment securities		145		1,133,969		0			0			1,134,114
Total	$	145	$	1,151,519	$	(763	)	$	(16,787	)	$	1,134,114
Liabilities
Derivatives	$	0	$	19,658	$	0		$	(16,787	)	$	2,871

(1) Amounts represent the impact of legally enforceable master netting arrangements that allow First Financial to settle positive and negative positions and also cash collateral held with the same counterparties.

Certain financial assets and liabilities are measured at fair value on a nonrecurring basis.  Adjustments to the fair market value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.  The following table summarizes financial assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2011:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Year-to-date Gains/(Losses)
Assets
Loans held for sale	$	0	$	8,824	$	0	$	0
Impaired loans (1)		156		18,046		323		0

(1) Amounts represent the fair value of collateral for impaired loans allocated to the allowance for loan and lease losses.  Fair values are determined using actual market prices (Level 1), independent third party valuations, discounted as appropriate (Level 2), and borrower records discounted as appropriate (Level 3).

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Derivative Financial Instruments, Average Remaining Maturity and the Weighted-Average Interest Rates being Paid and Received (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2011	Dec. 31, 2010
Derivative [Line Items]
Notional Value	$ 703,286	$ 578,959
Average Maturity (years)	P4.4Y
Fair Value	(2,871)
Weighted-Average Rate Receive	4.34%
Weighted-Average Rate Pay	4.47%
Pay fixed interest rate swaps with counterparty
Derivative [Line Items]
Notional Value	20,310
Average Maturity (years)	P4.4Y
Fair Value	(2,108)
Weighted-Average Rate Receive	2.23%
Weighted-Average Rate Pay	6.79%
Matched interest rate swaps | Receive fixed
Derivative [Line Items]
Notional Value	341,488
Average Maturity (years)	P4.4Y
Fair Value	16,729
Weighted-Average Rate Receive	5.87%
Weighted-Average Rate Pay	2.93%
Matched interest rate swaps | Pay fixed
Derivative [Line Items]
Notional Value	341,488
Average Maturity (years)	P4.4Y
Fair Value	(17,492)
Weighted-Average Rate Receive	2.93%
Weighted-Average Rate Pay	5.87%
Asset conversion swaps
Derivative [Line Items]
Notional Value	703,286
Average Maturity (years)	P4.4Y
Fair Value	$ (2,871)
Weighted-Average Rate Receive	4.34%
Weighted-Average Rate Pay	4.47%

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EARNINGS PER COMMON SHARE

6 Months Ended

Jun. 30, 2011

EARNINGS PER COMMON SHARE

NOTE 17:  EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended				Six months ended
	June 30,				June 30,
(Dollars in thousands, except per share data)	2011		2010		2011		2010
Numerator for basic and diluted earnings per share -income available to common shareholders:
Net income	$	15,973	$	17,774	$	33,180	$	29,372
Dividends on preferred stock		0		0		0		1,865
Income available to common shareholders	$	15,973	$	17,774	$	33,180	$	27,507
Denominator for basic earnings per share - weighted average shares		57,694,792		57,539,901		57,642,970		56,356,877
Effect of dilutive securities —
Employee stock awards		945,250		944,176		974,958		893,621
Warrants		94,620		119,962		104,520		114,824
Denominator for diluted earnings per share - adjusted weighted average shares		58,734,662		58,604,039		58,722,448		57,365,322
Earnings per share available to common shareholders
Basic	$	0.28	$	0.31	$	0.58	$	0.49
Diluted	$	0.27	$	0.30	$	0.57	$	0.48

Stock options and warrants, where the exercise price was greater than the average market price of the common shares, were not included in the computation of net income per diluted share as they would have been antidilutive.  These out-of-the-money options were 434,976 and 320,963 at June 30, 2011 and 2010, respectively.  The warrants to purchase 465,117 shares of common stock were outstanding as of June 30, 2011 and 2010.

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Employee Benefit Plan Amounts Recognized in Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Schedule of Pension and Other Postretirment Benefits Recgonized in Accumulated Other Comprehensive Income (Loss) [Line Items]
Net actuarial loss	$ 525	$ 525	$ 1,050	$ 1,050
Net prior service credit	(100)	(100)	(200)	(200)
Deferred tax (liabilities) assets	(160)	(158)	(321)	(26)
Net amount recognized	$ 265	$ 267	$ 529	$ 824

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Allowance for Loan and Lease Losses on Covered Loans for the Previous Five Quarters (Detail) (USD $) In Thousands	3 Months Ended					6 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	$ 31,555	$ 16,493	$ 11,583	$ 1,273	$ 0	$ 16,493	$ 0
Provision for loan and lease losses	23,895	26,016	13,997	20,725	18,962	49,911	28,422
Loans charged-off	(7,456)	(14,026)	(9,351)	(10,492)	(17,689)	(21,482)	(27,149)
Recoveries	3,050	3,072	264	77	0	6,122	0
Balance at end of period	$ 51,044	$ 31,555	$ 16,493	$ 11,583	$ 1,273	$ 51,044	$ 1,273

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Common stock, per share	$ 0.12	$ 0.10	$ 0.24	$ 0.20

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OTHER LONG-TERM DEBT

6 Months Ended

Jun. 30, 2011

OTHER LONG-TERM DEBT

NOTE 9:  OTHER LONG-TERM DEBT

Other long-term debt on the Consolidated Balance Sheets previously consisted of junior subordinated debentures owed to unconsolidated subsidiary trusts.  Capital securities were issued in the third quarter of 2003 by a statutory business trust, First Financial (OH) Statutory Trust II (Trust II).  These debentures were eligible for early redemption by First Financial in September of 2008 and were redeemed on June 30, 2011.

The debentures qualified as Tier I capital under Federal Reserve Board guidelines, but had been limited to 25% of qualifying Tier I capital.  After the early redemption, the Company has the capacity to issue approximately $171.5 million in additional qualifying debentures under these guidelines.

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Changes in Other Real Estate Owned (Detail) (Non Covered Loans, USD $) In Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at beginning of period	$ 17,907	$ 4,145
Additions	3,280	18,650
Disposals	1,356	3,989
Write-downs	3,518	899
Balance at end of period	16,313	17,907
Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Additions	2,193	1,130
Disposals	1,052	1,674
Write-downs	177	172
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Additions	1,087	17,520
Disposals	304	2,315
Write-downs	$ 3,341	$ 727

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Covered Nonaccrual Loans (Detail) (Covered Loans, USD $) In Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	$ 12,783	$ 12,783	$ 19,755
Interest income effect
Gross amount of interest that would have been recorded under original terms	961	2,019
Interest included in income	54	163
Net impact on interest income	907	1,856
Commercial
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	8,733	8,733	16,190
Real estate-commercial
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	2,883	2,883	2,074
Home equity
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	1,157	1,157	1,491
All other
Financing Receivable, Modifications [Line Items]
Nonaccrual loans	$ 10	$ 10	$ 0

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INCOME TAXES - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Income Taxes [Line Items]
Effective tax rate	35.70%	34.80%	35.40%	34.90%
Internal Revenue Service (IRS)
Income Taxes [Line Items]
Years open to income tax examinations			Tax years prior to 2008 have been closed and are no longer subject to U.S. federal income tax examinations.
State and Local Jurisdiction
Income Taxes [Line Items]
Years open to income tax examinations			Tax years 2007 through 2009 remain open to state and local examination in various jurisdictions.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2011

Related Tax Effects Allocated to Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The related tax effects allocated to other comprehensive income and accumulated other comprehensive income (loss) are as follows:

	June 30, 2011
	Transactions
(Dollars in thousands)	Pre-tax		Tax-effect			Net of tax		Balances Net of tax
Unrealized gain on securities available-for-sale	$	4,680	$	(1,767	)	$	2,913	$	11,977
Unrealized loss on derivatives		628		(237	)		391		0
Unfunded pension obligation		850		(321	)		529		(20,753	)
Foreign currency translation		309		0			309		874
Total	$	6,467	$	(2,325	)	$	4,142	$	(7,902	)

	June 30, 2010
	Transactions
(Dollars in thousands)	Pre-tax			Tax-effect			Net of tax			Balances Net of tax
Unrealized gain on securities available-for-sale	$	5,226		$	(2,073	)	$	3,153		$	13,377
Unrealized loss on derivatives		(1,949	)		711			(1,238	)		(307	)
Unfunded pension obligation		850			(26	)		824			(20,937	)
Foreign currency translation		(83	)		0			(83	)		36
Total	$	4,044		$	(1,388	)	$	2,656		$	(7,831	)

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INCOME TAXES

6 Months Ended

Jun. 30, 2011

INCOME TAXES

NOTE 13:  INCOME TAXES

First Financial’s effective tax rate for the second quarter of 2011 was 35.7% compared to 34.8% for the second quarter of 2010.  The 2011 year-to-date effective tax rate was 35.4% compared to 34.9% for 2010.

At June 30, 2011, and December 31, 2010, First Financial had no unrecognized tax benefits recorded under FASB ASC Topic 740-10, Income Taxes.  First Financial does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months.

First Financial recognizes interest and penalties on income tax assessments or income tax refunds in the Consolidated Financial Statements as a component of noninterest expense.

First Financial and its subsidiaries are subject to U.S. federal income tax as well as state and local income tax in several jurisdictions.  Tax years prior to 2008 have been closed and are no longer subject to U.S. federal income tax examinations.

First Financial is no longer subject to state and local income tax examinations for years prior to 2007.  The Company’s 2007 state examination by the state of Indiana has closed with no material impact to the Company’s financial position as a result of the examinations.  Tax years 2007 through 2009 remain open to state and local examination in various jurisdictions.

First Financial was notified in the second quarter of 2011 that the Internal Revenue Service will commence a routine examination of its income tax return for the calendar year 2009.  At this time, the company cannot make an assessment of the outcome of this examination.

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Cash and due from banks	$ 104,150	$ 105,981
Interest-bearing deposits with other banks	147,108	176,952
Investment securities available-for-sale, at market value (cost $1,114,869 at June 30, 2011 and $904,546 at December 31, 2010)	1,134,114	919,110
Investment securities held-to-maturity (market value $3,226 at June 30, 2011 and $18,066 at December 31, 2010)	3,001	17,406
Other investments	71,492	78,689
Loans held for sale	8,824	29,292
Loans:
Commercial	798,552	800,253
Real estate-construction	142,682	163,543
Real estate-commercial	1,144,368	1,139,931
Real estate-residential	256,788	269,173
Installment	63,799	69,711
Home Equity	344,457	341,310
Credit card	28,618	29,563
Lease financing	9,890	2,609
Total	2,789,154	2,816,093
Less: Allowance for loan losses	53,671	57,235
Net loans - uncovered	2,735,483	2,758,858
Covered loans	1,242,730	1,481,493
Less: Allowance for loan losses	51,044	16,493
Net loans - covered	1,191,686	1,465,000
Net loans	3,927,169	4,223,858
Premises and equipment	114,797	118,477
Goodwill	51,820	51,820
Other intangibles	4,847	5,604
FDIC indemnification asset	193,113	222,648
Accrued interest and other assets	281,172	300,388
TOTAL ASSETS	6,041,607	6,250,225
Deposits:
Interest-bearing	1,021,519	1,111,877
Savings	1,643,110	1,534,045
Time	1,581,603	1,794,843
Total interest-bearing deposits	4,246,232	4,440,765
Noninterest-bearing	728,178	705,484
Total deposits	4,974,410	5,146,249
Federal funds purchased and securities sold under agreements to repurchase	105,291	59,842
Long-term debt	102,255	128,880
Other long-term debt	0	20,620
Total borrowed funds	207,546	209,342
Accrued interest and other liabilities	137,889	197,240
TOTAL LIABILITIES	5,319,845	5,552,831
SHAREHOLDERS' EQUITY
Common stock - no par value Authorized - 160,000,000 shares Issued - 68,730,731 shares in 2011 and 2010	577,856	580,097
Retained earnings	329,455	310,271
Accumulated other comprehensive loss	(7,902)	(12,044)
Treasury stock, at cost, 10,471,291 shares in 2011 and 10,665,754 shares in 2010	(177,647)	(180,930)
TOTAL SHAREHOLDERS' EQUITY	721,762	697,394
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 6,041,607	$ 6,250,225

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GOODWILL AND OTHER INTANGIBLE ASSETS - Additional Information (Detail) (Core Deposits)	6 Months Ended
	Jun. 30, 2011 Year
Core Deposits
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets amortization method	accelerated basis
Estimated weighted average life	9.4

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Summary of Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Detail) (Fair Value, Measurements, Nonrecurring, USD $) In Thousands	6 Months Ended
	Jun. 30, 2011
Assets
Loans held for sale	$ 0
Impaired loans	0	[1]
Fair Value Measurements Using Level 1
Assets
Loans held for sale	0
Impaired loans	156	[1]
Fair Value Measurements Using Level 2
Assets
Loans held for sale	8,824
Impaired loans	18,046	[1]
Fair Value Measurements Using Level 3
Assets
Loans held for sale	0
Impaired loans	$ 323	[1]

[1] Amounts represent the fair value of collateral for impaired loans allocated to the allowance for loan and lease losses. Fair values are determined using actual market prices (Level 1), independent third party valuations, discounted as appropriate (Level 2), and borrower records discounted as appropriate (Level 3).

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OTHER LONG-TERM DEBT - Additional Information (Detail) (First Financial (OH) Statutory Trust II, USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2011
First Financial (OH) Statutory Trust II
Debt Disclosure [Line Items]
Capital securities issued by a statutory business trust	third quarter of 2003
Debentures first eligible for early redemption	September of 2008
Debentures redeemed	Jun. 30, 2011
Debenture limit of qualifying Tier I capital	25.00%
Capacity to issue additional debentures under these guidelines	$ 171.5

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LOANS (covered) - Additional Information (Detail) (Covered Loans, USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011 Loans Accounted for Under FASB ASC Topic 310-30	Dec. 31, 2010 Loans Accounted for Under FASB ASC Topic 310-30
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance including contractual principal, interest, fees, and penalties					$ 1,900,000,000	$ 2,200,000,000
Reclassification from non-accretable difference	$ 11,229,000	$ 0	$ 33,206,000	$ 0

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Allowance for Loan and Lease Losses on Covered Loans (Detail) (USD $) In Thousands	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	$ 51,044		$ 16,493
Ending allowance on acquired loans outside the scope of ASC 310-30	0		0
Ending allowance on covered loans	51,044	31,555	16,493	11,583	1,273	0	0
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	24,548		8,787
Ending allowance on acquired loans outside the scope of ASC 310-30	0		0
Ending allowance on covered loans	24,548		8,787
Real estate-commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	24,773		7,213
Ending allowance on acquired loans outside the scope of ASC 310-30	0		0
Ending allowance on covered loans	24,773		7,213
Real estate-residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	1,547		232
Ending allowance on acquired loans outside the scope of ASC 310-30	0		0
Ending allowance on covered loans	1,547		232
Installment
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending allowance on loans acquired with deteriorated credit quality (ASC 310-30)	176		261
Ending allowance on acquired loans outside the scope of ASC 310-30	0		0
Ending allowance on covered loans	$ 176		$ 261

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Location and Amounts Recognized for Fair Value Hedges (Detail) (Fair Value Hedges, USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Derivative Instruments, Gain (Loss) [Line Items]
Increase (decrease) to Interest Income	$ (236)	$ (251)	$ (471)	$ (511)
Interest Rate Contracts | Loans | Interest Income
Derivative Instruments, Gain (Loss) [Line Items]
Increase (decrease) to Interest Income	$ (236)	$ (251)	$ (471)	$ (511)

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Gains or Losses on Cash Flow Hedges (Detail) (USD $) In Thousands	3 Months Ended		6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Dec. 31, 2010	Jun. 30, 2010 Cash Flow Hedges	Jun. 30, 2010 Cash Flow Hedges	Jun. 30, 2010 Cash Flow Hedges Interest Rate Contracts Other long-term debt	Jun. 30, 2010 Cash Flow Hedges Interest Rate Contracts Other long-term debt	Jun. 30, 2010 Cash Flow Hedges Interest Rate Contracts Other long-term debt Interest Expense	Jun. 30, 2010 Cash Flow Hedges Interest Rate Contracts Other long-term debt Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain or (loss) recognized in OCI on derivatives (effective portion)	$ (600)	$ (796)	$ (999)	$ (796)	$ (999)
Amount of gain or (loss) reclassified from accumulated OCI into earnings (effective portion)		$ (144)	$ (286)			$ (144)	$ (286)

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Commercial and Consumer Credit Exposure by Risk Attribute (Detail) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Financing Receivable, Recorded Investment [Line Items]
Commercial	$ 798,552	$ 800,253
Real Estate - Construction	142,682	163,543
Real Estate - Commercial	1,144,368	1,139,931
Real Estate Residential	256,788	269,173
Installment	63,799	69,711
Home Equity	344,457	341,310
Other	38,508	32,172
Pass
Financing Receivable, Recorded Investment [Line Items]
Commercial	739,569	731,932
Real Estate - Construction	108,989	115,988
Real Estate - Commercial	989,787	979,023
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Commercial	30,334	36,453
Real Estate - Construction	2,708	4,829
Real Estate - Commercial	57,711	63,618
Substandard
Financing Receivable, Recorded Investment [Line Items]
Commercial	28,450	31,557
Real Estate - Construction	30,985	42,726
Real Estate - Commercial	96,870	97,290
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Commercial	199	311
Real Estate - Construction	0	0
Real Estate - Commercial	0	0
Performing
Financing Receivable, Recorded Investment [Line Items]
Real Estate Residential	250,136	262,654
Installment	63,351	69,561
Home Equity	341,981	338,757
Other	38,508	32,172
Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Real Estate Residential	6,652	6,519
Installment	448	150
Home Equity	2,476	2,553
Other	$ 0	$ 0

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COMMITMENTS AND CONTINGENCIES - Additional Information (Detail) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Commitments and Contingencies Disclosure [Line Items]
Letters of credit issued to guarantee performance of a client to a third party	$ 15,600,000	$ 17,600,000
Commitments to Extend Credit
Commitments and Contingencies Disclosure [Line Items]
Commitments outstanding to extend credit	$ 1,100,000,000	$ 1,000,000,000