-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IV2e0PA5G2tTedMlxgbnl3f7pu76Xe79yN5UnfVg2Ys9/wB0FSb5i8p3vvWSty1V 0RTx2VEmHl5i8vOmHCxM3Q== /in/edgar/work/0000950152-00-007761/0000950152-00-007761.txt : 20001114 0000950152-00-007761.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950152-00-007761 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FINANCIAL BANCORP /OH/ CENTRAL INDEX KEY: 0000708955 STANDARD INDUSTRIAL CLASSIFICATION: [6021 ] IRS NUMBER: 311042001 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12379 FILM NUMBER: 758907 BUSINESS ADDRESS: STREET 1: 300 HIGH ST CITY: HAMILTON STATE: OH ZIP: 45011 BUSINESS PHONE: 5138674700 MAIL ADDRESS: STREET 1: 300 HIGH ST CITY: HAMILTON STATE: OH ZIP: 45011 10-Q 1 l84893ae10-q.txt FIRST FINANCIAL BANCORP 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 ------------------------------ OR [ ] TRANSITION 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 (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 300 HIGH STREET, HAMILTON, OHIO 45011 ---------------------------------------- ------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (513) 867-4700 ----------------- 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 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 OCTOBER 31, 2000 -------------------------- ------------------------------- COMMON STOCK, NO PAR VALUE 46,274,791 2 FIRST FINANCIAL BANCORP. INDEX
PAGE NO. -------- PART I-FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS - SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 1 CONSOLIDATED STATEMENTS OF EARNINGS - NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 2 CONSOLIDATED STATEMENTS OF CASH FLOWS - NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 3 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS" EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 PART II-OTHER INFORMATION ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 15 SIGNATURES 16
3 PART I - FINANCIAL INFORMATION FIRST FINANCIAL BANCORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, dollars in thousands)
September 30, December 31, 2000 1999 ----------- ----------- ASSETS Cash and due from banks $ 168,196 $ 225,837 Interest-bearing deposits with other banks 15,490 8,867 Federal funds sold and securities purchased under agreements to resell 2,647 5,621 Investment securities held-to-maturity, at cost (market value - $28,966 at September 30, 2000 and $32,498 at December 31, 1999) 28,394 31,765 Investment securities available-for-sale, at market value 557,395 490,126 Loans Commercial 789,082 769,454 Real estate-construction 108,318 111,458 Real estate-mortgage 1,465,642 1,467,591 Installment 636,660 623,091 Credit card 21,674 22,408 Lease financing 47,202 46,508 ----------- ----------- Total loans 3,068,578 3,040,510 Less Unearned income 4,177 4,134 Allowance for loan losses 40,487 39,340 ----------- ----------- Net loans 3,023,914 2,997,036 Premises and equipment 58,805 59,004 Goodwill 29,242 30,077 Other intangibles 9,195 10,522 Deferred income taxes 6,553 8,008 Accrued interest and other assets 86,483 73,830 ----------- ----------- TOTAL ASSETS $ 3,986,314 $ 3,940,693 =========== =========== LIABILITIES Deposits Noninterest-bearing $ 412,792 $ 408,712 Interest-bearing 2,669,627 2,582,501 ----------- ----------- Total deposits 3,082,419 2,991,213 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 45,892 83,353 Federal Home Loan Bank borrowings 267,000 294,235 Other 2,892 4,530 ----------- ----------- Total short-term borrowings 315,784 382,118 Long-term borrowings 166,778 161,799 Accrued interest and other liabilities 35,302 33,024 ----------- ----------- TOTAL LIABILITIES 3,600,283 3,568,154 SHAREHOLDERS' EQUITY Common stock - no par value Authorized - 160,000,000 shares Issued - 46,925,351 in 2000 and 46,869,107 in 1999 374,327 373,447 Retained earnings 28,306 5,904 Accumulated comprehensive income (3,821) (6,398) Restricted stock awards (950) (414) Treasury stock, at cost, 650,110 in 2000 and 0 Shares in 1999 (11,831) 0 ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 386,031 372,539 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,986,314 $ 3,940,693 =========== ===========
See notes to consolidated financial statements. 1 4 FIRST FINANCIAL BANCORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (Dollars in thousands, except per share data)
Nine months ended Three months ended September 30, September 30, ----------------------------------- ---------------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ INTEREST INCOME Loans, including fees $ 207,432 $ 182,946 $ 70,989 $ 63,979 Investment securities Taxable 20,752 17,614 7,426 5,854 Tax-exempt 6,395 6,958 2,090 2,304 ------------ ------------ ------------ ------------ Total investment interest 27,147 24,572 9,516 8,158 Interest-bearing deposits with other banks 548 204 194 59 Federal funds sold and securities purchased under agreements to resell 170 294 57 78 ------------ ------------ ------------ ------------ TOTAL INTEREST INCOME 235,297 208,016 80,756 72,274 INTEREST EXPENSE Deposits 83,982 71,988 30,280 24,221 Short-term borrowings 16,805 8,413 5,786 4,395 Long-term borrowings 6,097 4,866 2,240 1,653 ------------ ------------ ------------ ------------ TOTAL INTEREST EXPENSE 106,884 85,267 38,306 30,269 ------------ ------------ ------------ ------------ NET INTEREST INCOME 128,413 122,749 42,450 42,005 Provision for loan losses 7,257 6,027 2,674 2,117 ------------ ------------ ------------ ------------ Net interest income after provision for loan losses 121,156 116,722 39,776 39,888 NONINTEREST INCOME Service charges on deposit accounts 13,866 12,027 4,912 4,275 Trust income 10,782 9,950 3,611 3,255 Investment securities gains 37 56 12 9 Other 7,880 8,547 3,028 2,954 ------------ ------------ ------------ ------------ Total noninterest income 32,565 30,580 11,563 10,493 NONINTEREST EXPENSES Salaries and employee benefits 48,600 45,714 15,455 15,554 Net occupancy expenses 5,547 5,323 1,871 1,806 Furniture and equipment expenses 4,791 4,703 1,620 1,575 Data processing expenses 5,434 4,842 1,651 1,567 Deposit insurance expense 386 418 124 125 State taxes 1,833 1,567 602 577 Amortization of intangibles 2,531 2,784 837 917 Merger and restructuring (353) 6,930 0 0 Other 19,749 19,487 6,583 6,793 ------------ ------------ ------------ ------------ Total noninterest expenses 88,518 91,768 28,743 28,914 ------------ ------------ ------------ ------------ Income before income taxes 65,203 55,534 22,596 21,467 Income tax expense 21,815 19,203 7,427 6,932 ------------ ------------ ------------ ------------ NET EARNINGS $ 43,388 $ 36,331 $ 15,169 $ 14,535 ============ ============ ============ ============ Net earnings per share-basic $ 0.93 $ 0.78 $ 0.33 $ 0.31 ============ ============ ============ ============ Net earnings per share-diluted $ 0.93 $ 0.77 $ 0.33 $ 0.31 ============ ============ ============ ============ Cash dividends declared per share $ 0.45 $ 0.41 $ 0.15 $ 0.14 ============ ============ ============ ============ Average basic shares outstanding 46,543,979 46,842,241 46,313,272 46,857,834 ============ ============ ============ ============ Average diluted shares outstanding 46,630,579 46,981,464 46,396,280 46,972,639 ============ ============ ============ ============
See notes to consolidated financial statements. 2 5 FIRST FINANCIAL BANCORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, dollars in thousands)
Nine months ended September 30, ----------------------------- 2000 1999 --------- --------- OPERATING ACTIVITIES Net earnings $ 43,388 $ 36,331 Adjustments to reconcile net earnings to net cash provided by operating activities Provision for loan losses 7,257 6,027 Provision for depreciation and amortization 7,384 6,930 Net amortization of investment security premiums and accretion of discounts (379) 166 Realized investment security gains (37) (56) Originations of mortgage loans held for sale (147,652) (171,273) Gains from sales of mortgage loans held for sale (754) (2,374) Proceeds from sale of mortgage loans held for sale 148,406 173,647 Deferred income taxes (157) 1,914 Increase in interest receivable (3,135) (4,106) Increase in cash surrender value of life insurance (5,927) (16,609) Decrease (increase) in prepaid expenses (1,213) 1,233 (Decrease) increase in accrued expenses (806) 1,363 Increase (decrease) in interest payable 2,975 (576) Other (3,383) (2,629) --------- --------- Net cash provided by operating activities 45,967 29,988 INVESTING ACTIVITIES Proceeds from sales of investment securities available-for-sale 0 14,482 Proceeds from calls, paydowns and maturities of investment securities available-for-sale 42,969 119,866 Purchases of investment securities available-for-sale (65,236) (114,679) Proceeds from calls, paydowns and maturities of investment securities held-to-maturity 6,707 6,110 Purchases of investment securities held-to-maturity (3,005) (906) Net decrease in interest-bearing deposits with other banks (6,623) (10,061) Net decrease in federal funds sold and securities purchased under agreements to resell 2,974 7,759 Net increase in loans and leases (78,036) (341,441) Recoveries from loans and leases previously charged off 1,775 3,050 Proceeds from disposal of other real estate owned 2,035 369 Purchases of premises and equipment (4,309) (5,345) --------- --------- Net cash used in investing activities (100,749) (320,796) FINANCING ACTIVITIES Net increase in total deposits 91,206 49,079 Net (decrease) increase in short-term borrowings (66,334) 231,764 Increase in long-term borrowings 4,979 31,568 Cash dividends declared (20,987) (18,540) Purchase of common stock (11,831) 0 Proceeds from exercise of stock options, net of shares purchased 108 693 --------- --------- Net cash provided by financing activities (2,859) 294,564 --------- --------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (57,641) 3,756 Cash and cash equivalents at beginning of period 225,837 164,500 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 168,196 $ 168,256 ========= =========
3 6 FIRST FINANCIAL BANCORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Unaudited) (Dollars in thousands)
Nine months ended September 30, -------------------------- 2000 1999 -------- -------- Supplemental disclosures Interest paid $103,910 $ 85,842 ======== ======== Income taxes paid $ 24,746 $ 16,955 ======== ======== Recognition of deferred tax liabilities attributable to FASB Statement No. 115 $ 1,612 $ 3,039 ======== ======== Acquisition of other real estate owned through foreclosure $ 1,389 $ 529 ======== ======== Issuance of restricted stock award $ 773 $ 146 ======== ======== Securitization of loans $ 40,737 $ 0 ======== ======== Non-cash transfer from securities available- for-sale to securities held-to-maturity $ 0 $ 4,020 ======== ========
See notes to consolidated financial statements. 4 7 FIRST FINANCIAL BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Dollars in Thousands)
Nine months ended September 30, ----------------------------- 2000 1999 --------- --------- Balances at January 1, as restated $ 372,539 $ 358,265 Net Earnings 43,388 36,331 Other comprehensive income, net of taxes: Changes in unrealized gains on securities, Available for sale 2,577 (8,936) --------- --------- Comprehensive income 45,965 27,395 Cash dividends declared (20,987) (18,540) Purchase of common stock (11,831) 0 Exercise of stock options, net of shares purchased 108 693 Amortization of restricted stock awards 237 127 --------- --------- Balance at September 30 $ 386,031 $ 367,940 ========= =========
See notes to consolidated financial statements. 5 8 FIRST FINANCIAL BANCORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (UNAUDITED) The consolidated financial statements for interim periods are unaudited; however, in the opinion of the management of First Financial Bancorp. ("Bancorp"), all 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 Bancorp, a financial holding company, include the accounts of Bancorp and its wholly-owned subsidiaries - First National Bank of Southwestern Ohio, Community First Bank & Trust, Indiana Lawrence Bank, Fidelity Federal Savings Bank, Citizens First State Bank, Union Bank & Trust Company, The Clyde Savings Bank Company, Peoples Bank and Trust Company, Bright National Bank, First Finance Mortgage Company of Southwestern Ohio (d.b.a. Community First Finance), Farmers State Bank, National Bank of Hastings, Vevay Deposit Bank, Sand Ridge Bank, Hebron Deposit Bank, First Financial Service Corporation, and Ohio City Insurance Agency. All significant intercompany transactions and accounts have been eliminated in consolidation. Intangible assets arising from the acquisition of subsidiaries are being amortized over varying periods, none of which exceeds 25 years. Core deposit balances are being amortized over varying periods, none of which exceeds 10 years. On July 21, 2000, Bancorp merged its wholly-owned subsidiary, Home Federal Bank, a Federal Savings Bank, Hamilton, Ohio, into another of its wholly-owned subsidiaries, First National Bank of Southwestern Ohio, Hamilton, Ohio, as an in-market consolidation. Savings are expected to be slightly accretive following the transition of thrift customers to bank customers. Bancorp received authorization from the Federal Reserve on March 13, 2000 to convert from a bank and savings and loan holding company to a financial holding company. Bancorp is now permitted to own and operate insurance agencies and certain other financial services firms under the provisions of the Gramm-Leach-Bliley Act enacted on November 12, 1999. On March 29, 2000, Bancorp signed a letter of intent to purchase the Ohio City Insurance Agency which was founded in 1997 with headquarters in Ohio City, Ohio. Bancorp completed the purchase of the Ohio City Insurance Agency on May 1, 2000. The financial impact of Ohio City Insurance Agency and the purchase price for the transaction are not material. The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with generally accepted accounting principles. NOTE 2: FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK In the normal course of business, Bancorp offers a variety of financial instruments with off-balance sheet risk to its customers to aid them in meeting their requirements for liquidity and credit enhancement and to reduce its own exposure to fluctuations in interest rates. These financial instruments include standby letters of credit and commitments outstanding to extend credit. Generally accepted accounting principles do not require these financial instruments to be recorded in the consolidated financial statements, and accordingly, they are not. Bancorp does not use off-balance sheet derivative financial instruments (such as interest rate swaps) as defined in the Financial Accounting Standards Board's (FASB) Statement No. 119 "Disclosure about 6 9 Derivative Financial Instruments and Fair Value of Financial Instruments". Bancorp's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for standby letters of credit and commitments outstanding to extend credit is represented by the contractual amounts of those instruments. Bancorp uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Following is a discussion of these transactions. Standby letters of credit are conditional commitments issued by Bancorp to guarantee the performance of a customer to a third party. Bancorp's portfolio of standby letters of credit consists primarily of performance assurances made on behalf of customers who have a contractual commitment to produce or deliver goods or services. The risk to Bancorp arises from its obligation to make payment in the event of the customers' contractual default. As of September 30, 2000, Bancorp had issued standby letters of credit aggregating $22,454,000 compared to $18,028,000 issued as of December 31, 1999. Management conducts regular reviews of these instruments on an individual customer basis, and the results are considered in assessing the adequacy of Bancorp's allowance for loan losses. Management does not anticipate any material losses as a result of these letters of credit. Loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the contract. 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. Bancorp evaluates each customer's creditworthiness on an individual basis. The amount of collateral obtained, if deemed necessary by Bancorp 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. Bancorp had commitments outstanding to extend credit totaling $496,297,000 at September 30, 2000 and $508,366,000 at December 31, 1999. Management does not anticipate any material losses as a result of these commitments. NOTE 3: COMPREHENSIVE INCOME Bancorp discloses comprehensive income in the "Consolidated Statements of Changes in Shareholders' Equity". Disclosure of the reclassification adjustments for the nine months ended September 30, 2000 and 1999 are shown in the table below.
Nine months ended September 30, ------------------------- 2000 1999 ------- -------- Other comprehensive income, net of tax: Unrealized holding gains (losses) arising during period $2,629 $(8,867) Less: reclassification adjustment for gains included in net income 52 69 ------ ------- Other comprehensive income (loss) $2,577 $(8,936) ====== =======
NOTE 4: MERGER AND RESTRUCTURING CHARGES In the second quarter of 1999, Bancorp recorded merger and restructuring charges of approximately $6.9 million before taxes or $5.5 million after taxes to coincide with its mergers with 7 10 Sand Ridge Financial Corporation (Sand Ridge) and Hebron Bancorp, Inc. (Hebron) and its plan for some operational consolidation, affiliate restructuring and the discontinuation of a product line. The components of these charges and the remaining unpaid amounts at December 31, 1999 and September 30, 2000 are shown in the following table. During the first nine months, based on current information, estimated liabilities associated with the merger and restructuring charges were reduced by $353,000. As of September 30, 2000, of the four facilities to be disposed of, two properties have been sold, Bancorp has decided to retain one property for use in another capacity, and one facility remains to be sold. Bancorp expects that the remaining balance in the liability account will be substantially utilized during 2000.
Charges Remaining Accrued Liability Liability Description of Charges in 1999 12/31/99 9/30/00 - ---------------------- ------- -------- ------- (Dollars in thousands) Merger costs $2,899 $ 219 $ 0 Disposals of property 1,574 115 95 Discontinued product line 1,100 167 104 Operations/affiliate restructuring 1,357 523 58 ------ ------ ---- Total $6,930 $1,024 $257 ====== ====== ====
NOTE 5: SUBSEQUENT EVENTS On October 24, 2000, Bancorp's Board of Directors authorized an additional stock repurchase program to repurchase up to five percent, or approximately 2.3 million, of the outstanding shares of First Financial Bancorp common stock in the open market or in privately negotiated transactions. The share purchase program is for general corporate purposes including future stock dividends. At valuation levels at the time of announcement, Bancorp believes stock repurchase provides an attractive investment opportunity in addition to managing its strong capital position. Stock repurchases at price levels at the time of announcement will be accretive to earnings per share and return on equity, thereby enhancing long-term shareholder value. 8 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FIRST FINANCIAL BANCORP. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA
2000 1999 -------------------------------------------- --------------------------- SEP. 30 JUN. 30 MAR. 31 DEC. 31 SEP. 30 ------- ------- ------- ------- ------- (DOLLARS IN THOUSANDS) NET EARNINGS $ 15,169 $ 14,349 $ 13,870 $ 13,992 $ 14,535 NET EARNINGS PER SHARE-BASIC 0.33 0.31 0.30 0.30 0.31 NET EARNINGS PER SHARE-DILUTED 0.33 0.31 0.30 0.30 0.31 NET EARNINGS PER SHARE-DILUTED-CASH BASIS (a) 0.34 0.32 0.31 0.31 0.32 AVERAGE CONSOLIDATED BALANCE SHEET ITEMS: LOANS LESS UNEARNED INCOME 3,087,025 3,087,245 3,066,552 3,022,313 2,933,882 INVESTMENT SECURITIES 587,117 569,683 536,148 531,709 549,441 OTHER EARNING ASSETS 15,358 19,624 13,304 13,958 12,787 ---------- ---------- ---------- ---------- ---------- TOTAL EARNING ASSETS 3,689,500 3,676,552 3,616,004 3,567,980 3,496,110 TOTAL ASSETS 3,980,154 3,965,393 3,904,639 3,865,437 3,757,969 DEPOSITS 3,032,342 3,037,649 2,990,226 2,985,289 2,892,952 SHAREHOLDERS' EQUITY 380,200 374,507 372,424 369,442 366,022 KEY RATIOS AVERAGE EQUITY TO AVERAGE TOTAL ASSETS 9.55% 9.44% 9.54% 9.56% 9.74% RETURN ON AVERAGE TOTAL ASSETS 1.52% 1.46% 1.43% 1.44% 1.53% RETURN ON AVERAGE EQUITY 15.87% 15.41% 14.98% 15.03% 15.75% NET INTEREST MARGIN (FULLY TAX EQUIVALENT) 4.71% 4.88% 4.88% 4.86% 4.92%
(a) EXCLUDING THE EFFECT OF AMORTIZATION OF GOODWILL AND CORE DEPOSITS, TAX EFFECTED WHEN APPLICABLE. THE CASH BASIS CALCULATIONS WERE SPECIFICALLY FORMULATED BY BANCORP AND MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES. NET INTEREST INCOME Net interest income, the principal source of earnings, is the amount by which interest and fees generated by earning assets exceed the interest costs of liabilities obtained to fund them. For analytical purposes, interest income presented in the table below has been adjusted to a tax equivalent basis assuming a 35% marginal tax rate for interest earned on tax-exempt assets such as municipal loans, tax-free leases and investments. This is to recognize the income tax savings which facilitates a comparison between taxable and tax-exempt assets. Year-to-date net interest income on a fully tax equivalent basis increased 4.25%, while the third quarter 2000 increased 0.76% over the same quarter in 1999. The principal reason for these increases was an increase in earning assets, the effects of which were somewhat offset by a decrease in the net interest margin. From a linked quarter basis (third quarter 2000 compared to second quarter 2000) net interest income on a fully tax equivalent basis decreased $948,000 or 2.13%. Factors contributing to the decrease from the preceding quarter included funding cost. The increased funding cost was a result of pressure prevalent throughout the financial services industry due in part to the interest rate environment and to one additional day of interest expense in the third quarter compared to the second quarter. Additionally, higher loan fees were received in the second quarter than in the third quarter.
QUARTER ENDED 2000 1999 ----------------------------- ------------------ SEP. 30 JUN. 30 MAR. 31 DEC. 31 SEP. 30 ------- ------- ------- ------- ------- (DOLLARS IN THOUSANDS) INTEREST INCOME $80,756 $78,774 $75,767 $74,382 $72,274 INTEREST EXPENSE 38,306 35,406 33,172 31,927 30,269 ------- ------- ------- ------- ------- NET INTEREST INCOME 42,450 43,368 42,595 42,455 42,005 TAX EQUIVALENT ADJUSTMENT TO INTEREST INCOME 1,205 1,235 1,246 1,278 1,318 ------- ------- ------- ------- ------- NET INTEREST INCOME (FULLY TAX EQUIVALENT) $43,655 $44,603 $43,841 $43,733 $43,323 ======= ======= ======= ======= =======
9 12 RATE/VOLUME ANALYSIS The impact of changes in volume and interest rates on net interest income is illustrated in the table below. As shown, an increase in volume had a significant impact on both interest income and interest expense for the nine months ended September 30, 2000 in comparison to 1999. The increase in volume had more impact on interest income than interest expense. However, the recent increase in rates affected interest expense more than interest income, giving a negative effect to net interest income. The change in interest due to the combined effect of both rate and volume has been allocated to the volume and rate variance on a prorated basis.
NINE MONTHS THREE MONTHS ENDED CHANGE DUE TO: ENDED CHANGE DUE TO: SEP. 30, 2000 ------------------- SEP. 30, 2000 ----------------- OVER 1999 RATE VOLUME OVER 1999 RATE VOLUME ------------- -------- -------- ------------- -------- ------- (DOLLARS IN THOUSANDS) INTEREST INCOME $ 27,281 $ 9,012 $ 18,269 $ 8,482 $ 4,370 $ 4,112 INTEREST EXPENSE 21,617 12,824 8,793 8,037 6,176 1,861 ---------- --------- --------- --------- --------- -------- NET INTEREST INCOME $ 5,664 $ (3,812) $ 9,476 $ 445 $ (1,806) $ 2,251 ========== ========= ========= ========= ========= ========
OPERATING RESULTS Net operating income represents net earnings before net securities transactions. Net operating income for the first nine months of 2000 was $43,336,000 which was an increase of $7,074,000 or 19.5% over that reported in the same period in 1999. The 2000 net operating income included a non-recurring expense of $700,000 related to the in-market consolidation of two of Bancorp's affiliates (Home Federal Bank, a Federal Savings Bank, into First National Bank of Southwestern Ohio). The 1999 net operating income included merger and restructuring charges of $6,930,000 as discussed in Note 4. Net operating income, excluding the non-recurring expense in 2000 and the merger and restructuring charges in 1999, increased $2,081,000 or 4.99% over 1999. The increase in net operating income, excluding the non-recurring items, can be primarily attributed to an increase in net interest income of $5,663,000 or 4.61% for the first nine months of 2000 compared to the same period in 1999. The increase in net interest income was driven by loan growth. The provision for loan losses increased 20.4% over 1999 while the allowance for loan losses ratio increased to 1.32% from 1.30%. Noninterest income excluding securities transactions for the first nine months of 2000 increased $2,004,000 or 6.57% over the comparable period in 1999. Continued strong growth in service charges on deposit accounts was offset by a decrease in gain on loan sales. Gains on loan sales recorded in other noninterest income were down $1,630,000 from the prior year due to the interest rate environment. The increase in trust fees was less than has been the trend due to lower market values on several large holdings. Noninterest expense, excluding the Home Federal related accrual in 2000 and the merger and restructuring charge in 1999, increased $2,979,000 or approximately 4.00% primarily as a result of increased salary and benefit expenses. The $700,000 accrual in 2000 for the Home Federal consolidation relates primarily to severance and therefore, was recorded in salary and benefits expenses. Net operating income for the third quarter of 2000 increased $654,000 or 4.51% over the same three month period in 1999. The increase for the quarter was due to increased net interest income and increases in all major noninterest income categories coupled with a slight decrease in noninterest expense. The favorable variances were partially offset by an increase in the provision for loan losses. 10 13 INCOME TAXES For the first nine months of 2000, income tax expense was $21,815,000 compared to $19,203,000 for the same period in 1999, or an increase of $2,612,000. In 2000, $21,830,000 of the tax expense was related to operating income with a tax benefit of $15,000 related to securities transactions. In the first nine months of 1999, income tax expense related to operating income was $19,216,000, with a tax benefit related to securities transactions of $13,000. The higher effective tax rate in 1999 was primarily attributable to merger expenses not being an allowed taxable deduction. Income tax expense for the third quarter of 2000 was $7,427,000 compared to $6,932,000 for the same period in 1999, which was an increase of $495,000. Tax expense relating to operating income totaled $7,423,000 and $6,951,000 for the quarters ended September 30, 2000 and 1999, respectively, with a tax expense related to securities transactions of $4,000 in 2000 and a tax benefit of $19,000 in 1999. NET EARNINGS Net earnings for the first nine months of 2000 were $43,388,000 or 19.4% greater than that recorded during the same period in 1999. Net earnings excluding the 2000 Home Federal accrual for its merger with First Southwestern and the 1999 merger and restructuring charges were $2,079,000 or 4.98% greater than the prior year for reasons discussed in the Operating Results section. Net securities gains through September 30, 2000 were $52,000 compared to $69,000 for the period ending September 30, 1999. Net earnings for the three months ended September 30, 2000 were $15,169,000 or 4.36% greater than the same period in 1999. Net securities gains for the third quarter of 2000 and 1999 were $8,000 and $28,000, respectively. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is maintained at a level believed adequate by management to absorb estimated probable credit losses. Management's periodic evaluation of the adequacy of the allowance is based on Bancorp's past loan 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, current economic conditions, and other relevant factors. This evaluation is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. At September 30, 2000 and 1999, the recorded investment in loans that are considered to be impaired under FASB Statement No. 114 was $6,547,000 and $1,761,000, respectively, all of which were on a nonaccrual basis. The related allowance for loan losses on these impaired loans was $3,222,000 at September 30, 2000 and $492,000 at September 30, 1999. At September 30, 2000 and 1999, there were $35,000 and $31,000, respectively, that as a result of write-downs, did not have an allowance for loan losses. The average recorded investment in impaired loans for the respective nine months and quarters ended September 30, 2000 and 1999, was approximately $5,228,000 and $6,709,000 for 2000 and $3,299,000 and $2,479,000 in 1999. For the nine months and quarter ended September 30, 2000, Bancorp recognized interest income on those impaired loans of $58,000 and $20,000 compared to $40,000 and $8,000 for the same periods in 1999. Bancorp recognizes income on impaired loans using the cash basis method. The table on the following page indicates the activity in the allowance for loan losses for the quarters presented. 11 14
QUARTER ENDED 1999 1999 --------------------------------------- ----------------------- SEP. 30 JUN. 30 MAR. 31 DEC. 31 SEP. 30 ------- ------- -------- ------- ------- (DOLLARS IN THOUSANDS) BALANCE AT BEGINNING OF PERIOD $ 40,238 $ 40,192 $ 39,340 $ 38,729 $ 37,505 PROVISION FOR LOAN LOSSES 2,674 2,222 2,361 3,205 2,117 LOANS CHARGED OFF (2,993) (2,803) (2,089) (3,113) (1,869) RECOVERIES 568 627 580 519 976 -------- -------- -------- -------- -------- NET CHARGE OFFS (2,425) (2,176) (1,509) (2,594) (893) -------- -------- -------- -------- -------- BALANCE AT END OF PERIOD $ 40,487 $ 40,238 $ 40,192 $ 39,340 $ 38,729 ======== ======== ======== ======== ======== RATIOS: ALLOWANCE TO PERIOD END LOANS, NET OF UNEARNED INCOME 1.32% 1.30% 1.31% 1.30% 1.30% RECOVERIES TO CHARGE OFFS 18.98% 22.37% 27.76% 16.67% 52.22% ALLOWANCE AS A MULTIPLE OF NET CHARGE OFFS 16.70X 18.49X 26.63X 15.17X 43.37X
NONPERFORMING/UNDERPERFORMING ASSETS The table below shows the categories which are included in nonperforming and underperforming assets. Nonperforming assets have increased $5,982,000 in the third quarter of 2000 when compared to the third quarter of 1999. The trend in nonperforming assets as a percent of loans has remained relatively stable, while increasing slightly over the last several quarters. In the third quarter of 2000 when compared to the third quarter of 1999, restructured loans have decreased $633,000 primarily due to one unsecured commercial loan that was moved to nonaccrual status the first quarter of 2000. Nonaccrual loans have increased $6,050,000, which is composed primarily of commercial, multi-family and 1-4 family residential investment properties. Other real estate owned increased $565,000 in the third quarter of 2000 compared to the third quarter of 1999, primarily from foreclosures on commercial, multi-family and 1-4 family residential mortgage loans. Accruing loans past due 90 days or more increased $1,775,000. This increase was comprised of some 12 loans of which approximately 65% were secured by residential mortgages. Accruing loans, including loans impaired under FASB Statement No. 114, which are past due 90 days or more where there is not a likelihood of becoming current are transferred to nonaccrual loans. However, those loans which management feels will become current and therefore accruing are classified as "Accruing loans 90 days or more past due" until they become current.
QUARTER ENDED 2000 1999 ------------------------------- ------------------- SEP. 30 JUN. 30 MAR. 31 DEC. 31 SEP. 30 ------- ------- ------- ------- ------- (DOLLARS IN THOUSANDS) NONACCRUAL LOANS $16,480 $15,586 $15,019 $11,283 $10,430 RESTRUCTURED LOANS 721 676 637 2,244 1,354 OREO/ISF* 919 1,345 1,551 1,707 354 ------- ------- ------- ------- ------- TOTAL NONPERFORMING ASSETS 18,120 17,607 17,207 15,234 12,138 ACCRUING LOANS PAST DUE 90 DAYS OR MORE 5,093 2,875 2,252 2,777 3,318 ------- ------- ------- ------- ------- TOTAL UNDERPERFORMING ASSETS $23,213 $20,482 $19,459 $18,011 $15,456 ======= ======= ======= ======= ======= NONPERFORMING ASSETS AS A PERCENT OF LOANS, NET OF UNEARNED INCOME PLUS OREO/ISF 0.59% 0.57% 0.56% 0.50% 0.41% ======= ======= ======= ======= ======= UNDERPERFORMING ASSETS AS A PERCENT OF LOANS, NET OF UNEARNED INCOME PLUS OREO/ISF 0.76% 0.66% 0.64% 0.59% 0.52% ======= ======= ======= ======= =======
*OTHER REAL ESTATE OWNED/IN-SUBSTANCE FORECLOSURE 12 15 LIQUIDITY AND CAPITAL RESOURCES Liquidity management is the process by which Bancorp provides for the continuing flow of funds necessary to meet its financial commitments on a timely basis. These commitments include withdrawals by depositors, funding credit commitments to borrowers, shareholder dividends, paying expenses of operations, and funding capital expenditures. Liquidity is derived primarily from deposit growth, maturing loans, the maturity of investment securities, access to other funding sources and markets, and a strong capital position. The most stable source of liability-funded liquidity for both the long-term and short-term is deposit growth and retention in the core deposit base. At the end of the third quarter of 2000 Bancorp's deposit liabilities had increased by 3.04% from December 31, 1999. Another source of funding is through short-term borrowings. Bancorp's short-term borrowings decreased to $315,784,000 at September 30, 2000, compared to $382,118,000 at December 31, 1999. The principal source of asset-funded liquidity is marketable investment securities, particularly those of shorter maturities. At September 30, 2000, securities maturing in one year or less amounted to $32,856,000, representing 5.61% of the total of the investment securities portfolio. 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 and interest-bearing deposits with other banks maturing within one year, are sources of liquidity. Total asset-funded sources of liquidity at September 30, 2000, amounted to $710,894,000, representing 17.8% of total assets. Sources of long-term asset funded liquidity are derived from the maturity of investment securities and maturing loans in excess of one year. At September 30, 2000, Bancorp had classified $557,395,000 in investment securities available-for-sale. Management examines Bancorp's liquidity needs in establishing this classification in accordance with the Financial Accounting Standards Board Statement No. 115 on accounting for certain investments in debt and equity securities. Liquidity is very important and as such is both monitored and managed closely by the asset/liability committee at each affiliate. Liquidity may be used to fund capital expenditures. Capital expenditures were $4,309,000 for the first nine months of 2000. In addition, remodeling is a planned and ongoing process given the 112 offices of Bancorp and its subsidiaries. Material commitments for capital expenditures as of September 30, 2000 were approximately $2,926,000. Management believes that Bancorp has sufficient liquidity to fund its current commitments. CAPITAL ADEQUACY The Federal Reserve established risk-based capital requirements for U.S. banking organizations which have been adopted by the Office of Thrift Supervision for savings and loan associations. Risk weights are assigned to on-and off-balance sheet items in arriving at risk-adjusted total assets. Regulatory capital is divided by risk-adjusted total assets, with the resulting ratios compared to minimum standards to determine whether a bank has adequate capital. Regulatory guidelines require a 4.00% Tier 1 capital ratio and an 8.00% Total risk-based capital ratio. A minimum 3.00% Leverage ratio is required for bank holding companies that either are rated composite "1" under the BOPEC rating system or have implemented the Board's risk-based capital market risk measure. The minimum leverage ratio for all other bank holding companies is 4.0%. Tier 1 capital consists primarily of common shareholders' equity, net of intangibles, and 13 16 Total risked-based capital is Tier 1 capital plus Tier 2 supplementary capital, which is primarily the allowance for loan losses subject to certain limits. The Leverage ratio is a result of Tier 1 capital divided by average total assets less certain intangibles. Bancorp's Tier I ratio at September 30, 2000, was 12.1%, its Total risked-based capital was 13.4% and its Leverage ratio was 8.98%. While Bancorp subsidiaries' ratios are well above regulatory requirements, management will continue to monitor the asset mix which affects these ratios due to the risk weights assigned various assets, and the allowance for loan losses, which influences the Total risk-based capital ratio. The table below illustrates the risk-based capital calculations and ratios for the last five quarters.
QUARTER ENDED 2000 1999 ------------------------------------ ---------------------- SEP. 30 JUN. 30 MAR. 31 DEC. 31 SEP. 30 ---------- ---------- ---------- ---------- --------- TIER I CAPITAL: (DOLLARS IN THOUSANDS) SHAREHOLDER'S EQUITY $ 386,031 $ 377,459 $ 373,186 $ 372,539 $ 367,940 LESS: INTANGIBLE ASSETS 35,675 36,256 36,854 37,610 38,364 LESS: UNREALIZED NET SECURITIES LOSSES (3,821) (6,870) (7,165) (6,398) (3,987) ----------- ---------- ---------- ---------- ---------- TOTAL TIER I CAPITAL $ 354,177 $ 348,073 $ 343,497 $ 341,327 $ 333,563 ========== ========== ========== ========== ========== TOTAL RISK-BASED CAPITAL: TIER I CAPITAL $ 354,177 $ 348,073 $ 343,497 $ 341,327 $ 333,563 QUALIFYING ALLOWANCE FOR LOAN LOSSES 36,578 36,826 36,295 35,636 35,280 ---------- ---------- ---------- --------- ---------- TOTAL RISK-BASED CAPITAL $ 390,755 $ 384,899 $ 379,792 $ 376,963 $ 368,843 ========== ========== ========== ========== ========== RISK WEIGHTED ASSETS $2,922,338 $2,942,675 $2,899,705 $2,847,221 $2,818,936 ========== ========== ========== ========== ========== RISK-BASED RATIOS: TIER I 12.12% 11.83% 11.85% 11.99% 11.83% ========== ========== ========== ========== ========== TOTAL RISK-BASED CAPITAL 13.37% 13.08% 13.10% 13.24% 13.08% ========== ========== ========== ========== ========== LEVERAGE 8.98% 8.86% 8.88% 8.92% 9.04% ========== ========== ========== ========== ==========
FORWARD-LOOKING INFORMATION The Form 10-Q should be read in conjunction with the consolidated financial statements, notes and table included elsewhere in the report and in the First Financial Bancorp. Annual Report on Form 10-K for the year ended December 31, 1999. Management's analysis may contain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties which may cause actual results to differ materially. For a discussion of certain factors that may cause such forward-looking statements to differ materially from actual results, refer to the 1999 Form 10-K. ACCOUNTING AND REGULATORY MATTERS Management is not aware of any other events or regulatory recommendations which, if implemented, are likely to have a material effect on Bancorp's liquidity, capital resources, or operations. 14 17 PART II-OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 Agreement between Stanley N. Pontius and First Financial Bancorp. dated August 4, 2000. 10.2 Agreement between Michael R. O'Dell and First Financial Bancorp. dated August 4, 2000. 10.3 Agreement between Mark W. Immelt and First Financial Bancorp. dated August 4, 2000. 10.4 Agreement between Michael T. Riley and First Financial Bancorp. dated August 4, 2000. 10.5 Agreement between Brian D. Moriarty and First Financial Bancorp. dated August 4, 2000. 27 Financial Data Schedule (b) Reports on Form 8-K During the quarter ended September 30, 2000, the registrant did not file any reports on Form 8-K. 15 18 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/ Michael R. O'Dell /s/ C. Douglas Lefferson - ------------------------------- ------------------------ Michael R. O'Dell, Senior Vice C. Douglas Lefferson President, Chief Financial Comptroller Officer and Secretary (Principal Accounting Officer) Date November 8, 2000 Date November 8, 2000 -------------------------- --------------------- 16 EX-10.1 2 l84893aex10-1.txt EXHIBIT 10.1 1 EXHIBIT 10.1 CONFIDENTIAL - ------------ August 4, 2000 Stanley N. Pontius President & CEO First Financial Bancorp 300 High Street P.O. Box 476 Hamilton, OH 45012 Dear Stan: You are employed by First Financial Bancorp ("FFBC") in a key executive position. Continuity of the management of FFBC and its affiliate banks is a critical factor in the continued success of FFBC. The Board of Directors of FFBC believes it is in the best interest of FFBC to encourage the continued effort and dedication of key members of management to their assigned duties. In consideration of the mutual promises contained in this letter, FFBC shall provide to you, and you shall receive from FFBC, the benefits set forth in this letter ("Agreement"), if your employment with FFBC is terminated during the term of this Agreement. 1. Purpose. This Agreement establishes certain basic terms and conditions relating to your employment with FFBC, and special arrangements and dispute resolution proceedings relating to the termination of your employment for any reason other than: (i) your retirement; (ii) your becoming totally and permanently disabled under the FFBC long-term disability plan or policy; or (iii) your death. This Agreement supersedes all prior agreements with FFBC and any of its affiliate banks or any predecessor businesses, except the Confidentiality Agreement concurrently entered, or previously entered, between you and FFBC, and the special severance benefits provided under this Agreement are to be provided instead of any other severance arrangements offered by FFBC or its affiliate banks. Notwithstanding the foregoing, neither your termination of employment nor anything contained in this Agreement shall have any adverse effect upon your rights under any tax-qualified "pension benefit plan," as such term is defined 2 Stanley N. Pontius August 4, 2000 Page 2 in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or under any "welfare benefit plan" as defined in ERISA, including by way of illustration and not limitation, any medical surgical or hospitalization benefit coverage or long-term disability benefit coverage; or under any non-qualified deferred compensation arrangement, including by way of illustration and not limitation, any stock incentive plan or non-qualified pension plan; or under the FFBC Performance Incentive Plan for any completed plan year. 2. Employment. FFBC agrees that, during the term of this Agreement, you will be employed with FFBC, in your present position or in a position that is comparable to your present position in compensation, responsibility and stature and for which you are suited by education and background and that: (a) you are, and will continue to be, eligible to participate in any employee benefit plan of FFBC in accordance with its terms; and (b) you will be entitled to the same treatment under any generally applicable employment policy or practice as any other member of Executive Management Group whose position in the organization is comparable to yours. Those plans, policies and practices that generally apply to other members of the Executive Management Group will be referred to in this Agreement as your "Employment Benefits." Your Employment Benefits may be modified from time to time after the date hereof without violation of this Agreement if the changes apply generally to other members of the Executive Management Group. 3. Term of Agreement. This Agreement shall become effective on the date of this Agreement ("Commencement Date") and shall continue in effect through the earlier of (i) the fifth anniversary of the Commencement Date; (ii) the date of your retirement, death or total and permanent disability; or (iii) the completion of full payment of all benefits promised hereunder. Absent your death, total and permanent disability or retirement, this Agreement shall be renewed annually from and after the fifth anniversary of the Commencement Date unless written notice to the contrary is given by you or by FFBC at least six (6) months prior to the expiration of the term, including any extension thereof. 4. Termination of Employment. Your employment may be terminated in accordance with any of the following paragraphs, but only upon one (1) month's advance written notice (which period shall be referred to in this Agreement as the "Notice Period"): 3 Stanley N. Pontius August 4, 2000 Page 3 (a) Involuntary Termination. FFBC may terminate your employment without cause. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice Period. The expiration of the Notice Period shall be your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the release and covenant not to sue described in Section 5. (b) Involuntary Termination for Cause. FFBC may terminate your employment for "Cause" with written notice setting forth the Cause for termination. "Cause" means a willful engaging in gross misconduct materially and demonstrably injurious to FFBC. "Willful" means an act or omission in bad faith and without reasonable belief that such act or omission was in, or not opposed to, the best interests of FFBC. The expiration of the Notice Period is your "Date of Termination for Cause." Upon your Date of Termination for Cause, you shall only be entitled to those benefits provided under Section 6. (c) Voluntary Termination. You may voluntarily terminate your employment. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice period provided you satisfactorily perform your duties during the Notice Period unless relieved of those duties by FFBC. The expiration of the Notice Period is your "Voluntary Date of Termination." Upon your Voluntary Date of Termination, you shall only be entitled to those benefits provided under Section 6. (d) Voluntary Termination for Good Reason. You may terminate your employment by notice setting forth a Good Reason for termination if the notice is delivered to FFBC within thirty (30) days following the occurrence of any "Good Reason." "Good Reason" means a (i) change in the duties of your position, or the transfer to a new position, which is not comparable to your present position in compensation, responsibility or status in violation of Section 2; (ii) substantial alteration in the nature or status of your responsibilities in violation of Section 2; (iii) reduction in your base salary; (iv) refusal by FFBC, or its successor, to renew the term of this Agreement for any reason, prior to your reaching your normal retirement date under the FFBC Pension Benefit Plan; or (v) changes in your Employment Benefits in violation of Section 2. If you give notice of termination for Good Reason, you shall continue to receive your full base salary and Employment Benefits during the Notice Period as in effect prior to the event that is the Good Reason for termination, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2. The expiration of the Notice Period is your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the written release and covenant not to sue described in Section 5. 4 Stanley N. Pontius August 4, 2000 Page 4 5. Special Severance Benefits. If your employment with FFBC is involuntarily terminated in accordance with Section 4(a) or you voluntarily terminate your employment for Good Reason in accordance with Section 4(d) and you provide FFBC with a separate, written release and covenant not to sue (on a form provided by and satisfactory to FFBC) which releases FFBC from all claims arising from your employment and termination of your employment, and you do not revoke this release and covenant not to sue, then you shall receive the following benefits, less any applicable withholding required for federal, state or local taxes: (a) your base salary shall be continued in effect for a period of thirty-six (36) months from your Date of Termination (hereinafter called your "Severance Pay Period"); (b) if, prior to your Date of Termination, you have participated in the FFBC Performance Incentive Plan for a complete calendar year, you will receive an incentive compensation payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to 3.0 times the percentage of the incentive payment made or required to be made for the calendar year pursuant to the Performance Incentive Plan immediately preceding the calendar year in which your Date of Termination occurs; (c) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to the total of the following: (i) With respect to any shares of Stock subject to an Option granted to you as of the time of the Change in Control under the First Financial Bancorp 1991 Stock Incentive Plan (the "Incentive Plan") that you cannot exercise as a result of your termination of employment, the difference between the fair market value of such Stock, determined as of your Date of Termination, and the Option Price. (ii) With respect to any Restricted Stock granted to you under the Incentive Plan as of the time of the Change in Control which you forfeit as a result of your termination of employment, the fair market value of such Restricted Stock, determined as of your Date of Termination and as if all restrictions had been removed. (iii) For purposes of this Section 5, "Stock," "Options," "Option Price," "Restricted Stock" and "Committee" will have the meaning given those terms in the Incentive Plan, and your right to exercise Options or to receive Restricted Stock without forfeiture will be determined after any adjustments made by the Committee under Sections 8.8 and 11.1 of the Incentive Plan, and after any amendments made to the Incentive Plan in connection with the Change in Control. 5 Stanley N. Pontius August 4, 2000 Page 5 (iv) For purposes of this Section 5, "Change in Control" will have the following meaning: (a) a plan has been approved by the shareholders of FFBC and consummated for FFBC to be merged or consolidated with another corporation and as a result of such merger or consolidation less than 75% of the outstanding voting securities of the surviving or resulting corporation will be owned in the aggregate by the former shareholders of FFBC as the same shall have existed immediately prior to such merger or consolidation; (b) an agreement for the sale by FFBC of substantially all of its assets to another corporation which is not a wholly owned subsidiary has been approved by the shareholders (or the Board of Directors or appropriate officers if shareholder approval is not required) and consummated; (c) "beneficial ownership" as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") of twenty percent (20%) or more of the total voting capital stock of FFBC then issued and outstanding has been acquired by any person or "group" as defined in Section 13(d)(3) of the Exchange Act; or (d) individuals who were members of the Board of FFBC immediately prior to a meeting of the shareholders of FFBC involving a contest for the election of directors do not constitute a majority of the Board immediately following such election, unless the election of such new directors was recommended to the shareholders by the management of FFBC. The Board of FFBC has final authority to determine the exact date on which a Change in Control has occurred under the foregoing definitions. (d) your Employment Benefits shall be continued during your Severance Pay Period, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2; provided, however, that you shall not: (i) accumulate vacation pay for periods after your Date of Termination; (ii) first qualify for long-term disability benefits or sickness and accident plan benefits by reason of an illness, accident or disability occurring, or a sickness or illness first manifesting itself, after your Date of Termination; (iii) be eligible to continue to make contributions to any Internal Revenue Code Section 401(k) plan maintained by FFBC or qualify for a share of any employer contribution made to any tax-qualified defined contribution plan; (iv) be eligible to accumulate service for pension plan purposes; or (v) retain possession of any motor vehicle provided to you by FFBC. (e) you shall qualify for full COBRA health benefit continuation coverage upon the expiration of your Severance Pay Period; 6 Stanley N. Pontius August 4, 2000 Page 6 (f) you shall be entitled to full executive outplacement assistance with an agency selected by FFBC with the fee paid by FFBC in an amount not to exceed five percent (5%) of your annual base salary; (g) with respect to the Endorsement Method Split Dollar Plan Agreement (the "Split Dollar Agreement") to which you are a party (and solely for purposes of the Split Dollar Agreement), the duration of your Severance Pay Period shall be considered as if it were active employment for purposes of determining whether you were eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan, as provided in Section VI(B) of the Split Dollar Agreement; and (h) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment (the "Split Dollar Payment") within ninety (90) days of your Date of Termination in one lump-sum equal to the present value of the death benefit you would have received under the Split Dollar Agreement, determined as if you had terminated on your Date of Termination, were then eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan (whether or not this is actually the case), and died at age 75 when the Split Dollar Agreement was still in effect. For purposes of this Section 5, present value will be determined using an annual discount rate of 7%. Notwithstanding the prior two sentences, if you elect to receive an assignment of the policy under Section X of the Split Dollar Agreement, the Split Dollar Payment shall be applied to the cash payment to FFBC required under Section X of the Split Dollar Agreement, and any portion of the Split Dollar Payment in excess of the amount required under Section X shall be paid to you. The provisions of this Paragraph (g) will apply whether or not your Split Dollar Agreement is terminated before you receive the Split Dollar Payment. (i) Notwithstanding any other provision of this Agreement, if the receipt of any payment under Section 5 of this Agreement in combination with any other payments to you from FFBC or its affiliates that are parachute payments (as defined in Section 280G of the Internal Revenue Code), shall, in the opinion of independent tax counsel of recognized standing selected by FFBC, cause you to be liable for the payment of any excise tax pursuant to Section 280G and Section 4999 of the Internal Revenue Code, then FFBC will pay to you an additional amount equal to the amount of such excise tax and the additional federal, state, and local income taxes for which you will be liable as a result of this additional payment. Such payment will be made within 60 days of the date your employment terminates. The release and covenant not to sue which you agree to provide prior to the receipt of special severance benefits under this Section 5 of this Agreement shall comply with the requirements of the Older Workers Benefit Protection Act and applicable state and 7 Stanley N. Pontius August 4, 2000 Page 7 federal laws and regulations. If you do not provide FFBC with such a written release and covenant not to sue, any claims concerning this Agreement or otherwise arising from your employment with FFBC, or its affiliate banks, shall be subject to final and binding arbitration as described in Section 7. 6. Benefits Upon Voluntary Termination or Termination for Cause. Upon your Date of Termination for Cause in accordance with Section 4(b) or your Voluntary Date of Termination in accordance with Section 4(c), all special severance benefits under this Agreement will be void. In such an event, you shall be eligible for any benefits provided in accordance with the plans and practices of FFBC that are applicable to employees generally. 7. Arbitration. Any dispute under this Agreement, and any claims of wrongful or discriminatory termination based on any state or federal statute, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination, shall be submitted to final and binding arbitration, subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective June 1, 1997, as amended from time to time, except as hereinafter provided: (a) FFBC shall pay the arbitrator's fee and a court reporter's attendance fee; (b) Each party shall bear the cost of its own attorney's fees. However, if you prevail in a challenge to FFBC's determination as to cause for your termination or if you prevail on any claim that you were discriminated against in violation of any federal law or statute, you shall be reimbursed by FFBC for the filing fee and any reasonable costs or expenses incurred in such a challenge, including reasonable attorney's fees; (c) The arbitration hearing shall be held in Hamilton, Ohio, unless the parties mutually agree to another location; (d) Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to two (2) pre-hearing depositions of two (2) hours each, unless the arbitrator orders additional discovery; (e) The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association as in effect from time to time, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its Roster and the parties shall select the arbitrator by alternately striking names with 8 Stanley N. Pontius August 4, 2000 Page 8 the party requesting arbitration first striking; and (f) Either party shall be entitled to an injunction or other appropriate equitable relief to enforce the arbitration provisions of this Agreement and FFBC shall be entitled to an injunction to prevent any breach, pending arbitration, of the Confidentiality Agreement described below in paragraph 8 or the Covenant Not to Compete described below in paragraph 10. It is the intention of the parties to avoid litigation in any court of all claims concerning this Agreement, or otherwise arising from your employment with FFBC and that all such claims will be subject to this arbitration agreement. Neither party shall commence or pursue any litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate and the arbitration award are enforceable under and subject to the Federal Arbitration Act, 9 U.S.C. Section I, et seq. ("FAA"). If the FAA is held not to apply for any reason and the law of the state in which you are employed recognizes the enforceability of this Agreement and the arbitration award, then this Agreement and the arbitration award are enforceable under the laws of the state in which you are employed. Both parties consent that judgment upon the arbitration award may be entered in any federal or state court that has jurisdiction. The acceptance of any benefit under this Agreement shall be deemed ratification of this agreement to arbitrate claims. In the event you breach this Agreement by filing a lawsuit, at the time your lawsuit is filed, you will return any Special Severance Benefits paid to you and be subject to injunctive relief enforcing this Agreement. 8. Confidentiality. You will not disclose to any person or use for the benefit of yourself or any other person any confidential or proprietary information of FFBC without the prior written consent of the Senior Vice President, Human Resources of FFBC. Upon your termination of employment, you will return to FFBC all written or electronically stored memoranda, notes, plans, customer lists, records, reports or other documents of any kind or description (including all copies in any form whatsoever) relating to the business of FFBC and fully comply with any separate confidentiality agreement to which you and FFBC are parties. 9. Conflicts of Interest. You agree for so long as you are employed by FFBC to avoid dealings and situations that would create the potential for a conflict of interest with FFBC. In this regard, you agree to comply with the FFBC policy regarding conflicts of interest and all applicable state or federal regulations concerning conflicts of interest applicable to commercial bank or savings bank officers. 9 Stanley N. Pontius August 4, 2000 Page 9 10. Covenant Not to Compete. During the term of your employment, and for a period of six (6) months following the termination of your employment for any reason other than as set forth in Section 4(b), you agree not to be employed by, serve as officer or director of, consultant to or advisor to any business that engages either directly or indirectly in commercial banking, savings banking or mortgage lending in the geographic area of Ohio, Indiana, Michigan or Kentucky or which is reasonably likely to engage in such businesses in the same geographic area during the six (6) month period following your termination of employment. 11. Notice. Notices required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, in a properly addressed envelope. Notices to FFBC shall be addressed to the Senior Vice President, Human Resources. 12. Modification; Waiver; Successors. No provision of this Agreement may be waived, modified or discharged except pursuant to a written instrument signed by you and the Senior Vice President, Human Resources, of FFBC. This Agreement is binding upon any successor to all or substantially all of the business or assets of FFBC. 13. Validity; Counterparts. This Agreement shall be governed by and construed under the law of the State of Ohio. The validity or unenforceability of any provision hereof shall not affect the validity or enforceability of any other provision hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 10 Stanley N. Pontius August 4, 2000 Page 10 Sincerely yours, FIRST FINANCIAL BANCORP By:___________________________ ACCEPTED AND AGREED TO THIS ____ DAY OF AUGUST, 2000. __________________________________ Stanley N. Pontius EX-10.2 3 l84893aex10-2.txt EXHIBIT 10.2 1 EXHIBIT 10.2 CONFIDENTIAL August 4, 2000 Michael R. O'Dell Senior Vice President & CFO First Financial Bancorp 300 High Street P.O. Box 476 Hamilton, OH 45012 Dear Mike: You are employed by First Financial Bancorp ("FFBC") in a key executive position. Continuity of the management of FFBC is a critical factor in the continued success of FFBC. The Board of Directors of FFBC believes it is in the best interest of FFBC to encourage the continued effort and dedication of key members of management to their assigned duties. In consideration of the mutual promises contained in this letter, FFBC shall provide to you, and you shall receive from FFBC, the benefits set forth in this letter ("Agreement"), if your employment with FFBC is terminated during the term of this Agreement. 1. Purpose. This Agreement establishes certain basic terms and conditions relating to your employment with FFBC, and special arrangements and dispute resolution proceedings relating to the termination of your employment for any reason other than: (i) your retirement; (ii) your becoming totally and permanently disabled under the FFBC long-term disability plan or policy; or (iii) your death. This Agreement supersedes all prior agreements with FFBC and any of its affiliate banks or any predecessor businesses, except the Confidentiality Agreement concurrently entered, or previously entered, between you and FFBC, and the special severance benefits provided under this Agreement are to be provided instead of any other severance arrangements offered by FFBC or its affiliate banks. Notwithstanding the foregoing, neither your termination of employment nor anything contained in this Agreement shall have any adverse effect 2 Michael R. O'Dell August 4, 2000 Page 2 upon your rights under any tax-qualified "pension benefit plan," as such term is defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or under any "welfare benefit plan" as defined in ERISA, including by way of illustration and not limitation, any medical surgical or hospitalization benefit coverage or long-term disability benefit coverage; or under any non-qualified deferred compensation arrangement, including by way of illustration and not limitation, any stock incentive plan or non-qualified pension plan; or under the FFBC Performance Incentive Plan for any completed plan year. 2. Employment. FFBC agrees that, during the term of this Agreement, you will be employed with FFBC, in your present position or in a position that is comparable to your present position in compensation, responsibility and stature and for which you are suited by education and background and that: (a) you are, and will continue to be, eligible to participate in any employee benefit plan of FFBC in accordance with its terms; and (b) you will be entitled to the same treatment under any generally applicable employment policy or practice as any other member of Executive Management Group whose position in the organization is comparable to yours. Those plans, policies and practices that generally apply to other members of the Executive Management Group will be referred to in this Agreement as your "Employment Benefits." Your Employment Benefits may be modified from time to time after the date hereof without violation of this Agreement if the changes apply generally to other members of the Executive Management Group. 3. Term of Agreement. This Agreement shall become effective on the date of this Agreement ("Commencement Date") and shall continue in effect through the earlier of (i) the fifth anniversary of the Commencement Date; (ii) the date of your retirement, death or total and permanent disability; or (iii) the completion of full payment of all benefits promised hereunder. Absent your death, total and permanent disability or retirement, this Agreement shall be renewed annually from and after the fifth anniversary of the Commencement Date unless written notice to the contrary is given by you or by FFBC at least six (6) months prior to the expiration of the term, including any extension thereof. 4. Termination of Employment. Your employment may be terminated in accordance with any of the following paragraphs, but only upon one (1) month's advance written notice (which period shall 3 Michael R. O'Dell August 4, 2000 Page 3 be referred to in this Agreement as the "Notice Period"): (a) Involuntary Termination. FFBC may terminate your employment without cause. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice Period. The expiration of the Notice Period shall be your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the release and covenant not to sue described in Section 5. (b) Involuntary Termination for Cause. FFBC may terminate your employment for "Cause" with written notice setting forth the Cause for termination. "Cause" means a willful engaging in gross misconduct materially and demonstrably injurious to FFBC. "Willful" means an act or omission in bad faith and without reasonable belief that such act or omission was in, or not opposed to, the best interests of FFBC. The expiration of the Notice Period is your "Date of Termination for Cause." Upon your Date of Termination for Cause, you shall only be entitled to those benefits provided under Section 6. (c) Voluntary Termination. You may voluntarily terminate your employment. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice period provided you satisfactorily perform your duties during the Notice Period unless relieved of those duties by FFBC. The expiration of the Notice Period is your "Voluntary Date of Termination." Upon your Voluntary Date of Termination, you shall only be entitled to those benefits provided under Section 6. (d) Voluntary Termination for Good Reason. You may terminate your employment by notice setting forth a Good Reason for termination if the notice is delivered to FFBC within thirty (30) days following the occurrence of any "Good Reason." "Good Reason" means a (i) change in the duties of your position, or the transfer to a new position, which is not comparable to your present position in compensation, responsibility or status in violation of Section 2; (ii) substantial alteration in the nature or status of your responsibilities in violation of Section 2; (iii) reduction in your base salary; (iv) refusal by FFBC, or its successor, to renew the term of this Agreement for any reason, prior to your reaching your normal retirement date under the FFBC Pension Benefit Plan; or (v) changes in your Employment Benefits in violation of Section 2. If you give notice of termination for Good Reason, you shall continue to receive your full base salary and Employment Benefits during the Notice Period as in effect prior to the event that is the Good Reason for termination, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2. The expiration of the Notice Period is your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the written release and covenant not to sue described in Section 5. 4 Michael R. O'Dell August 4, 2000 Page 4 5. Special Severance Benefits. If your employment with FFBC is involuntarily terminated in accordance with Section 4(a) or you voluntarily terminate your employment for Good Reason in accordance with Section 4(d) and you provide FFBC with a separate, written release and covenant not to sue (on a form provided by and satisfactory to FFBC) which releases FFBC from all claims arising from your employment and termination of your employment, and you do not revoke this release and covenant not to sue, then you shall receive the following benefits, less any applicable withholding required for federal, state or local taxes: (a) your base salary shall be continued in effect for a period of thirty-six (36) months from your Date of Termination (hereinafter called your "Severance Pay Period"); (b) if, prior to your Date of Termination, you have participated in the FFBC Performance Incentive Plan for a complete calendar year, you will receive an incentive compensation payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to 3.0 times the percentage of the incentive payment made or required to be made for the calendar year pursuant to the Performance Incentive Plan immediately preceding the calendar year in which your Date of Termination occurs; (c) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to the total of the following: (i) With respect to any shares of Stock subject to an Option granted to you as of the time of the Change in Control under the First Financial Bancorp 1991 Stock Incentive Plan (the "Incentive Plan") that you cannot exercise as a result of your termination of employment, the difference between the fair market value of such Stock, determined as of your Date of Termination, and the Option Price. (ii) With respect to any Restricted Stock granted to you under the Incentive Plan as of the time of the Change in Control which you forfeit as a result of your termination of employment, the fair market value of such Restricted Stock, determined as of your Date of Termination and as if all restrictions had been removed. (iii) For purposes of this Section 5, "Stock," "Options," "Option Price," "Restricted Stock" and "Committee" will have the meaning given those terms in the Incentive Plan, and your right to exercise Options or to receive Restricted Stock without forfeiture will be determined after any adjustments made by the Committee under Sections 8.8 and 11.1 of the Incentive Plan, and after any amendments made to the Incentive Plan in connection with the Change in Control. 5 Michael R. O'Dell August 4, 2000 Page 5 (iv) For purposes of this Section 5, "Change in Control" will have the following meaning: (a) a plan has been approved by the shareholders of FFBC and consummated for FFBC to be merged or consolidated with another corporation and as a result of such merger or consolidation less than 75% of the outstanding voting securities of the surviving or resulting corporation will be owned in the aggregate by the former shareholders of FFBC as the same shall have existed immediately prior to such merger or consolidation; (b) an agreement for the sale by FFBC of substantially all of its assets to another corporation which is not a wholly owned subsidiary has been approved by the shareholders (or the Board of Directors or appropriate officers if shareholder approval is not required) and consummated; (c) "beneficial ownership" as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") of twenty percent (20%) or more of the total voting capital stock of FFBC then issued and outstanding has been acquired by any person or "group" as defined in Section 13(d)(3) of the Exchange Act; or (d) individuals who were members of the Board of FFBC immediately prior to a meeting of the shareholders of FFBC involving a contest for the election of directors do not constitute a majority of the Board immediately following such election, unless the election of such new directors was recommended to the shareholders by the management of FFBC. The Board of FFBC has final authority to determine the exact date on which a Change in Control has occurred under the foregoing definitions. (d) your Employment Benefits shall be continued during your Severance Pay Period, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2; provided, however, that you shall not: (i) accumulate vacation pay for periods after your Date of Termination; (ii) first qualify for long-term disability benefits or sickness and accident plan benefits by reason of an illness, accident or disability occurring, or a sickness or illness first manifesting itself, after your Date of Termination; (iii) be eligible to continue to make contributions to any Internal Revenue Code Section 401(k) plan maintained by FFBC or qualify for a share of any employer contribution made to any tax-qualified defined contribution plan; (iv) be eligible to accumulate service for pension plan purposes; or (v) retain possession of any motor vehicle provided to you by FFBC. (e) you shall qualify for full COBRA health benefit continuation coverage upon the expiration of your Severance Pay Period; 6 Michael R. O'Dell August 4, 2000 Page 6 (f) you shall be entitled to full executive outplacement assistance with an agency selected by FFBC with the fee paid by FFBC in an amount not to exceed five percent (5%) of your annual base salary; (g) with respect to the Endorsement Method Split Dollar Plan Agreement (the "Split Dollar Agreement") to which you are a party (and solely for purposes of the Split Dollar Agreement), the duration of your Severance Pay Period shall be considered as if it were active employment for purposes of determining whether you were eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan, as provided in Section VI(B) of the Split Dollar Agreement; and (h) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment (the "Split Dollar Payment") within ninety (90) days of your Date of Termination in one lump-sum equal to the present value of the death benefit you would have received under the Split Dollar Agreement, determined as if you had terminated on your Date of Termination, were then eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan (whether or not this is actually the case), and died at age 75 when the Split Dollar Agreement was still in effect. For purposes of this Section 5, present value will be determined using an annual discount rate of 7%. Notwithstanding the prior two sentences, if you elect to receive an assignment of the policy under Section X of the Split Dollar Agreement, the Split Dollar Payment shall be applied to the cash payment to FFBC required under Section X of the Split Dollar Agreement, and any portion of the Split Dollar Payment in excess of the amount required under Section X shall be paid to you. The provisions of this Paragraph (g) will apply whether or not your Split Dollar Agreement is terminated before you receive the Split Dollar Payment. (i) Notwithstanding any other provision of this Agreement, if the receipt of any payment under Section 5 of this Agreement in combination with any other payments to you from FFBC or its affiliates that are parachute payments (as defined in Section 280G of the Internal Revenue Code), shall, in the opinion of independent tax counsel of recognized standing selected by FFBC, cause you to be liable for the payment of any excise tax pursuant to Section 280G and Section 4999 of the Internal Revenue Code, then FFBC will pay to you an additional amount equal to the amount of such excise tax and the additional federal, state, and local income taxes for which you will be liable as a result of this additional payment. Such payment will be made within 60 days of the date your employment terminates. The release and covenant not to sue which you agree to provide prior to the receipt of special severance benefits under this Section 5 of this Agreement shall comply with the requirements of the Older Workers Benefit Protection Act and applicable state and 7 Michael R. O'Dell August 4, 2000 Page 7 federal laws and regulations. If you do not provide FFBC with such a written release and covenant not to sue, any claims concerning this Agreement or otherwise arising from your employment with FFBC, or its affiliate banks, shall be subject to final and binding arbitration as described in Section 7. 6. Benefits Upon Voluntary Termination or Termination for Cause. Upon your Date of Termination for Cause in accordance with Section 4(b) or your Voluntary Date of Termination in accordance with Section 4(c), all special severance benefits under this Agreement will be void. In such an event, you shall be eligible for any benefits provided in accordance with the plans and practices of FFBC that are applicable to employees generally. 7. Arbitration. Any dispute under this Agreement, and any claims of wrongful or discriminatory termination based on any state or federal statute, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination, shall be submitted to final and binding arbitration, subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective June 1, 1997, as amended from time to time, except as hereinafter provided: (a) FFBC shall pay the arbitrator's fee and a court reporter's attendance fee; (b) Each party shall bear the cost of its own attorney's fees. However, if you prevail in a challenge to FFBC's determination as to cause for your termination or if you prevail on any claim that you were discriminated against in violation of any federal law or statute, you shall be reimbursed by FFBC for the filing fee and any reasonable costs or expenses incurred in such a challenge, including reasonable attorney's fees; (c) The arbitration hearing shall be held in Hamilton, Ohio, unless the parties mutually agree to another location; (d) Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to two (2) pre-hearing depositions of two (2) hours each, unless the arbitrator orders additional discovery; (e) The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association as in effect from time to time, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its 8 Michael R. O'Dell August 4, 2000 Page 8 Roster and the parties shall select the arbitrator by alternately striking names with the party requesting arbitration first striking; and (f) Either party shall be entitled to an injunction or other appropriate equitable relief to enforce the arbitration provisions of this Agreement and FFBC shall be entitled to an injunction to prevent any breach, pending arbitration, of the Confidentiality Agreement described below in paragraph 8 or the Covenant Not to Compete described below in paragraph 10. It is the intention of the parties to avoid litigation in any court of all claims concerning this Agreement, or otherwise arising from your employment with FFBC, and that all such claims will be subject to this arbitration agreement. Neither party shall commence or pursue any litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate and the arbitration award are enforceable under and subject to the Federal Arbitration Act, 9 U.S.C. Section I, et seq. ("FAA"). If the FAA is held not to apply for any reason and the law of the state in which you are employed recognizes the enforceability of this Agreement and the arbitration award, then this Agreement and the arbitration award are enforceable under the laws of the state in which you are employed. Both parties consent that judgment upon the arbitration award may be entered in any federal or state court that has jurisdiction. The acceptance of any benefit under this Agreement shall be deemed ratification of this agreement to arbitrate claims. In the event you breach this Agreement by filing a lawsuit, at the time your lawsuit is filed, you will return any Special Severance Benefits paid to you and be subject to injunctive relief enforcing this Agreement. 8. Confidentiality. You will not disclose to any person or use for the benefit of yourself or any other person any confidential or proprietary information of FFBC without the prior written consent of the Chief Executive Officer of FFBC. Upon your termination of employment, you will return to FFBC all written or electronically stored memoranda, notes, plans, customer lists, records, reports or other documents of any kind or description (including all copies in any form whatsoever) relating to the business of FFBC and fully comply with any separate confidentiality agreement to which you and FFBC are parties. 9. Conflicts of Interest. You agree for so long as you are employed by FFBC to avoid dealings and situations that would create the potential for a conflict of interest with FFBC. In this regard, you agree to comply with the FFBC policy regarding conflicts of interest and all applicable state or federal regulations concerning conflicts of interest applicable to commercial bank or savings bank officers. 9 Michael R. O'Dell August 4, 2000 Page 9 10. Covenant Not to Compete. During the term of your employment, and for a period of six (6) months following the termination of your employment for any reason other than as set forth in Section 4(b), you agree not to be employed by, serve as officer or director of, consultant to or advisor to any business that engages either directly or indirectly in commercial banking, savings banking or mortgage lending in the geographic area of Ohio, Indiana, Michigan or Kentucky or which is reasonably likely to engage in such businesses in the same geographic area during the six (6) month period following your termination of employment. 11. Notice. Notices required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, in a properly addressed envelope. Notices to FFBC shall be addressed to the Chief Executive Officer. 12. Modification; Waiver; Successors. No provision of this Agreement may be waived, modified or discharged except pursuant to a written instrument signed by you and the Chief Executive Officer of FFBC. This Agreement is binding upon any successor to all or substantially all of the business or assets of FFBC. 13. Validity; Counterparts. This Agreement shall be governed by and construed under the law of the State of Ohio. The validity or unenforceability of any provision hereof shall not affect the validity or enforceability of any other provision hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 10 Michael R. O'Dell August 4, 2000 Page 10 Sincerely yours, FIRST FINANCIAL BANCORP By:___________________________ ACCEPTED AND AGREED TO THIS ____ DAY OF AUGUST, 2000 __________________________________ Michael R. O'Dell EX-10.3 4 l84893aex10-3.txt EXHIBIT 10.3 1 EXHIBIT 10.3 CONFIDENTIAL August 4, 2000 Mark W. Immelt President First National Bank of Southwestern Ohio 300 High Street P.O. Box 476 Hamilton, OH 45012 Dear Mark: You are employed by First Financial Bancorp and First National Bank of Southwestern Ohio, a wholly owned subsidiary of FFBC, (collectively "FFBC") in a key executive position. Continuity of the management of FFBC and its affiliate banks is a critical factor in the continued success of FFBC. The Board of Directors of FFBC believes it is in the best interest of FFBC to encourage the continued effort and dedication of key members of management to their assigned duties. In consideration of the mutual promises contained in this letter, FFBC shall provide to you, and you shall receive from FFBC, the benefits set forth in this letter ("Agreement"), if your employment with FFBC and its affiliate bank, is terminated during the term of this Agreement. 1. Purpose. This Agreement establishes certain basic terms and conditions relating to your employment with FFBC, and special arrangements and dispute resolution proceedings relating to the termination of your employment for any reason other than: (i) your retirement; (ii) your becoming totally and permanently disabled under the FFBC long-term disability plan or policy; or (iii) your death. This Agreement supersedes all prior agreements with FFBC and any of its affiliate banks or any predecessor businesses, except the Confidentiality Agreement concurrently entered, or previously entered, between you and FFBC, and the special severance benefits provided under this Agreement are to be provided instead of any other severance arrangements offered by FFBC or its affiliate banks. Notwithstanding the foregoing, neither your termination of 2 Mark W. Immelt August 4, 2000 Page 2 employment nor anything contained in this Agreement shall have any adverse effect upon your rights under any tax-qualified "pension benefit plan," as such term is defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or under any "welfare benefit plan" as defined in ERISA, including by way of illustration and not limitation, any medical surgical or hospitalization benefit coverage or long-term disability benefit coverage; or under any non-qualified deferred compensation arrangement, including by way of illustration and not limitation, any stock incentive plan or non-qualified pension plan; or under the FFBC Performance Incentive Plan for any completed plan year. 2. Employment. FFBC agrees that, during the term of this Agreement, you will be employed with FFBC, and/or any other direct or indirect subsidiary or affiliate of FFBC to which you may be transferred, in your present position or in a position that is comparable to your present position in compensation, responsibility and stature and for which you are suited by education and background and that: (a) you are, and will continue to be, eligible to participate in any employee benefit plan of FFBC in accordance with its terms; and (b) you will be entitled to the same treatment under any generally applicable employment policy or practice as any other member of Executive Management Group whose position in the organization is comparable to yours. Those plans, policies and practices that generally apply to other members of the Executive Management Group will be referred to in this Agreement as your "Employment Benefits." Your Employment Benefits may be modified from time to time after the date hereof without violation of this Agreement if the changes apply generally to other members of the Executive Management Group. 3. Term of Agreement. This Agreement shall become effective on the date of this Agreement ("Commencement Date") and shall continue in effect through the earlier of (i) the fifth anniversary of the Commencement Date; (ii) the date of your retirement, death or total and permanent disability; or (iii) the completion of full payment of all benefits promised hereunder. Absent your death, total and permanent disability or retirement, this Agreement shall be renewed annually from and after the fifth anniversary of the Commencement Date unless written notice to the contrary is given by you or by FFBC at least six (6) months prior to the expiration of the term, including any extension thereof. 3 Mark W. Immelt August 4, 2000 Page 3 4. Termination of Employment. Your employment may be terminated in accordance with any of the following paragraphs, but only upon one (1) month's advance written notice (which period shall be referred to in this Agreement as the "Notice Period"): (a) Involuntary Termination. FFBC may terminate your employment without cause. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice Period. The expiration of the Notice Period shall be your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the release and covenant not to sue described in Section 5. (b) Involuntary Termination for Cause. FFBC may terminate your employment for "Cause" with written notice setting forth the Cause for termination. "Cause" means a willful engaging in gross misconduct materially and demonstrably injurious to FFBC. "Willful" means an act or omission in bad faith and without reasonable belief that such act or omission was in, or not opposed to, the best interests of FFBC. The expiration of the Notice Period is your "Date of Termination for Cause." Upon your Date of Termination for Cause, you shall only be entitled to those benefits provided under Section 6. (c) Voluntary Termination. You may voluntarily terminate your employment. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice period provided you satisfactorily perform your duties during the Notice Period unless relieved of those duties by FFBC. The expiration of the Notice Period is your "Voluntary Date of Termination." Upon your Voluntary Date of Termination, you shall only be entitled to those benefits provided under Section 6. (d) Voluntary Termination for Good Reason. You may terminate your employment by notice setting forth a Good Reason for termination if the notice is delivered to FFBC within thirty (30) days following the occurrence of any "Good Reason." "Good Reason" means a (i) change in the duties of your position, or the transfer to a new position, which is not comparable to your present position in compensation, responsibility or status in violation of Section 2; (ii) substantial alteration in the nature or status of your responsibilities in violation of Section 2; (iii) reduction in your base salary; (iv) refusal by FFBC, or its successor, to renew the term of this Agreement for any reason, prior to your reaching your normal retirement date under the FFBC Pension Benefit Plan; or (v) changes in your Employment Benefits in violation of Section 2. If you give notice of termination for Good Reason, you shall continue to receive your full base salary and Employment Benefits during the Notice Period as in effect prior to the event that is the Good Reason for termination, subject to the right of FFBC to make any changes to your 4 Mark W. Immelt August 4, 2000 Page 4 Employment Benefits permitted in accordance with Section 2. The expiration of the Notice Period is your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the written release and covenant not to sue described in Section 5. 5. Special Severance Benefits. If your employment with FFBC is involuntarily terminated in accordance with Section 4(a) or you voluntarily terminate your employment for Good Reason in accordance with Section 4(d) and you provide FFBC with a separate, written release and covenant not to sue (on a form provided by and satisfactory to FFBC) which releases FFBC from all claims arising from your employment and termination of your employment, and you do not revoke this release and covenant not to sue, then you shall receive the following benefits, less any applicable withholding required for federal, state or local taxes: (a) your base salary shall be continued in effect for a period of twenty-four (24) months from your Date of Termination (hereinafter called your "Severance Pay Period"); (b) if, prior to your Date of Termination, you have participated in the FFBC Performance Incentive Plan for a complete calendar year, you will receive an incentive compensation payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to 2.0 times the percentage of the incentive payment made or required to be made for the calendar year pursuant to the Performance Incentive Plan immediately preceding the calendar year in which your Date of Termination occurs; (c) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to the total of the following: (i) With respect to any shares of Stock subject to an Option granted to you as of the time of the Change in Control under the First Financial Bancorp 1991 Stock Incentive Plan (the "Incentive Plan") that you cannot exercise as a result of your termination of employment, the difference between the fair market value of such Stock, determined as of your Date of Termination, and the Option Price. (ii) With respect to any Restricted Stock granted to you under the Incentive Plan as of the time of the Change in Control which you forfeit as a result of your termination of employment, the fair market value of such Restricted Stock, determined as of your Date of Termination and as if all restrictions had been removed. 5 Mark W. Immelt August 4, 2000 Page 5 (iii) For purposes of this Section 5, "Stock," "Options," "Option Price," "Restricted Stock" and "Committee" will have the meaning given those terms in the Incentive Plan, and your right to exercise Options or to receive Restricted Stock without forfeiture will be determined after any adjustments made by the Committee under Sections 8.8 and 11.1 of the Incentive Plan, and after any amendments made to the Incentive Plan in connection with the Change in Control. (iv) For purposes of this Section 5, "Change in Control" will have the following meaning: (a) a plan has been approved by the shareholders of FFBC and consummated for FFBC to be merged or consolidated with another corporation and as a result of such merger or consolidation less than 75% of the outstanding voting securities of the surviving or resulting corporation will be owned in the aggregate by the former shareholders of FFBC as the same shall have existed immediately prior to such merger or consolidation; (b) an agreement for the sale by FFBC of substantially all of its assets to another corporation which is not a wholly owned subsidiary has been approved by the shareholders (or the Board of Directors or appropriate officers if shareholder approval is not required) and consummated; (c) "beneficial ownership" as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") of twenty percent (20%) or more of the total voting capital stock of FFBC then issued and outstanding has been acquired by any person or "group" as defined in Section 13(d)(3) of the Exchange Act; or (d) individuals who were members of the Board of FFBC immediately prior to a meeting of the shareholders of FFBC involving a contest for the election of directors do not constitute a majority of the Board immediately following such election, unless the election of such new directors was recommended to the shareholders by the management of FFBC. The Board of FFBC has final authority to determine the exact date on which a Change in Control has occurred under the foregoing definitions. (d) your Employment Benefits shall be continued during your Severance Pay Period, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2; provided, however, that you shall not: (i) accumulate vacation pay for periods after your Date of Termination; (ii) first qualify for long-term disability benefits or sickness and accident plan benefits by reason of an illness, accident or disability occurring, or a sickness or illness first manifesting itself, after your Date of Termination; (iii) be eligible to continue to make contributions to any Internal Revenue Code Section 401(k) plan maintained by FFBC or qualify for a share of any 6 Mark W. Immelt August 4, 2000 Page 6 employer contribution made to any tax-qualified defined contribution plan; (iv) be eligible to accumulate service for pension plan purposes; or (v) retain possession of any motor vehicle provided to you by FFBC. (e) you shall qualify for full COBRA health benefit continuation coverage upon the expiration of your Severance Pay Period; (f) you shall be entitled to full executive outplacement assistance with an agency selected by FFBC with the fee paid by FFBC in an amount not to exceed five percent (5%) of your annual base salary; (g) with respect to the Endorsement Method Split Dollar Plan Agreement (the "Split Dollar Agreement") to which you are a party (and solely for purposes of the Split Dollar Agreement), the duration of your Severance Pay Period shall be considered as if it were active employment for purposes of determining whether you were eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan, as provided in Section VI(B) of the Split Dollar Agreement; and (h) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment (the "Split Dollar Payment") within ninety (90) days of your Date of Termination in one lump-sum equal to the present value of the death benefit you would have received under the Split Dollar Agreement, determined as if you had terminated on your Date of Termination, were then eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan (whether or not this is actually the case), and died at age 75 when the Split Dollar Agreement was still in effect. For purposes of this Section 5, present value will be determined using an annual discount rate of 7%. Notwithstanding the prior two sentences, if you elect to receive an assignment of the policy under Section X of the Split Dollar Agreement, the Split Dollar Payment shall be applied to the cash payment to FFBC required under Section X of the Split Dollar Agreement, and any portion of the Split Dollar Payment in excess of the amount required under Section X shall be paid to you. The provisions of this Paragraph (g) will apply whether or not your Split Dollar Agreement is terminated before you receive the Split Dollar Payment. (i) Notwithstanding any other provision of this Agreement, if the receipt of any payment under Section 5 of this Agreement in combination with any other payments to you from FFBC or its affiliates that are parachute payments (as defined in Section 280G of the Internal Revenue Code), shall, in the opinion of 7 Mark W. Immelt August 4, 2000 Page 7 independent tax counsel of recognized standing selected by FFBC, cause you to be liable for the payment of any excise tax pursuant to Section 280G and Section 4999 of the Internal Revenue Code, then FFBC will pay to you an additional amount equal to the amount of such excise tax and the additional federal, state, and local income taxes for which you will be liable as a result of this additional payment. Such payment will be made within 60 days of the date your employment terminates. The release and covenant not to sue which you agree to provide prior to the receipt of special severance benefits under this Section 5 of this Agreement shall comply with the requirements of the Older Workers Benefit Protection Act and applicable state and federal laws and regulations. If you do not provide FFBC with a written release and covenant not to sue, any claims concerning this Agreement or otherwise arising from your employment with FFBC, or its affiliate banks, shall be subject to final and binding arbitration as described in Section 7. 6. Benefits Upon Voluntary Termination or Termination for Cause. Upon your Date of Termination for Cause in accordance with Section 4(b) or your Voluntary Date of Termination in accordance with Section 4(c), all special severance benefits under this Agreement will be void. In such an event, you shall be eligible for any benefits provided in accordance with the plans and practices of FFBC that are applicable to employees generally. 7. Arbitration. Any dispute under this Agreement, and any claims of wrongful or discriminatory termination based on any state or federal statute, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination, shall be submitted to final and binding arbitration, subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective June 1, 1997, as amended from time to time, except as hereinafter provided: (a) FFBC shall pay the arbitrator's fee and a court reporter's attendance fee; (b) Each party shall bear the cost of its own attorney's fees. However, if you prevail in a challenge to FFBC's determination as to cause for your termination or if you prevail on any claim that you were discriminated against in violation of any federal law or statute, you shall be reimbursed by FFBC for the filing fee and any reasonable costs or expenses incurred in such a challenge, including reasonable attorney's fees; 8 Mark W. Immelt August 4, 2000 Page 8 (c) The arbitration hearing shall be held in Hamilton, Ohio, unless the parties mutually agree to another location; (d) Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to two (2) pre-hearing depositions of two (2) hours each, unless the arbitrator orders additional discovery; (e) The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association as in effect from time to time, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its Roster and the parties shall select the arbitrator by alternately striking names with the party requesting arbitration first striking; and (f) Either party shall be entitled to an injunction or other appropriate equitable relief to enforce the arbitration provisions of this Agreement and FFBC shall be entitled to an injunction to prevent any breach, pending arbitration, of the Confidentiality Agreement described below in paragraph 8 or the Covenant Not to Compete described below in paragraph 10. It is the intention of the parties to avoid litigation in any court of all claims concerning this Agreement, or otherwise arising from your employment with FFBC, or its affiliate bank, and that all such claims will be subject to this arbitration agreement. Neither party shall commence or pursue any litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate and the arbitration award are enforceable under and subject to the Federal Arbitration Act, 9 U.S.C. Section I, et seq. ("FAA"). If the FAA is held not to apply for any reason and the law of the state in which you are employed recognizes the enforceability of this Agreement and the arbitration award, then this Agreement and the arbitration award are enforceable under the laws of the state in which you are employed. Both parties consent that judgment upon the arbitration award may be entered in any federal or state court that has jurisdiction. The acceptance of any benefit under this Agreement shall be deemed ratification of this agreement to arbitrate claims. In the event you breach this Agreement by filing a lawsuit, at the time your lawsuit is filed, you will return any Special Severance Benefits paid to you and be subject to injunctive relief enforcing this Agreement. 8. Confidentiality. You will not disclose to any person or use for the benefit of yourself or any other person any confidential or proprietary information of FFBC without the prior written consent of the Chief Executive Officer of FFBC. Upon your termination of 9 Mark W. Immelt August 4, 2000 Page 9 employment, you will return to FFBC all written or electronically stored memoranda, notes, plans, customer lists, records, reports or other documents of any kind or description (including all copies in any form whatsoever) relating to the business of FFBC and fully comply with any separate confidentiality agreement to which you and FFBC are parties. 9. Conflicts of Interest. You agree for so long as you are employed by FFBC to avoid dealings and situations that would create the potential for a conflict of interest with FFBC. In this regard, you agree to comply with the FFBC policy regarding conflicts of interest and all applicable state or federal regulations concerning conflicts of interest applicable to commercial bank or savings bank officers. 10. Covenant Not to Compete. During the term of your employment, and for a period of six (6) months following the termination of your employment for any reason other than as set forth in Section 4(b), you agree not to be employed by, serve as officer or director of, consultant to or advisor to any business that engages either directly or indirectly in commercial banking, savings banking or mortgage lending in the geographic area of Ohio, Indiana, Michigan or Kentucky or which is reasonably likely to engage in such businesses in the same geographic area during the six (6) month period following your termination of employment. 11. Notice. Notices required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, in a properly addressed envelope. Notices to FFBC shall be addressed to the Chief Executive Officer. 12. Modification; Waiver; Successors. No provision of this Agreement may be waived, modified or discharged except pursuant to a written instrument signed by you and the Chief Executive Officer of FFBC. This Agreement is binding upon any successor to all or substantially all of the business or assets of FFBC. 13. Validity; Counterparts. This Agreement shall be governed by and construed under the law of the State of Ohio. The validity or unenforceability of any provision hereof shall not affect the validity or 10 Mark W. Immelt August 4, 2000 Page 10 enforceability of any other provision hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Sincerely yours, FIRST FINANCIAL BANCORP By:___________________________ and FIRST NATIONAL BANK OF SOUTHWESTERN OHIO By:___________________________ ACCEPTED AND AGREED TO THIS ____ DAY OF AUGUST, 2000. __________________________________ Mark W. Immelt EX-10.4 5 l84893aex10-4.txt EXHIBIT 10.4 1 EXHIBIT 10.4 CONFIDENTIAL August 4, 2000 Michael T. Riley President and CEO First Financial Bancorp Service Corporation 4400 Lewis Street Middletown, OH 45044 Dear Mike: You are employed by First Financial Bancorp and First Financial Bancorp Service Corporation, a wholly owned subsidiary of FFBC, (collectively "FFBC") in a key executive position. Continuity of the management of FFBC and its affiliate banks is a critical factor in the continued success of FFBC. The Board of Directors of FFBC believes it is in the best interest of FFBC to encourage the continued effort and dedication of key members of management to their assigned duties. In consideration of the mutual promises contained in this letter, FFBC shall provide to you, and you shall receive from FFBC, the benefits set forth in this letter ("Agreement"), if your employment with FFBC, and its affiliate corporation, is terminated during the term of this Agreement. 1. Purpose. This Agreement establishes certain basic terms and conditions relating to your employment with FFBC, and special arrangements and dispute resolution proceedings relating to the termination of your employment for any reason other than: (i) your retirement; (ii) your becoming totally and permanently disabled under the FFBC long-term disability plan or policy; or (iii) your death. This Agreement supersedes all prior agreements with FFBC and any of its affiliate banks or any predecessor businesses, except the Confidentiality Agreement concurrently entered, or previously entered, between you and FFBC, and the special severance benefits provided under this Agreement are to be provided instead of any other severance arrangements offered by FFBC or its affiliate corporation. Notwithstanding the foregoing, neither your termination of employment nor anything contained in this Agreement shall have any 2 Michael T. Riley August 4, 2000 Page 2 adverse effect upon your rights under any tax-qualified "pension benefit plan," as such term is defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or under any "welfare benefit plan" as defined in ERISA, including by way of illustration and not limitation, any medical surgical or hospitalization benefit coverage or long-term disability benefit coverage; or under any non-qualified deferred compensation arrangement, including by way of illustration and not limitation, any stock incentive plan or non-qualified pension plan; or under the FFBC Performance Incentive Plan for any completed plan year. 2. Employment. FFBC agrees that, during the term of this Agreement, you will be employed with FFBC, and/or any other direct or indirect subsidiary or affiliate of FFBC to which you may be transferred, in your present position or in a position that is comparable to your present position in compensation, responsibility and stature and for which you are suited by education and background and that: (a) you are, and will continue to be, eligible to participate in any employee benefit plan of FFBC in accordance with its terms; and (b) you will be entitled to the same treatment under any generally applicable employment policy or practice as any other member of Executive Management Group whose position in the organization is comparable to yours. Those plans, policies and practices that generally apply to other members of the Executive Management Group will be referred to in this Agreement as your "Employment Benefits." Your Employment Benefits may be modified from time to time after the date hereof without violation of this Agreement if the changes apply generally to other members of the Executive Management Group. 3. Term of Agreement. This Agreement shall become effective on the date of this Agreement ("Commencement Date") and shall continue in effect through the earlier of (i) the fifth anniversary of the Commencement Date; (ii) the date of your retirement, death or total and permanent disability; or (iii) the completion of full payment of all benefits promised hereunder. Absent your death, total and permanent disability or retirement, this Agreement shall be renewed annually from and after the fifth anniversary of the Commencement Date unless written notice to the contrary is given by you or by FFBC at least six (6) months prior to the expiration of the term, including any extension thereof. 3 Michael T. Riley August 4, 2000 Page 3 4. Termination of Employment. Your employment may be terminated in accordance with any of the following paragraphs, but only upon one (1) month's advance written notice (which period shall be referred to in this Agreement as the "Notice Period"): (a) Involuntary Termination. FFBC may terminate your employment without cause. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice Period. The expiration of the Notice Period shall be your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the release and covenant not to sue described in Section 5. (b) Involuntary Termination for Cause. FFBC may terminate your employment for "Cause" with written notice setting forth the Cause for termination. "Cause" means a willful engaging in gross misconduct materially and demonstrably injurious to FFBC. "Willful" means an act or omission in bad faith and without reasonable belief that such act or omission was in, or not opposed to, the best interests of FFBC. The expiration of the Notice Period is your "Date of Termination for Cause." Upon your Date of Termination for Cause, you shall only be entitled to those benefits provided under Section 6. (c) Voluntary Termination. You may voluntarily terminate your employment. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice period provided you satisfactorily perform your duties during the Notice Period unless relieved of those duties by FFBC. The expiration of the Notice Period is your "Voluntary Date of Termination." Upon your Voluntary Date of Termination, you shall only be entitled to those benefits provided under Section 6. (d) Voluntary Termination for Good Reason. You may terminate your employment by notice setting forth a Good Reason for termination if the notice is delivered to FFBC within thirty (30) days following the occurrence of any "Good Reason." "Good Reason" means a (i) change in the duties of your position, or the transfer to a new position, which is not comparable to your present position in compensation, responsibility or status in violation of Section 2; (ii) substantial alteration in the nature or status of your responsibilities in violation of Section 2; (iii) reduction in your base salary; (iv) refusal by FFBC, or its successor, to renew the term of this Agreement for any reason, prior to your reaching your normal retirement date under the FFBC Pension Benefit Plan; or (v) changes in your Employment Benefits in violation of Section 2. If you give notice of termination for Good Reason, you shall continue to receive your full base salary and Employment Benefits during the Notice Period as in effect prior to the event that is the Good Reason for termination, subject to the right of FFBC to make any changes to your 4 Michael T. Riley August 4, 2000 Page 4 Employment Benefits permitted in accordance with Section 2. The expiration of the Notice Period is your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the written release and covenant not to sue described in Section 5. 5. Special Severance Benefits. If your employment with FFBC is involuntarily terminated in accordance with Section 4(a) or you voluntarily terminate your employment for Good Reason in accordance with Section 4(d) and you provide FFBC with a separate, written release and covenant not to sue (on a form provided by and satisfactory to FFBC) which releases FFBC from all claims arising from your employment and termination of your employment, and you do not revoke this release and covenant not to sue, then you shall receive the following benefits, less any applicable withholding required for federal, state or local taxes: (a) your base salary shall be continued in effect for a period of twenty-four (24) months from your Date of Termination (hereinafter called your "Severance Pay Period"); (b) if, prior to your Date of Termination, you have participated in the FFBC Performance Incentive Plan for a complete calendar year, you will receive an incentive compensation payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to 2.0 times the percentage of the incentive payment made or required to be made for the calendar year pursuant to the Performance Incentive Plan immediately preceding the calendar year in which your Date of Termination occurs; (c) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to the total of the following: (i) With respect to any shares of Stock subject to an Option granted to you as of the time of the Change in Control under the First Financial Bancorp 1991 Stock Incentive Plan (the "Incentive Plan") that you cannot exercise as a result of your termination of employment, the difference between the fair market value of such Stock, determined as of your Date of Termination, and the Option Price. (ii) With respect to any Restricted Stock granted to you under the Incentive Plan as of the time of the Change in Control which you forfeit as a result of your termination of employment, the fair market value of such Restricted Stock, determined as of your Date of Termination and as if all restrictions had been removed. 5 Michael T. Riley August 4, 2000 Page 5 (iii) For purposes of this Section 5, "Stock," "Options," "Option Price," "Restricted Stock" and "Committee" will have the meaning given those terms in the Incentive Plan, and your right to exercise Options or to receive Restricted Stock without forfeiture will be determined after any adjustments made by the Committee under Sections 8.8 and 11.1 of the Incentive Plan, and after any amendments made to the Incentive Plan in connection with the Change in Control. (iv) For purposes of this Section 5, "Change in Control" will have the following meaning: (a) a plan has been approved by the shareholders of FFBC and consummated for FFBC to be merged or consolidated with another corporation and as a result of such merger or consolidation less than 75% of the outstanding voting securities of the surviving or resulting corporation will be owned in the aggregate by the former shareholders of FFBC as the same shall have existed immediately prior to such merger or consolidation; (b) an agreement for the sale by FFBC of substantially all of its assets to another corporation which is not a wholly owned subsidiary has been approved by the shareholders (or the Board of Directors or appropriate officers if shareholder approval is not required) and consummated; (c) "beneficial ownership" as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") of twenty percent (20%) or more of the total voting capital stock of FFBC then issued and outstanding has been acquired by any person or "group" as defined in Section 13(d)(3) of the Exchange Act; or (d) individuals who were members of the Board of FFBC immediately prior to a meeting of the shareholders of FFBC involving a contest for the election of directors do not constitute a majority of the Board immediately following such election, unless the election of such new directors was recommended to the shareholders by the management of FFBC. The Board of FFBC has final authority to determine the exact date on which a Change in Control has occurred under the foregoing definitions. (d) your Employment Benefits shall be continued during your Severance Pay Period, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2; provided, however, that you shall not: (i) accumulate vacation pay for periods after your Date of Termination; (ii) first qualify for long-term disability benefits or sickness and accident plan benefits by reason of an illness, accident or disability occurring, or a sickness or illness first manifesting itself, after your Date of Termination; (iii) be eligible to continue to make contributions to any Internal Revenue Code Section 401(k) plan maintained by FFBC or qualify for a share of any 6 Michael T. Riley August 4, 2000 Page 6 employer contribution made to any tax-qualified defined contribution plan; (iv) be eligible to accumulate service for pension plan purposes; or (v) retain possession of any motor vehicle provided to you by FFBC. (e) you shall qualify for full COBRA health benefit continuation coverage upon the expiration of your Severance Pay Period; (f) you shall be entitled to full executive outplacement assistance with an agency selected by FFBC with the fee paid by FFBC in an amount not to exceed five percent (5%) of your annual base salary; (g) with respect to the Endorsement Method Split Dollar Plan Agreement (the "Split Dollar Agreement") to which you are a party (and solely for purposes of the Split Dollar Agreement), the duration of your Severance Pay Period shall be considered as if it were active employment for purposes of determining whether you were eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan, as provided in Section VI(B) of the Split Dollar Agreement; and (h) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment (the "Split Dollar Payment") within ninety (90) days of your Date of Termination in one lump-sum equal to the present value of the death benefit you would have received under the Split Dollar Agreement, determined as if you had terminated on your Date of Termination, were then eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan (whether or not this is actually the case), and died at age 75 when the Split Dollar Agreement was still in effect. For purposes of this Section 5, present value will be determined using an annual discount rate of 7%. Notwithstanding the prior two sentences, if you elect to receive an assignment of the policy under Section X of the Split Dollar Agreement, the Split Dollar Payment shall be applied to the cash payment to FFBC required under Section X of the Split Dollar Agreement, and any portion of the Split Dollar Payment in excess of the amount required under Section X shall be paid to you. The provisions of this Paragraph (g) will apply whether or not your Split Dollar Agreement is terminated before you receive the Split Dollar Payment. (i) Notwithstanding any other provision of this Agreement, if the receipt of any payment under Section 5 of this Agreement in combination with any other payments to you from FFBC or its affiliates that are parachute payments (as defined in Section 280G of the Internal Revenue Code), shall, in the opinion of independent tax counsel of recognized standing selected by FFBC, cause you to 7 Michael T. Riley August 4, 2000 Page 7 be liable for the payment of any excise tax pursuant to Section 280G and Section 4999 of the Internal Revenue Code, then FFBC will pay to you an additional amount equal to the amount of such excise tax and the additional federal, state, and local income taxes for which you will be liable as a result of this additional payment. Such payment will be made within 60 days of the date your employment terminates. The release and covenant not to sue which you agree to provide prior to the receipt of special severance benefits under this Section 5 of this Agreement shall comply with the requirements of the Older Workers Benefit Protection Act and applicable state and federal laws and regulations. If you do not provide FFBC with such a written release and covenant not to sue, any claims concerning this Agreement or otherwise arising from your employment with FFBC, or its affiliate banks, shall be subject to final and binding arbitration as described in Section 7. 6. Benefits Upon Voluntary Termination or Termination for Cause. Upon your Date of Termination for Cause in accordance with Section 4(b) or your Voluntary Date of Termination in accordance with Section 4(c), all special severance benefits under this Agreement will be void. In such an event, you shall be eligible for any benefits provided in accordance with the plans and practices of FFBC that are applicable to employees generally. 7. Arbitration. Any dispute under this Agreement, and any claims of wrongful or discriminatory termination based on any state or federal statute, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination, shall be submitted to final and binding arbitration, subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective June 1, 1997, as amended from time to time, except as hereinafter provided: (a) FFBC shall pay the arbitrator's fee and a court reporter's attendance fee; (b) Each party shall bear the cost of its own attorney's fees. However, if you prevail in a challenge to FFBC's determination as to cause for your termination or if you prevail on any claim that you were discriminated against in violation of any federal law or statute, you shall be reimbursed by FFBC for the filing fee and any reasonable costs or expenses incurred in such a challenge, including reasonable attorney's fees; 8 Michael T. Riley August 4, 2000 Page 8 (c) The arbitration hearing shall be held in Hamilton, Ohio, unless the parties mutually agree to another location; (d) Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to two (2) pre-hearing depositions of two (2) hours each, unless the arbitrator orders additional discovery; (e) The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association as in effect from time to time, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its Roster and the parties shall select the arbitrator by alternately striking names with the party requesting arbitration first striking; and (f) Either party shall be entitled to an injunction or other appropriate equitable relief to enforce the arbitration provisions of this Agreement and FFBC shall be entitled to an injunction to prevent any breach, pending arbitration, of the Confidentiality Agreement described below in paragraph 8 or the Covenant Not to Compete described below in paragraph 10. It is the intention of the parties to avoid litigation in any court of all claims concerning this Agreement, or otherwise arising from your employment with FFBC, or its affiliate corporation, and that all such claims will be subject to this arbitration agreement. Neither party shall commence or pursue any litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate and the arbitration award are enforceable under and subject to the Federal Arbitration Act, 9 U.S.C. Section I, et seq. ("FAA"). If the FAA is held not to apply for any reason and the law of the state in which you are employed recognizes the enforceability of this Agreement and the arbitration award, then this Agreement and the arbitration award are enforceable under the laws of the state in which you are employed. Both parties consent that judgment upon the arbitration award may be entered in any federal or state court that has jurisdiction. The acceptance of any benefit under this Agreement shall be deemed ratification of this agreement to arbitrate claims. In the event you breach this Agreement by filing a lawsuit, at the time your lawsuit is filed, you will return any Special Severance Benefits paid to you and be subject to injunctive relief enforcing this Agreement. 8. Confidentiality. You will not disclose to any person or use for the benefit of yourself or any other person any confidential or proprietary information of FFBC without the prior written consent of the Chief Executive Officer of FFBC. Upon your termination of 9 Michael T. Riley August 4, 2000 Page 9 employment, you will return to FFBC all written or electronically stored memoranda, notes, plans, customer lists, records, reports or other documents of any kind or description (including all copies in any form whatsoever) relating to the business of FFBC and fully comply with any separate confidentiality agreement to which you and FFBC are parties. 9. Conflicts of Interest. You agree for so long as you are employed by FFBC to avoid dealings and situations that would create the potential for a conflict of interest with FFBC. In this regard, you agree to comply with the FFBC policy regarding conflicts of interest and all applicable state or federal regulations concerning conflicts of interest applicable to commercial bank or savings bank officers. 10. Covenant Not to Compete. During the term of your employment, and for a period of six (6) months following the termination of your employment for any reason other than as set forth in Section 4(b), you agree not to be employed by, serve as officer or director of, consultant to or advisor to any business that engages either directly or indirectly in commercial banking, savings banking or mortgage lending in the geographic area of Ohio, Indiana, Michigan or Kentucky or which is reasonably likely to engage in such businesses in the same geographic area during the six (6) month period following your termination of employment. 11. Notice. Notices required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, in a properly addressed envelope. Notices to FFBC shall be addressed to the Chief Executive Officer. 12. Modification; Waiver; Successors. No provision of this Agreement may be waived, modified or discharged except pursuant to a written instrument signed by you and the Chief Executive Officer of FFBC. This Agreement is binding upon any successor to all or substantially all of the business or assets of FFBC. 10 Michael T. Riley August 4, 2000 Page 10 13. Validity; Counterparts. This Agreement shall be governed by and construed under the law of the State of Ohio. The validity or unenforceability of any provision hereof shall not affect the validity or enforceability of any other provision hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Sincerely yours, FIRST FINANCIAL BANCORP By:___________________________ and FIRST FINANCIAL BANCORP SERVICE CORP. By:___________________________ ACCEPTED AND AGREED TO THIS ____ DAY OF AUGUST, 2000. __________________________________ Michael T. Riley EX-10.5 6 l84893aex10-5.txt EXHIBIT 10.5 1 EXHIBIT 10.5 CONFIDENTIAL August 4, 2000 Brian D. Moriarty Senior Vice President Human Resources First Financial Bancorp 300 High Street P.O. Box 476 Hamilton, OH 45012 Dear Brian: You are employed by First Financial Bancorp and First National Bank of Southwestern Ohio, a wholly owned subsidiary of FFBC, (collectively "FFBC") in a key executive position. Continuity of the management of FFBC and its affiliate banks is a critical factor in the continued success of FFBC. The Board of Directors of FFBC believes it is in the best interest of FFBC to encourage the continued effort and dedication of key members of management to their assigned duties. In consideration of the mutual promises contained in this letter, FFBC shall provide to you, and you shall receive from FFBC, the benefits set forth in this letter ("Agreement"), if your employment with FFBC, and its affiliate bank, is terminated during the term of this Agreement. 1. Purpose. This Agreement establishes certain basic terms and conditions relating to your employment with FFBC, and special arrangements and dispute resolution proceedings relating to the termination of your employment for any reason other than: (i) your retirement; (ii) your becoming totally and permanently disabled under the FFBC long-term disability plan or policy; or (iii) your death. This Agreement supersedes all prior agreements with FFBC and any of its affiliate banks or any predecessor businesses, except the Confidentiality Agreement concurrently entered, or previously entered, between you and FFBC, and the special severance benefits provided under this 2 Brian D. Moriarty August 4, 2000 Page 2 Agreement are to be provided instead of any other severance arrangements offered by FFBC or its affiliate banks. Notwithstanding the foregoing, neither your termination of employment nor anything contained in this Agreement shall have any adverse effect upon your rights under any tax-qualified "pension benefit plan," as such term is defined in the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or under any "welfare benefit plan" as defined in ERISA, including by way of illustration and not limitation, any medical surgical or hospitalization benefit coverage or long-term disability benefit coverage; or under any non-qualified deferred compensation arrangement, including by way of illustration and not limitation, any stock incentive plan or non-qualified pension plan; or under the FFBC Performance Incentive Plan for any completed plan year. 2. Employment. FFBC agrees that, during the term of this Agreement, you will be employed with FFBC, and/or any other direct or indirect subsidiary or affiliate of FFBC to which you may be transferred, in your present position or in a position that is comparable to your present position in compensation, responsibility and stature and for which you are suited by education and background and that: (a) you are, and will continue to be, eligible to participate in any employee benefit plan of FFBC in accordance with its terms; and (b) you will be entitled to the same treatment under any generally applicable employment policy or practice as any other member of Executive Management Group whose position in the organization is comparable to yours. Those plans, policies and practices that generally apply to other members of the Executive Management Group will be referred to in this Agreement as your "Employment Benefits." Your Employment Benefits may be modified from time to time after the date hereof without violation of this Agreement if the changes apply generally to other members of the Executive Management Group. 3. Term of Agreement. This Agreement shall become effective on the date of this Agreement ("Commencement Date") and shall continue in effect through the earlier of (i) the fifth anniversary of the Commencement Date; (ii) the date of your retirement, death or total and permanent disability; or (iii) the completion of full payment of all benefits promised hereunder. Absent your death, total and permanent disability or retirement, this Agreement shall be renewed annually from and after the fifth anniversary of the Commencement Date unless written notice to the contrary is given by you or by FFBC at least six (6) months prior to the expiration of the term, including any extension thereof. 3 Brian D. Moriarty August 4, 2000 Page 3 4. Termination of Employment. Your employment may be terminated in accordance with any of the following paragraphs, but only upon one (1) month's advance written notice (which period shall be referred to in this Agreement as the "Notice Period"): (a) Involuntary Termination. FFBC may terminate your employment without cause. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice Period. The expiration of the Notice Period shall be your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the release and covenant not to sue described in Section 5. (b) Involuntary Termination for Cause. FFBC may terminate your employment for "Cause" with written notice setting forth the Cause for termination. "Cause" means a willful engaging in gross misconduct materially and demonstrably injurious to FFBC. "Willful" means an act or omission in bad faith and without reasonable belief that such act or omission was in, or not opposed to, the best interests of FFBC. The expiration of the Notice Period is your "Date of Termination for Cause." Upon your Date of Termination for Cause, you shall only be entitled to those benefits provided under Section 6. (c) Voluntary Termination. You may voluntarily terminate your employment. In such an event, you shall continue to receive your full salary and Employment Benefits during the Notice period provided you satisfactorily perform your duties during the Notice Period unless relieved of those duties by FFBC. The expiration of the Notice Period is your "Voluntary Date of Termination." Upon your Voluntary Date of Termination, you shall only be entitled to those benefits provided under Section 6. (d) Voluntary Termination for Good Reason. You may terminate your employment by notice setting forth a Good Reason for termination if the notice is delivered to FFBC within thirty (30) days following the occurrence of any "Good Reason." "Good Reason" means a (i) change in the duties of your position, or the transfer to a new position, which is not comparable to your present position in compensation, responsibility or status in violation of Section 2; (ii) substantial alteration in the nature or status of your responsibilities in violation of Section 2; (iii) reduction in your base salary; (iv) refusal by FFBC, or its successor, to renew the term of this Agreement for any reason, prior to your reaching your normal retirement date under the FFBC Pension Benefit Plan; or (v) changes in your Employment Benefits in violation of Section 2. If you give notice of termination for Good Reason, you shall continue to receive your full base salary and Employment Benefits during the Notice Period as in effect prior to the event that is the Good 4 Brian D. Moriarty August 4, 2000 Page 4 Reason for termination, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2. The expiration of the Notice Period is your "Date of Termination." Upon your Date of Termination, you shall be entitled to those benefits provided under Section 5, provided you give FFBC the written release and covenant not to sue described in Section 5. 5. Special Severance Benefits. If your employment with FFBC is involuntarily terminated in accordance with Section 4(a) or you voluntarily terminate your employment for Good Reason in accordance with Section 4(d) and you provide FFBC with a separate, written release and covenant not to sue (on a form provided by and satisfactory to FFBC) which releases FFBC from all claims arising from your employment and termination of your employment, and you do not revoke this release and covenant not to sue, then you shall receive the following benefits, less any applicable withholding required for federal, state or local taxes: (a) your base salary shall be continued in effect for a period of twenty-four (24) months from your Date of Termination (hereinafter called your "Severance Pay Period"); (b) if, prior to your Date of Termination, you have participated in the FFBC Performance Incentive Plan for a complete calendar year, you will receive an incentive compensation payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to 2.0 times the percentage of the incentive payment made or required to be made for the calendar year pursuant to the Performance Incentive Plan immediately preceding the calendar year in which your Date of Termination occurs; (c) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment within thirty (30) days of your Date of Termination in one lump-sum in an amount equal to the total of the following: (i) With respect to any shares of Stock subject to an Option granted to you as of the time of the Change in Control under the First Financial Bancorp 1991 Stock Incentive Plan (the "Incentive Plan") that you cannot exercise as a result of your termination of employment, the difference between the fair market value of such Stock, determined as of your Date of Termination, and the Option Price. (ii) With respect to any Restricted Stock granted to you under the Incentive Plan as of the time of the Change in Control which you forfeit as a result of your termination of employment, the fair market value of such 5 Brian D. Moriarty August 4, 2000 Page 5 Restricted Stock, determined as of your Date of Termination and as if all restrictions had been removed. (iii) For purposes of this Section 5, "Stock," "Options," "Option Price," "Restricted Stock" and "Committee" will have the meaning given those terms in the Incentive Plan, and your right to exercise Options or to receive Restricted Stock without forfeiture will be determined after any adjustments made by the Committee under Sections 8.8 and 11.1 of the Incentive Plan, and after any amendments made to the Incentive Plan in connection with the Change in Control. (iv) For purposes of this Section 5, "Change in Control" will have the following meaning: (a) a plan has been approved by the shareholders of FFBC and consummated for FFBC to be merged or consolidated with another corporation and as a result of such merger or consolidation less than 75% of the outstanding voting securities of the surviving or resulting corporation will be owned in the aggregate by the former shareholders of FFBC as the same shall have existed immediately prior to such merger or consolidation; (b) an agreement for the sale by FFBC of substantially all of its assets to another corporation which is not a wholly owned subsidiary has been approved by the shareholders (or the Board of Directors or appropriate officers if shareholder approval is not required) and consummated; (c) "beneficial ownership" as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") of twenty percent (20%) or more of the total voting capital stock of FFBC then issued and outstanding has been acquired by any person or "group" as defined in Section 13(d)(3) of the Exchange Act; or (d) individuals who were members of the Board of FFBC immediately prior to a meeting of the shareholders of FFBC involving a contest for the election of directors do not constitute a majority of the Board immediately following such election, unless the election of such new directors was recommended to the shareholders by the management of FFBC. The Board of FFBC has final authority to determine the exact date on which a Change in Control has occurred under the foregoing definitions. (d) your Employment Benefits shall be continued during your Severance Pay Period, subject to the right of FFBC to make any changes to your Employment Benefits permitted in accordance with Section 2; provided, however, that you shall not: (i) accumulate vacation pay for periods after your Date of Termination; (ii) first qualify for long-term disability benefits or sickness and accident plan benefits by reason of an illness, accident or disability occurring, or a sickness or illness first manifesting itself, after your Date of Termination; 6 Brian D. Moriarty August 4, 2000 Page 6 (iii) be eligible to continue to make contributions to any Internal Revenue Code Section 401(k) plan maintained by FFBC or qualify for a share of any employer contribution made to any tax-qualified defined contribution plan; (iv) be eligible to accumulate service for pension plan purposes; or (v) retain possession of any motor vehicle provided to you by FFBC. (e) you shall qualify for full COBRA health benefit continuation coverage upon the expiration of your Severance Pay Period; (f) you shall be entitled to full executive outplacement assistance with an agency selected by FFBC with the fee paid by FFBC in an amount not to exceed five percent (5%) of your annual base salary; (g) with respect to the Endorsement Method Split Dollar Plan Agreement (the "Split Dollar Agreement") to which you are a party (and solely for purposes of the Split Dollar Agreement), the duration of your Severance Pay Period shall be considered as if it were active employment for purposes of determining whether you were eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan, as provided in Section VI(B) of the Split Dollar Agreement; and (h) if your Date of Termination is within twelve (12) months after a Change in Control, you will receive a payment (the "Split Dollar Payment") within ninety (90) days of your Date of Termination in one lump-sum equal to the present value of the death benefit you would have received under the Split Dollar Agreement, determined as if you had terminated on your Date of Termination, were then eligible to receive a retirement benefit under the early retirement provisions of First Financial Bancorp Employees' Pension Plan (whether or not this is actually the case), and died at age 75 when the Split Dollar Agreement was still in effect. For purposes of this Section 5, present value will be determined using an annual discount rate of 7%. Notwithstanding the prior two sentences, if you elect to receive an assignment of the policy under Section X of the Split Dollar Agreement, the Split Dollar Payment shall be applied to the cash payment to FFBC required under Section X of the Split Dollar Agreement, and any portion of the Split Dollar Payment in excess of the amount required under Section X shall be paid to you. The provisions of this Paragraph (g) will apply whether or not your Split Dollar Agreement is terminated before you receive the Split Dollar Payment. (i) Notwithstanding any other provision of this Agreement, if the receipt of any payment under Section 5 of this Agreement in combination with any other 7 Brian D. Moriarty August 4, 2000 Page 7 payments to you from FFBC or its affiliates that are parachute payments (as defined in Section 280G of the Internal Revenue Code), shall, in the opinion of independent tax counsel of recognized standing selected by FFBC, cause you to be liable for the payment of any excise tax pursuant to Section 280G and Section 4999 of the Internal Revenue Code, then FFBC will pay to you an additional amount equal to the amount of such excise tax and the additional federal, state, and local income taxes for which you will be liable as a result of this additional payment. Such payment will be made within 60 days of the date your employment terminates. The release and covenant not to sue which you agree to provide prior to the receipt of special severance benefits under this Section 5 of this Agreement shall comply with the requirements of the Older Workers Benefit Protection Act and applicable state and federal laws and regulations. If you do not provide FFBC with such a written release and covenant not to sue, any claims concerning this Agreement or otherwise arising from your employment with FFBC, or its affiliate banks, shall be subject to final and binding arbitration as described in Section 7. 6. Benefits Upon Voluntary Termination or Termination for Cause. Upon your Date of Termination for Cause in accordance with Section 4(b) or your Voluntary Date of Termination in accordance with Section 4(c), all special severance benefits under this Agreement will be void. In such an event, you shall be eligible for any benefits provided in accordance with the plans and practices of FFBC that are applicable to employees generally. 7. Arbitration. Any dispute under this Agreement, and any claims of wrongful or discriminatory termination based on any state or federal statute, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination, shall be submitted to final and binding arbitration, subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective June 1, 1997, as amended from time to time, except as hereinafter provided: (a) FFBC shall pay the arbitrator's fee and a court reporter's attendance fee; (b) Each party shall bear the cost of its own attorney's fees. However, if you prevail in a challenge to FFBC's determination as to cause for your termination or if you prevail on any claim that you were discriminated against in violation of any federal law or statute, you shall be reimbursed by FFBC for the filing fee and any 8 Brian D. Moriarty August 4, 2000 Page 8 reasonable costs or expenses incurred in such a challenge, including reasonable attorney's fees; (c) The arbitration hearing shall be held in Hamilton, Ohio, unless the parties mutually agree to another location; (d) Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to two (2) pre-hearing depositions of two (2) hours each, unless the arbitrator orders additional discovery; (e) The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association as amended from time to time, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its Roster and the parties shall select the arbitrator by alternately striking names with the party requesting arbitration first striking; and (f) Either party shall be entitled to an injunction or other appropriate equitable relief to enforce the arbitration provisions of this Agreement and FFBC shall be entitled to an injunction to prevent any breach, pending arbitration, of the Confidentiality Agreement described below in paragraph 8 or the Covenant Not to Compete described below in paragraph 10. It is the intention of the parties to avoid litigation in any court of all claims concerning this Agreement, or otherwise arising from your employment with FFBC, or its affiliate bank, and that all such claims will be subject to this arbitration agreement. Neither party shall commence or pursue any litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate and the arbitration award are enforceable under and subject to the Federal Arbitration Act, 9 U.S.C. Section I, et seq. ("FAA"). If the FAA is held not to apply for any reason and the law of the state in which you are employed recognizes the enforceability of this Agreement and the arbitration award, then this Agreement and the arbitration award are enforceable under the laws of the state in which you are employed. Both parties consent that judgment upon the arbitration award may be entered in any federal or state court that has jurisdiction. The acceptance of any benefit under this Agreement shall be deemed ratification of this agreement to arbitrate claims. In the event you breach this Agreement by filing a lawsuit, at the time your lawsuit is filed, you will return any Special Severance Benefits paid to you and be subject to injunctive relief enforcing this Agreement. 9 Brian D. Moriarty August 4, 2000 Page 9 8. Confidentiality. You will not disclose to any person or use for the benefit of yourself or any other person any confidential or proprietary information of FFBC without the prior written consent of the Chief Executive Officer of FFBC. Upon your termination of employment, you will return to FFBC all written or electronically stored memoranda, notes, plans, customer lists, records, reports or other documents of any kind or description (including all copies in any form whatsoever) relating to the business of FFBC and fully comply with any separate confidentiality agreement to which you and FFBC are parties. 9. Conflicts of Interest. You agree for so long as you are employed by FFBC to avoid dealings and situations that would create the potential for a conflict of interest with FFBC. In this regard, you agree to comply with the FFBC policy regarding conflicts of interest and all applicable state or federal regulations concerning conflicts of interest applicable to commercial bank or savings bank officers. 10. Covenant Not to Compete. During the term of your employment, and for a period of six (6) months following the termination of your employment for any reason other than as set forth in Section 4(b), you agree not to be employed by, serve as officer or director of, consultant to or advisor to any business that engages either directly or indirectly in commercial banking, savings banking or mortgage lending in the geographic area of Ohio, Indiana, Michigan or Kentucky or which is reasonably likely to engage in such businesses in the same geographic area during the six (6) month period following your termination of employment. 11. Notice. Notices required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, in a properly addressed envelope. Notices to FFBC shall be addressed to the Chief Executive Officer. 12. Modification; Waiver; Successors. No provision of this Agreement may be waived, modified or discharged except pursuant to a written instrument signed by you and the Chief Executive Officer of FFBC. This Agreement is binding upon any successor to all or substantially all of the business or assets of FFBC. 10 Brian D. Moriarty August 4, 2000 Page 10 13. Validity; Counterparts. This Agreement shall be governed by and construed under the law of the State of Ohio. The validity or unenforceability of any provision hereof shall not affect the validity or enforceability of any other provision hereof. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Sincerely yours, FIRST FINANCIAL BANCORP By:___________________________ and FIRST NATIONAL BANK OF SOUTHWESTERN OHIO By:___________________________ ACCEPTED AND AGREED TO THIS ____ DAY OF AUGUST, 2000 __________________________________ Brian D. Moriarty EX-27 7 l84893aex27.txt FINANCIAL DATA SCHEDULE EX-27
9 0000708955 FIRST FINANCIAL BANCORP. 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 168,196 15,490 2,647 0 557,395 28,394 28,966 3,064,401 40,487 3,986,314 3,082,419 315,784 35,302 166,778 0 0 374,327 11,704 3,986,314 207,432 27,147 718 235,297 83,982 106,884 128,413 7,257 37 88,518 65,203 43,388 0 0 43,388 0.93 0.93 8.72 16,480 5,093 721 0 39,340 7,885 1,775 40,487 40,487 0 0
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