STOCK OPTIONS AND AWARDS

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK OPTIONS AND AWARDS

Stock Options And Awards

First Financial follows the provisions of FASB ASC Topic 718, Compensation-Stock Compensation, which requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation expense over the service period for all awards expected to vest. Share-based compensation expense for stock options and restricted stock awards included in salaries and employee benefits expense for the year ended December 31, 2012, and 2011, was $4.2 million and $3.9 million, respectively. Total unrecognized compensation cost related to nonvested share-based compensation was $5.2 million at December 31, 2012 and is expected to be recognized over a weighted average period of 1.9 years .

As of December 31, 2012, First Financial had five stock-based compensation plans. The 1999 Stock Incentive Plan for Officers and Employees and the 1999 Stock Option Plan for Non-Employee Directors provided incentive stock options and stock awards to certain key employees and non-qualified stock options to non-employee directors (the "1999 Plans") of First Financial for up to 7,507,500 common shares. The options become exercisable at a rate of 25% per year on the anniversary date of the grant and remain outstanding for 10 years after the initial grant date. All options expire at the end of the exercise period. No additional awards may be granted under the 1999 Plans. On June 15, 2009, the shareholders approved the 2009 Employee Stock Plan and the 2009 Non-Employee Director Plan providing for the issuance of 1,500,000 shares and 75,000 shares, respectively. The 2009 Employee Stock Plan expired on June 15, 2012, and thus, no new awards may be granted under this plan. On May 22, 2012, First Financial shareholders approved the First Financial Bancorp. 2012 Stock Plan and amendments to the 2009 Non-Employee Director Plan. At December 31, 2012, there were 1,745,906 shares and 43,623 shares available for issuance under these plans, respectively.

First Financial utilizes the Black-Scholes valuation model to determine the fair value of its stock options. In addition to the stock option strike price, the Black-Scholes valuation model requires the use of the following assumptions: the expected dividend yield based on historical dividend payouts; the expected stock price volatility based on the historical volatility of Company stock for a period approximating the expected life of the options; the risk-free rate based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option; and the expected option life represented by the period of time the options are expected to be outstanding and is based on historical trends. No options were granted in 2012, 2011 or 2010.

Stock option activity for the year ended December 31, 2012, is summarized as follows:

(Dollars in thousands, except per share data)	Number of shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at beginning of year	2,364,926		$	13.99
Granted	0		0.00
Exercised	(302,824	)	12.95
Forfeited or expired	(70,727	)	14.66
Outstanding at end of year	1,991,375		$	14.13	3.9 years	$	2,673
Exercisable at end of year	1,991,375		$	14.13	3.9 years	$	2,673

The intrinsic value of stock options is defined as the difference between the current market value and the grant price. First Financial uses treasury shares purchased under the Company's share repurchase program to satisfy share-based exercises.

	2012		2011		2010
Total intrinsic value of options exercised	$	1,277	$	477	$	1,862
Cash received from exercises	$	320	$	150	$	272
Tax benefit from exercises	$	1,576	$	1,421	$	1,033

Restricted stock awards have historically been recorded as deferred compensation, a component of shareholders' equity, at the fair value of these awards at the grant date and amortized on a straight-line basis to salaries and benefits expense over the specified vesting periods, which is currently three years for employees and non-employee directors, but was four years prior to April 2010 for employees only. For awards granted to non-employee directors through 2010, the vesting of the awards only required a service period to be met.

Activity in restricted stock for the previous three years ended December 31 is summarized as follows:

	2012				2011				2010
	Number of shares		Weighted  Average Grant Date Fair Value		Number of shares		Weighted  Average Grant Date Fair Value		Number of shares		Weighted  Average Grant Date Fair Value
Nonvested at beginning of year	518,736		$	15.99	485,498		$	15.63	401,934		$	12.05
Granted	290,706		17.00		261,356		16.02		235,964		20.00
Vested	(228,233	)	15.58		(200,525	)	14.87		(120,073	)	12.97
Forfeited	(62,453	)	16.61		(27,593	)	18.10		(32,327	)	12.93
Nonvested at end of year	518,756		$	16.65	518,736		$	15.99	485,498		$	15.63

The fair value of restricted stock is determined based on the number of shares granted and the quoted price of First Financial's common stock. The total fair value of restricted stock vested during 2012 was $3.6 million.