10-Q

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 March 31, 2010                                                                               

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.)

201 East Fourth Street, Suite 1900
Cincinnati, Ohio	45202
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code   (513) 979-5837 

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

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

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

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

Yes  ¨  No  x

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

Class	Outstanding at May 7, 2010
Common stock, No par value	57,850,210

FIRST FINANCIAL BANCORP.

INDEX

	Page No.
Part I-FINANCIAL INFORMATION
Item 1-Financial Statements
Consolidated Balance Sheets - March 31, 2010 and December 31, 2009 (unaudited)		1
Consolidated Statements of Income - Three Months Ended March 31, 2010 and 2009 (unaudited)		2
Consolidated Statements of Cash Flows - Three Months Ended March 31, 2010 and 2009 (unaudited)		3
Consolidated Statements of Changes in Shareholders’ Equity - Three Months Ended March 31, 2010 and 2009 (unaudited)		4
Notes to Consolidated Financial Statements (unaudited)		5
Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3-Quantitative and Qualitative Disclosures about Market Risk		42
Item 4-Controls and Procedures		43
Part II-OTHER INFORMATION
Item 1-Legal Proceedings		44
Item 1A-Risk Factors		46
Item 2-Unregistered Sales of Equity Securities and Use of Proceeds		58
Item 6-Exhibits		60
Signatures		63

PART I - FINANCIAL INFORMATION

ITEM I - FINANCIAL STATEMENTS

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

(Dollars in thousands, except per share data)

(Unaudited)

	March 31,			December 31,
	2010			2009
ASSETS
Cash and due from banks	$	308,330		$	344,150
Interest-bearing deposits with other banks		416,619			262,017
Investment securities trading		0			200
Investment securities available-for-sale, at market value (cost $412,887 at March 31, 2010 and $454,953 at December 31, 2009)		430,519			471,002
Investment securities held-to-maturity (market value $18,403 at March 31, 2010 and $18,590 at December 31, 2009)		17,903			18,115
Other investments		87,029			89,830
Loans held for sale		3,243			6,413
Loans:
Commercial		763,084			800,261
Real estate-construction		216,289			253,223
Real estate-commercial		1,091,830			1,079,628
Real estate-residential		306,769			321,047
Installment		78,682			82,989
Home equity		330,973			328,940
Credit card		27,960			29,027
Lease financing		15			14
Total loans, excluding covered loans		2,815,602			2,895,129
Covered loans		1,828,158			1,929,549
Total loans		4,643,760			4,824,678
Less:  Allowance for loan losses		56,642			59,311
Net loans		4,587,118			4,765,367
Premises and equipment		115,836			107,351
Goodwill		51,908			51,908
Other intangibles		7,058			7,461
FDIC indemnification asset		301,961			316,040
Accrued interest and other assets		244,902			241,269
TOTAL ASSETS	$	6,572,426		$	6,681,123
LIABILITIES
Deposits:
Interest-bearing	$	1,042,790		$	1,060,383
Savings		1,303,737			1,231,081
Time		2,135,683			2,229,500
Total interest-bearing deposits		4,482,210			4,520,964
Noninterest-bearing		741,476			829,676
Total deposits		5,223,686			5,350,640
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase		38,443			37,430
Total short-term borrowings		38,443			37,430
Long-term debt		394,404			404,716
Other long-term debt		20,620			20,620
Accrued interest and other liabilities		202,305			192,550
TOTAL LIABILITIES		5,879,458			6,005,956
SHAREHOLDERS' EQUITY
Preferred stock - $1,000 par value Authorized - 80,000 shares Outstanding - 0 shares in 2010 and 80,000 shares in 2009		0			79,195
Common stock - no par value Authorized - 160,000,000 shares Issued - 68,730,731 shares in 2010 and 62,358,614 shares in 2009		581,747			490,532
Retained earnings		305,239			301,328
Accumulated other comprehensive loss		(9,091	)		(10,487	)
Treasury Stock, at cost, 10,896,762 shares in 2010 and 10,924,793 shares in 2009		(184,927	)		(185,401	)
TOTAL SHAREHOLDERS' EQUITY		692,968			675,167
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	6,572,426		$	6,681,123

See notes to consolidated financial statements.

1

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three months ended
	March 31,
	2010			2009
Interest income
Loans, including fees	$	79,338		$	33,657
Investment securities
Taxable		5,396			8,690
Tax-exempt		235			434
Total investment securities interest		5,631			9,124
Other earning assets		5,590			0
Total interest income		90,559			42,781
Interest expense
Deposits		15,648			9,803
Short-term borrowings		19			507
Long-term borrowings		2,557			1,306
Subordinated debentures and capital securities		315			237
Total interest expense		18,539			11,853
Net interest income		72,020			30,928
Provision for loan losses		11,378			4,259
Net interest income after provision for loan losses		60,642			26,669
Noninterest income
Service charges on deposit accounts		5,611			4,079
Trust and wealth management fees		3,545			3,289
Bankcard income		1,968			1,291
Net gains from sales of loans		169			384
(Loss) income on preferred securities		(30	)		11
Other		8,105			2,979
Total noninterest income		19,368			12,033
Noninterest expenses
Salaries and employee benefits		30,241			17,653
Net occupancy		8,122			2,817
Furniture and equipment		2,273			1,802
Data processing		1,232			818
Marketing		1,074			640
Communication		1,208			671
Professional services		1,743			953
State intangible tax		1,331			668
FDIC expense		2,010			282
Other		12,920			3,630
Total noninterest expenses		62,154			29,934
Income before income taxes		17,856			8,768
Income tax expense		6,258			3,033
Net income		11,598			5,735
Dividends on preferred stock		1,865			578
Net income available to common shareholders	$	9,733		$	5,157
Net earnings per common share - basic:	$	0.18		$	0.14
Net earnings per common share - diluted:	$	0.17		$	0.14
Cash dividends declared per share	$	0.10		$	0.10
Average basic shares outstanding		55,161,551			37,142,531
Average diluted shares outstanding		56,114,424			37,840,954

See notes to consolidated financial statements.

2

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollars in thousands)

	Three months ended
	March 31,
	2010			2009
Operating activities
Net income	$	11,598		$	5,735
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan and lease losses		11,378			4,259
Provision for depreciation and amortization		2,668			1,910
Stock-based compensation expense		716			782
Pension expense		475			630
Net amortization of premiums and accretion of discounts on investment securities		294			303
Loss (income) on trading securities		30			(11	)
Originations of loans held for sale		(12,711	)		(43,998	)
Net gains from sales of loans held for sale		(169	)		(384	)
Proceeds from sales of loans held for sale		16,051			41,842
Deferred income taxes		12,701			0
Decrease in interest receivable		3,511			267
(Increase) decrease in cash surrender value of life insurance		(350	)		119
Increase in prepaid expenses		(1,472	)		(1,080	)
Decrease in indemnification asset		14,079			0
Decrease in accrued expenses		(12,191	)		(416	)
Increase (decrease) in interest payable		3,864			(546	)
Other		13,972			(2,004	)
Net cash provided by operating activities		64,444			7,408
Investing activities
Proceeds from sales of securities available-for-sale		0			29
Proceeds from calls, paydowns and maturities of securities available-for-sale		41,896			45,177
Purchases of securities available-for-sale		(124	)		(112,931	)
Proceeds from calls, paydowns and maturities of securities held-to-maturity		263			265
Purchases of securities held-to-maturity		(51	)		0
Net increase in interest-bearing deposits with other banks		(154,602	)		(7,055	)
Net decrease (increase) in loans and leases, excluding covered loans		50,125			(57,701	)
Net decrease in covered loans		101,391			0
Proceeds from disposal of other real estate owned		1,413			1,236
Purchases of premises and equipment		(10,870	)		(2,996	)
Net cash provided by (used in) investing activities		29,441			(133,976	)
Financing activities
Net (decrease) increase in total deposits		(126,954	)		108,441
Net increase in short-term borrowings		1,013			8,016
Payments on long-term borrowings		(8,753	)		(11,332	)
Cash dividends paid on common stock		(5,143	)		(6,950	)
Cash dividends paid on preferred stock		(1,100	)		0
Redemption of preferred stock		(80,000	)		0
Issuance of common stock		91,192			0
Proceeds from exercise of stock options		33			0
Excess tax liability on share-based compensation		7			(34	)
Net cash (used in) provided by financing activities		(129,705	)		98,141
Cash and cash equivalents:
Net decrease in cash and cash equivalents		(35,820	)		(28,427	)
Cash and cash equivalents at beginning of period		344,150			100,935
Cash and cash equivalents at end of period	$	308,330		$	72,508

See notes to consolidated financial statements.

3

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, dollars in thousands except per share data)

	Preferred			Preferred			Common		Common						Accumulated other
	Stock			Stock			Stock		Stock			Retained			comprehensive			Treasury stock
	Shares			Amount			Shares		Amount			earnings			income (loss)			Shares			Amount			Total
Balances at January 1, 2009		80,000		$	78,019			48,558,614	$	394,169		$	76,339		$	(11,905	)		(11,077,413	)	$	(188,295	)	$	348,327
Net income													5,735												5,735
Unrealized holding gains (losses) on securities available-for-sale arising during the period																3,619									3,619
Change in retirement obligation																180									180
Unrealized loss on derivatives-Prime Swap market value adj.																(119	)								(119	)
Unrealized loss on derivatives-Trust Preferred Swap market value adj.																(339	)								(339	)
Total comprehensive income																									9,076
Cash dividends declared :
Common stock at $0.10 per share													(3,745	)											(3,745	)
Preferred stock													(578	)											(578	)
Discount on preferred stock					56								(56	)											0
Excess tax liability on share-based compensation										(34	)														(34	)
Restricted stock awards, net of forfeitures										(30	)								(6,779	)		(38	)		(68	)
Share-based compensation expense										782															782
Balances at March 31, 2009		80,000			78,075			48,558,614		394,887			77,695			(8,564	)		(11,084,192	)		(188,333	)		353,760
Balances at January 1, 2010		80,000			79,195			62,358,614		490,532			301,328			(10,487	)		(10,924,793	)		(185,401	)		675,167
Net income													11,598												11,598
Unrealized holding gains on securities available-for-sale arising during the period																862									862
Change in retirement obligation																557									557
Unrealized loss on derivatives-Prime Swap market value adj.																(121	)								(121	)
Unrealized loss on derivatives-Trust Preferred Swap market value adj.																(204	)								(204	)
Foreign Currency Exchange																302									302
Total comprehensive income																									12,994
Issuance of common stock								6,372,117		91,192															91,192
Preferred stock-CPP payoff		(80,000	)		(79,235	)																			(79,235	)
Cash dividends declared :
Common stock at $0.10 per share													(5,782	)											(5,782	)
Preferred stock													(1,100	)											(1,100	)
Discount on preferred stock					40								(805	)											(765	)
Excess tax benefit on share-based compensation										7															7
Exercise of stock options, net of shares purchased										(700	)								38,695			309			(391	)
Restricted stock awards, net of forfeitures																			(10,664	)		165			165
Share-based compensation expense										716															716
Balances at March 31, 2010		0		$	0			68,730,731	$	581,747		$	305,239		$	(9,091	)		(10,896,762	)	$	(184,927	)	$	692,968

See Notes to Consolidated Financial Statements.

4

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2010

(Unaudited)

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

NOTE 1:  BASIS OF PRESENTATION

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

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.  Actual realized amounts could differ materially from those estimates.  These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and serve to update the First Financial Bancorp. Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2009.  These financial statements may not include all information and notes necessary to constitute a complete set of financial statements under GAAP applicable to annual periods and accordingly should be read in conjunction with the financial information contained in the Form 10-K.  Management believes these unaudited consolidated financial statements reflect all adjustments of a normal recurring nature which are necessary for a fair presentation of the results for the interim periods presented.  The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.  The Consolidated Balance Sheet as of December 31, 2009, has been derived from the audited financial statements in the company’s 2009 Form 10-K.

The Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) became effective July 1, 2009.  At that date, the ASC became the FASB’s officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities, superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Tax Force, and related literature.  Rules and interpretive releases of the Securities and Exchange Commission (SEC) under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  All other accounting literature is considered non-authoritative.  The change to ASC affects the way companies refer to GAAP in financial statements and accounting policies.  Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section, and Paragraph structure.

NOTE 2:  RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

Effective January 1, 2010, First Financial adopted the amended guidance on the consolidation  of variable interest entities in ASC Topic 810.  This guidance affects all entities and enterprises currently within its scope, as well as qualifying special purpose entities that were previously outside of its scope, and is effective for fiscal years beginning after November 15, 2009, with early adoption prohibited.  The adoption of this guidance did not have a material impact on First Financial’s Consolidated Financial Statements.

Effective January 1, 2010, First Financial adopted the amended guidance on derecognition on transfers of financial assets in ASC Topic 860, Transfers and Servicing.  This guidance removes the concept of a qualifying special-purpose entity and removes the exception from applying ASC Topic 810, Consolidations, to qualifying special-purpose entities.  This guidance applies prospectively to transfers of financial assets occurring on or after the effective date and is effective for fiscal years beginning after November 15, 2009, with early adoption prohibited.  The adoption of this guidance did not have a material impact on First Financial’s Consolidated Financial Statements.

Effective January 1, 2010, First Financial adopted the amended guidance on variable interest entities in ASC Topic 810-10. This guidance replaces the quantitative-based risks-and-rewards calculation for determining which reporting entity, if any, has controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has (1) the power to direct the activities of a variable interest entity that most significantly affect the entity’s economic performance and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity. This guidance also requires additional disclosures about a reporting entity’s involvement with variable interest entities and about any significant changes in risk exposure as a result of that involvement. The adoption of this guidance did not have a material impact on First Financial’s Consolidated Financial Statements.

5

Effective January 1, 2010 First Financial adopted the amended guidance on fair value disclosures in ASC Topic 820, Fair Value Measurements and Disclosures. This amended guidance requires disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. The guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value and amends guidance on employers’ disclosures about postretirement benefit plan assets under ASC Topic 715, Compensation – Post Retirement Benefits, to require that disclosures be provided by classes of assets instead of by major categories of assets. This guidance is effective for the first reporting period, including interim periods, beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. For further detail on First Financial’s fair value measurements and disclosures, see Note 14 - Fair Value Disclosures.

NOTE 3:  BUSINESS COMBINATIONS

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

Prior to the acquisition, Peoples operated 19 banking centers in the Cincinnati, Ohio metropolitan area.  Excluding the effects of purchase accounting adjustments, First Financial acquired $579.6 million in assets and assumed approximately $520.8 million of the deposits of Peoples.

In connection with the Peoples acquisition, First Financial Bank entered into a loss sharing agreement with the FDIC that covers $449.7 million of assets, based upon seller’s records, including single family residential mortgage loans, commercial real estate and commercial and industrial loans, and OREO (collectively covered assets).  First Financial acquired other Peoples assets that are not covered by the loss sharing agreement with the FDIC including investment securities purchased at fair market value and other tangible assets.  Pursuant to the terms of the loss sharing agreement, the covered assets are subject to a stated loss threshold of $190.0 million whereby the FDIC will reimburse First Financial for 80% of losses of up to $190.0 million, and 95% of losses in excess of this amount. First Financial will reimburse the FDIC for its share of recoveries with respect to losses for which the FDIC paid First Financial a reimbursement under the loss sharing agreement. The FDIC’s obligation to reimburse First Financial for losses with respect to covered assets begins with the first dollar of loss incurred.

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

Prior to the acquisition, Irwin operated 27 banking centers primarily located in Indiana, with banking centers also located in Michigan, Nevada, Arizona, California, Kentucky, Missouri, New Mexico and Utah. Excluding the effects of purchase accounting adjustments, First Financial acquired $2.6 billion in assets and assumed approximately $2.5 billion of the deposits of Irwin.

In connection with the Irwin acquisitions, First Financial Bank entered into loss sharing agreements with the FDIC that collectively cover approximately $2.2 billion of assets, based upon seller’s records, which include single family residential mortgage loans, commercial real estate and commercial and industrial loans (covered assets). First Financial acquired other Irwin assets that are not covered by loss sharing agreements with the FDIC including investment securities purchased at fair market value and other tangible assets. Pursuant to the terms of the loss sharing agreements, the covered assets of Irwin Union Bank are subject to a stated loss threshold of $526.0 million whereby the FDIC will reimburse First Financial for 80% of losses of up to $526.0 million, and 95% of losses in excess of this amount. Also pursuant to the terms of the loss sharing agreements, the covered assets of Irwin FSB are subject to a stated loss threshold of $110.0 million whereby the FDIC will reimburse First Financial for 80% of losses of up to $110.0 million, and 95% of losses in excess of this amount. First Financial will reimburse the FDIC for its share of recoveries with respect to losses for which the FDIC paid First Financial a reimbursement under the loss sharing agreements. The FDIC’s obligation to reimburse First Financial for losses with respect to covered assets begins with the first dollar of loss incurred.

6

The amounts covered by the loss sharing agreements are the pre-acquisition book values of the underlying covered assets, the contractual balance of unfunded commitments that were acquired, and certain future net direct costs. The loss sharing agreements applicable to single family residential mortgage loans provide for FDIC loss sharing and First Financial reimbursement to the FDIC, in each case as described above, for ten years. The loss sharing agreements applicable to all other covered assets provide for FDIC loss sharing for five years and First Financial reimbursement of recoveries to the FDIC for eight years, in each case as described above.

The loss sharing agreements are subject to certain servicing procedures as specified in agreements with the FDIC. The expected reimbursements under the loss sharing agreements were recorded as indemnification assets at their estimated fair values of $69.7 million and $247.0 million for the Peoples Agreement and the Irwin Agreements, respectively, on the acquisition dates. The indemnification assets reflect the present value of the expected net cash reimbursement related to the loss sharing agreements described above.

The estimated fair value of liabilities assumed exceeded the estimated fair value of assets acquired in the Peoples acquisition, resulting in the recognition of goodwill in the amount of approximately $18.1 million. In the Irwin acquisition, the estimated fair value of assets acquired exceeded the estimated fair value of liabilities assumed, resulting in a bargain purchase gain of $379.1 million and the recognition of a $238.4 million after-tax gain.

First Financial did not acquire the real estate, banking facilities, furniture and equipment of Peoples as part of the purchase and assumption agreement but has the option to purchase these assets at fair market value from the FDIC. This purchase option expires 90 days after acquisition date, but was extended by the FDIC. First Financial completed a review of the former Peoples locations and notified the FDIC during the first quarter of 2010 of the company’s intent to purchase certain properties for a combined purchase price of $7.9 million. The acquisition date for these properties has not been determined at this time.

First Financial has determined that the acquisitions of the net assets of Peoples and Irwin constitute business combinations as defined by the FASB ASC Topic 805, Business Combinations.  Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required.  Fair values were determined based on the requirements of FASB ASC Topic 820, Fair Value Measurements.  In many cases the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change.

Early in the fourth quarter of 2009, First Financial successfully completed the technology conversion and operational integration of Peoples.  The conversion of Irwin’s technology and operational systems was completed in the first quarter of 2010.  During the first quarter of 2010, in conjunction with the planning and product mapping of the Irwin technology integration, First Financial determined that certain non-interest bearing, interest bearing and other savings accounts products were ultimately classified in categories different than had been previously reported.  Based upon this updated product level information, the previously reported deposit line items in the third and fourth quarters of 2009 have been reclassified to reflect the classifications as shown in the first quarter 2010 reporting.  This reclassification did not change the total amount of outstanding deposits in any reported period, only individual line items.

First Financial and the FDIC are engaged in on-going discussions that may impact which assets and liabilities are ultimately acquired or assumed by First Financial and/or the purchase prices.  In addition, the tax treatment of FDIC assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the acquisition dates.

Estimated fair values are considered preliminary and, in accordance with FASB ASC Topic 805, are subject to change up to one year after the acquisition date.  This allows for adjustments to the initial purchase entries if additional information relative to closing date fair values becomes available.  Adjustments to acquisition date estimated fair values are recorded in the period in which the acquisition occurred and, as a result, previously reported results are subject to change.  Certain reclassifications of prior periods’ amounts may also be made to conform to the current period’s presentation and would have no effect on previously reported net income amounts.

7

	Peoples							Irwin
	As Recorded		Fair Value			As Recorded		As Recorded		Fair Value			As Recorded
(Dollars in thousands)	by FDIC		Adjustments			by FFB		by FDIC		Adjustments			by FFB
Assets
Cash and interest-bearing deposits	$	87,158	$	0		$	87,158	$	158,786	$	0		$	158,786
Investment securities		37,681		0			37,681		70,700		0			70,700
							0
Covered loans		431,217		(106,751	)		324,466		2,237,158		(481,891	)		1,755,267
Total loans		431,217		(106,751	)		324,466		2,237,158		(481,891	)		1,755,267
Goodwill (Bargain Purchase)		0		18,106			18,106		0		(379,086	)		(379,086	)
Core deposit intangible		0		1,820			1,820		0		3,326			3,326
Covered other real estate owned		18,457		(7,728	)		10,729		796		0			796
FDIC indemnification asset		0		69,657			69,657		0		247,016			247,016
Other assets		5,115		(4,695	)		420		106,073		(9,488	)		96,585
Total assets acquired	$	579,628	$	(29,591	)	$	550,037		2,573,513	$	(620,123	)	$	1,953,390
Liabilities
Deposits
Noninterest-bearing deposit accounts	$	49,424	$	0		$	49,424	$	300,859	$	0		$	300,859
Interest-bearing deposit accounts		0		0			0		741,525		0			741,525
Savings deposits		168,220		0			168,220		79,987		0			79,987
Time deposits		303,135		0			303,135		1,376,076		0			1,376,076
Total deposits		520,779		0			520,779		2,498,447		0			2,498,447
Advances from Federal Home Loan Banks		58,940		4,598			63,538		337,433		17,685			355,118
Accrued expenses and other liabilities		344		0			344		32,638		0			32,638
Total liabilities assumed	$	580,063	$	4,598		$	584,661	$	2,868,518	$	17,685		$	2,886,203
Due from FDIC for net liabilities assumed	$	435	$	34,189		$	34,624	$	295,005	$	637,808		$	932,813

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.

Cash and due from banks and interest-bearing deposits in banks and the Federal Reserve – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment Securities – Investment securities were acquired from the FDIC at fair market value.

Covered loans – Fair values for covered loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, loan term and whether or not the loan was amortizing, and current discount rates.  The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows.  Fair values of covered loans include both a rate-based valuation mark, representing the carrying value discount required to establish the appropriate effective yield for covered loans, as well as a credit-based valuation mark representing the valuation adjustment applied to covered loans related to credit loss assumptions.

Core deposit intangible – This intangible asset represents the value of the relationships that Peoples and Irwin had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, and the net maintenance cost attributable to customer deposits.

Covered other real estate owned – Covered OREO is presented at the estimated present value that management expects to receive when the property is sold, net of related costs of disposal.

FDIC indemnification asset – This loss sharing asset is measured separately from the related covered assets as it is not contractually embedded in the covered assets and is not transferable with the covered assets should First Financial choose to dispose of them. Fair value was estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages.  These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC.  

8

Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date.  No fair value adjustment was applied for time deposits as First Financial was provided with the option, upon acquisition, to reset deposit rates to market rates currently offered.

Advances from Federal Home Loan Banks – The fair values of Federal Home Loan Bank (FHLB) advances were based on contractual pre-payment penalties that are determined by the FHLB.

NOTE 4:  GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Changes in the net carrying amount of goodwill are shown below.  No changes to goodwill were recorded in 2010.

(Dollars in thousands)
Balance at December 31, 2008	$	28,261
Goodwill acquired:
Peoples Community Bank		18,107
Branch Acquisition		5,540
Balance at December 31, 2009	$	51,908

Assets and liabilities of acquired entities are recorded at their estimated fair values as of the acquisition date and are subject to refinement for up to one year as information relative to the fair values of that data becomes available. The change in the goodwill for 2009 was a result of the purchase accounting adjustments related to the FDIC-assisted transaction in July of 2009 for Peoples Community Bank and the August of 2009 purchase of three branches, and related loans and deposits, from Irwin Union Bank and Trust Company. First Financial expects all the goodwill resulting from the acquisitions described above to be deductible for tax purposes.

Goodwill is not amortized, but is measured for impairment on an annual basis as of October 1 of each year or whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value. First Financial performed its annual impairment test as of October 1, 2009, and determined that no impairment was indicated.

Other intangible assets

Other intangible assets consist of mortgage servicing rights, core deposit intangibles, and insurance expirations. Intangible assets, excluding servicing rights, are primarily amortized on an accelerated basis over their estimated useful lives and have an estimated weighted average life of 9.3 years.

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Other intangible assets consisted of the following:

	March 31, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
(Dollars in thousands)	Amount		Amortization			Amount
Core deposit intangibles	$	5,691	$	(705	)	$	4,986
Mortgage servicing rights		2,065		(117	)		1,948
Other		178		(54	)		124
Total other intangible assets	$	7,934	$	(876	)	$	7,058

	December 31, 2009
	Gross					Net
	Carrying		Accumulated			Carrying
(Dollars in thousands)	Amount		Amortization			Amount
Core deposit intangibles	$	5,691	$	(332	)	$	5,359
Mortgage servicing rights		2,072		(96	)		1,976
Other		178		(52	)		126
Total other intangible assets	$	7,941	$	(480	)	$	7,461

Mortgage Servicing Rights

Changes in capitalized mortgage servicing rights are summarized as follows:

	March 31,
(Dollars in thousands)	2010			2009
Balance at beginning of year	$	1,976		$	398
Rights capitalized		0			0
Amortization		(28	)		(29	)
Rights sold		0			0
Balance at end of period	$	1,948		$	369

Due to the acquisition of Irwin Union Bank in 2009, First Financial acquired $1.9 million in servicing rights.  No new servicing rights were capitalized.

The estimated fair value of capitalized mortgage servicing rights was $1.9 million at March 31, 2010, and $2.0 million at December 31, 2009.

NOTE 5:  COMMITMENTS AND CONTINGENCIES

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

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

Standby letters of credit – These transactions are conditional commitments issued by First Financial to guarantee the performance of a client to a third party.  First Financial’s portfolio of standby letters of credit consists primarily of performance assurances made on behalf of clients who have a contractual commitment to produce or deliver goods or services.  The risk to First Financial arises from its obligation to make payment in the event of the clients’ contractual default to produce the contracted good or service to a third party.  First Financial has issued standby letters of credit aggregating $32.8 million and $22.9 million at March 31, 2010, and December 31, 2009, respectively.

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

Loan commitments – Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the commitment.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  First Financial evaluates each client’s creditworthiness on an individual basis.  The amount of collateral obtained, if deemed necessary by First Financial upon extension of credit, is based on management’s credit evaluation of the counterparty.  The collateral held varies, but may include securities, real estate, inventory, plant, or equipment.  First Financial had commitments outstanding to extend credit totaling $1.1 billion at both March 31, 2010, and December 31, 2009.

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

NOTE 6:  INVESTMENTS

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

	Held-to-Maturity									Available-for-Sale
	Amortized		Unrealized		Unrealized			Market		Amortized		Unrealized		Unrealized			Market
(Dollars in thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Treasuries	$	13,908	$	193	$	(21	)	$	14,080	$	0	$	0	$	0		$	0
Securities of U.S. government agencies and corporations		0		0		0			0		10,043		472		0			10,515
Mortgage-backed securities		141		5		0			146		376,728		16,589		(176	)		393,141
Obligations of state and other political subdivisions		3,854		323		0			4,177		16,884		274		(123	)		17,035
Other securities		0		0		0			0		9,232		596		0			9,828
Total	$	17,903	$	521	$	(21	)	$	18,403	$	412,887	$	17,931	$	(299	)	$	430,519

The following is a summary of held-to-maturity and available-for-sale investment securities as of December 31, 2009.

	Held-to-Maturity									Available-for-Sale
	Amortized		Unrealized		Unrealized			Market		Amortized		Unrealized		Unrealized			Market
(Dollars in thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Treasuries	$	13,857	$	204	$	(31	)	$	14,030	$	0	$	0	$	0		$	0
Securities of U.S. government agencies and corporations		0		0		0			0		20,036		585		0			20,621
Mortgage-backed securities		149		1		0			150		407,221		15,407		(369	)		422,259
Obligations of state and other political subdivisions		4,109		301		0			4,410		17,949		303		(130	)		18,122
Other securities		0		0		0			0		9,747		266		(13	)		10,000
Total	$	18,115	$	506	$	(31	)	$	18,590	$	454,953	$	16,561	$	(512	)	$	471,002

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The following is a summary of debt investment securities by estimated maturity as of March 31, 2010.

	Held-to-Maturity				Available-for-Sale
	Amortized		Market		Amortized		Market
(Dollars in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	6,592	$	6,639	$	7,482	$	7,596
Due after one year through five years		9,988		10,292		331,239		346,277
Due after five years through ten years		433		495		59,828		61,729
Due after ten years		890		977		14,338		14,917
Total	$	17,903	$	18,403	$	412,887	$	430,519

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

	March 31, 2010
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. Treasuries	$	4,137	$	21	$	0	$	0	$	4,137	$	21
Mortgage-backed securities		20,432		84		2,928		92		23,360		176
Obligations of state and other political subdivisions		935		16		1,553		107		2,488		123
Total	$	25,504	$	121	$	4,481	$	199	$	29,985	$	320

	December 31, 2009
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. Treasuries	$	2,277	$	31	$	0	$	0	$	2,277	$	31
Mortgage-backed securities		23,800		266		1,608	$	103		25,408		369
Obligations of state and other political subdivisions		621		10		1,540	$	120		2,161		130
Other securities		312		13		0	$	0		312		13
Total	$	27,010	$	320	$	3,148	$	223	$	30,158	$	543

Unrealized losses on debt securities are generally due to higher current market yields relative to the yields of the debt securities at their amortized cost.  Unrealized losses due to credit risk associated with the underlying collateral of the debt security, if any, are not material.  All securities with unrealized losses are reviewed quarterly to determine if any impairment is other than temporary, requiring a write-down to fair market value. First Financial considers the percentage loss on a security, duration of the loss, average life or duration of the security, credit rating of the security, as well as payment performance and the company’s intent and ability to hold the security to maturity when determining whether any impairment is other than temporary. At this time First Financial does not intend to sell, and it is not more likely than not that the Company will be required to sell, debt security issues temporarily impaired prior to maturity or recovery of book value. First Financial had no other than temporary impairment charges for the three months ended March 31, 2010.

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First Financial had trading securities with a fair value of $0 at March 31, 2010, $0.2 million at December 31, 2009, and $0.1 million at March 31, 2009.  For further detail on the fair value of investment securities, see Note 14 – Fair Value Disclosures.

NOTE 7:  DERIVATIVES

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

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

	March 31, 2010						December 31, 2009						March 31, 2009
	Fair Value		Cash Flow				Fair Value		Cash Flow				Fair Value		Cash Flow
(Dollars in thousands)	Hedges		Hedges		Total		Hedges		Hedges		Total		Hedges		Hedges		Total
Instruments associated with:
Loans	$	472,432	$	0	$	472,432	$	456,077	$	0	$	456,077	$	366,864	$	0	$	366,864
Other long-term debt		0		20,000		20,000		0		20,000		20,000		0		20,000		20,000
Total notional value	$	472,432	$	20,000	$	492,432	$	456,077	$	20,000	$	476,077	$	366,864	$	20,000	$	386,864

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

First Financial manages this market value credit risk through counterparty credit policies. These policies require the company to maintain a total derivative notional position of less than 10 percent of assets, total credit exposure of less than 3 percent of capital, and no single counterparty credit risk exposure greater than $20 million. The company is currently well below all single counterparty and portfolio limits. At March 31, 2010, the company had a total counterparty notional amount outstanding of approximately $267.4 million, spread among six counterparties, with an outstanding liability from these contracts of $5.5 million.

In connection with its use of derivative instruments, First Financial from time to time is required to post cash collateral with its counterparties to offset its market position.  Derivative collateral balances were $9.2 million, $11.2 million, and $11.4 million at March 31, 2010, December 31, 2009, and March 31, 2009, respectively. First Financial classifies the derivative cash collateral outstanding with its counterparties as an adjustment to the fair value of the derivative contracts within accrued interest and other liabilities in the Consolidated Balance Sheets.

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

		March 31, 2010							December 31, 2009							March 31, 2009
	Balance	Notional		Estimated Fair Value					Notional		Estimated Fair Value					Notional		Estimated Fair Value
(Dollars in thousands)	Sheet Location	Amount		Gain		Loss			Amount		Gain		Loss			Amount		Gain		Loss
Fair Value Hedges
Pay fixed interest rate swaps with counterparty	Accrued interest and other liabilities	$	22,292		0	$	(2,112	)	$	22,559	$	0	$	(1,928	)	$	24,108	$	0	$	(3,057	)
Matched interest rate swaps with borrower	Accrued interest and other assets		225,070	$	12,143		0			216,759		10,226		(32	)		171,378		15,024		-
Matched interest rate swaps with counterparty	Accrued interest and other liabilities		225,070		0		(12,637	)		216,759		32		(10,661	)		171,378		0	$	(14,718	)
Cash Flow Hedge
Trust Preferred Swap	Accumulated other comprehensive loss		20,000		689		0			20,000		998		0			20,000		0		(533	)
Total		$	492,432	$	12,832	$	(14,749	)	$	476,077	$	11,256	$	(12,621	)	$	386,864	$	15,024	$	(18,308	)

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The following table details the derivative financial instruments, the average remaining maturities and the weighted-average interest rates being paid and received by First Financial at March 31, 2010:

			Average
	Notional		Maturity		Fair			Weighted-Average Rate
(Dollars in thousands)	Value		(years)		Value			Receive			Pay
Asset conversion swaps
Pay fixed interest rate swaps with counterparty	$	22,292		5.5	$	(2,112	)		2.24	%		6.82	%
Receive fixed, matched interest rate swaps with borrower		225,070		4.9		12,143			6.31	%		2.79	%
Pay fixed, matched interest rate swaps with counterparty		225,070		4.9		(12,637	)		2.79	%		6.31	%
Total asset conversion swaps	$	472,432		4.9	$	(2,606	)		4.45	%		4.67	%
Liability conversion swaps
Trust Preferred Swap	$	20,000		9.0	$	689			3.39	%		6.20	%
Total liability conversion swaps	$	20,000		9.0	$	689			3.39	%		6.20	%
Total swap portfolio	$	492,432		5.1	$	(1,917	)		4.41	%		4.74	%

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

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

			Increase (decrease) to Interest Income
(Dollars in thousands)			Three Months Ended
Derivatives in fair value		Location of change in fair value	March 31,			December 31,				March 31,
hedging relationships		recognized in earnings on derivative	2010			2009				2009
Interest Rate Contracts
	Loans	Interest Income - Loans	$	(260	)		$	(253	)	$	(252	)
Total			$	(260	)		$	(253	)	$	(252	)

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

Effective March 30, 2009, First Financial executed a cash flow hedge utilizing an interest rate swap to hedge against interest rate volatility on $20.0 million of floating rate trust preferred securities based on the London Inter-Bank Offered Rate (LIBOR).  The interest rate swap involves the receipt by First Financial of variable-rate interest amounts in exchange for fixed-rate interest payments by First Financial for a period of 10 years.  The net interest receivable or payable on the trust preferred interest rate swap is accrued and recognized as an adjustment to interest expense.  The fair value of the trust preferred interest rate swap is included in accrued interest and other assets or liabilities on the Consolidated Balance Sheets.  Changes in the fair value of the trust preferred interest rate swap are included in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.  The following table details the location and amounts recognized for cash flow hedges.

14

	Amount of gain or (loss)			Amount of gain or (loss)
	recognized in OCI on derivatives		Location of gain or	reclassified from accumulated
	(effective portion)		(loss) reclassified from	OCI into earnings (effective portion)
(Dollars in thousands)	Three Months Ended		accumulated OCI into	Three Months Ended
Derivatives in cash flow	March 31,		earnings (effective	March 31,
hedging relationships	2010		portion)	2010
Interest Rate Contracts
Other long-term debt	$	433	Interest Expense - Other long-term debt	$	(142	)
Total	$	433		$	(142	)

First Financial expects approximately $0.4 million of the unrecognized losses on cash flow hedges, net of taxes, at March 31, 2010 to be reclassified into earnings within the next 12 months.

During the first quarter of 2010, U.S. lawmakers moved closer to passing financial reform legislation, including new regulations on the use of derivatives.  First Financial continues to monitor these developments and assess the potential impact on its use of derivatives.

NOTE 8:  LONG-TERM DEBT

Long-term debt on the Consolidated Balance Sheets consists of FHLB long-term advances and repurchase agreements utilizing investment securities pledged as collateral. These instruments are primarily utilized to reduce overnight liquidity risk and to mitigate interest rate sensitivity on the balance sheet. During the third quarter of 2008, First Financial executed $115.0 million of these term debt instruments utilizing a combination of its funding sources such as pledging investment securities to collateralize $65.0 million in repurchase agreements and borrowing $50.0 million from the FHLB.  The $115.0 million of borrowings have remaining maturities between one and three years and a weighted average rate of 3.63%. Securities pledged as collateral in conjunction with the repurchase agreements are included within Investment securities available-for-sale on the Consolidated Balance Sheets. First Financial assumed additional FHLB long-term advances in the Peoples and Irwin acquisitions of $63.5 million and $216.3 million, respectively. As of March 31, 2010, the FHLB long-term advances assumed in the two transactions totaled $247.0 million and had remaining maturities between one and 15 years and a weighted average rate of 4.70%.

The following is a summary of long-term debt:
(Dollars in thousands)	March 31, 2010
	Amount		Average Rate
Federal Home Loan Bank	$	329,404		2.95	%
National Market Repurchase Agreement		65,000		3.50	%
Total long-term debt	$	394,404		3.04	%

NOTE 9:  OTHER LONG-TERM DEBT

Other long-term debt on the Consolidated Balance Sheets consists of junior subordinated debentures owed to unconsolidated subsidiary trusts.  Capital securities were issued in the third quarter of 2003 by a statutory business trust, First Financial (OH) Statutory Trust II (Trust II).

The debentures issued in 2003 were eligible for early redemption by First Financial in September of 2008. First Financial did not elect to redeem early, but under the terms of the agreement may redeem the securities on any interest payment date after September of 2008, with a final maturity in 2033.

First Financial owns 100% of the common equity of the remaining trust, Trust II. The trust was formed with the sole purpose of issuing the capital securities and investing the proceeds from the sale of such capital securities in the debentures. The debentures held by the trust are the sole asset of the trust. Distributions on the capital securities are payable quarterly at a variable rate of interest, which is equal to the interest rate being earned by the trust on the debentures and are recorded as interest expense of First Financial. The interest rate is subject to change every three months, indexed to the three-month London Inter-Bank Offered Rate (LIBOR).  During the first quarter of 2009, First Financial executed a cash flow hedge utilizing an interest rate swap to hedge against interest rate volatility on the $20.0 million of floating rate trust preferred securities. The interest rate swap involves the receipt by First Financial of variable-rate interest amounts in exchange for fixed-rate interest payments by First Financial for a period of 10 years.  The net interest receivable or payable on the trust preferred interest rate swap will be accrued and recognized as an adjustment to interest expense.  For further information on this cash flow hedge, see Note 7.

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First Financial has the option to defer interest for up to five years on the debentures. However, the debt covenants prevent the payment of dividends on First Financial’s common stock if the interest is deferred. The capital securities are subject to mandatory redemption, in whole or in part, upon repayment of the debentures. First Financial has entered into agreements which, taken collectively, fully or unconditionally guarantee the capital securities subject to the terms of the guarantees. The debenture currently qualifies as Tier I capital under Federal Reserve Board guidelines, but is limited to 25% of qualifying Tier I capital. The company has the capacity to issue approximately $149.1 million in additional qualifying debentures under these guidelines.

The following is a summary of other long-term debt:

(Dollars in $000’s)	Amount		Contractual Rate			Maturity Date
First Financial (OH) Statutory Trust II	$	20,000		3.39	%	09/30/2033

Effective March 30, 2009, First Financial executed a cash flow hedge utilizing an interest rate swap to hedge against interest rate volatility on $20.0 million of floating rate trust preferred securities indexed to the London Inter-Bank Offered Rate (LIBOR). The interest rate swap involves the receipt by First Financial of variable-rate interest amounts in exchange for fixed-rate interest payments by First Financial for a period of 10 years. This interest rate swap effectively fixed the rate of interest on the floating rate trust preferred securities at 6.20% for the 10 year life of the swap. The net interest receivable or payable on the trust preferred interest rate swap is accrued and recognized as an adjustment to interest expense. The fair value of the trust preferred interest rate swap is included in accrued interest and other assets or liabilities on the Consolidated Balance Sheets. Changes in the fair value of the trust preferred interest rate swap are included in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

NOTE 10:  COVERED LOANS

First Financial evaluates purchased loans for impairment in accordance with the provisions of FASB ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The cash flows expected to be collected on purchased loans are estimated based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments.  Purchased loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected. While is was determined that most purchased loans were not impaired, First Financial elected to account for all purchased loans under FASB ASC Topic 310-30 except loans with revolving privileges, which are outside the scope of this guidance, and loans for which cash flows could not be estimated, which are accounted for under the cost recovery method.  Purchased impaired loans were not classified as nonperforming assets at March 31, 2010 as the loans are considered to be performing under FASB ASC Topic 310-30.  Therefore, interest income, through accretion of the difference between the carrying value of the loans and the expected cash flows is being recognized on all purchased loans being accounted for under FASB ASC Topic 310-30.

The following table reflects the carrying value of all purchased impaired and nonimpaired loans as of March 31, 2010:

			Loans
			Excluded from		Total
	FASB ASC		FASB ASC		Purchased
(Dollars in thousands)	Topic 310-30		Topic 310-30(1)		Loans
Commercial	$	390,444	$	70,237	$	460,681
Real estate - construction		79,127		0		79,127
Real estate - commercial		968,040		10,941		978,981
Real estate - residential		205,706		78,759		284,465
Installment		7,434		7,394		14,828
Total loans		1,650,751		167,331		1,818,082
Other covered loans		0		10,076		10,076
Total covered loans	$	1,650,751	$	177,407	$	1,828,158

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

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The outstanding balance of all purchased impaired and nonimpaired loans accounted for under ASC Topic 310-30, including contractual principal, interest, fees and penalties, was $2.7 billion and $3.0 billion as of March 31, 2010 and December 31, 2009, respectively.

Changes in the carrying amount of accretable yield for purchased impaired and nonimpaired loans were as follows for the three months ended March 31, 2010:

(Dollars in thousands)	Accretable  Yield			Carrying Amount of Loans
Balance at beginning of period (1)	$	486,313		$	1,733,106
Additions (2)		-			-
Accretion		(39,000	)		39,000
Payments received, net		(9,730	)		(121,355	)
Balance at end of period	$	437,583		$	1,650,751

(1)   Reflects a $15.8 million adjustment to the accretable yield due to prepayments and charge-offs in 2009.

(2)   Excludes covered lines of credit which are outside the scope of FASB Topic 310-30 and certain consumer loans which are treated under the cost recovery method.

There were no allowances for loan and lease losses related to the purchased impaired and nonimpaired loans at March 31, 2010.

First Financial and the FDIC are engaged in on-going discussions that may impact which assets and liabilities are ultimately acquired or assumed by First Financial and/or the purchase prices. The estimated fair values for the purchased impaired and nonimpaired loans were based upon the FDIC’s estimated data for acquired loans. First Financial anticipates the final determination of the acquired loans will be completed in the second quarter of 2010 and expects to finalize its analysis of these loans when this occurs.

NOTE 11:  ALLOWANCE FOR LOAN AND LEASE LOSSES (excluding covered loans)

All loans acquired in the Peoples and Irwin acquisitions are covered by loss sharing agreements with the FDIC, whereby the FDIC reimburses First Financial for the majority of the losses incurred. Additionally, these loans were recorded at fair value as of the acquisition date.  Generally the determination of the fair value of the loans resulted in a significant write-down in the value of the loans, which was assigned to an accretable or nonaccretable balance, with the accretable balance being recognized as interest income over the remaining term of the loan. In accordance with accounting for business combinations, there was no allowance brought forward on any of the acquired loans, as the credit losses evident in the loans were included in the determination of the fair value of the loans at the acquisition date and are represented by the nonaccretable balance. The majority of the nonaccretable balance is expected to be received from the FDIC through the loss sharing agreements and is recorded as a separate asset from the covered loans and reflected on the Consolidated Balance Sheets.  As a result, all of the loans acquired in the Peoples and Irwin acquisitions were considered to be accruing loans as of the acquisition date. In accordance with bank regulatory reporting standards, covered loans that are contractually past due will continue to be reported as past due and still accruing based on the number of days past due.  Due to the significant difference in the accounting for the covered loans and the loss sharing agreements with the FDIC, management believes that asset quality measures excluding the covered loans are generally more meaningful. Therefore, management has included asset quality measures that exclude covered loans in the tables below.

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

	Three Months Ended
	2010			2009
(Dollars in thousands)	Mar. 31			Dec. 31			Sep. 30			June 30			Mar. 31
Balance at beginning of period	$	59,311		$	55,770		$	38,649		$	36,437		$	35,873
Provision for loan losses		11,378			14,812			26,655			10,358			4,259
Loans charged off		(14,485	)		(12,055	)		(10,063	)		(8,771	)		(4,060	)
Recoveries		438			784			529			625			365
Balance at end of period	$	56,642		$	59,311		$	55,770		$	38,649		$	36,437
Allowance for loan and lease losses to
total ending loans		2.01	%		2.05	%		1.94	%		1.34	%		1.33	%

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The allowance for uncovered loan and lease losses related to loans that are identified as impaired, as defined by FASB ASC 310-10-35-4, are based on discounted cash flows using the loan’s initial effective interest rate or the fair value of the collateral for certain collateral dependent loans.  Interest income for impaired loans is recorded on a cash basis during the period the loan is considered impaired after recovery of principal is reasonably assured.

First Financial’s investment in impaired loans is as follows:

	As of and for the Quarter Ended
	2010		2009
(Dollars in thousands)	Mar. 31		Dec. 31		Sep. 30		Jun. 30		Mar. 31
Impaired loans requiring a valuation	$	35,363	$	27,666	$	23,579	$	16,229	$	7,137
Impaired loans not requiring a valuation		39,090		49,437		40,113		21,364		17,554
Total impaired loans	$	74,453	$	77,103	$	63,692	$	37,593	$	24,691
Valuation allowance	$	12,310	$	11,662	$	9,789	$	5,890	$	3,024
Average impaired loans for the period	$	75,778	$	70,398	$	50,643	$	31,142	$	21,336
Interest income included in revenue	$	204	$	186	$	117	$	25	$	12

NOTE 12:  INCOME TAXES

First Financial’s effective tax rate for the first quarter of 2010 was 35.0% compared to 34.6% for the first quarter of 2009.  The increase in the effective tax was primarily due to a decrease in tax-exempt investment and loan interest as well as an increase in taxable income associated with the 2009 bank acquisitions.  The increase was partially offset by increased bank owned life insurance income as well as tax credits related to investments in low income housing which were also a result of the 2009 acquisitions.

At March 31, 2010, and December 31, 2009, First Financial had no FASB ASC Topic 740-10 unrecognized tax benefits recorded.  First Financial does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months.

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

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

First Financial is no longer subject to state and local income tax examinations for years prior to 2006.  First Financial’s 2006 and 2007 tax years are currently under examination by the state of Indiana.  Management anticipates no material impact to the company’s financial position as a result of this examination.  Tax years 2006 through 2008 remain open to state and local examination in various jurisdictions.  The years open to examination by state and local government authorities vary by jurisdiction and First Financial is not aware of any material outstanding tax examination matters.

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NOTE 13:  EMPLOYEE BENEFIT PLANS

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

In April of 2009, due to the unfunded pension obligation resulting from the significant decline in equity market values, First Financial contributed $30.8 million to its defined benefit pension plan.  First Financial does not expect to make additional contributions to the plan during 2010.

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

	Three months ended
	March 31,
(Dollars in thousands)	2010			2009
Service cost	$	600		$	590
Interest cost		700			675
Expected return on assets		(1,250	)		(918	)
Amortization of prior service cost		(100	)		(105	)
Recognized net actuarial loss		525			388
Net periodic benefit cost	$	475		$	630

Amounts recognized in accumulated other comprehensive income (loss):

	Three months ended
	March 31,
(Dollars in thousands)	2010			2009
Net actuarial loss	$	525		$	388
Net prior service credit		(100	)		(105	)
Deferred tax assets (liabilities)		132			(103	)
Net amount recognized	$	557		$	180

NOTE 14:  FAIR VALUE DISCLOSURES

Fair Value Option

Prior to the election of the FVO effective January 1, 2008, First Financial’s equity securities of government sponsored entities totaled $3.8 million and were classified as investment securities available-for-sale.  At December 31, 2009, the fair value of the equity securities of government sponsored entities for which the FVO was elected was $0.2 million, a decrease of approximately $3.6 million from the fair value of the equity securities at January 1, 2008.  Since January 1, 2008, changes in market value for the equity securities of government sponsored entities for which the FVO was elected have been recorded in other noninterest income.  In January of 2010, the remaining equity security of government-sponsored entities was sold at a loss of $30,000.

Fair Value Measurement

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

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

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

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

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

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

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

Covered loans – Fair values for covered loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, loan term and whether or not the loan was amortizing, and current discount rates. Covered loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. The discount rates used for covered loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows.

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

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

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FDIC indemnification asset – These loss sharing assets are measured separately from the related covered assets as they are not contractually embedded in the assets and are not transferable with the assets should the Bank choose to dispose of them. Fair value was estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. These expected reimbursements do not include reimbursable amounts related to future covered expenditures. These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC.

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

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

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

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

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

	March 31,2010				December31, 2009
	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	value		value		value		value
Financial assets
Cash and short-term investments	$	724,949	$	724,949	$	606,167	$	606,167
Investment securities trading		0		0		200		200
Investment securities held-to-maturity		17,903		18,403		18,115		18,590
Investment securities available-for-sale		430,519		430,519		471,002		471,002
Other investments		87,029		87,029		89,830		89,830
Loans held for sale		3,243		3,243		8,052		8,052
Loans (excluding covered loans)		2,758,960		2,798,157		2,834,179		2,906,009
Covered loans		1,828,158		1,828,158		1,929,549		1,929,549
Mortgage-servicing rights		1,948		1,948		1,976		1,976
FDIC indemnification asset		301,961		301,961		316,040		316,040
Accrued interest receivable		19,136		19,136		22,647		22,647
Derivative financial instruments		689		689		998		998
Financial liabilities
Deposits
Noninterest-bearing		741,476		741,476		829,676		829,676
Interest-bearing demand		1,042,790		1,042,790		1,060,383		1,060,383
Savings		1,303,737		1,303,737		1,231,081		1,231,081
Time		2,135,683		2,144,113		2,229,500		2,230,273
Total deposits		5,223,686		5,232,116		5,350,640		5,351,413
Short-term borrowings		38,443		38,443		37,430		37,430
Long-term debt		394,404		398,721		404,716		428,358
Other long-term debt		20,620		20,620		20,620		20,620
Accrued interest payable		8,623		8,623		4,759		4,759
Derivative financial instruments		2,606		2,606		2,363		2,363

The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis at March 31, 2010:

(Dollars in thousands)	Fair Value Measurements Using							Netting			Assets/Liabilities
	Level 1		Level 2		Level 3			Adjustments (1)			at Fair Value
Assets
Derivatives	$	0	$	13,448	$	(616	)	$	(12,143	)	$	689
Available-for-sale investment securities		121		430,398		0			0			430,519
Total	$	121	$	443,846	$	(616	)	$	(12,143	)	$	431,208
Liabilities
Derivatives	$	0	$	14,749	$	0		$	(12,143	)	$	2,606

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

(2) Amount represents an item for which First Financial elected the fair value option under the Financial Instruments Topic of the FASB ASC.

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Certain financial assets and liabilities are measured at fair value on a nonrecurring basis.  Adjustments to the fair market value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.  The following table summarizes financial assets and liabilities measured at fair value on a nonrecurring basis at March 31, 2010:

(Dollars in thousands)	Fair Value Measurements Using						Year-to-date
	Level 1		Level 2		Level 3		Gains/(Losses)
Assets
Loans held for sale (1)	$	0	$	4,720	$	0		0
Impaired loans (2)		0		18,967		4,086		0

(1) Includes $1,476 that are classified in covered loans on the Consolidated Balance Sheets.

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

NOTE 15:  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

	March 31, 2010
	Transactions									Balances
(Dollars in thousands)	Pre-tax			Tax-effect			Net of tax			Net of tax
Unrealized gain on securities available-for-sale	$	1,583		$	(721	)	$	862		$	11,086
Unrealized loss on derivatives		(496	)		171			(325	)		606
Unfunded pension obligation		425			132			557			(21,204	)
Foreign currency translation		302			0			302			421
Total	$	1,814		$	(418	)	$	1,396		$	(9,091	)

	March 31, 2009
	Transactions									Balances
(Dollars in thousands)	Pre-tax			Tax-effect			Net of tax			Net of tax
Unrealized gain on securities available-for-sale	$	5,690		$	(2,071	)	$	3,619		$	10,558
Unrealized gain on derivatives		(720	)		262			(458	)		311
Unfunded pension obligation		283			(103	)		180			(19,433	)
Total	$	5,253		$	(1,912	)	$	3,341		$	(8,564	)

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NOTE 16:  EARNINGS PER COMMON SHARE      

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

	Three months ended
	March 31,
(Dollars in thousands, except per sharedata)	2010		2009
Numerator for basic and diluted earnings per share - income available to common shareholders:
Net income	$	11,598	$	5,735
Dividends on preferred stock		1,865		578
Income available to common shareholders:	$	9,733	$	5,157
Denominator for basic earnings per share - weighted average shares		55,161,551		37,142,531
Effect of dilutive securities —
Employee stock awards		843,186		698,423
Warrants		109,687		0
Denominator for diluted earnings per share - adjusted weighted average shares		56,114,424		37,840,954
Earnings per share available to common shareholders
Basic	$	0.18	$	0.14
Diluted	$	0.17	$	0.14

Stock options and warrants, where the exercise price was greater than the average market price of the common shares, were not included in the computation of net income per diluted share as they would have been antidilutive.  These out-of-the-money options were 521,726 and 3,340,006 at March 31, 2010 and 2009, respectively.  The warrant to purchase 465,117 shares of common stock was also outstanding as of March 31, 2010.  At March 31, 2009, the warrant to purchase 930,233 shares of common stock was also outstanding, but was out-of-the-money.  The reduction in the warrant share position was a result of the common stock offering that occurred in June of 2009, in accordance with rules established by the U.S. Treasury.

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ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (MD&A)

FIRST FINANCIAL BANCORP. AND SUBSIDIARIES

(Unaudited)

SUMMARY

MARKET STRATEGY

First Financial serves a combination of metropolitan and non-metropolitan markets in Ohio, Indiana, Kentucky, and Michigan through 115 full-service banking centers across 75 communities. Market selection is based upon a number of factors, but markets are primarily chosen for their potential for growth, and long-term profitability. First Financial’s goal is to develop a competitive advantage utilizing a local market focus; building long-term relationships with clients and helping them reach greater levels of success in their financial life. During the third quarter of 2009, First Financial assumed the banking operations of Peoples Community Bank (Peoples), Irwin Union Bank and Trust Company (Irwin Union Bank) and Irwin Union Bank, F.S.B. (Irwin FSB) (collectively, Irwin) through Federal Deposit Insurance Corporation (FDIC) assisted transactions. First Financial acquired a specialty, franchise lending subsidiary as part of the Irwin acquisition. The franchise finance business provides equipment and leasehold improvement financing for franchisees, in the quick service and casual dining restaurant sector, throughout the United States. First Financial intends to continue to concentrate future growth plans and capital investments in its metropolitan markets, however, the acquired franchise finance subsidiary is a national business. Smaller markets have historically provided stable, low-cost funding sources to First Financial and they remain an important part of its funding base. First Financial believes its historical strength in these markets should enable it to retain or improve its market share.

BUSINESS COMBINATIONS

All references to acquired balances reflect the fair value unless stated otherwise.

During the third quarter of 2009, through FDIC-assisted transactions, First Financial acquired the banking operations of Peoples and Irwin. The company also acquired 3 Indiana banking centers, including related deposits and loans, from Irwin in a separate and unrelated transaction. The acquisitions of the Peoples and Irwin franchises significantly expands the First Financial footprint, opens new markets and strengthens the company through the generation of additional capital. Through these three transactions, the company added a total of 49 banking centers, including 39 banking centers within the company’s primary markets.

In connection with the Peoples and Irwin FDIC-assisted transactions, First Financial entered into loss sharing agreements with the FDIC. Under the terms of these agreements the FDIC will reimburse First Financial for a percentage of losses with respect to certain loans (covered loans) and other real estate owned (OREO) (collectively, covered assets) beginning with the first dollar of loss. These agreements provide for loss protection on single-family, residential loans for a period of ten years and First Financial is required to share any recoveries of previously charged-off amounts for the same time period, on the same pro-rata basis with the FDIC. All other loans are provided loss protection for a period of five years and recoveries of previously charged-off loans must be shared with the FDIC for a period of eight years, again on the same pro-rata basis. Covered loans now represent approximately 40% of First Financial’s loans.

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

An overview of the transactions and their respective loss share agreements are discussed below.

Peoples Community Bank

Including cash received from the FDIC, First Financial acquired $566.0 million in assets, including $336.1 million in loans and other real estate, and assumed $584.7 million in liabilities, including $520.8 million in deposits. All assets and liabilities were recorded at their estimated fair market value resulting in recorded goodwill of $18.1 million as the estimated fair value of liabilities assumed exceeded the estimated fair value of assets acquired.

Covered assets totaling $324.4 million in fair value are subject to a stated loss threshold of $190.0 million whereby the FDIC will reimburse First Financial for 80% of covered asset losses up to $190.0 million, and 95% of losses beyond $190.0 million. The FDIC’s obligation to reimburse First Financial for losses with respect to covered assets begins with the first dollar of loss incurred.

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First Financial holds a purchase option from the FDIC for each of Peoples bank properties and their associated contents. First Financial completed a review of the former Peoples locations and notified the FDIC of the company’s intent to purchase certain properties for a combined purchase price of $7.9 million during the first quarter of 2010. The acquisition date for these properties has not been determined at this time.

Early in the fourth quarter of 2009, First Financial successfully completed the technology conversion and operational integration of Peoples. In conjunction with these efforts, two former Peoples banking centers were consolidated into First Financial locations and one First Financial banking center was consolidated into a former Peoples location.

Irwin

Including cash received from the FDIC, First Financial acquired $3.3 billion in assets, including $1.8 billion in loans, and assumed $2.9 billion in liabilities, including $2.5 billion in deposits, with all assets and liabilities recorded at their estimated fair market value.

The loans were acquired under a modified transaction structure with the FDIC whereby certain nonperforming loans, foreclosed real estate, acquisition, development and construction loans, and residential and commercial land loans were excluded from the acquired portfolio. The estimated fair value for loans acquired was based upon the FDIC’s estimated data for acquired loans. The company and the FDIC continue to evaluate the total loan portfolio of Irwin to be excluded from the portfolio acquired by First Financial.  We anticipate the final determination of the excluded loans will be completed by the end of the second quarter of 2010.

Covered assets acquired from Irwin Union Bank totaling $1.5 billion in fair value are subject to a stated loss threshold of $526.0 million whereby the FDIC will reimburse First Financial for 80% of covered asset losses up to $526.0 million, and 95% of losses beyond $526.0 million. The FDIC’s obligation to reimburse First Financial for losses with respect to covered assets begins with the first dollar of loss incurred.

Covered assets acquired from Irwin FSB totaling $259.4 million in fair value are subject to a stated loss threshold of $110.0 million whereby the FDIC will reimburse First Financial for 80% of covered asset losses up to $110.0 million, and 95% of losses beyond $110.0 million. The FDIC’s obligation to reimburse First Financial for losses with respect to covered assets begins with the first dollar of loss incurred.

As the estimated fair value of assets acquired exceeded the estimated fair value of liabilities assumed, First Financial recorded a pre-tax bargain purchase gain of $379.1 million, as required by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations.

Conversion of Irwin’s technology and operational systems was completed in the first quarter of 2010.

Irwin Banking Centers

Separate and unrelated to the previously mentioned FDIC-assisted transactions, the company purchased 3 banking centers located in Indiana from Irwin Union Bank, including $84.6 million in deposits and $41.1 million in performing loans. Assets acquired in this transaction are not subject to a loss share agreement. Loans were acquired at par value and there was no premium paid on assumed deposits. The technology conversion and operational integration of all assets acquired and liabilities assumed was complete at the acquisition date. The purchased assets and assumed liabilities were recorded at their estimated fair value resulting in recorded goodwill of $5.5 million as the estimated fair value of liabilities assumed exceeded the estimated fair value of assets acquired. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition, as additional information relative to closing date fair values becomes available.

Strategic Decisions

Management has concluded that the markets previously operated by Irwin in the western United States do not align with the long-term strategic plans for the company. Each of these markets pursued an exit strategy whereby the market presidents worked with an institution of their choosing to refer existing client relationships. If a suitable financial institution was not identified, an exit date was selected for each market and the office closed in compliance with the applicable regulatory requirements. Exit strategies coincided with the conversion and operational integration process. In the fourth quarter of 2009, the company elected to close the St. Louis, Missouri location and sold $43.0 million in western market loans, at their unpaid principal balances.

Additionally, in the first quarter of 2010, First Financial closed 7 of the remaining 9 western market offices and sold an additional $24.6 million in western market loans at their unpaid principal balances.  At March 31, 2010, First Financial had $627.7 million in unpaid principal balances in loans and $211.2 million in deposits from the western market offices. First Financial will continue to service the loans and deposits in these markets in compliance with the terms of the purchase agreements with the FDIC and FDIC as receiver and related loss share agreements.

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First Financial also acquired, as part of the Irwin transaction, a franchise finance business. This national business is a specialty lender in the quick service and casual dining segments of the restaurant industry. It is led by a seasoned management team with strong underwriting, credit management and loss mitigation experience. There were outstanding principal balances of approximately $621.3 million in franchise finance loans at March 31, 2010, all of which are covered under a loss share agreement with the FDIC except for $42.1 million of loans originated subsequent to the acquisition.

This business offers First Financial the ability to diversify its earning assets and will be supported as part of the company’s ongoing strategy. The overall portfolio size will be managed to a risk-appropriate level so as not to create an industry concentration.

OVERVIEW OF OPERATIONS

First quarter 2010 net income was $11.6 million, net income available to common shareholders was $9.7 million and earnings per diluted common share were $0.17.  This compares with net income of $8.7 million and earnings per diluted common share of $0.14 for the first quarter of 2009, and net income of $13.8 million, net income available to common shareholders of $12.8 million and earnings per diluted common share of $0.25 for the fourth quarter of 2009.

Each acquisition in the third quarter of 2009 was considered a business combination and accounted for under FASB ASC Topic 805, Business Combinations, ASC Topic 820, Fair Value Measurements and Disclosures, and ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. All acquired assets and liabilities were recorded at their estimated fair market values as of the date of acquisition, and identifiable intangible assets were recorded at their estimated fair value. These estimated fair market values are considered preliminary, and are subject to change for up to one year after the acquisition date as additional information relative to closing date fair values becomes available.  Certain reclassifications of prior periods’ amounts have been made to conform to current period’s presentation and had no effect on previously reported net income amounts or financial condition.  For a more detailed discussion of the transactions please see Note 3, Business Combinations.

Return on average assets for the first quarter of 2010 was 0.71% compared to 0.62% for the comparable period in 2009 and 0.80% for the linked-quarter (first quarter of 2010 compared to the fourth quarter of 2009).  Return on average shareholders’ equity for the first quarter of 2010 was 6.67% compared to 6.63% for the comparable period in 2009 and 8.05% for the linked-quarter.

A discussion of the first quarter of 2010 results of operations follows.

NET INTEREST INCOME

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

	Three Months Ended
	March 31,
(Dollars in thousands)	2010			2009
Net interest income	$	72,020		$	30,928
Tax equivalent adjustment		212			363
Net interest income - tax equivalent	$	72,232		$	31,291
Average earning assets	$	5,994,747		$	3,482,645
Net interest margin *		4.87	%		3.61	%
Net interest margin (fully tax equivalent) *		4.89	%		3.65	%

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

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Net interest income for the first quarter of 2010 was $72.0 million, an increase of $41.1 million from the first quarter of 2009 net interest income of $30.9 million and a decrease of $1.2 million from the fourth quarter of 2009 net interest income of $73.2 million.  Net interest income on a fully tax-equivalent basis for the first quarter 2010 was $72.2 million as compared to $73.5 million for the fourth quarter 2009 and an increase of $40.9 million, or 130.8%, as compared to the comparable year-over-year period.  In addition to higher levels of interest earning assets and interest bearing liabilities resulting from the 2009 acquisitions, the year-over-year increase was also impacted by the significant increase in the net interest margin.  The linked quarter decline resulted from the lower level of interest-earning assets.

Included in net interest income for both the first quarter 2010 and fourth quarter 2009 were the results of operations classified by the Company as acquired-non-strategic.  These amounts totaled $10.9 million and $16.8 million during those periods, respectively.

Net interest margin was 4.87% for the first quarter 2010 as compared to 4.63% for the fourth quarter 2009 and 3.61% for the first quarter 2009.  The increase of 126 basis points over the comparable year-over-year period was primarily attributable to the higher yield on covered loans, improved pricing in new loan originations, lower funding costs of deposits as a result of repricing acquired CDs and disciplined pricing strategies, and an overall decrease in earning assets.  The increase of 24 basis points over the linked quarter was impacted by several items, including a net increase of 28 bps related to the impact of one-time fee or income adjustments, the lower earning asset base for the quarter and the day count difference in the quarter on the earning asset base.  Repricing of brokered and retail CDs and deposit funding mix changes positively impacted the net interest margin by 11 bps, offset by a 12 basis point decline related to paydowns of covered and uncovered loans and sales of covered loans and a 6 basis point decline related to cash flows from the investment portfolio.

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

QUARTERLY CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS

	March 31, 2010								December 31, 2009								March 31, 2009
	Average					Average			Average					Average			Average					Average
(Dollars in thousands)	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
Earning assets
Investments:
Interest-bearing deposits with other banks	$	394,741		$	342		0.35	%	$	447,999		$	208		0.18	%	$	7,291		$	-		0.00	%
Investment securities		558,595			5,631		4.09	%		608,952			6,742		4.39	%		758,257			9,124		4.88	%
Gross loans including covered loans and
indemnification asset (1)		5,041,411			84,586		6.80	%		5,208,281			86,395		6.58	%		2,717,097			33,657		5.02	%
Total earning assets		5,994,747			90,559		6.13	%		6,265,232			93,345		5.91	%		3,482,645			42,781		4.99	%
Nonearning assets
Cash and due from banks		336,333								274,601								78,359
Allowance for loan and lease losses		(59,891	)							(54,164	)							(37,189	)
Premises and equipment		108,608								106,999								84,932
Other assets		291,274								271,255								168,763
Total assets	$	6,671,071							$	6,863,923							$	3,777,510
Interest-bearing liabilities
Deposits:
Interest-bearing	$	1,050,697			1,021		0.39	%	$	1,093,735			1,268		0.46	%	$	642,934			350		0.22	%
Savings		1,318,374			2,139		0.66	%		1,233,715			2,013		0.65	%		620,509			347		0.23	%
Time		2,175,400			12,488		2.33	%		2,382,717			13,926		2.32	%		1,142,257			9,106		3.23	%
Short-term borrowings		38,413			19		0.20	%		42,552			23		0.21	%		401,830			507		0.51	%
Long-term borrowings		420,463			2,872		2.77	%		429,364			2,933		2.71	%		164,978			1,543		3.79	%
Total interest-bearing liabilities		5,003,347			18,539		1.51	%		5,182,083			20,163		1.54	%		2,972,508			11,853		1.62	%
Noninterest-bearing liabilities and shareholders' equity
Noninterest-bearing demand		774,393								840,314								416,206
Other liabilities		188,555								161,686								37,939
Shareholders' equity		704,776								679,840								350,857
Total liabilities and
shareholders' equity	$	6,671,071							$	6,863,923							$	3,777,510
Net interest income				$	72,020							$	73,182							$	30,928
Net interest spread							4.62	%							4.37	%							3.37	%
Contribution of noninterest-bearing sources of funds							0.25	%							0.26	%							0.24	%
Net interest margin (2)							4.87	%							4.63	%							3.61	%

(1) Nonaccrual loans and loans held for sale are included in average balances for each applicable loan category.

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

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RATE/VOLUME ANALYSIS

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

	Changes for the Three Months Ended March 31
	Linked Qtr. Income Variance									Comparable Qtr. Income Variance
(Dollars in thousands)	Rate			Volume			Total			Rate			Volume			Total
Earning assets
Investment securities	$	(467	)	$	(644	)	$	(1,111	)	$	(1,480	)	$	(2,013	)	$	(3,493	)
Other earning assets		189			(55	)		134			6			336			342
Gross loans (1)		2,933			(4,742	)		(1,809	)		11,931			38,998			50,929
Total earning assets		2,655			(5,441	)		(2,786	)		10,457			37,321			47,778
Interest-bearing liabilities
Total interest-bearing deposits	$	(628	)	$	(931	)	$	(1,559	)	$	(1,519	)	$	7,364		$	5,845
Borrowed funds
Short-term borrowings		(1	)		(3	)		(4	)		(308	)		(180	)		(488	)
Federal Home Loan Bank long-term debt		61			(115	)		(54	)		(383	)		1,634			1,251
Other long-term debt		0			(7	)		(7	)		78			0			78
Total borrowed funds		60			(125	)		(65	)		(613	)		1,454			841
Total interest-bearing liabilities		(568	)		(1,056	)		(1,624	)		(2,132	)		8,818			6,686
Net interest income (2)	$	3,223		$	(4,385	)	$	(1,162	)	$	12,589		$	28,503		$	41,092

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

(2) Not tax equivalent.

NONINTEREST INCOME

First quarter 2010 noninterest income was $19.4 million, an increase of $7.3 million from the first quarter of 2009, and a decrease of $1.8 million from the fourth quarter of 2009.  During both the first quarter 2010 and fourth quarter 2009, covered loan activity positively impacted noninterest income.  Excluding the $6.1 million and $8.2 million of accelerated discounts related to prepayments and dispositions on covered loans in the first quarter of 2010 and the fourth quarter of 2009, respectively, noninterest income earned in the first quarter 2010 was $13.3 million as compared to $15.9 million in the fourth quarter 2009 and $12.0 million in the first quarter 2009.  The linked quarter decrease was attributable to lower service charges on deposit accounts, loan service fees, and gains on sales of mortgage loans.  Excluding the effect of the accelerated discount related to covered loan prepayments and dispositions, and the $0.6 million gain from the sale of the property and casualty liability portion of the company’s insurance business, prior to employee-related costs, in the first quarter of 2009, the $1.8 million increase in the comparable year-over-year quarter was driven primarily by higher service charges on deposit accounts resulting from an increase in transaction-based deposits, increased bankcard income and higher trust and wealth management fees primarily due to an improvement in market valuations, offset partially by lower gains on sales of mortgage loans.

NONINTEREST EXPENSE

First quarter 2010 noninterest expense was $62.2 million, compared with $29.9 million in the first quarter of 2009, and $61.6 million in the fourth quarter of 2009.  First quarter 2010 noninterest expense continued to be effected by acquisition-related costs as well as other transition-related items and costs.  After adjusting for these items, estimated noninterest expense was essentially unchanged, totaling $47.5 million for the first quarter 2010 and $47.2 million for the fourth quarter 2009.  Compared to the year-over-year quarter, estimated noninterest expense increased $18.6, driven primarily by higher salaries and employee benefits and occupancy costs resulting from the 2009 acquisitions, as well as higher FDIC premiums which were partially attributable to the increase in deposits associated with the acquisitions, but also due to the increase in the assessments resulting from the Temporary Liquidity Guaranty Program, which temporarily increases the deposit insurance coverage for depositors.  Further discussion on this program in provided in the Capital section of this MD&A.

Acquisition-related costs for the first quarter of 2010 consisted of $1.0 million in integration-related costs, $1.5 million in professional services fees, and $0.2 million in other costs.  Transition related items such as salaries and employee benefits were $4.9 million, occupancy expense was $2.3 million, and other was $1.2 million for the same period.    Additionally, there was $1.9 million of expense associated with the proportionate share of losses in excess of the credit-based valuation mark and $0.6 million for FDIC indemnification support.  These expenses totaled $13.6 for the first quarter of 2010.

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Likewise, in the fourth quarter of 2009, acquisition-related costs consisted of $2.6 million for salaries and benefits and $1.1 million for occupancy expense. Transition related items such as salaries and employee benefits were $5.5 million, while occupancy expense was $1.9 million for the same period. There was $0.8 million of expense associated with the proportionate share of losses in excess of the credit-based valuation mark, and $0.4 million for the FDIC indemnification asset. These expenses totaled $12.8 for the fourth quarter of 2009, as well.

INCOME TAXES

Income tax expense was $6.3 million and $3.0 million for the first quarters of 2010 and 2009, respectively. The effective taxes rate for the first quarter of 2010 was 35.04% and for 2009 was 34.6%. The increase in the effective tax was primarily due to a decrease in tax-exempt investment and loan interest as well as an increase in taxable income associated with the 2009 bank acquisitions. The increase was partially offset by increased bank owned life insurance income as well as tax credits related to investments in low income housing which were also a result of the 2009 acquisitions.

LOANS (excluding covered loans)

Loans, excluding covered loans, totaled $2.82 billion at the end of the first quarter, a decrease of $77.9 million, or 2.7%, over the balance of $2.89 billion as of December 31, 2009 and an increase of $79.1 million, or 2.9%, over the amount of $2.74 billion as of March 31, 2009. As compared to the linked quarter, the composition of the loan portfolio remained essentially the same with the majority of the decrease occurring in the commercial and construction portfolios as loan demand remained sluggish in the Company’s strategic operating markets.

Average total loans increased $135.3 million or 5.0% from the first quarter of 2009, excluding loans held for sale of $2.3 million for the first quarter of 2010 and $5.1 million for the first quarter of 2009.  Average commercial, commercial real estate, and construction loans increased $170.5 million or 8.8% from the first quarter of 2009.

Average total loans decreased $79.6 million or 10.9% on an annualized basis, from the fourth quarter of 2009, excluding loans held for sale of $2.3 million for the first quarter of 2010 and $2.9 million for the fourth quarter of 2009. Average commercial, commercial real estate, and construction loans decreased $48.0 million or 9.0% on an annualized basis, from the fourth quarter of 2009.

INVESTMENTS

Investment securities totaled $535.5 million as of March 31, 2010 as compared to $579.1 million as of December 31, 2009 and $765.6 million as of March 31, 2009. The total investment portfolio represented 8.2% of total assets at March 31, 2010, 8.7% at December 31, 2009, and 20.1% at March 31, 2009. Securities available-for-sale at March 31, 2010, totaled $430.5 million, compared with $733.9 million at March 31, 2009, and $471.0 million at December 31, 2009. The decrease relative to the comparable periods was due to net securities paydowns and maturities, the majority of which were agency mortgage-backed securities. Further impacting the year-over-year comparison was the sale of $149.4 million of securities, the proceeds of which were used to fund the purchase of $145.1 million of performing loans from Irwin in the second quarter 2009. While loan demand remains muted, the Company intends on redeploying its excess liquidity to purchase investments as market conditions permit. Future purchases will be made utilizing the same discipline and portfolio management philosophy applied in the past, including avoidance of credit risk and geographic concentration risk within mortgage-backed securities, while also balancing the Company’s overall asset / liability management objectives. During the second quarter 2010, the Company began to redeploy its excess liquidity, purchasing $100 million of FNMA agency securities in accordance with these guidelines.

The company has recorded, as a component of equity in accumulated other comprehensive income, an unrealized after-tax gain on the investment portfolio of approximately $11.1 million at March 31, 2010, compared with an unrealized after-tax gain of $10.6 million at March 31, 2009, and an unrealized after-tax gain of $10.2 million at December 31, 2009.

During the fourth quarter of 2008, First Financial completed the sale of $80 million in perpetual preferred securities to the U.S. Treasury under the Capital Purchase Program (“CPP”), a component of the Troubled Asset Relief Program (“TARP”). At the time of issuance the company had both short and long-term plans for the use of CPP proceeds. In anticipation of the receipt of the $80 million in capital, the company began purchasing agency-guaranteed, mortgage backed securities during the fourth quarter 2008. It was expected that as additional organic lending opportunities became available, the cash flows from the CPP Investment Portfolio would provide sufficient liquidity and capital support for redeployment into loans. This investment portfolio was specifically designated as the CPP Investment Portfolio.

As a result of the June 30, 2009 purchase of the $145.1 million performing loan portfolio from Irwin, the company executed a strategy to restructure the CPP Investment Portfolio to fund this purchase.  During the second quarter of 2009, $149.4 million of CPP Investment Portfolio securities, with an effective yield of 4.67%, were sold resulting in an aggregate pre-tax gain of $3.3 million.

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DEPOSITS AND FUNDING

Total deposits as of March 31, 2010 were $5.22 billion, a decline of $127.0 million, or 2.4%, from $5.35 billion as of December 31, 2009.  A significant portion of this decrease related to declines in interest-bearing deposits of $17.6 million, noninterest bearing deposits of $88.2 million and time deposits of $93.8 million, offset by an increase in savings accounts of $72.7 million.  The net decrease was attributable to the closing of seven Irwin branches located in acquired-non-strategic western markets, which, when combined with the runoff associated with other western market branches, resulted in a decrease of $135.9 million in deposits.  Overall, deposit retention from the acquisitions continues to exceed management’s expectations.

Borrowed funds as of March 31, 2010 totaled $453.5 million, representing a decrease of $9.3 million, or 2.0%, from $462.8 million as of December 31, 2009.  This decrease was primarily due to maturities of long-term Federal Home Loan Bank advances.  As compared to the similar year-over-year period, borrowed funds declined $66.5 million, or 12.8%, from $520.0 million as of March 31, 2009.   The year-over-year comparison was impacted by long-term borrowings assumed as a result of the FDIC-assisted transactions that were offset by significant maturities of primarily short- and long-term Federal Home Loan Bank advances and other short-term borrowings.  Other than the Federal Home Loan Bank long-term debt acquired in the Peoples and Irwin transactions in the third quarter of 2009, First Financial has not increased long-term borrowings since the third quarter of 2008.

RISK MANAGEMENT

First Financial manages risks through processes that regularly assess the overall level of risk and identifies specific risks and the steps being taken to mitigate them. First Financial continues to enhance its risk management capabilities and has, over time, enhanced risk awareness as part of the culture of the company. First Financial employ’s a structured Enterprise Risk Management (ERM) approach as part of this progression. ERM allows First Financial to align a variety of risk management activities within the company into a cohesive, enterprise-wide approach, focus on process-level risk management activities and strategic objectives within the risk management culture, deliberately consider risk responses and effectiveness of mitigation compared to established standards for risk appetite and tolerance, recognize and respond to the significant organizational changes that have increased the size and complexity of the organization, and consolidate information obtained through a common process into concise business performance and risk information for management and the board of directors.

First Financial uses a robust regulatory risk framework as one of the foundational components of its ERM framework. This not only allows for a common categorization among business units, but allows for a consistent and complete risk framework that can be summarized and assessed enterprise-wide. In addition, the framework is consistent with that used by the company’s regulators, allowing for additional feedback on First Financials ability to assess and measure risk across the organization and for management and the board of directors to identify and understand differences in assessed risk profiles using this same foundation. The goal of this framework is to implement effective risk management techniques and strategies, minimize losses, and strengthen the company’s overall performance.

CREDIT RISK

Credit risk represents the risk of loss due to failure of a customer or counterparty to meet its financial obligations in accordance with contractual terms. First Financial manages credit risk through underwriting, periodically reviewing and approving its credit exposures using Board approved credit policies and guidelines.

Allowance for loan and lease losses (Excluding covered assets)

There was no allowance for loan and lease losses related to covered loans at March 31, 2010 as these loans were recorded at acquisition at their estimated fair value. With the exception of covered loans accounted for outside the scope of FASB ASC Topic 310-30, improvements in the estimated fair value of covered loans are reflected through higher yields on these loans while declines in the estimated fair value of covered loans are recorded as impairment charges in the company’s operating results in the period in which the decline occurs.

All loans acquired in the Peoples and Irwin acquisitions are covered by loss sharing agreements with the FDIC, whereby the FDIC reimburses First Financial for the majority of the losses incurred. Additionally, these loans were recorded at fair value as of the acquisition date. Generally the determination of the fair value of the loans resulted in a significant write-down in the value of the loans, which was assigned to an accretable or nonaccretable balance, with the accretable balance being recognized as interest income over the remaining term of the loan. In accordance with accounting for business combinations, there was no allowance brought forward on any of the acquired loans, as the credit losses evident in the loans were included in the determination of the fair value of the loans at the acquisition date and are represented by the nonaccretable balance. The majority of the nonaccretable balance is expected to be received from the FDIC through the loss sharing agreements and is recorded as a separate asset from the covered loans and reflected on the Consolidated Balance Sheets. As a result, the majority of loans acquired in the Peoples and Irwin acquisitions were considered to be accruing loans as of the acquisition date. In accordance with regulatory reporting standards, covered loans that are contractually past due will continue to be reported as past due and still accruing based on the number of days past due.

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Due to the significant difference in the accounting for the covered loans and the loss sharing agreements with the FDIC, management believes that asset quality measures excluding the covered loans are generally more meaningful. Therefore, management has included asset quality measures that exclude covered loans in the table in this section. First Financial had $20.6 million of covered nonaccrual loans, $201.4 million of covered loans 90 days past due and still accruing, and $12.7 million of covered OREO at March 31, 2010.

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

The provision for loan and lease losses for the first quarter of 2010 was $11.4 million compared to $4.3 million for the same period in 2009 and $14.8 million for the linked-quarter. The allowance for loan and lease losses for those same periods was $56.6 million, $36.4 million, and $59.3 million, respectively. The allowance for loan and lease losses to period-end loans ratio was 2.01% as of March 31, 2010, compared to the March 31, 2009, and December 31, 2009, ratios of 1.33% and 2.05%, respectively.

First quarter 2010 net charge-offs were $14.0 million, or 2.00% of average loans and leases, compared with $11.3 million, or 1.53%, for the linked quarter and $3.7 million, or 0.55%, for the comparable year-over-year quarter. While the Company experienced improvement in its construction portfolio metrics, continued stress in the commercial and commercial real estate portfolios resulted in the overall increase in net charge-offs. Specifically, alleged fraudulent activity by one borrower to whom both commercial and commercial real estate credit was extended, totaling $8.8 million in the aggregate, was charged off during the first quarter 2010, representing 125 basis points of average loans and leases. The majority of this amount was previously reserved for in the fourth quarter 2009. Excluding this activity, net charge-offs during the quarter totaled $5.2 million, or 75 basis points of average loans and leases.

First quarter 2010 provision expense was $11.4 million as compared to $14.8 million during the linked quarter and $4.3 million during the comparable year-over-year quarter. As a percentage of net charge-offs, first quarter 2010 provision expense equaled 81.0% compared to 131.4% during the fourth quarter 2009 and 115.3% during the first quarter 2009. Excluding the alleged fraudulent activity discussed above, first quarter 2010 provision expense equaled 217.0% of net charge-offs.

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

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	Three Months Ended
	2010			2009
(Dollars in thousands)	Mar. 31			Dec. 31			Sep. 30			June 30			Mar. 31
ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY
Balance at beginning of period	$	59,311		$	55,770		$	38,649		$	36,437		$	35,873
Provision for loan losses		11,378			14,812			26,655			10,358			4,259
Gross charge-offs
Commercial		6,275			1,143			3,622			4,707			2,521
Real estate-construction		2,126			6,788			3,854			1,340			0
Real estate-commercial		3,932			1,854			927			1,351			382
Real estate-residential		534			262			471			351			231
Installment		414			449			315			304			400
Home equity		684			1,105			382			332			218
All other		520			454			492			386			308
Total gross charge-offs		14,485			12,055			10,063			8,771			4,060
Recoveries
Commercial		109			148			91			333			60
Real estate-construction		0			0			81			0			0
Real estate-commercial		12			360			86			14			16
Real estate-residential		3			3			2			20			2
Installment		160			195			205			203			254
Home equity		87			6			9			1			0
All other		67			72			55			54			33
Total recoveries		438			784			529			625			365
Total net charge-offs		14,047			11,271			9,534			8,146			3,695
Ending allowance for loan losses	$	56,642		$	59,311		$	55,770		$	38,649		$	36,437
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED)
Commercial		3.19	%		0.47	%		1.31	%		2.08	%		1.21	%
Real estate-construction		4.36	%		10.48	%		6.90	%		2.09	%		0.00	%
Real estate-commercial		1.29	%		0.57	%		0.30	%		0.62	%		0.17	%
Real estate-residential		1.13	%		0.31	%		0.56	%		0.38	%		0.25	%
Installment		1.30	%		1.15	%		0.50	%		0.45	%		0.62	%
Home equity		0.73	%		1.31	%		0.47	%		0.44	%		0.30	%
All other		6.46	%		5.40	%		6.35	%		5.00	%		4.18	%
Total net charge-offs		2.00	%		1.53	%		1.31	%		1.19	%		0.55	%

While First Financial’s credit quality trends have experienced some deterioration over the past several quarters, the company believes it is still well-positioned to handle the challenging economic environment and avoid many of the troublesome areas facing the financial services industry.  However, the possibility exists that the company could experience higher credit costs over the next several quarters.

Nonperforming/Underperforming Assets (Excluding covered assets)

Nonperforming loans totaled $74.5 million and nonperforming assets totaled $92.5 million as of March 31, 2010 compared with $77.8 million and $81.9 million, respectively, for the linked quarter and $24.9 million and $28.4 million, respectively, for the comparable year-over-year quarter.  Nonperforming loans related to the commercial and commercial real estate portfolios increased $13.7 million in the aggregate for the quarter, offset by a reduction of $17.9 million in nonperforming construction loans.

Similar to the past several quarters, the higher level of nonperforming loans, which are accounted for under FASB Codification Topic 310-10-35: Subsequent Measurement of Receivables, continues to adversely impact the company’s nonperforming loan coverage ratios. The first quarter 2010 allowance for loan and lease losses as a percent of nonaccrual loans was 84.7% compared with 82.8% in the fourth quarter of 2009, and 147.6% in the fourth quarter of 2009, and the allowance for loan and lease losses as a percent of nonperforming loans was 76.1% at March 31, 2010, compared with 76.3% in the fourth quarter of 2009, and 146.4% in the first quarter of 2009.

Restructured Loans

During the first quarter of 2010, the company restructured approximately $1.5 million of residential mortgage loans for borrowers. The terms of the modifications included a combination of temporary interest rate reductions, term extensions and re-amortizations. These actions did not have a significant financial impact on the company. There can be no assurance these actions will be successful in improving the long-term performance of the borrowers.

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Delinquent Loans

Loans 30-to-89 days past due totaled $22.6 million, or 0.80% of period end loans, as of March 31, 2010.  This compares to $19.1 million, or 0.66%, as of December 31, 2009 and $20.4 million, or 0.75%, as of March 31, 2009.  Similar to activity in nonperforming loans, the increase was attributable to commercial and commercial real estate credits, offset by declines in construction, home equity and credit card loans.

Other Real Estate Owned

At March 31, 2010, OREO was $18.1 million, compared with $4.1 million at December 31, 2009, and $3.5 million at March 31, 2009.  One relationship with multiple commercial land loans, totaling $13.6 million in the aggregate, all of which was previously classified as nonperforming, was transferred to OREO as First Financial took possession of the underlying properties.

The table that follows shows the categories that are included in nonperforming and underperforming assets, excluding covered assets, as of March 31, 2010, and the four previous quarters, as well as related credit quality ratios.

	Quarter Ended
	2010			2009
(Dollars in thousands)	Mar. 31			Dec. 31			Sep. 30			June 30			Mar. 31
Nonaccrual loans
Commercial	$	21,572		$	13,756		$	13,244		$	8,100		$	8,412
Real estate - construction		17,710			35,604			26,575			11,936			240
Real estate - commercial		21,196			15,320			12,407			10,130			9,170
Real estate - residential		4,116			3,993			5,253			4,897			4,724
Installment		365			660			493			394			464
Home equity		1,910			2,324			2,534			2,136			1,681
All other		0			0			0			0			0
		66,869			71,657			60,506			37,593			24,691
Restructured loans		7,584			6,125			3,102			197			201
Total nonperforming loans		74,453			77,782			63,608			37,790			24,892
Other real estate owned (OREO)		18,087			4,145			4,301			5,166			3,513
Total nonperforming assets		92,540			81,927			67,909			42,956			28,405
Accruing loans past due 90 days or more		286			417			308			318			255
Total underperforming assets	$	92,826		$	82,344		$	68,217		$	43,274		$	28,660
Allowance for loan and lease losses to
Nonaccrual loans		84.71	%		82.77	%		92.17	%		102.81	%		147.57	%
Nonperforming loans		76.08	%		76.25	%		87.68	%		102.27	%		146.38	%
Total ending loans		2.01	%		2.05	%		1.94	%		1.34	%		1.33	%
Nonperforming loans to total loans		2.65	%		2.69	%		2.21	%		1.31	%		0.91	%
Nonperforming assets to
Ending loans, plus OREO		3.27	%		2.83	%		2.36	%		1.48	%		1.04	%
Total assets, including covered assets		1.41	%		1.23	%		0.94	%		1.14	%		0.75	%

MARKET RISK

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

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

Liquidity

Liquidity management is the process by which First Financial manages the continuing flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost. These funding commitments include withdrawals by depositors, credit commitments to borrowers, shareholder dividends, expenses of its operations, and capital expenditures. Liquidity is monitored and closely managed by ALCO, a group of senior officers from the lending, deposit gathering, finance, risk management, and treasury areas. It is ALCO’s responsibility to ensure First Financial has the necessary level of funds available for normal operations as well as maintain a contingency funding policy to ensure that liquidity stress events are quickly identified, and management plans are in place to respond. This is accomplished through the use of policies which establish limits and require measurements to monitor liquidity trends, including management reporting that identifies the amounts and costs of all available funding sources. First Financial has expanded its various funding sources, including overnight borrowing lines, and has a diversified base of liquidity sources. These sources are periodically tested for funding availability and there have been no restrictions in availability.

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

Capital expenditures, such as banking center expansions and technology investments, were $10.9 million and $3.0 million for the first three months of 2010 and 2009, respectively.  Management believes that First Financial has sufficient liquidity to fund its future capital expenditure commitments.

As of March 31, 2010, First Financial had pledged certain eligible residential and farm real estate loans, home equity lines of credit, as well as certain government and agency securities, totaling $1.4 billion as collateral for borrowings to the FHLB. For ease of borrowing execution, First Financial utilizes a blanket collateral agreement with the FHLB.

From time to time, First Financial utilizes its short-term line of credit and longer-term advances from the Federal Home Loan Bank (FHLB) as funding sources. At both March 31, 2010 and December 31, 2009, the company had no short-term borrowings from the FHLB. At March 31, 2010, and December 31, 2009, total long-term borrowings from the FHLB were $329.4 million and $339.7 million, respectively. The total remaining borrowing capacity from the FHLB at March 31, 2010, was $245.9 million.

The principal source of asset-funded liquidity is marketable investment securities, particularly those of shorter maturities. The market value of investment securities classified as available-for-sale totaled $430.5 million at March 31, 2010. Securities classified as held-to-maturity that are maturing in one year or less are also a source of liquidity and totaled $6.6 million at March 31, 2010. In addition, other types of assets such as cash and due from banks, federal funds sold and securities purchased under agreements to resell, as well as loans maturing within one year, are sources of liquidity.

At March 31, 2010, in addition to liquidity on hand of $724.9 million, First Financial had unused and available overnight wholesale funding of approximately $2.3 billion to fund any significant deposit runoff that may occur as a result of acquired-non-strategic markets.

Certain restrictions exist regarding the ability of First Financial’s subsidiaries to transfer funds to First Financial in the form of cash dividends, loans, or advances. The approval of the subsidiaries’ respective primary federal regulators is required for First Financial’s subsidiaries to pay dividends in excess of regulatory limitations. Dividends paid to First Financial from its subsidiaries totaled $0.2 million for the first three months of 2010. As of March 31, 2010, First Financial’s subsidiaries had retained earnings of $359.3 million of which $226.7 million was available for distribution to First Financial without prior regulatory approval. Management is not aware of any other events or regulatory requirements that, if implemented, are likely to have a material effect on First Financial’s liquidity.

First Financial Bancorp makes quarterly interest payments on its junior subordinated debenture owed to its unconsolidated subsidiary trust. Interest expense related to this other long-term debt totaled $0.3 million for the three months ended March 31, 2010, and $0.2 million for the same period in 2009. Through the execution of an interest-rate swap the company has fixed its interest rate on the debentures for the next 10 years at 6.20%.

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During 2009, First Financial made quarterly dividend payments to the U.S. Treasury on the 80,000 perpetual preferred securities, which carried a 5.0% dividend rate for the first five years and a 9.0% rate thereafter. On February 24, 2010, First Financial Bancorp redeemed all of the $80.0 million of senior preferred shares issued to the U.S. Treasury in December 2008 under its CPP. First Financial included in its computation of earnings per diluted common share the impact of a non-cash, deemed dividend of $0.8 million, representing the unaccreted preferred stock discount remaining on the transaction date. This one-time deemed dividend was in addition to the first quarter 2010 preferred cash dividends paid through the redemption date, totaling $1.1 million.

First Financial had no share repurchase activity under publicly announced plans in 2009 or 2010.  First Financial does not plan to repurchase any of its shares during 2010.

OPERATIONAL RISK

As with all companies, First Financial is subject to operational risk. Operational risk is the risk of loss due to human error, inadequate or failed internal systems and controls, violations of, or noncompliance with, laws, rules, regulations, prescribed practices, or ethical standards, and external influences such as market conditions, fraudulent activities, disasters, and security risks. First Financial continuously strives to strengthen the company’s system of internal controls to ensure compliance with laws, rules, and regulations, and to improve the oversight of our operational risk.

COMPLIANCE RISK

Compliance risk represents the risk of regulatory sanctions, reputational impact or financial loss resulting from the company’s failure to comply with regulations and standards of good banking practice. Activities which may expose First Financial to compliance risk include, but are not limited to, those dealing with the prevention of money laundering, privacy and data protection, community reinvestment initiatives, fair lending challenges resulting from the company’s expansion of its banking center network and employment and tax matters.

STRATEGIC AND/OR REPUTATION RISK

Strategic and/or reputation risk represents the risk of loss due to impairment of reputation, failure to fully develop and execute business plans, failure to assess current and new opportunities in business, markets and products, and any other event not identified in the defined risk types mentioned previously. Mitigation of the various risk elements that represent strategic and/or reputation risk is achieved through initiatives to help First Financial better understand and report on the various risks.

CAPITAL

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

On June 8, 2009, First Financial completed a public offering of 13.8 million shares of its common stock adding approximately $98.0 million of additional common equity, after offering related costs. As a result of the capital raise during the second quarter, the company's capital ratios further improved and continued to significantly exceed the amounts necessary to be classified as well capitalized.

On February 2, 2010, First Financial completed a public offering of 6.4 million shares of its common stock adding approximately $91.2 million of additional common equity, after offering related costs. This public offering completed the issuance of common shares available to be offered pursuant to a prospectus supplement and base prospectus files as part of an existing shelf registration statement, filed with the Securities and Exchange Commission (SEC) on Form S-3.

Consolidated regulatory capital ratios at March 31, 2010, included the leverage ratio of 10.10%, Tier 1 ratio of 17.97%, and total capital ratio of 19.23%. All regulatory capital ratios exceeded the amounts necessary to be classified as “well capitalized,” and total regulatory capital exceeded the “minimum” requirement by approximately $419.2 million, on a consolidated basis. The tangible capital ratio was 9.73% at March 31, 2010.

Quantitative measures established by regulation to ensure capital adequacy require First Financial to maintain minimum amounts and ratios (as defined by the regulations and set forth in the following table) of Total and Tier 1 capital to risk-weighted assets and to average assets, respectively. Management believes, as of March 31, 2010, that First Financial met all capital adequacy requirements to which it was subject. At March 31, 2010, and December 31, 2009, regulatory notifications categorized First Financial as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, First Financial must maintain minimum Total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There have been no conditions or events since those notifications that management believes has changed the institution’s category.

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

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

The Peoples and Irwin FDIC-assisted transactions, which were each accounted for as a business combination, resulted in the recognition of an FDIC Indemnification Asset, which represents the fair value of estimated future payments by the FDIC to First Financial for losses on covered assets.  The FDIC Indemnification Asset, as well as covered assets, are risk-weighted at 20% for regulatory capital requirement purposes.

U.S. Department of the Treasury Troubled Asset Relief Program

The U.S. Department of the Treasury (“Treasury”), working with the Federal Reserve Board, established late in 2008 the Troubled Asset Relief Program (TARP) Capital Purchase Program (CPP), which was intended to stabilize the financial services industry.  One of the components of the CPP included a $250 billion voluntary capital purchase program for certain qualified and healthy banking institutions.  Pursuant to the CPP, Treasury purchased from First Financial 80,000 shares of $1,000 par value senior perpetual preferred securities at a price of $80.0 million equal to approximately 3.0% of the company’s then risk-weighted assets.  Treasury also received a warrant for the purchase of common stock in the amount of 930,233 shares at a strike price of $12.90 per share.  As a result of the common equity raised during the second quarter of 2009, the number of common shares eligible for purchase under the warrant agreement was reduced by 50% to 465,117 shares.  Such preferred shares paid a dividend of 5% for the first five years and increased to 9% thereafter.  In addition, subject to certain limited exceptions, financial institutions participating in the CPP are prohibited from (a) increasing their dividend to common shareholders and (b) conducting share repurchases without prior approval of the Treasury.  Participating financial institutions are also subject to certain limitations on executive compensation as well as other conditions.  On January 21, 2009, First Financial filed a registration statement on Form S-3 with the SEC to register these securities as required by the security purchase agreement with the Treasury.  On February 19, 2009, the registration statement was deemed effective by the SEC.

On February 24, 2010, First Financial redeemed all of the $80.0 million of senior preferred shares issued to the Treasury in December 2008 under its CPP. First Financial included in its computation of earnings per diluted common share the impact of a non-cash, deemed dividend of $0.8 million or $0.01 per common share, representing the unaccreted CPP preferred stock discount remaining as of the redemption date.  When combined with the cash dividend of $1.1 million paid during the first quarter of 2010, the total effect on net income available to common shareholders was $1.9 million, or $0.03 per diluted common share, compared to dividends paid during the fourth quarter 2009 of $1.0 million, or $0.02 per diluted common share and the first quarter 2009 of $0.6 million, or $0.02 per diluted common share.  The per share calculations reflect the increase in average diluted common shares outstanding as a result of the offering.

A warrant issued in connection with the preferred shares continues to be held by the U.S. Treasury.  The warrant enables the holder to purchase up to 465,117 shares of the Company’s common stock at an exercise price of $12.90 per share.  The Company has previously announced its intent not to repurchase the warrant, which expires on December 23, 2018.  During April 2010, the U.S. Treasury announced its intent to sell the warrant in a public offering to be executed using a modified Dutch auction methodology.  If the warrant sale is consummated in full, the U.S. Treasury would no longer hold any securities issued by First Financial.

FDIC Temporary Liquidity Program/Transaction Account Guarantee Program

First Financial opted to participate in the FDIC’s temporary liquidity guarantee program. The components of this program included the guarantee, until December 31, 2012, of certain newly issued senior unsecured debt issued by banks and bank holding companies through October 31, 2009 and full deposit insurance coverage for noninterest-bearing transaction accounts, regardless of size, until June 30, 2010. Participation in these programs would result in an increase in deposit insurance premiums and any debt subject to an insurance premium.  First Financial did not issue any debt with respect to this program.

In April 2010, the FDIC announced the continued extension of the Transaction Account Guarantee Program (TAG) beyond the current expiration of June 30, 2010 to December 31, 2010, with the possibility of a 12 month extension through December 31, 2011.  First Financial Bank had previously participated in the expanded coverage (unlimited FDIC insurance on demand deposits and low rate NOW accounts) in both the initial introduction and in the first extension (November 2009).  First Financial Bank has concluded that it would be in the best interest of the bank, clients, and shareholders to opt-out of the new extensions.  This was communicated to the FDIC on April 29, 2010.  Therefore, beginning on July 1, 2010, First Financial Bank will no longer participate in the FDIC's TAG and funds held in noninterest bearing transaction accounts, certain interest-bearing checking accounts, and IOLTA/ IOTA accounts will no longer be guaranteed in full under TAG.  However, these accounts will be insured up to $250,000 per depositor under the FDIC's general deposit rules.

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The standard insurance amount of $250,000 per depositor is in effect through December 31, 2013. On January 1, 2014, the standard insurance amount is scheduled to return to $100,000 per depositor for all account categories except IRAs and certain other retirement accounts, which will remain at $250,000 per depositor.

The following table illustrates the actual and required capital amounts and ratios as of March 31, 2010, and the year ended December 31, 2009.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
MARCH 31, 2010
Total capital to risk-weighted assets
Consolidated		717,839		19.23	%		298,633		8.00	%		N/A		N/A
First Financial Bank		632,945		17.01	%		297,726		8.00	%		372,158		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated		670,620		17.97	%		149,316		4.00	%		N/A		N/A
First Financial Bank		578,618		15.55	%		148,863		4.00	%		223,295		6.00	%
Tier 1 capital to average assets
Consolidated		670,620		10.10	%		264,785		4.00	%		N/A		N/A
First Financial Bank		578,618		8.73	%		264,400		4.00	%		330,500		5.00	%

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
DECEMBER 31, 2009
Total capital to risk-weighted assets
Consolidated		703,202		17.99	%		312,648		8.00	%		N/A		N/A
First Financial Bank		622,076		15.95	%		311,929		8.00	%		389,911		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated		654,104		16.74	%		156,324		4.00	%		N/A		N/A
First Financial Bank		565,666		14.51	%		155,965		4.00	%		233,947		6.00	%
Tier 1 capital to average assets
Consolidated		654,104		9.57	%		272,495		4.00	%		N/A		N/A
First Financial Bank		565,666		8.24	%		273,698		4.00	%		342,123		5.00	%

CRITICAL ACCOUNTING POLICIES

First Financial’s Consolidated Financial Statements are prepared based on the application of accounting policies. These policies require the reliance on estimates and assumptions. Changes in underlying factors, assumptions, or estimates in any of these areas could have a material impact on First Financial’s future financial condition and results of operations. In management’s opinion, some of these areas have a more significant impact than others on First Financial’s financial reporting. For First Financial, these areas currently include accounting for the allowance for loan and lease losses covered loans, FDIC indemnification asset, goodwill, pension and income taxes.

Allowance for Loan and Lease Losses.  First Financial maintains the allowance for loan and lease losses at a level sufficient to absorb potential losses inherent in the loan portfolio given the conditions at the time. Management determines the adequacy of the allowance based on periodic evaluations of the loan portfolio and other factors. These evaluations are inherently subjective as they require material estimates, all of which may be susceptible to significant change, including, among others:

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• Probability of default,

• Loss given default,

• Exposure at date of default,

• Amounts and timing of expected future cash flows on impaired loans,

• Value of collateral,

• Historical loss exposure, and

• The effects of changes in economic conditions that may not be reflected in historical results.

To the extent actual outcomes differ from management's estimates, additional provision for credit losses may be required that would impact First Financial's operating results.

Covered loans. Loans acquired in FDIC-assisted transactions are covered under loss sharing agreements. Covered loans were recorded at fair value at acquisition. Fair values for covered loans were based on a discounted cash flow methodology that considered various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting the Company’s assessment of risk inherent in the cash flow estimates. Covered loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques.

FDIC indemnification asset. FDIC indemnification assets result from the loss share agreements in the assisted transactions and are measured separately from the related covered assets as they are not contractually embedded in the assets and are not transferable with the assets should First Financial choose to dispose of them. Fair value is estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. These expected reimbursements do not include reimbursable amounts related to future covered expenditures. These cash flows are discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC.

Goodwill. Goodwill arising from business acquisitions represents the value attributable to unidentifiable intangible elements in the business acquired. FASB ASC Topic 350, Intangibles-Goodwill and Other, requires goodwill to be tested for impairment on an annual basis and more frequently in certain circumstances. At least annually, First Financial reviews goodwill for impairment using both income and asset based approaches. The income-based approach utilizes a multiple of earnings method in which First Financial's annualized earnings are compared to equity to provide an implied book-value-to-earnings multiple. First Financial then compares the implied multiple to current marketplace earnings multiples for which banks are being traded. An implied multiple less than current marketplace earnings multiples is an indication of possible goodwill impairment. The asset-based approach uses the discounted cash flows of First Financial's assets and liabilities, inclusive of goodwill, to determine an implied fair value. This input is used to calculate the fair value of the company, including goodwill, and is compared to the company's book value. An implied fair value that exceeds the company's book value is an indication that goodwill is not impaired. If First Financial's book value exceeds the implied fair value, an impairment loss equal to the excess amount would be recognized. Based on First Financial's analysis at year-end 2008 and during the first quarter of 2009, there have been no impairment charges required.

Pension. First Financial sponsors a non-contributory defined-benefit pension plan covering substantially all employees. Accounting for the pension plan involves material estimates regarding future plan obligations and investment returns on plan assets. Significant assumptions used in the pension plan include the discount rate, expected return on plan assets, and the rate of compensation increase. First Financial determines the discount rate assumption using published Corporate Bond Indices, projected cash flows of the pension plan, and comparisons to external industry surveys for reasonableness. The expected long-term return on plan assets is based on the composition of plan assets and a consensus of estimates of expected future returns from similarly managed portfolios while the rate of compensation increase is compared to historical increases for plan participants. Changes in these assumptions can have a material impact on the amount of First Financial's future pension obligations, on the funded status of the plan and can impact First Financial's operating results.

Income Taxes. First Financial evaluates and assesses the relative risks and appropriate tax treatment of transactions after considering statutes, regulations, judicial precedent and other information and maintains tax accruals consistent with its evaluation of these relative risks. Changes to the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws, the status of examinations being conducted by taxing authorities and changes to statutory, judicial and regulatory guidance that impact the relative risks of tax positions. These changes, when they occur, can affect deferred taxes and accrued taxes as well as the current period's income tax expense and can be material to First Financial's operating results.

ACCOUNTING AND REGULATORY MATTERS

Note 2 to the Consolidated Financial Statements discusses new accounting standards adopted by First Financial during 2010 and the expected impact of accounting standards recently issued but not yet required to be adopted.  To the extent the adoption of new accounting standards materially affects financial condition, results of operations, or liquidity, the impacts are discussed in the applicable section(s) of Management’s Discussion and Analysis and the Notes to the Consolidated Financial Statements.

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FORWARD LOOKING INFORMATION

Certain statements contained in this report that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the Act).  In addition, certain statements in future filings by First Financial with the SEC, in press releases, and in oral and written statements made by or with the approval of First Financial which are not statements of historical fact constitute forward-looking statements within the meaning of the Act.

Examples of forward-looking statements include, but are not limited to, projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure and other financial items, statements of plans and objectives of First Financial or its management or board of directors, and statements of future economic performances and statements of assumptions underlying such statements.  Words such as “believes,” “anticipates,” “intends,” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Management’s analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risk and uncertainties that may cause actual results to differ materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

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

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

· the effects of and changes in policies and laws of regulatory agencies, inflation and interest rates;

· technology changes;

· mergers and acquisitions, including costs or difficulties related to the integration of acquired companies, including our ability to successfully integrate the branches of Peoples and Irwin which were acquired out of FDIC receivership;

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

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

· our ability to increase market share and control expenses;

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

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

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

· our ability to manage loan delinquency and charge-off rates and changes in estimation of the adequacy of the allowance for loan losses; and

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

In addition, please refer to our Annual Report on Form 10-K for the year ended December 31, 2009, as well as our other filings with the SEC, for a more detailed discussion of these risks and uncertainties and other factors.  Such forward-looking statements are meaningful only on the date when such statements are made, and First Financial undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such a statement is made to reflect the occurrence of unanticipated events.

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ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

Presented below is the estimated impact on First Financial’s net interest income as of March 31, 2010, assuming immediate, parallel shifts in interest rates:

	-200 basis points			-100 basis points			+100 basis points			+200 basis points
March 31, 2010		(7.19	)%		(2.78	)%		1.89	%		3.93	%

Modeling the sensitivity of net interest income and the economic value of equity to changes in market interest rates is highly dependent on numerous assumptions incorporated into the modeling process.  Due to the current low interest rate environment, funding rates on deposit and wholesale funding instruments were not reduced below 0.0% in the down 200 and down 100 basis points scenarios.  The analysis provides a framework as to what our overall sensitivity is as of our most recent reported position.  Management strategies may impact future reporting periods, as our actual results may differ from simulated results due to the timing, magnitude, and frequency of interest rate changes, the difference between actual experience, and the characteristics assumed, as well as changes in market conditions.  Market based prepayment speeds are factored into the analysis for loan and securities portfolios.  Rate sensitivity for transactional deposit accounts is modeled based on both historical experience and external industry studies.

First Financial uses economic value of equity sensitivity analysis to understand the impact of changes in interest rates on long-term cash flows, income, and capital.  Economic value of equity is based on discounting the cash flows for all balance sheet instruments under different interest-rate scenarios.  Deposit premiums are based on external industry studies and utilizing historical experience.  Presented below is the change in First Financial’s economic value of equity position as of March 31, 2010, assuming immediate, parallel shifts in interest rates and excluding the impact of the Irwin acquisition as noted above:

	-200 basis points			-100 basis points			+100 basis points			+200 basis points
March 31, 2010		(14.07	)%		(6.16	)%		2.66	%		5.15	%

First Financial, utilizing interest rates primarily based upon external industry studies, models additional scenarios covering the next twelve months.  Based on these scenarios, First Financial has a relatively neutral rate risk position of a positive 1.69% when compared to a base-case scenario with interest rates held constant.  Given its outlook for future interest rates, First Financial is managing its balance sheet with a bias toward asset sensitivity.

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

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ITEM 4.   CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

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

On July 31, 2009, First Financial acquired the banking operations of Peoples Community Bank (Peoples) through an agreement with the Federal Deposit Insurance Corporation. On September 18, 2009, First Financial acquired the banking operations of Irwin Union Bank and Trust Company and Irwin Union Bank, FSB (Irwin, collectively) through an agreement with the Federal Deposit Insurance Corporation.  The internal control over financial reporting of Peoples’ and Irwin’s banking operations were excluded from the evaluation of effectiveness of First Financial’s disclosure controls and procedures as of the period end covered by this report as a result of the timing of the acquisitions.  As a result of the Peoples and Irwin acquisitions, First Financial will be evaluating changes to processes, information technology systems and other components of internal control over financial reporting as part of its integration activities.

The acquired Peoples banking operations represents 10.0% of total consolidated deposits and 8.4% of total consolidated assets as of the period covered by this report.  The acquired Irwin banking operations represents 47.8% of total consolidated deposits and 29.7% of total consolidated assets as of the period covered by this report.

Changes in Internal Control over Financial Reporting

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

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PART II-OTHER INFORMATION

Item 1.         Legal Proceedings.

We make the following disclosure in connection with the acquisition of certain assets and assumption of certain liabilities of Irwin Union Bank and Trust Company (Irwin Union Bank) by First Financial Bank from the FDIC as receiver for Irwin Union Bank.  The acquisition was completed pursuant to a Purchase and Assumption Agreement by and among the FDIC, the FDIC as receiver, and First Financial Bank dated September 18, 2009, as amended (the “Purchase Agreement”).  Some of these claims involve Irwin Union Bank prior to it being placed in receivership and are thus the responsibility of the FDIC as receiver pursuant to the Purchase Agreement.  Furthermore, with respect to the claims set forth below, First Financial Bank has or expects to submit requests for indemnification to the FDIC as receiver pursuant to Section 12 of the Purchase Agreement.  Pursuant to the Purchase Agreement, the FDIC as receiver has agreed to indemnify and hold harmless First Financial Bank for certain claims against Irwin Union Bank and the former subsidiaries of Irwin Union Bank for actions taken on or prior to September 18, 2009.  First Financial believes the matters discussed below qualify for indemnification. Furthermore, discussions are ongoing with the FDIC regarding indemnification with respect to certain actions taken by Irwin and its subsidiaries in connection the purchase of certain assets and assumption of certain liabilities of Irwin by First Financial Bank from the FDIC as receiver.

Litigation in Connection with Loans Purchased by Former Irwin Subsidiaries from Freedom Mortgage Corporation

On January 22, 2008, Irwin Union Bank and Irwin Home Equity Corporation (IHE), filed suit against Freedom Mortgage Corporation (Freedom) in the United States District Court for the Northern District of California, Oakland Division, Irwin Union Bank, et al. v. Freedom Mortgage Corp. (the “First California Action”), for breach of contract and negligence arising out of Freedom’s refusal to repurchase certain mortgage loans that Irwin Union Bank and IHE had purchased from Freedom. Irwin Union Bank and IHE are seeking damages in excess of $8 million from Freedom.

In response, in March 2008, Freedom moved to compel arbitration of the claims asserted in the First California Action and filed suit against Irwin Mortgage Corporation (Irwin Mortgage) and its former indirect parent, Irwin Financial Corporation (IFC), (now in Chapter 7 bankruptcy), in the United States District Court for the District of Delaware, Freedom Mortgage Corporation v. Irwin Financial Corporation et al., (the “Delaware Action”). Freedom alleged that the repurchase demands in the First California Action represent various breaches of an Asset Purchase Agreement dated as of August 7, 2007, which was entered into by IFC, Irwin Mortgage and Freedom in connection with the sale to Freedom of the majority of Irwin Mortgage’s loan origination assets. In the Delaware Action, Freedom sought damages in excess of $8 million and to compel Irwin Financial to order its (now former) subsidiaries in the First California Action to dismiss their claims.

In April 2008, the California district court stayed the First California Action pending completion of arbitration. The arbitration remains pending.  The California district judge previously stated on the record that she would not hear Freedom’s claims in the Delaware Action until the arbitration is completed.

On March 23, 2009, the Delaware district court granted Irwin’s motion to transfer the Delaware Action to the Northern District of California, and ordered that the Delaware case be closed.  The Delaware Action was transferred on March 30, 2009 and officially filed in the United States District Court for the Northern District of California, San Francisco Division, on March 31, 2009, Freedom Mortgage Corporation v. Irwin Financial Corporation and Irwin Mortgage Corporation (the “Second California Action”).

As a result of the FDIC receivership of Irwin Union Bank and the bankruptcy of Irwin Financial, several stipulations were entered into postponing various case management dates originally ordered by the court.  No reserves have been established for this litigation.

First Financial Bank continues to evaluate this matter and expects to conduct discussions with the FDIC counsel and make a claim for indemnification with respect to the subsidiaries.

Homer v. Sharp

This lawsuit was filed by a mother and children on or about May 6, 2008 in the Circuit Court for Baltimore City, Maryland, against various defendants, including Irwin Mortgage and a former Irwin Mortgage employee, for injuries from exposure to lead-based paint. Irwin Mortgage and its former employee were the subject of three counts each of the 40-count complaint, which alleged, among other things, negligence and violations of the Maryland Lead Poisoning Prevention Act, unfair and deceptive trade practices in violation of the Maryland Consumer Protection Act, loss of an infant’s services, incursion of medical expenses, and emotional distress and mental anguish. Plaintiffs sought damages of $5 million on each count. The counts against Irwin Mortgage and the former employee alleged involvement with one of six properties named in the complaint.

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The former Irwin Mortgage employee was dismissed for lack of jurisdiction.  As a result of a pre-trial conference held May 3, 2010, plaintiffs’ counsel filed a stipulation to dismiss Irwin Mortgage with prejudice from this litigation.

First Financial Bank expects to conduct discussions with FDIC counsel and make a claim for indemnification with respect to the subsidiary.

EverBank v. Irwin Mortgage Corporation and Irwin Union Bank and Trust Company-Demand for Arbitration

On March 25, 2009, Irwin Mortgage and Irwin Union Bank received an arbitration demand (Demand) from EverBank for administration by the American Arbitration Association (AAA), claiming damages for alleged breach of an ”Agreement for Purchase and Sale of Servicing” (the “EverBank Agreement”) under which Irwin Mortgage is alleged to have sold the servicing of certain mortgage loans to EverBank. The Demand also alleges that Irwin Union Bank is the guarantor of Irwin Mortgage’s obligations under the EverBank Agreement, and that the EverBank Agreement was amended November 1, 2006 to include additional loans. According to the Demand, EverBank alleges that Irwin Mortgage and Irwin Union Bank breached certain warranties and covenants under the EverBank Agreement by failing to repurchase certain loans and failing to indemnify EverBank after EverBank had demanded repurchase. The Demand sets forth several claims based on legal theories of breach of warranty, breach of the covenant of good faith and fair dealing, promissory estoppel, specific performance and unjust enrichment, and requests damages, penalties, interest, attorneys’ fees, costs, and other appropriate relief to be granted by the arbitration panel. The Demand also states that, as a result of Irwin Mortgage’s alleged failure to repurchase loans, EverBank has allegedly incurred and continues to incur damages that it claims could exceed $10,000,000.  In April 2009, Irwin Mortgage and Irwin Union Bank filed an answer and counter-claims to the Demand.  Discussions to resolve this matter led to the issuance of a stay of the arbitration on February 16, 2010.  A reserve has been established that is deemed appropriate for resolution of all open repurchase issues with EverBank.

On October 23, 2009, First Financial requested indemnification from the FDIC for this matter under the Agreement and expects to conduct discussions with the FDIC.

Additional Repurchase Demands

Irwin Mortgage has recorded a liability for losses from the potential repurchases by Irwin Mortgage of loans it sold that allegedly contained origination errors.  Such alleged errors included inaccurate appraisals, errors in underwriting, and ineligibility for inclusion in loan programs of government-sponsored entities.  In determining liability levels for repurchases, we estimate the number of loans that may contain origination errors, the year in which the loss is expected to occur, and the expected severity of the loss upon occurrence applied to an average loan amount. Inaccurate assumptions in setting this liability could result in changes in future liabilities.   A reserve has been established that is deemed appropriate for resolution of verified repurchase issues.

In addition, in August 2009, Irwin Mortgage received a request to repurchase approximately 1,700 mobile home loans with an unpaid principal balance of approximately $154 million  The request alleged that title was not perfected with respect to these loans in accordance with contractual terms.  However, Irwin Mortgage believes the requesting party has failed to provide sufficient evidence to support its claim.  Irwin Mortgage disputed the claim in September 2009.  Additional unsubstantiated claims have been received subsequent to the August 2009 requests of approximately $15 million.  Based on the information available at the time of this filing, there is insufficient evidence to warrant the recording of a reserve for these claims.

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

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Item 1A.       Risk Factors.

Possible Additional Risks

The risks listed here are not the only risks we face. Additional risks that are not presently known, or that we presently deem to be immaterial, also could have a material adverse effect on our financial condition, results of operations, business, and prospects. (See also “Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations” for certain forward looking statements.)

Recent Market, Legislative, and Regulatory Events

Difficult market conditions have adversely affected our industry.

Dramatic declines in the housing market over the past years, with falling home prices and increasing foreclosures, unemployment and under-employment, have negatively impacted the credit performance of real estate related loans and resulted in significant write-downs of asset values by financial institutions. These write-downs, initially of mortgage-backed securities (MBS) but spreading to other securities and loans have caused many financial institutions to seek additional capital, to reduce or eliminate dividends, to merge with larger and stronger institutions and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional investors have reduced or ceased providing funding to borrowers, including to other financial institutions. This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. The resulting economic pressure on consumers and lack of confidence in the financial markets has adversely affected our business, financial condition and results of operations. Market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default rates, which may impact our charge-offs and provision for credit and fraud losses. A worsening of these conditions would likely exacerbate the adverse effects of these difficult market conditions on us and others in the financial institutions industry.

Current levels of market volatility are unprecedented.

The capital and credit markets have been experiencing volatility and disruption for more than 12 months. Recently, volatility and disruption have reached unprecedented levels. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuers’ underlying financial strength. If current levels of market disruption and volatility continue or worsen, there can be no assurance that we will not experience an adverse effect, which may be material, on our ability to access capital and on our business, financial condition and results of operations.  Numerous facts and circumstances are considered when evaluating the carrying value of our goodwill. One of those considerations is our market capitalization, evaluated over a reasonable period of time, in relation to the aggregate estimated fair value of the reporting units. While this comparison provides some relative market information regarding the estimated fair value of the reporting units, it is not determinative and needs to be evaluated in the context of the current economic and political environment. However, significant and/or sustained declines in First Financial’s market capitalization, especially in relation to First Financial’s book value, could be an indication of potential impairment of goodwill.

The soundness of other financial institutions could adversely affect us.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due us. There is no assurance that any such losses would not materially and adversely affect our results of operations.

There can be no assurance that enacted legislation or any proposed federal programs will stabilize the U.S. financial system and such legislation and programs may adversely affect us.

There has been much legislative and regulatory action in response to the financial crises affecting the banking system and financial markets and threats to investment banks and other financial institutions.  There can be no assurance, however, as to the actual impact that the legislation and its implementing regulations or any other governmental program will have on the financial markets. The failure of the actions by the legislators, the regulatory bodies or the U.S. government to stabilize the financial markets and a continuation or worsening of current financial market conditions could materially and adversely affect our business, financial condition, results of operations, and access to credit or the trading price of our common shares.

Contemplated and proposed legislation, state and federal programs, and increased government control or influence may adversely affect us by increasing the uncertainty in our lending operations and expose us to increased losses, including legislation that would allow bankruptcy courts to permit modifications to mortgage loans on a debtor’s primary residence, moratoriums on a mortgagor’s right to foreclose on property, and requirements that fees be paid to register other real estate owned property. Statutes and regulations may be altered that may potentially increase our costs to service and underwrite mortgage loans. Additionally, federal intervention and operation of formerly private institutions may adversely affect our rights under contracts with such institutions and the way in which we conduct business in certain markets.

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Treasury “Stress Tests” and Other Actions may Adversely Affect Bank Operations and Value of Shares.

On February 10, 2009, the Treasury outlined a plan to restore stability to the financial system. This announcement included reference to a plan by the Treasury to conduct “stress tests” of certain banks which received funds under the CPP and similar Treasury programs. The methods and procedures to be used by the Treasury in conducting its “stress tests,” how these methods and procedures will be applied, and the significance or consequence of such tests presently are not known. Any of these or their consequences could adversely affect the banking industry in general, and the value of First Financial shares, among other things.

The fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings.

The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States. Its policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments, both of which affect the net interest margin. The resultant changes in interest rates can also materially decrease the value of certain financial assets we hold, such as debt securities. Its policies can also adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans. Changes in Federal Reserve Board policies are beyond our control and difficult to predict; consequently, the impact of these changes on our activities and results of operations is difficult to predict.

Risks Relating to Our Business

Credit Risks

When we loan money, commit to loan money or enter into a letter of credit or other contract with a counterparty, we incur credit risk, or the risk of losses if our borrowers do not repay their loans or our counterparties fail to perform according to the terms of their contracts.

Large, individual loans, letters of credit and contracts magnify such credit risks.  As lending is one of our primary business activities, the credit quality of our portfolio can have a significant impact on our earnings. We estimate and establish reserves for credit risks and credit losses inherent in our total loan portfolio. This process, which is critical to our financial results and condition, requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of our borrowers to repay their loans. As is the case with any such assessments, there is always the chance that we will fail to identify the proper factors or that we will fail to accurately estimate the impacts of factors that we identify.  In addition, large loans, letters of credit and contracts with individual counterparties in our portfolio magnify the credit risk that we face, as the impact of large borrowers and counterparties not repaying their loans or performing according to the terms of their contracts has a disproportionately significant impact on our credit losses and reserves.

Weakness in the economy and in the real estate market, including specific weakness within our geographic footprint, has adversely affected us and may continue to adversely affect us.

If the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations decline, or continue to decline, this could result in, among other things, a deterioration of credit quality or a reduced demand for credit, including a resultant effect on our loan portfolio and allowance for loan and lease losses. These factors could result in higher delinquencies and greater charge-offs in future periods, which would materially adversely affect our financial condition and results of operations.

Weakness in the real estate market, including the secondary residential mortgage loan markets, could adversely affect us.

Significant ongoing disruptions in the secondary market for residential mortgage loans have limited the market for and liquidity of many mortgage loans. The effects of ongoing mortgage market challenges, combined with the ongoing correction in residential real estate market prices and reduced levels of home sales, could result in further price reductions in single family home values, adversely affecting the value of collateral securing mortgage loans that we hold, mortgage loan originations and profits on sales of mortgage loans. These trends could continue and such conditions could result in higher losses, write downs and impairment charges in our mortgage and other lines of business. Continued declines in real estate values, home sale volumes, financial stress on borrowers as a result of job losses, interest rate resets on adjustable rate mortgage loans or other factors could have further adverse effects on borrowers that could result in higher delinquencies and greater charge-offs in future periods, which adversely affect our financial condition or results of operations. Additionally, decreases in real estate values might adversely affect the creditworthiness of state and local governments, and this might result in decreased profitability or credit losses from loans made to such governments. A decline in home values or overall economic weakness could also have an adverse impact upon the value of real estate or other assets which we own upon foreclosing a loan and our ability to realize value on such assets.

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Real estate volatility and future changes in our disposition strategies could result in net proceeds that differ significantly from our OREO fair value appraisals.

Our other real estate owned (“OREO”) portfolio consists of properties that we obtained through foreclosure or through an in-substance foreclosure in satisfaction of loans. Properties in our OREO portfolio are recorded at the lower of the recorded investment in the loans for which the properties previously served as collateral or the “fair value”, which represents the estimated sales price of the properties on the date acquired less estimated selling costs. Generally, in determining “fair value” an orderly disposition of the property is assumed, except where a different disposition strategy is expected. Significant judgment is required in estimating the fair value of OREO property, and the period of time within which such estimates can be considered current is significantly shortened during periods of market volatility, as is currently being experienced and as experienced during 2008 and 2009.

In response to market conditions and other economic factors, we may utilize alternative sale strategies other than orderly disposition as part of our OREO disposition strategy, such as immediate liquidation sales. In this event, as a result of the significant judgments required in estimating fair value and the variables involved in different methods of disposition, the net proceeds realized from such sales transactions could differ significantly from appraisals, comparable sales, and other estimates used to determine the fair value of our OREO properties.

The information that we use in managing our credit risk may be inaccurate or incomplete, which may result in an increased risk of default and otherwise have an adverse effect on our business, results of operations and financial condition.

In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished by or on behalf of clients and counterparties, including financial statements and other financial information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. Although we regularly review our credit exposure to specific clients and counterparties and to specific industries that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to detect, such as fraud. Moreover, such circumstances, including fraud, may become more likely to occur and/or be detected in periods of general economic uncertainty, such as at the present time. We may also fail to receive full information with respect to the risks of a counterparty.  In addition, in cases where we have extended credit against collateral, we may find that we are undersecured, for example, as a result of sudden declines in market values that reduce the value of collateral or due to fraud with respect to such collateral. If such events or circumstances were to occur, it could result in a potential loss of revenue and have an adverse effect on our business, results of operations and financial condition.

Recently declining values of real estate, increases in unemployment, and the related effects on local economies may increase our credit losses, which would negatively affect our financial results.

We offer a variety of secured loans, including commercial lines of credit, commercial term loans, real estate, construction, home equity, consumer and other loans. Many of our loans are secured by real estate (both residential and commercial) in our market area. A major change in the real estate market, such as deterioration in the value of this collateral, or in the local or national economy, could adversely affect our customer’s ability to pay these loans, which in turn could adversely impact us. Additionally, increases in unemployment also may adversely affect the ability of certain clients to pay loans and the financial results of commercial clients in localities with higher unemployment, which may result in loan defaults and foreclosures and which may impair the value of our collateral. Risk of loan defaults and foreclosures are unavoidable in the banking industry, and we try to limit our exposure to this risk by monitoring our extensions of credit carefully. We cannot fully eliminate credit risk, and as a result credit losses may increase in the future.

Deteriorating credit quality, particularly in real estate loans, has adversely impacted us and may continue to adversely impact us.

Late in 2008 we began to experience a downturn in the overall credit performance of our loan portfolio, as well as acceleration in the deterioration of general economic conditions. This deterioration, including a significant increase in national and regional unemployment levels and decreased sources of liquidity are the primary drivers of the increased stress being placed on most borrowers and is negatively impacting their ability to repay. These conditions resulted in an increase in our loan loss reserves.

We expect credit quality to remain challenging and could continue to deteriorate for much of 2010, notably in commercial real estate. Continued deterioration in the quality of our credit portfolio could significantly increase nonperforming loans, require additional increases in loan loss reserves, elevate charge-off levels and have a material adverse effect on our capital, financial condition, and results of operations. Furthermore, given the size of our loan portfolio, it is possible that a deterioration in the credit quality of one or two of our largest credits could have a material adverse effect on our capital, financial condition, and results of operations. Because we have substantially fewer nonperforming assets than many of our peers, the credit quality of our loan portfolio in recent quarters has and may continue to deteriorate at a faster rate than many of our peers.

The results of the internal stress test may not accurately predict the impact on our company if the condition of the economy were to continue to deteriorate.

During 2009 we conducted a number of internal stress tests. These stress tests were based on the tests that were administered to the nation’s 19 largest banks by the Treasury in connection with its Supervisory Capital Assessment Program. Under the stress tests, we applied the Treasury’s assumptions to estimate our credit losses, resources available to absorb those losses and any necessary additions to capital that would be required under the “more adverse” stress test scenario.

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While we believe we have appropriately applied the Treasury’s assumptions in performing our internal stress tests, we can not assure you that the results of this test are comparable to the results of stress tests performed and publicly released by the Treasury or that the results of our stress test would be the same if it had been performed by the Treasury. Moreover, the results of the stress tests may not accurately reflect the impact on our company if the economy does not improve or continues to deteriorate. Any continued deterioration of the economy could result in credit losses significantly higher, with a corresponding impact on our resources and capital requirements, than those predicted by our internal stress tests.

Our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio.

Like all financial institutions, we maintain an allowance for loan losses to provide for loans in our portfolio that may not be repaid in their entirety. We believe that our allowance for loan losses is maintained at a level adequate to absorb probable losses inherent in our loan portfolio as of the corresponding balance sheet date. However, our allowance for loan losses may not be sufficient to cover actual loan losses, and future provisions for loan losses could materially and adversely affect our operating results. We have seen a significant increase in the level of potential problem loans and other loans with higher than normal risk. We expect to receive more frequent requests from borrowers to modify loans. The related accounting measurements related to impairment and the loan loss allowance require significant estimates which are subject to uncertainty and changes relating to new information and changing circumstances. Our estimates of the risk of loss and amount of loss on any loan are complicated by the significant uncertainties surrounding our borrowers’ abilities to successfully execute their business models through changing economic environments, competitive challenges and other factors. Because of the degree of uncertainty and susceptibility of these factors to change, our actual losses may vary from our current estimates.

State and federal regulators, as an integral part of their examination process, periodically review our allowance for loan losses and may require us to increase our allowance for loan losses by recognizing additional provisions for loan losses charged to expense, or to decrease our allowance for loan losses by recognizing loan charge-offs, net of recoveries. Any such additional provisions for loan losses or charge-offs, as required by these regulatory agencies, could have a material adverse effect on our financial condition and results of operations.

We expect fluctuations in our loan loss provisions due to the uncertain economic conditions.

Operating Risks

The introduction, implementation, withdrawal, success and timing of business initiatives and strategies, including, but not limited to, the opening of new banking centers, may be less successful or may be different than anticipated, which could adversely affect our business.

First Financial makes certain projections and develops plans and strategies for its banking and financial products. If we do not accurately determine demand for our banking and financial products, it could result in us incurring significant expenses without the anticipated increases in revenue, which could result in a material adverse effect on its business.

Changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital or liquidity.

Given our business mix, and the fact that most of the assets and liabilities are financial in nature, we tend to be sensitive to market interest rate movements and the performance of the financial markets. In addition to the impact of the general economy, changes in interest rates or in valuations in the debt or equity markets could directly impact us in one or more of the following ways:

· The yield on earning assets and rates paid on interest bearing liabilities may change in disproportionate ways;

· The value of certain balance sheet and off-balance sheet financial instruments or the value of equity investments that we hold could decline;

· The value of assets for which we provide processing services could decline; or

· To the extent we access capital markets to raise funds to support our business; such changes could affect the cost of such funds or the ability to raise such funds.

We may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could harm our liquidity, results of operations, and financial condition.

When we sell mortgage loans, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to the purchaser about the mortgage loans and the manner in which they were originated. Our whole loan sale agreements require us to repurchase or substitute mortgage loans in the event we breach any of these representations or warranties. In addition, we may be required to repurchase mortgage loans as a result of borrower fraud. Likewise, we are required to repurchase or substitute mortgage loans if we breach a representation or warranty in connection with our securitizations. While we have taken steps to enhance our underwriting policies and procedures, there can be no assurance that these steps will be effective or reduce risk associated with loans sold in the past. If the level of repurchase and indemnity activity becomes material, our liquidity, results of operations and financial condition will be adversely affected.

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Clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding.

Checking and savings account balances and other forms of client deposits could decrease if clients perceive alternative investments as providing superior expected returns. When clients move money out of bank deposits in favor of alternative investments, we can lose a relatively inexpensive source of funds, increasing our funding costs.

Consumers may decide not to use banks to complete their financial transactions, which could affect net income.

Technology and other changes now allow parties to complete financial transactions without banks. For example, consumers can pay bills and transfer funds directly without banks. This process could result in the loss of fee income, as well as the loss of client deposits and the income generated from those deposits.

Our asset management business subjects us to a variety of risks.

At March 31, 2010, we had $2.3 billion in assets under management.  A sharp decline in the stock market can negatively impact the amount of assets under management and thus subject our earnings to a broader variety of risks and uncertainties.

Negative public opinion could damage our reputation and adversely impact business and revenues.

As a financial institution, our earnings and capital are subject to risks associated with negative public opinion. Negative public opinion could result from our actual or alleged conduct in any number of activities, including lending practices, the failure of any product or service sold by us to meet our clients’ expectations or applicable regulatory requirements, corporate governance and acquisitions, or from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can adversely affect our ability to keep and attract and/or retain clients and can expose us to litigation and regulatory action. Actual or alleged conduct by one of our businesses can result in negative public opinion about our other businesses. Negative public opinion could also affect our ability to borrow funds in the unsecured wholesale debt markets.

We rely on other companies to provide key components of our business infrastructure.

Third parties provide key components of our business infrastructure such as banking services, processing, and Internet connections and network access. Any disruption in such services provided by these third parties or any failure of these third parties to handle current or higher volumes of use could adversely affect our ability to deliver products and services to clients and otherwise to conduct business. Technological or financial difficulties of a third party service provider could adversely affect our business to the extent those difficulties result in the interruption or discontinuation of services provided by that party. We may not be insured against all types of losses as a result of third party failures and our insurance coverage may be inadequate to cover all losses resulting from system failures or other disruptions. Failures in our business infrastructure could interrupt the operations or increase the costs of doing business.

We rely on our systems, employees, and certain counterparties, and certain failures could materially adversely affect our operations.

We are exposed to many types of operational risk, including the risk of fraud by employees and outsiders, clerical and record-keeping errors, and computer/telecommunications systems malfunctions. Our businesses are dependent on our ability to process a large number of increasingly complex transactions. If any of our financial, accounting, or other data processing systems fail or have other significant shortcomings, we could be materially adversely affected. We are similarly dependent on our employees. We could be materially adversely affected if one of our employees causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our operations or systems. Third parties with which we do business could also be sources of operational risk to us, including relating to break-downs or failures of such parties’ own systems or employees. Any of these occurrences could result in our diminished ability to operate one or more of our businesses, potential liability to clients, reputational damage and regulatory intervention, which could materially adversely affect us. We may also be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, which may include, for example, computer viruses or electrical or telecommunications outages or natural disasters, or events arising from local or regional politics, including terrorist acts. Such disruptions may give rise to losses in service to clients and loss or liability to us. In addition there is the risk that our controls and procedures as well as business continuity and data security systems prove to be inadequate. Any such failure could affect our operations and could materially adversely affect our results of operations by requiring us to expend significant resources to correct the defect, as well as by exposing us to litigation or losses not covered by insurance.

We depend on the accuracy and completeness of information about clients and counterparties.

In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished by or on behalf of clients and counterparties, including financial statements and other financial information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors.

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Industry Risks

Regulation by federal and state agencies could adversely affect the business, revenue, and profit margins.

We are heavily regulated by federal and state agencies. This regulation is to protect depositors, the federal deposit insurance fund and the banking system as a whole. Congress and state legislatures and federal and state regulatory agencies continually review banking laws, regulations, and policies for possible changes. Changes to statutes, regulations, or regulatory policies, including interpretation or implementation of statutes, regulations, or policies, could affect us adversely, including limiting the types of financial services and products we may offer and/or increasing the ability of non-banks to offer competing financial services and products. Also, if we do not comply with laws, regulations, or policies, we could receive regulatory sanctions and damage to our reputation.

Competition in the financial services industry is intense and could result in losing business or reducing margins.

We operate in a highly competitive industry that could become even more competitive as a result of legislative, regulatory and technological changes, and continued consolidation. We face aggressive competition from other domestic and foreign lending institutions and from numerous other providers of financial services. The ability of non-banking financial institutions to provide services previously limited to commercial banks has intensified competition. Because non-banking financial institutions are not subject to the same regulatory restrictions as banks and bank holding companies, they can often operate with greater flexibility and lower cost structures. Securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. This may significantly change the competitive environment in which we conduct business. Some of our competitors have greater financial resources and/or face fewer regulatory constraints. As a result of these various sources of competition, we could lose business to competitors or be forced to price products and services on less advantageous terms to retain or attract clients, either of which would adversely affect our profitability.

Future legislation could harm our competitive position.

Federal, state, and local legislatures increasingly have been considering proposals to substantially change the financial institution regulatory system and to expand or contract the powers of banking institutions and bank holding companies. Various legislative bodies have also recently been considering altering the existing framework governing creditors’ rights, including legislation that would result in or allow loan modifications of various sorts. Such legislation may change banking statutes and the operating environment in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. We cannot predict whether new legislation will be enacted and, if enacted, the effect that it, or any regulations, would have on our activities, financial condition, or results of operations.

Maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services.

Our success depends, in part, on the ability to adapt products and services to evolving industry standards. There is increasing pressure to provide products and services at lower prices. This can reduce net interest income and noninterest income from fee-based products and services. In addition, the widespread adoption of new technologies could require us to make substantial capital expenditures to modify or adapt existing products and services or develop new products and services. We may not be successful in introducing new products and services in response to industry trends or development in technology or those new products may not achieve market acceptance. As a result, we could lose business, be forced to price products and services on less advantageous terms to retain or attract clients, or be subject to cost increases.

Company Risks

We may not pay dividends on your common shares.

Holders of our common shares are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments. Although we have historically declared cash dividends on our common shares, we are not required to do so and may reduce or eliminate our common shares dividend in the future. This could adversely affect the market price of our common shares.  Also, our ability to increase our dividend or to make other distributions was restricted due to our participation in the CPP, which limited (without the consent of the Treasury) our ability to increase our dividend or to repurchase our common shares for so long as any preferred securities issued under such program remain outstanding.  Our ability to increase our dividend or to make other distributions is not impacted by the warrant held by Treasury.

There may be future sales or other dilution of our equity, which may adversely affect the market price of our common shares.

Generally, we are not restricted from issuing additional common shares, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common shares. We are currently authorized to issue up to 160 million common shares, of which 57,850,210 shares are outstanding. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares. These authorized but unissued shares could be issued on terms or in circumstances that could dilute the interests of other shareholders.

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Furthermore, in connection with our participation in the CPP, the U.S. Treasury received a warrant as discussed under “-The U.S. Department of the Treasury Troubled Asset Relief Program”, and we have agreed to provide the U.S. Treasury with certain anti-dilutive adjustments as well as registration rights. The issuance of additional common shares as a result of exercise of the warrant or otherwise or the issuance of securities convertible or exercisable into common shares would dilute the ownership interest of our existing common shareholders.  The market price of our common shares could decline as a result of this offering as well as other sales of a large block of common shares or similar securities in the market after this offering, or the perception that such sales could occur.

Our liquidity is dependent upon our ability to receive dividends from our subsidiaries, which accounts for most of our revenue and could affect our ability to pay dividends, and we may be unable to enhance liquidity from other sources.

We are a separate and distinct legal entity from our subsidiaries, including First Financial Bank. We receive substantially all of our revenue from dividends from our subsidiaries. These dividends are the principal source of funds to pay dividends on our common stock and interest and principal on our debt. Various federal and/or state laws and regulations limit the amount of dividends that our bank and certain of our non-bank subsidiaries may pay us. Additionally, if our subsidiaries’ earnings are not sufficient to make dividend payments to us while maintaining adequate capital levels, we may not be able to make dividend payments to our common shareholders.

To enhance liquidity, we may depend upon borrowings under credit facilities or other indebtedness. As a result of recent turbulence in the capital and credit markets, many lenders and institutional investors have reduced or ceased to provide funding to borrowers and, as a result, we may not be able to further increase liquidity through additional borrowings.

Limitations on our ability to receive dividends from our subsidiaries or an inability to increase liquidity through additional borrowings, or inability to maintain, renew or replace existing credit facilities, could have a material adverse effect on our liquidity and on our ability to pay dividends on our common and preferred shares and interest and principal on our debt.

Significant legal actions could subject us to substantial uninsured liabilities.

We are from time to time subject to claims related to our operations. These claims and legal actions, including supervisory actions by our regulators, could involve large monetary claims and significant defense costs. Substantial legal liability or significant regulatory action against us could have material adverse financial effects or cause significant reputational harm to us, which in turn could seriously harm our business prospects. We may be exposed to substantial uninsured liabilities, which could adversely affect our results of operations and financial condition.

If our regulators deem it appropriate, they can take regulatory actions that could impact our ability to compete for new business, constrain our ability to fund our liquidity needs, and increase the cost of our services.

First Financial and its subsidiaries are subject to the supervision and regulation of various State and Federal regulators, including the Office of the Comptroller of the Currency, the Federal Reserve, the FDIC, SEC, FINRA, and various state regulatory agencies. As such, First Financial is subject to a wide variety of laws and regulations. As part of their supervisory process, which includes periodic examinations and continuous monitoring, the regulators have the authority to impose restrictions or conditions on our activities and the manner in which we manage the organization. These actions could impact the organization in a variety of ways, including subjecting us to monetary fines, restricting our ability to pay dividends, precluding mergers or acquisitions, limiting our ability to offer certain products or services, or imposing additional capital, operating, or oversight requirements.

Disruptions in our ability to access capital markets may negatively affect our capital resources and liquidity.

In managing our consolidated balance sheet, we depend on wholesale capital markets to provide us with sufficient capital resources and liquidity to meet our commitments and business needs, and to accommodate the transaction and cash management needs of our clients. Other sources of funding available to us, and upon which we rely as regular components of our liquidity risk management strategy, include inter-bank borrowings, repurchase agreements, and borrowings from the Federal Home Loan Bank system. Any occurrence that may limit our access to these sources, such as a decline in the confidence of debt purchasers, or our depositors or counterparties participating in the capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity.

Management’s ability to retain key officers and employees may change.

Our future operating results depend substantially upon the continued service of its executive officers and key personnel. Our future operating results also depend in significant part upon its ability to attract and retain qualified management, financial, technical, marketing, sales and support personnel. Competition for qualified personnel is intense, and we cannot ensure success in attracting or retaining qualified personnel. There may be only a limited number of persons with the requisite skills to serve in these positions, and it may be increasingly difficult for us to hire personnel over time.

Our ability to retain key officers and employees may be further impacted by legislation and regulation affecting the financial services industry. For example, Section 7001 of the ARRA which amended Section 111 of the EESA in its entirety, as well as the interim regulations issued by the U.S. Treasury, significantly expanded the executive compensation restrictions. Such restrictions applied to us as a participant in the CPP and generally continued to apply for as long as any Senior Preferred shares were outstanding. These ARRA restrictions shall not apply to us during such time when the federal government only holds warrants to purchase common shares. Such restrictions and standards may further impact management's ability to compete with financial institutions that are not subject to the same limitations as First Financial under Section 7001 of the ARRA.

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Our business, financial condition, or results of operations could be materially adversely affected by the loss of any of its key employees, or our inability to attract and retain skilled employees.

Potential acquisitions may disrupt our business and dilute shareholder value and we may not be able to successfully consummate or integrate such acquisitions.

Acquiring other banks, businesses, or branches involves various risks commonly associated with acquisitions, including, among other things:

· potential exposure to unknown or contingent liabilities of the target company;

· exposure to potential asset quality issues of the target company;

· difficulty and expense of integrating the operations and personnel of the target company;

· potential disruption to our business;

· potential diversion of our management’s time and attention;

· the possible loss of key employees and customers of the target company;

· difficulty in estimating the value (including goodwill) of the target company;

· difficulty in receiving appropriate regulatory approval for any proposed transaction;

· difficulty in estimating the fair value of acquired assets, liabilities and derivatives of the target company;     and

· potential changes in accounting, banking, or tax laws or regulations that may affect the target company.

We regularly evaluate merger and acquisition opportunities and conduct due diligence activities related to possible transactions with other financial institutions and financial services companies. As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt or equity securities may occur at any time. Acquisitions could involve the payment of a premium over book and market values, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future transaction.

Any merger or acquisition opportunity that we decide to pursue will ultimately be subject to regulatory approval and other closing conditions. We may expend substantial time and resources pursuing potential acquisitions which may not be consummated because regulatory approval is not received or other closing conditions are not satisfied. In addition, our existing credit facility and the terms of other indebtedness that we may subsequently incur may restrict our ability to consummate certain acquisitions. Furthermore, any difficulty integrating businesses acquired as a result of a merger or acquisition and the failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have an adverse impact on our liquidity, results of operations, and financial condition and any such integration could divert management’s time and attention from managing our company in an effective manner and could be significantly more expensive than we anticipate.

Our accounting policies and processes are critical to how we report our financial condition and results of operations. They require management to make estimates about matters that are uncertain.

Accounting policies and processes are fundamental to how we record and report the financial condition and results of operations. Management must exercise judgment in selecting and applying many of these accounting policies and processes so they comply with Generally Accepted Accounting Principles in the United States (U.S. GAAP).

Management has identified certain accounting policies as being critical because they require management’s judgment to ascertain the valuations of assets, liabilities, commitments, and contingencies. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset, valuing an asset or liability, or reducing a liability. We have established detailed policies and control procedures that are intended to ensure these critical accounting estimates and judgments are well controlled and applied consistently. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. Because of the uncertainty surrounding our judgments and the estimates pertaining to these matters, we cannot guarantee that we will not be required to adjust accounting policies or restate prior period financial statements. See the “Critical Accounting Policies” in the MD&A and Note 1, “Accounting Policies,” to the Consolidated Financial Statements, in our annual report on Form 10-K for the year ended December 31, 2009 for more information.

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Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition.

From time to time, the Financial Accounting Standards Board (“FASB”) and SEC change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in us restating prior period financial statements.

Our results of operations depend upon the results of operations of our subsidiaries.

We are a holding company that conducts substantially all of our operations through our bank and other subsidiaries. As a result, our ability to make dividend payments on our common shares will depend primarily upon the receipt of dividends and other distributions from our subsidiaries. There are various regulatory restrictions on the ability of our bank subsidiary to pay dividends or make other payments to us. As of the close of business on March 31, 2010, our bank subsidiary had an additional $226.7 million available to pay dividends to us without prior regulatory approval.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accurately accumulated and communicated to management, and recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, that alternative reasoned judgments can be drawn, or that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

Our financial instruments carried at fair value expose us to certain market risks.

We maintain an available for sale investment securities portfolio which includes assets with various types of instruments and maturities.  We also maintain certain assets that are classified and accounted for as trading assets. The changes in fair value of the available for sale securities are recognized in shareholders equity as a component of other comprehensive income. The changes in fair value of financial instruments classified as trading assets are carried at fair value and recognized in earnings. The financial instruments carried at fair value are exposed to market risks related to changes in interest rates and market liquidity. We manage the market risks associated with these instruments through broad asset/liability management strategies. Changes in the market values of these financial instruments could have a material adverse impact on our financial condition or results of operations. We may classify additional financial assets or financial liabilities at fair value in the future.

Our revenues derived from our investment securities may be volatile and subject to a variety of risks.

We generally maintain investment securities and trading positions in the fixed income markets. Unrealized gains and losses associated with our investment portfolio and mark to market gains and losses associated with our trading portfolio are affected by many factors, including our credit position, interest rate volatility, volatility in capital markets, and other economic factors. Our return on such investments could experience volatility and such volatility may materially adversely affect our financial condition and results of operations. Additionally, accounting regulations may require us to record a charge prior to the actual realization of a loss when market valuations of such securities are impaired and such impairment is considered to be other than temporary.

We are subject to ongoing tax examinations in various jurisdictions. The Internal Revenue Service and other taxing jurisdictions may propose various adjustments to our previously filed tax returns. It is possible that the ultimate resolution of such proposed adjustments, if unfavorable, may be material to the results of operations in the period it occurs.

In the ordinary course of business, we operate in various taxing jurisdictions and are subject to income and nonincome taxes. The effective tax rate is based in part on our interpretation of the relevant current tax laws. We believe the aggregate liabilities related to taxes are appropriately reflected in the consolidated financial statements. We review the appropriate tax treatment of all transactions taking into consideration statutory, judicial, and regulatory guidance in the context of our tax positions. In addition, we rely on various tax opinions, recent tax audits, and historical experience.

From time to time, we engage in business transactions that may have an effect on our tax liabilities. Where appropriate, we have obtained opinions of outside experts and have assessed the relative merits and risks of the appropriate tax treatment of business transactions taking into account statutory, judicial, and regulatory guidance in the context of the tax position. However, changes to our estimates of accrued taxes can occur due to changes in tax rates, implementation of new business strategies, resolution of issues with taxing authorities regarding previously taken tax positions prior to acquisition and newly enacted statutory, judicial, and regulatory guidance. Such changes could affect the amount of our accrued taxes and could be material to our financial position and/or results of operations.

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In the event the Internal Revenue Service, State of Ohio, or other state tax officials propose adjustments to our previously filed tax returns (or those of our subsidiaries), it is possible that the ultimate resolution of the proposed adjustments, if unfavorable, may be material to the results of operations in the period it occurs.

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

Changes in national and local economic conditions could lead to higher loan charge-offs in connection with the acquisitions all of which may not be supported by the loss sharing agreements with the FDIC.

In connection with the acquisitions, we acquired a significant portfolio of loans. Although we marked down the loan portfolios we have acquired, there is no assurance that the non-impaired loans we acquired will not become impaired or that the impaired loans will not suffer further deterioration in value resulting in additional charge-offs to this loan portfolio. The fluctuations in national, regional and local economic conditions, including those related to local residential, commercial real estate and construction markets, which may increase the level of charge-offs that we make to our loan portfolio, and, consequently, reduce our net income, may also increase the level of charge-offs on the loan portfolios that we have acquired in the acquisitions and correspondingly reduce our net income. These fluctuations are not predictable, cannot be controlled and may have a material adverse impact on our operations and financial condition even if other favorable events occur. See “Business Risks – Credit Risks“ in our Annual Report on Form 10-K for the year ended December 31, 2009 for more information on the factors affecting the levels of these charge-offs.

Although we have entered into loss sharing agreements with the FDIC, which provide that a significant portion of losses related to specified loan portfolios that we have acquired in connection with the acquisitions will be indemnified by the FDIC, we are not protected from all losses resulting from charge-offs with respect to those specified loan portfolios. Additionally, the loss sharing agreements have limited terms; therefore, any charge-off of related losses that we experience after the term of the loss sharing agreements will not be reimbursed by the FDIC and will negatively impact our net income.

We may fail to realize any benefits and incur unanticipated losses related to the assets of Peoples Community Bank, Irwin Union Bank and Trust Company and Irwin Union Bank, FSB  that First Financial Bank acquired and the liabilities of Peoples Community Bank, Irwin Union Bank and Trust Company and Irwin Union Bank, FSB  that were assumed.

The success of these acquisitions will depend, in part, on First Financial’s ability to successfully combine the acquired businesses and assets with First Financial’s business and First Financial’s ability to successfully manage the significant loan portfolio that was acquired. As with any acquisition involving a financial institution, particularly with respect to the acquisition nearly doubling the size of First Financial and the large increase in the number of bank branches, there may be business and service changes and disruptions that result in the loss of customers or cause customers to close their accounts and move their business to competing financial institutions. It is possible that the integration process could result in the loss of key employees, the disruption of ongoing business, or inconsistencies in standards, controls, procedures and policies that adversely affect First Financial’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the acquisition. Successful integration may also be hampered by differences between the organizations. Although First Financial had significant operations in the principal regional markets in which the acquired entities operated, the loss of key employees of these entities could adversely affect First Financial’s ability to successfully conduct business in certain local markets in which the entities operated, which could have an adverse effect on First Financial’s financial results. Integration efforts will also divert attention and resources from First Financial’s management. Additionally, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit the ability to successfully integrate the institutions. If First Financial experiences difficulties with, or delays in, the integration process, the anticipated benefits of the acquisitions may not be realized fully, or at all, or may take longer to realize than expected. Furthermore, any cost savings that are realized may be offset by losses in revenues or other charges to earnings.

Finally, First Financial will need to ensure that the banking operations of the acquired entities maintain effective disclosure controls as well as internal controls and procedures for financial reporting, and such compliance efforts may be costly and may divert the attention of management.

First Financial’s Exchange Act reports contain limited financial information on which to evaluate the acquisition of Irwin Union Bank and Trust Company and Irwin Union Bank, FSB.

The acquisition of the banking operations and certain assets of Irwin Union Bank and Irwin FSB are significant acquisitions for First Financial; however, First Financial’s Exchange Act reports contain limited financial information on which to evaluate these acquisitions.  First Financial’s Exchange Act reports may not contain all of the financial and other information about Irwin Union Bank and Trust Company and Irwin Union, FSB and the assets that were acquired and liabilities assumed that investors may consider important, including information related to the loan portfolio acquired and the impact of the acquisition on First Financial.

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First Financial will be expanding operations into new geographic areas.

Portions of the market areas represented by Irwin Union Bank and Irwin FSB, including those in Arizona, California,  Nevada and Utah, are areas in which First Financial historically conducted no banking activities. Although First Financial has indicated it plans to divest itself of banking centers in areas outside its strategic footprint, in the interim, First Financial must effectively integrate these new markets to retain and expand the business currently conducted by these branches while maintaining appropriate risk controls. The ability to compete effectively in the new markets will be dependent on First Financial’s ability to understand the local market and competitive dynamics and identify and retain certain employees from Irwin who know their markets better than First Financial does.

Furthermore, the operations of the acquired franchise lending business will increase the concentration risk of First Financial’s lending in this area and First Financial will rely on the expertise of those individuals currently at the acquired franchise group.

Prior to the acquisition, Irwin Union Bank and Trust Company and a number of its subsidiaries, notably Irwin Home Equity and Irwin Mortgage Corporation were the subject of a number of legal actions regarding their mortgage and/or home equity lines of business and these matters may require significant resources and  management attention.

In connection with the acquisition of certain assets and assumption of certain liabilities of Irwin Union Bank by First Financial Bank from the FDIC as receiver for Irwin Union Bank, First Financial assumed, subject to the terms of a Purchase and Assumption Agreement by and among the FDIC, the FDIC as receiver, and First Financial Bank dated September 18, 2009, as amended (the “Purchase Agreement”), certain legal claims against the subsidiaries of Irwin Union Bank.  Some of these claims involve Irwin Union Bank prior to it being placed in receivership and are thus the responsibility of the FDIC as receiver pursuant to the Agreement.  Furthermore, with respect to the claims involving the subsidiaries, First Financial Bank has or expects to submit requests for indemnification to the FDIC as receiver pursuant to Section 12 of the Purchase Agreement.  Pursuant to the Purchase Agreement, the FDIC as receiver has agreed to indemnify and hold harmless First Financial Bank for certain claims against Irwin and its former subsidiaries for actions taken on or prior to September 18, 2009.  There can be no assurances the FDIC will agree with our positions regarding indemnification.

Although the assets and liabilities that the FDIC as receiver determines are subject to First Financial’s indemnification claims will be covered by the FDIC as receiver and thus excluded from the acquisition of Irwin Union Bank, during the process of integrating Irwin Union Bank and its subsidiaries with First Financial Bank, First Financial may discover other inconsistencies in standards, controls, procedures and policies that adversely affect First Financial’s ability to achieve the anticipated benefits of the acquisition of Irwin Union Bank and could distract management from implementing its strategic plan.  Furthermore, unless the FDIC as receiver assumes the defense of such claims, First Financial will have to expend considerable time and effort to defend the actions, subject to such indemnification.

We have identified a number of claims against which we believe we should be indemnified pursuant to the Purchase Agreement, and we have submitted and expect to continue to submit requests for indemnification to the FDIC as receiver. The process of seeking indemnification from the FDIC as receiver with respect to such litigation could be time-consuming and subject to dispute. Further, until the FDIC as receiver has approved and reimbursed us for the claims for which we should be indemnified, we could be exposed to liabilities arising from the defense of such claims.  Discussions are ongoing with the FDIC regarding indemnification with respect to certain actions taken by Irwin and/or its subsidiaries prior to September 18, 2009.

The acquisitions have increased First Financial’s commercial real estate loan portfolio, which have a greater credit risk than residential mortgage loans.

With the acquisition of the Irwin entities loan portfolios, the commercial loan and construction loan portfolios have become a larger portion of First Financial Bank’s total loan portfolio than it was prior to the acquisitions. This type of lending is generally considered to have more complex credit risks than traditional single-family residential lending, because the principal is concentrated in a limited number of loans with repayment dependent on the successful operation of the related real estate or construction project. Consequently, these loans are more sensitive to the current adverse conditions in the real estate market and the general economy. These loans are generally less predictable and more difficult to evaluate and monitor and collateral may be more difficult to dispose of in a market decline.

First Financial Bank’s acquisitions of Peoples and Irwin from the FDIC have caused us to modify our disclosure controls and procedures, which may not result in the material information that we are required to disclose in our Exchange Act reports being recorded, processed, summarized, and reported adequately.

Our management is responsible for establishing and maintaining effective disclosure controls and procedures that are designed to cause the material information that we are required to disclose in reports that we file or submit under the Exchange Act to be recorded, processed, summarized, and reported to the extent applicable within the time periods required by the SEC’s rules and forms. The internal control over financial reporting of Peoples’ and Irwin’s banking operations were excluded from the evaluation of effectiveness of our disclosure controls and procedures as of the period ended December 31, 2009, because of the timing of the acquisitions. As a result of the Peoples and Irwin acquisitions, however, we will be implementing changes to processes, information technology systems and other components of internal control over financial reporting as part of our integration activities. Notwithstanding any changes to our disclosure controls and procedures resulting from our evaluation of the same after the Peoples and Irwin acquisitions, our control systems, no matter how well designed and operated, may not result in the material information that we are required to disclose in our Exchange Act reports being recorded, processed, summarized, and reported adequately. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

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Certain fair value estimates and other measures associated with the assets of Peoples and Irwin acquired from the FDIC remain uncertain, and subject to change, based on future determinations made by the FDIC, which could adversely affect our financial condition and results of operations.

We have determined that the acquisitions of the net assets of Peoples and Irwin constitute business combinations as defined under GAAP. Accordingly, the assets acquired and liabilities assumed have been presented by us in our financial statements at their fair values as required. In many cases, the determination of these fair values requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. Under GAAP, these fair value estimates are considered preliminary, and remain subject to change for up to one year after the closing dates of the acquisitions as additional information relative to closing date fair values becomes available. We and the FDIC are engaged in on-going discussions that may impact which assets and liabilities were acquired or assumed by First Financial and/or the associated purchase prices. Based upon these discussions, there could be further adjustments to those assets acquired or assumed. In addition, the tax treatment of FDIC assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the acquisition dates. Any future changes to such measures or determinations could adversely affect our financial condition and results of operations.

First Financial Bank’s failure to fully comply with the loss-sharing provisions relating to its acquisitions of Peoples and Irwin from the FDIC could jeopardize the loss-share coverage afforded to certain individual or pools of assets, rendering First Financial Bank financially responsible for the full amount of any losses related to such assets.

In connection with First Financial Bank’s acquisitions of Peoples and Irwin from the FDIC, First Financial Bank entered into loss-sharing agreements with the FDIC whereby the FDIC has agreed to cover 80% of the losses on certain single family residential mortgage loans and certain commercial loans (together, “covered assets”), and 95% of the losses on such covered assets in excess of thresholds stated in the loss-sharing agreements. First Financial Bank’s management of and application of the terms and conditions of the loss-sharing provisions of the Purchase and Assumption Agreements related to the covered assets is monitored by the FDIC through periodic reports that First Financial Bank must submit to the FDIC and on-site compliance visitations by the FDIC. If First Financial Bank fails to fully comply with its obligations under the loss-sharing provisions of the Purchase and Assumption Agreements relating to First Financial Bank’s acquisitions of Peoples and Irwin from the FDIC, First Financial Bank could lose the benefit of the loss-share coverage as it applies to certain individual or pools of covered assets. Without such loss-share coverage, First Financial Bank would be solely financially responsible for the losses sustained by such individual or pools of assets.

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

(c) The following table shows the total number of shares repurchased in the first quarter of 2010.

Issuer Purchases of Equity Securities

	(a)		(b)		(c)		(d)
					Total Number
					of Shares		Maximum Number
	Total Number		Average		Purchased as		of Shares that may
	of Shares		Price Paid		Part of Publicly		yet be purchased
Period	Purchased (1)		Per Share		Announced Plans (2)		Under the Plans
January 1 through
January 31, 2010		1,574	$	14.65		0		4,969,105
February 1 through
February 28, 2010		48,449		17.41		0		4,969,105
March 1 through
March 31, 2010		59,463		18.77		0		4,969,105
Total		109,486	$	18.11		0		4,969,105

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

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	(a)		(b)
	Total Number		Average
	of Shares		Price Paid
Period	Purchased		Per Share
First Financial Bancorp Thrift Plan
January 1 through
January 31, 2010		0	$	0.00
February 1 through
February 28, 2010		0		0.00
March 1 through
March 31, 2010		0		0.00
Total		0	$	0.00
Director Fee Stock Plan
January 1 through
January 31, 2010		1,574	$	14.65
February 1 through
February 28, 2010		0		0.00
March 1 through
March 31, 2010		0		0.00
Total		1,574	$	14.65
Stock Plans
January 1 through
January 31, 2010		0	$	0.00
February 1 through
February 28, 2010		48,449		17.41
March 1 through
March 31, 2010		59,463		18.77
Total		107,912	$	18.16

(2) First Financial has two publicly announced stock repurchase plans under which it is currently authorized to purchase shares of its common stock.  Neither of the plans expired during this quarter.  However, as of March 31, 2010, all shares under the 2003 plan have been repurchased.  The table that follows provides additional information regarding those plans.

		Total Shares
Announcement	Total Shares Approved for	Repurchased Under	Expiration
Date	Repurchase	the Plan	Date
1/25/2000	7,507,500	2,538,395	None
2/25/2003	2,243,715	2,243,715	Completed

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Item 6.            Exhibits

(a) Exhibits:

3.1 Amended and Restated Articles of Incorporation (filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference).

3.2 Certificate of Amendment by the Board of Directors to the Amended and Restated Articles of Incorporation (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 24, 2008, and incorporated herein by reference).

3.3 Certificate of Amendment by Shareholders to the Amended and Restated Articles of Incorporation (filed as Exhibit 4.2 to the Form S-3 filed on January 21, 2009, and incorporated herein by reference, Registration No. 333-156841).

3.4 Amended and Restated Regulations, as amended as of May 1, 2007 (filed as Exhibit 3.2 to the Form 10-Q for the quarter ended June 30, 2007 and incorporated herein by reference.

4.1 Letter Agreement, dated as of December 23, 2008, between the Registrant and the United States Department of the Treasury, which includes the Securities Purchase Agreement – Standard Terms (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 30, 2008, and incorporated herein by reference).

4.2 Warrant to Purchase up to 930,233 shares of Common Stock dated as of December 23, 2008 (filed as Exhibit 4.1 to the Form 8-K filed on December 30, 2008 and incorporated herein by reference).

4.3 Form of Series A Preferred Stock Certificate dated as of December 23, 2008 (filed as Exhibit 4.2 to the Form 8-K filed on December 30, 2008 and incorporated herein by reference).

4.4 No instruments defining the rights of holders of long-term debt of First Financial are filed herewith.  Pursuant to (b)(4)(iii) of Item 601 of Regulation S-K, First Financial agrees to furnish a copy of any such agreements to the Securities and Exchange Commission upon request.

10.1 Agreement between Charles D. Lefferson and First Financial Bancorp. dated August 4, 2000 (filed as Exhibit 10.5 to the Form 10-K for the year ended December 31, 2002 and incorporated herein by reference). *+

10.2 Amendment to Employment Agreement between Charles D. Lefferson and First Financial Bancorp. dated May 23, 2003 (filed as Exhibit 10.5 to the Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference).*+

10.3 First Financial Bancorp. Dividend Reinvestment and Share Purchase Plan, dated April 24, 1997 (incorporated herein by reference to a Registration Statement on Form S-3, Registration No. 333-25745).

10.4 First Financial Bancorp. 1999 Stock Incentive Plan for Officers and Employees, dated April 27, 1999 (incorporated herein by reference to a Registration Statement on Form S-3, Registration No. 333-86781).*

10.5 First Financial Bancorp. 1999 Non-Employee Director Stock Plan, as dated April 27, 1999 and amended and restated as of April 26, 2006 (filed as Exhibit 10.11 to the Form 10-Q for the quarter ended March 31, 2006 and incorporated herein by reference).*

10.6 First Financial Bancorp. Director Fee Stock Plan amended and restated effective April 20, 2004 (filed as Exhibit 10.12 to the Form10-Q for the quarter ended June 30, 2004 and incorporated herein by reference).*

10.7 Form of Executive Supplemental Retirement Plan.*

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10.8 Form of Endorsement Method Split Dollar Agreement for Certain Executives.*

10.9 First Financial Bancorp. Amended and Restated Deferred Compensation Plan.*

10.10 Form of Stock Option Agreement for Incentive Stock Options (2005 – 2008) (filed as Exhibit 10.1 to the Form 8-K filed on April 22, 2005 and incorporated herein by reference).*

10.11 Form of Stock Option Agreement for Non-Qualified Stock Options (2005-2008) (filed as Exhibit 10.2 to the Form 8-K filed on April 22, 2005 and incorporated herein by reference).*

10.12 Form of Agreement for Restricted Stock Awards (2005-2007) (filed as Exhibit 10.3 to the Form 8-K filed on April 22, 2005 and incorporated herein by reference).*

10.13 Amended and Restated Employment and Non-Competition Agreement between Claude E. Davis and First Financial Bancorp. dated August 22, 2006, and incorporated herein by reference to Exhibit 10.1 to First Financial Bancorp’s Form 8-K filed on August 28, 2006.*++

10.14 First Financial Bancorp. Amended and Restated Severance Pay Plan as approved April 28, 2008 (filed as Exhibit 10.19 to the Form 10-Q filed on May 9, 2008 and incorporated herein by reference).*

10.15 Terms of First Financial Bancorp. Short-Term Incentive Plan (2007) (incorporated herein by reference to the Form 8-K filed on May 4, 2007).*

10.16 First Financial Bancorp. Amended and Restated Key Management Severance Plan as approved February 26, 2008 (filed as Exhibit 10.21 to the Form 10-Q filed on May 9, 2008 and incorporated herein by reference).*

10.17 Form of Agreement for Restricted Stock Award (2008) (filed as Exhibit 10.22 to the Form 10-Q filed on May 9, 2008 and incorporated herein by reference).*

10.18 Long-Term Incentive Plan Grant Design (2008) (filed as Exhibit 10.23 to the Form 10-Q filed on May 9, 2008 and incorporated herein by reference).*

10.19 Short-Term Incentive Plan Design (2008) (filed as Exhibit 10.24 to the Form 10-Q filed on May 9, 2008 and incorporated herein by reference).*

10.20 Letter Agreement, dated December 23, 2008, including Securities Purchase Agreement – Standard Terms incorporated by reference therein, between First Financial and the United States Department of the Treasury (filed as Exhibit 10.1 to the Form 8-K filed on December 30, 2008 and incorporated herein by reference).

10.21 Form of Waiver, executed by each of Messrs. Claude E. Davis, C. Douglas Lefferson, J. Franklin Hall, Samuel J. Munafo and Gregory A. Gehlmann dated as of December 23, 2008 (filed as Exhibit 10.2 to the Form 8-K filed on December 30, 2008 and incorporated herein by reference).*

10.22 Form of Letter Agreement, executed by each of Messrs. Claude E. Davis, C. Douglas Lefferson, J. Franklin Hall, Samuel J. Munafo and Gregory A. Gehlmann dated as of December 23, 2008 (filed as Exhibit 10.3 to the Form 8-K filed on December 30, 2008 and incorporated herein by reference).*

10.23 Form of Amendment No. 1 to Agreement for Restricted Stock Awards for 2005 Awards (filed as Exhibit 10.24 to the Form 10-K filed on March 11, 2009 and incorporated herein by reference).*

10.24 Form of Amendment No. 1 to Agreement for Restricted Stock Awards for 2006 Awards (filed as Exhibit 10.25 to the Form 10-K filed on March 11, 2009 and incorporated herein by reference).*

10.25 Form of Amendment No. 1 to Agreement for Restricted Stock Awards for 2007 Awards (filed as Exhibit 10.26 to the Form 10-K filed on March 11, 2009 and incorporated herein by reference).*

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10.26 Terms of First Financial Bancorp. Short-Term Incentive Plan (2009) (incorporated herein by reference to the Form 8-K filed on April 16, 2009).*

10.27 First Financial Bancorp. 2009 Employee Stock Plan (filed as Appendix A to the DEF 14 Definitive Proxy Statement filed on April 23, 2009 and incorporated herein by reference).*

10.28 First Financial Bancorp. 2009 Non-Employee Director Stock Plan (filed as Appendix B to the DEF 14 Definitive Proxy Statement filed on April 23, 2009 and incorporated herein by reference).*

10.29 Form of Agreement for Restricted Stock Awards for 2009 Awards under the First Financial Bancorp. 1999 Stock Incentive Plan for Officers and Employees (filed as Exhibit 10.30 for the Form 10-Q filed on November 16, 2009 and incorporated herein by reference).*

10.30 Form of Agreement for Restricted Stock Awards for Awards under the First Financial Bancorp.  2009 Employee Stock Plan (filed as Exhibit 10.31 for the Form 10-Q filed on November 16, 2009 and incorporated herein by reference).*

10.31 Executive Supplemental Savings Agreement between Claude E. Davis and First Financial Bancorp. Dated August 25, 2008.*

10.32 Form of Amended and Restated Agreement for Restricted Stock Award (2009) for NEOs/Top Five Compensated Employees.*

14 First Financial Bancorp. Code of Business Conduct and Ethics as amended April 27, 2010.

31.1 Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.

31.2 Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.

32.1 Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 furnished herewith.

 32.2 Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 furnished herewith.

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

* Compensatory plans or arrangements.

+ Similar agreements between the Company and NEOs J. Franklin Hall and Samuel J. Munafo exist, the material differences which are disclosed in the Company's definitive proxy statement filed with the SEC on Schedule 14A on April 19, 2009.

++ A similar agreement between the Company and NEO Gregory A. Gehlmann exists, the material differences which are disclosed in the Company's definitive proxy statement filed with the SEC on Schedule 14A on April 19, 2009.

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SIGNATURES

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

		FIRST FINANCIAL BANCORP.
		(Registrant)
/s/ J. Franklin Hall		/s/ Anthony M. Stollings
J. Franklin Hall		Anthony M. Stollings
Executive Vice President and		Senior Vice President, Chief Accounting
Chief Financial Officer		Officer, and Controller
Date	5/10/09	Date	5/10/09

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EX-10.7

EXHIBIT 10.7

FIRST FINANCIAL BANCORP

EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

First Financial Bancorp, an Ohio corporation (the "Company") establishes this First Financial Bancorp Executive Supplemental Retirement Plan (the "Plan") for the purpose of attracting and retaining high quality executives by providing benefits in excess of one or more of the limitations applicable to the Company's qualified pension plan under the Internal Revenue Code.

ARTICLE I

DEFINITIONS

1.1           "Affiliate" means each entity with whom the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Section 1563(a)(1), (2), and (3) for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language "at least 50 percent" is used instead of "at least 80 percent" each place it appears in Section 1563(a)(1), (2), and (3), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c), "at least 50 percent" is used instead of "at least 80 percent" each place it appears in that regulation.  Such term shall be interpreted in a manner consistent with the definition of "service recipient" contained in Section 409A of the Code.

1.2           "Affiliated Group" means (i) the Company and (ii) all Affiliates.

1.3           "Beneficiary" means the person(s) designated as such pursuant to Article VI of this Plan.

1.4           "Board" means the Board of Directors of the Company.

1.5           "Code" shall mean the Internal Revenue Code of 1986, as amended.

1.6           "Committee" shall mean the Compensation Committee of the Board.

1.7           "Company" means First Financial Bancorp, an Ohio corporation, or its successor.

1.8           "Eligible Executive" means an employee of the Company or another member of the Affiliated Group who (a) participates in the Pension Plan, and (b) is a member of a "select group of management or highly compensated employees," within the meaning of Sections 201, 301 and 401 of ERISA.

1.9           "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

1.10         "Normal Retirement Age" means the Participant's 65th birthday.

1.11         "Participant" means each Eligible Executive who has become a Participant in the Plan pursuant to Article II.

1.12         "Pension Plan" means the First Financial Bancorp Employees' Pension Plan and Trust, as amended from time to time.

1.13         "Plan" means this First Financial Bancorp Executive Supplemental Retirement Plan.

1.14         "Separation from Service" means a termination of employment or service with the Affiliated Group for any reason, including death, in such a manner as to constitute a "separation from service" as defined under Section 409A of the Code.  Upon a sale or other disposition of the assets of the Company or any member of the Affiliated Group to an unrelated purchaser, the Committee reserves the right, to the extent permitted by Section 409A of the Code, to determine whether Participants providing services to the purchaser after and in connection with the purchase transaction have experienced a Separation from Service.

1.15         "Statutory Limits" means the compensations and benefit accrual limits provided under Section 401(a)(17) and Section 415 of the Code, which are imposed on the benefits accrued under the Pension Plan.

ARTICLE II

PARTICIPATION

An Eligible Executive shall become a Participant in the Plan only upon designation as a Participant by the Committee.  A Participant's active participation in the Plan shall be suspended upon his employment status change as determined by the Committee or Separation from Service.  Further, a Participant shall cease to be a Participant upon his non-vested Separation from Service under the Plan.  .

ARTICLE III

SUPPLEMENTAL BENEFITS

3.1  Eligibility.  A Participant (or Beneficiary) who is entitled to a vested benefit under the Pension Plan shall be eligible for a supplemental benefit under this Article as hereinafter provided..

3.2  Amount of Supplemental Benefit.  The benefit payable under the Plan to a Participant (or Beneficiary) who is eligible therefor shall be determined as follows:.

(a)           the vested Accrued Benefit the Participant would receive under the Pension Plan, calculated without regard to the Statutory Limits.

reduced (but not below zero) by -

(b) the vested Accrued Benefit the Participant will receive under the Pension Plan,

and, if applicable, further reduced (but not below zero) for -

-2-

(c)           commencement of the Plan benefit prior to Normal Retirement Age, to the same extent (if any) that the Participant's benefit under the Pension Plan would have been reduced for commencement prior to Normal Retirement Age if the Participant's Pension Plan benefit had commenced as of the date of the Participant's Separation from Service under the Plan.

For purposes of this Section 3.2, Accrued Benefit shall have the meaning provided in the Pension Plan.  The Plan benefit shall be determined by an actuary selected by the Company in its sole discretion, which actuary shall calculate the Plan benefit in accordance with the actuarial assumptions provided under the Pension Plan.  To the extent the Pension Plan is amended after January 1, 2010, such amendment to the Pension Plan may not modify any assumption or benefit provision used in calculating the Participant's benefit under the Plan to the extent such change in assumption or benefit provision would cause any portion of the Participant's benefit provided under the Plan to become taxable under Section 409A.

3.3  Vesting.  The benefits under this Article shall vest at the same time(s), in the same manner, and to the same extent as the Participant's benefit under the Pension Plan.  No supplemental benefit shall be payable to a Participant under this Plan if the Participant is not eligible to receive a vested benefit under the Pension Plan.

3.4  Form of Payment. The Plan benefit calculated in accordance with Section 3.2 shall be paid to the Participant in the form of a single lump-sum payment.  No other form of payment may be elected by the Participant under the Plan.

3.5  Time of Commencement.  A Participant's benefit under the Plan shall be paid as of the first business day of the seventh month following the Participant's Separation from Service (or if earlier, the first business day of the month following the Participant's death).

3.6  Termination for Cause.  In the event a Participant is terminated for “Cause”, he/she shall have not rights, and shall not be entitled to any benefits, under this Agreement.  For purposes of this Agreement, “Cause” shall mean any one or more of the following:

(a)           any act constituting (i) a felony under the federal laws of the United States, the laws of any state, or any other applicable law, (ii) fraud, embezzlement, misappropriation of assets, willful misfeasance, or dishonesty, or (iii) other actions or criminal conduct which in any way materially and adversely affects the reputation, goodwill, or business position of the Company;

(b)           the failure of the Participant to perform and observe all material obligations and conditions to be performed and observed by the Participant under his employment agreement, or to perform the duties in accordance, in all material respects, with the policies, procedures, and directions established from time to time by the Committee or the Board (any such failure, a “Performance Failure”), and to correct such Performance Failure promptly following notice from the Board to do so; or

(c)           having corrected (or the Company’s having waived the correction of ) a Performance Failure, the occurrence of any subsequent Performance Failure (whether of the same or different type or nature).

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ARTICLE IV

SECTION 409A OF THE CODE; TARP COMPENSATION STANDARDS

4.1 Discretionary Acceleration of Payments.  To the extent permitted by Section 409A of the Code, the Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan as provided in this Section.  The provisions of this Section are intended to comply with the exception to accelerated payments under Treasury Regulation § 1.409A-3(j) and shall be interpreted and administered accordingly.    

(a)           Domestic Relations Orders.  The Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan to an individual other than the Participant as may be necessary to fulfill a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).

(b)           Conflicts of Interest.  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to the extent necessary for any Federal officer or employee in the executive branch to comply with an ethics agreement with the Federal government.  Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to the extent reasonably necessary to avoid the violation of an applicable Federal, state, local, or foreign ethics law or conflicts of interest law (including where such payment is reasonably necessary to permit the Participant to participate in activities in the normal course of his position in which the Participant would otherwise not be able to participate under an applicable rule).

(c)           Employment Taxes.  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a), and 3121(v)(2) of the Code, or the Railroad Retirement Act (RRTA) tax imposed under Sections 3201, 3211, 3231(e)(1), and 3231(e)(8) of the Code, where applicable, on compensation deferred under the Plan (the FICA or RRTA amount).  Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment, to pay the income tax at source on wages imposed under Section 3401 of the Code or the corresponding withholding provisions of applicable state, local, or foreign tax laws as a result of the payment of the FICA or RRTA amount, and to pay the additional income tax at source on wages attributable to the pyramiding Section 3401 of the Code wages and taxes.  However, the total payment under this acceleration provision must not exceed the aggregate of the FICA or RRTA amount, and the income tax withholding related to such FICA or RRTA amount.

(d)           Limited Cash-Outs.  The Committee may, in its sole discretion, require a mandatory lump sum payment of amounts deferred under the Plan that do not exceed the applicable dollar amount under Section 402(g)(1)(B) of the Code, provided that the payment results in the termination and liquidation of the entirety of the Participant's interest under the Plan, including all agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Section 409A of the Code.

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(e)           Payment Upon Income Inclusion Under Section 409A.  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan at any time the Plan fails to meet the requirements of Section 409A of the Code.  The payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code.

(f)           Certain Payments to Avoid a Nonallocation Year Under Section 409(p).  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to prevent the occurrence of a nonallocation year (within the meaning of Section 409(p)(3) of the Code) in the plan year of an employee stock ownership plan next following the plan year in which such payment is made, provided that the amount paid may not exceed 125 percent of the minimum amount of payment necessary to avoid the occurrence of a nonallocation year.

(g)           Payment of State, Local, or Foreign Taxes.  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to reflect payment of state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan before the amount is paid or made available to the participant (the state, local, or foreign tax amount).  Such payment may not exceed the amount of such taxes due as a result of participation in the Plan.  The payment may be made in the form of withholding pursuant to provisions of applicable state, local, or foreign law or by payment directly to the Participant.  Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the income tax at source on wages imposed under Section 3401 of the Code as a result of such payment and to pay the additional income tax at source on wages imposed under Section 3401 of the Code attributable to such additional wages and taxes.  However, the total payment under this acceleration provision must not exceed the aggregate of the state, local, and foreign tax amount, and the income tax withholding related to such state, local, and foreign tax amount.

(h)           Certain Offsets.  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as satisfaction of a debt of the Participant to the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code), where such debt is incurred in the ordinary course of the service relationship between the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) and the Participant, the entire amount of reduction in any of the service recipient's (as defined in Section 409A of the Code) taxable years does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.

(i)             Bona Fide Disputes As To A Right To A Payment.  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan where such payments occur as part of a settlement between the Participant and the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) of an arm’s length, bona fide dispute as to the Participant's right to the deferred amount.

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(j)            Plan Terminations and Liquidations.  The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as provided in Section 7.2.

(k)           Other Events and Conditions.  The Committee may accelerate payment of a Participant's benefit under the Plan upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

Except as otherwise specifically provided in the Plan, the Committee may not accelerate the time or schedule of any payment or amount scheduled to be paid under the Plan within the meaning of Section 409A of the Code.  Notwithstanding anything contained in this Section 4.1 to the contrary, in no event may a payment be accelerated pursuant to paragraphs (d), (e), (f), (g), (h), (i), (j) or (k) of this Section 4.1 following a Participant's Separation from Service to a date that is prior to the first business day of the seventh month following the Participant's Separation from Service (or if earlier, the first business day of the month following the Participant's death).  The provisions of this Section 4.1 are intended to comply with the exceptions to accelerated payments under Treasury Regulation §1.409A-3(j)(4) and shall be interpreted and administered accordingly.

4.2 Delay of Payments.  To the extent permitted under Section 409A of the Code, the Committee may, in its sole discretion, delay payment under any of the following circumstances, provided that the Committee treats all payments to similarly situated Participants on a reasonably consistent basis:  

(a)           Federal Securities Laws or Other Applicable Law.  A Payment may be delayed where the Committee reasonably anticipates that the making of the payment will violate federal securities laws or other applicable law; provided that the delayed payment is made at the earliest date at which the Committee reasonably anticipates that the making of the payment will not cause such violation.  For purposes of the preceding sentence, the making of a payment that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not treated as a violation of applicable law.

(b)           Other Events and Conditions.  A payment may be delayed upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

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4.3 Compliance With Code Section 409A.  It is intended that the Plan comply with the provisions of Section 409A of the Code, so as to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year that is prior to the taxable year or years in which such amounts would otherwise actually be paid or made available to Participants or Beneficiaries.  The Plan shall be construed, administered, and governed in a manner that effects such intent, and the Committee shall not take any action that would be inconsistent with such intent.  However, the tax treatment of deferrals under this Plan is not warranted or guaranteed.  Neither the Company, the other members of the Affiliated Group, directors, officers, employees, advisers nor the Committee shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant or Beneficiary (or any other individual claiming a benefit through the Participant or Beneficiary) as a result of the Plan.  Any reference in the Plan to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.  For purposes of the Plan, the phrase "permitted by Section 409A of the Code," or words or phrases of similar import, shall mean that the event or circumstance shall only be permitted to the extent it would not cause an amount deferred or payable under the Plan to be includible in the gross income of a Participant or Beneficiary under Section 409A(a)(1) of the Code.

4.4 Compliance With TARP, EESA and ARRA.  It is intended that the Plan comply with, and be administered in accordance with, the executive compensation and corporate governance restrictions imposed under the Emergency Economic Stabilization Act of 2008 ("EESA"), the Troubled Asset Relief Program ("TARP"), American Recovery and Reinvestment Act of 2009 ("ARRA"), together with all regulations and guidance promulgated thereunder (the "TARP Compensation Standards"), for the period in which the Company participates in TARP and for such additional period thereafter as may be required by TARP, EESA or ARRA (the "TARP Period").To ensure compliance with the TARP Compensation Standards, the following additional provisions shall apply.

(a)           TARP Policy.  The Plan and the benefits provide under the Plan shall be subject to the First Financial Bancorp TARP Policy, but only to the extent, and only for such period, as may be necessary to ensure the Plan and the benefits provided under the Plan comply with the applicable requirements of the TARP Compensation Standards.  In the event that any provision of the Plan is found to be in conflict with the TARP Compensation Standards and/or TARP Policy, the Plan shall be deemed amended automatically, and to the extent necessary retroactively, to reflect the requirements of the TARP Compensation Standards, and the Plan shall be interpreted and administered accordingly.

(b)           Consent to Compliance with the TARP Compensation Standards.  As a condition of participation in the Plan, each Participant shall acknowledge that (i) the benefits provided under the Plan may be subject to the TARP Compensation Standards and/or TARP Policy, (ii) the Plan may be amended and/or its administration modified in order to comply with the TARP Compensation Standards and TARP Policy, and (iii) a Participant shall be required (as determined by the Committee or the Board) to repay all amounts paid from the Plan that are later determined to have been paid in violation of the TARP Compensation Standards or TARP Policy.

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ARTICLE V

ADMINISTRATION

5.1  Administration.  The Plan shall be administered by the Committee, which shall have the exclusive right and full discretion (i) to interpret the Plan, (ii) to decide any and all matters arising hereunder (including the right to remedy possible ambiguities, inconsistencies, or admissions), (iii) to make, amend and rescind such rules as it deems necessary for the proper administration of the Plan and (iv) to make all other determinations necessary or advisable for the administration of the Plan, including determinations regarding eligibility for benefits payable under the Plan.  All interpretations of the Committee with respect to any matter hereunder shall be final, conclusive and binding on all persons affected thereby.  No member of the Committee shall be liable for any determination, decision, or action made in good faith with respect to the Plan.  The Company will indemnify and hold harmless the members of the Committee from and against any and all liabilities, costs, and expenses incurred by such persons as a result of any act, or omission, in connection with the performance of such persons’ duties, responsibilities, and obligations under the Plan, other than such liabilities, costs, and expenses as may result from the bad faith, willful misconduct, or criminal acts of such persons.

5.2  Claims Procedure. In accordance with the requirements of Section 503 of ERISA, the Plan provides a benefit claims and appeals procedure that is intended to comply with the regulations issued by the Secretary of Labor at 29 C.F.R. 2560.503-1.  Unless a separate procedure is established for the Plan, the claims and appeals procedure set forth in Section 7.14 of the Pension Plan (as may be amended from time to time) shall apply to the Plan.

ARTICLE VI

BENEFICIARIES

6.1  Beneficiary Designation.  The Participant shall have the right, at any time, to designate any person or persons as Beneficiary (both primary and contingent) to whom payment under the Plan shall be made in the event of the Participant’s death.  The Beneficiary designation shall be effective when it is submitted in writing to and acknowledged by the Committee during the Participant’s lifetime on a form prescribed by the Committee.

6.2  Revision of Designation.  The submission of a new Beneficiary designation shall cancel all prior Beneficiary designations.  Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of a Beneficiary designation shall revoke such designation, unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in the case of marriage the Participant’s new spouse has previously been designated as Beneficiary.

6.3  Successor Beneficiary.  If the primary Beneficiary dies prior to complete distribution of any the benefits payable under this Plan any remaining benefits shall be paid to the contingent Beneficiary elected by the Participant.

6.4  Absence of Valid Designation.  If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new designation, or if every person designated as Beneficiary predeceases the Participant or dies prior to complete distribution of the Participant’s benefits, then the Committee shall direct the distribution of any benefits payable under this Plan to the relevant estate.

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ARTICLE VII

AMENDMENT AND TERMINATION

7.1 Amendment.  The Company reserves the right to amend, terminate or freeze the Plan, in whole or in part, at any time by action of the Board.

7.2 Payments Upon Termination of Plan.  In the event that the Plan is terminated, the vested benefits of a Participant shall be paid to the Participant or his Beneficiary on the dates on which the Participant or his Beneficiary would otherwise receive payments hereunder without regard to the termination of the Plan.  Notwithstanding the preceding sentence, and to the extent permitted under Section 409A of the Code and the TARP Compensation Standards, the Company, by action taken by its Board or its designee, may terminate the Plan and pay Participants and Beneficiaries their entire vested benefit subject to the following conditions:

(a)           Dissolution; Bankruptcy Court Order.  The termination occurs within twelve (12) months after a corporate dissolution taxed under Section 331 of the Code, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A).   In such event, the vested benefit of each Participant shall be paid at the time and pursuant to the schedule specified by the Committee, so long as all payments are required to be made by the latest of: (i) the end of the calendar year in which the Plan termination occurs, (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (iii) the first calendar year in which payment is administratively practicable.

(b)           Change in Control.  The termination occurs pursuant to an irrevocable action of the Board or its designee that is taken within the thirty (30) days preceding or the twelve (12) months following a change in control event (within the meaning of Treasury Regulation § 1.409A-3(i)(5) (a "Change in Control"), and all other plans sponsored by the Company (determined immediately after the Change in Control) that are required to be aggregated with this Plan under Section 409A of the Code are also terminated with respect to each participant therein who experienced the Change in Control ("Change in Control Participant").   In such event, the vested benefit of each Participant under the Plan and each Change in Control Participant under all aggregated plans shall be paid at the time and pursuant to the schedule specified by the Committee, so long as all payments are required to be made no later than twelve (12) months after the date that the Board or its designee irrevocably approves the termination.

(c)           Company's Discretion.  The termination does not occur "proximate to a downturn in the financial health" of the Company (within the meaning of Treasury Regulation § 1.409A-3(j)(4)(ix)), and all other arrangements required to be aggregated with the Plan under Section 409A of the Code are also terminated and liquidated.   In such event, the Participant's entire vested benefit shall be paid at the time and pursuant to the schedule specified by the Committee, so long as all payments are required to be made no earlier than twelve (12) months, and no later than twenty-four (24) months, after the date the Board or its designee irrevocably approves the termination of the Plan.  Notwithstanding the foregoing, any payment that would otherwise be paid pursuant to the terms of the Plan prior to the twelve (12) month anniversary of the date that the Board or its designee irrevocably approves the termination of the Plan shall continue to be paid in accordance with the terms of the Plan.  If the Plan is terminated pursuant to this Section 7.2(c), the Company shall be prohibited from adopting a new plan or arrangement that would be aggregated with this Plan under Section 409A of the Code within three (3) years following the date that the Board or its designee irrevocably approves the termination and liquidation of the Plan.

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(d)           Other Events.  The termination occurs upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

Notwithstanding anything contained in this Section 7.2 to the contrary, in no event may a payment be accelerated following a Participant's Separation from Service to a date that is prior to the first business day of the seventh month following the Participant's Separation from Service (or if earlier, upon the first business day of the month following the Participant's death).

The provisions of paragraphs (a), (b), (c) and (d) of this Section 7.2 are intended to comply with the exception to accelerated payments under Treasury Regulation §1.409A-3(j)(4)(ix) and shall be interpreted and administered accordingly.  The term "Company" as used in paragraphs (b) and (c) of this Section 7.2 shall include the Company and any entity which would be considered to be a single employer with the Company under Code Sections 414(b) or Section 414(c).

ARTICLE VIII

MISCELLANEOUS

           8.1 Construction and Governing Law.  The Plan shall be construed, enforced, and administered and the validity thereof determined in accordance with the laws of the State of Ohio, to the extent that applicable federal law does not apply to the Plan.  Words used herein in the masculine gender shall be construed to include the feminine gender where appropriate and the words used herein in the singular or plural shall be construed as being in the plural or singular where appropriate.

8.2  No Employment Rights.  Neither the establishment or maintenance of the Plan nor the status of an employee as a Participant shall give any Participant any right to be retained in employment; and no Participant and no person claiming under or through such Participant shall have any right or interest in any benefit under the Plan unless and until the terms, conditions and provisions of the Plan affecting such Participant shall have been satisfied.

8.3  Unfunded Plan.  The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.  Notwithstanding the foregoing, the Company may elect, at its sole discretion, to establish a grantor trust (with a trustee selected by the Company) to which the Company may allocate funds to provide for the benefits provided under the Plan, provided that such trust complies with the requirements of Revenue Procedure 92-64 (and any related or subsequent guidance) and the allocation of funds to such trust does not otherwise violate Section 409A, the TARP Compensation Standards or any other applicable federal law.

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8.4  Discharge of Obligations.  The payment to a Participant or his Beneficiary of his entire benefit under the Plan shall discharge all obligations of the Affiliated Group to such Participant or Beneficiary under the Plan with respect to that Plan benefit.

8.5  Nonalienation.  The right of any Participant or any person claiming under or through a Participant to any benefit or any payment hereunder shall not be subject in any manner to attachment or other legal process for the debts of the Participant or person; and the same shall not be subject to anticipation, alienation, sale, transfer, assignment or encumbrance.

8.6  Limitation of Liability.  No member of the Board and no officer or employee of any member of the Affiliated Group shall be liable to any person for any action taken or omitted in connection with this Plan, nor shall any member of the Affiliated Group be liable to any person for any such action or omission.  No person shall, because of the Plan, acquire any right to an accounting or to examine the books or the affairs of any member of the Affiliated Group.  Nothing in the Plan shall be construed to create any trust or fiduciary relationship between any member of the Affiliated Group and any Participant or any other person.

8.7  Successors.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume this Plan.  This Plan shall be binding upon and inure to the benefit of the Company and any successor of the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by sale, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the "Company" for the purposes of this Plan), and the heirs, Beneficiaries, executors and administrators of each Participant.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed as of this _____ day of _____________, _____.

FIRST FINANCIAL BANCORP

By:

Name:

Title:

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EX-10.8

EXHIBIT 10.8

ENDORSEMENT METHOD SPLIT DOLLAR AGREEMENT

THIS AGREEMENT (the "Agreement") is made as of this ___ day of ________, by and between the following parties: First Financial Bank, N.A. (the "Bank") and «executive» (the "Executive").

This Agreement between the Bank and the Executive sets forth the terms under which the Bank will purchase and own a life insurance policy (the "Policy") insuring the life of the Executive; and the death proceeds of the Policy will be divided between the Bank and the beneficiary designated by the Executive.  This Agreement is made in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged.

I. POLICY TITLE AND OWNERSHIP

The Bank has applied for one or more life insurance policies, hereinafter collectively referred to as the "Policy," insuring the life of the Executive.  Schedule A, which is attached hereto and incorporated herein by reference as if fully rewritten, provides the following information with regard to the Policy: the issuer thereof (the "Insurer"), the policy number, and such other information as therein set forth.  The Bank and the Executive agree to take all necessary action to cause the Insurer to issue the Policy and to cause the Policy to conform to the provisions of this Agreement.  The Bank and the Executive further agree that the Policy shall be subject to the terms and conditions of this Agreement.  If the Bank and the Executive mutually agree to change the coverage under the Policy, the rights, duties, and benefits of the parties to such changed coverage shall continue to be subject to the terms of this Agreement.

The Bank shall be the sole and absolute owner of and shall possess all incidents of ownership in the Policy and may exercise all ownership rights granted to the owner thereof by the terms of the Policy except as may be otherwise provided in this Agreement.

This Agreement is effective as to a Policy upon execution of this Agreement or upon issuance of such Policy, whichever is later.  The Bank shall be responsible for safeguarding the Policy.

II. BENEFICIARY DESIGNATION RIGHTS

The Executive shall have the right and power to instruct the Bank from time to time to designate a beneficiary or beneficiaries (collectively referred to herein as the "Executive's Beneficiary") to receive the Part Two Share of the proceeds payable under this Agreement upon the death of the Executive, and to elect a payment option for such Executive's Beneficiary, subject to any right or interest the Bank may have in such proceeds, as provided in this Agreement.  The Bank agrees to designate the Executive's Beneficiary for the Part Two Share in such Policy in accordance with the written direction of the Executive.  The parties to this Agreement shall execute and forward promptly and without unreasonable delay, changes in beneficiary designation forms and documents, including the Policy, as required by the Insurer, to effectuate the exercise of any rights of the parties hereto.  If the Executive does not designate a Beneficiary or if no Beneficiary survives the Executive, the Executive's Beneficiary shall be his or her estate.

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III. PREMIUM PAYMENT METHOD

The Bank shall pay amounts equal to the planned premiums and any other premium payments that might become necessary to keep the Policy in force.

IV. USE OF DIVIDENDS

Dividends declared on the Policy shall be applied as the Bank elects on the Policy application.

V. TAXABLE BENEFIT

The Executive will receive an annual taxable benefit equal to the assumed cost of insurance to the extent required by the Internal Revenue Service.  The Bank will cause the amount of imputed income received annually to be reported to the Executive on Form W-2 or its equivalent.

VI. DIVISION OF DEATH PROCEEDS

Upon the death of the Executive, the Bank shall cooperate with the Executive's Beneficiary to take whatever action is necessary to collect the death benefit provided under the Policy.  Subject to Section VII of this Agreement, the death proceeds of the Policy shall be as follows and paid in the following order to the extent that such proceeds permit.  When such death benefit has been collected and paid as provided herein, this Agreement shall thereupon terminate.

A. Part One Share.  First the Bank shall be entitled to an amount known herein as the "Part One Share" which is equal to the premiums which the Bank has paid for the Policy since the effective date of this Agreement.

B. Part Two Share.  Second, the Executive's Beneficiary shall be entitled to an amount known herein as the "Part Two Share" which is equal to the following:

(i) If the Executive is employed by the Bank or an Affiliated Employer at the time of his or her death, the Part Two Share shall be equal to three times the Executive's base salary in effect at the time of his or her death.  For purposes of this Agreement, "Affiliated Employer" means First Financial Bancorp and any employer which is a direct or indirect subsidiary of First Financial Bancorp, but only during the period it is such a subsidiary.

(ii) If the Executive is not employed by the Bank or an Affiliated Employer at the time of his or her death, and if, when the Executive's employment with the Bank and all Affiliated Employers terminated, the Executive:  (a) was then eligible to receive an immediate retirement benefit under the Early Retirement, Normal Retirement, Late Retirement, or Disability Retirement provisions of the First Financial Bancorp Employees' Pension Plan and Trust as in effect from time to time, and (b) had been employed by First Financial Bancorp and/or an Affiliated Employer for at least five years, the Part Two Share shall be equal to three (3) times the Executive's base salary at the time of his or her termination of employment.  For purposes of clause (b) of this subparagraph, employment with an Affiliated Employer other than First Financial Bancorp (or the successor or predecessor of that Affiliated Employer) during any period during which that employer is not a subsidiary or affiliate of First Financial Bancorp shall be disregarded.

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(iii) For purposes of this Agreement, an Executive's base salary shall be his or her base annual rate of compensation not including fringe benefits, bonuses, incentive compensation, severance pay, contributions to or benefits paid under qualified or nonqualified retirement or deferred compensation plans, stock options, expense reimbursements, or other forms of special compensation.  Notwithstanding the prior sentence, the Executive's base salary shall include any pre-tax elective deferral contributions made at the Executive's election under a cash or deferred arrangement that is qualified under section 401(k) of the Internal Revenue Code of 1986, as amended (“Code”), and any elective contributions made by the Executive under a Code section 125 cafeteria plan or flexible spending arrangement.

VII. OTHER DISPOSITION OF THE POLICY

Subject to the Executive's option to purchase an assignment of the Policy under Section IX below, if this Agreement terminates for any reason (except due to the death of the Executive if such death entitles the Executive's Beneficiary to a Part Two Share under Section VI hereof), the Bank may surrender or cancel the Policy for its cash surrender value and retain all such value, or the Bank may change the beneficiary designation provisions of the Policy, naming itself or any other person or entity as beneficiary thereof, or exercise any other ownership rights in and to the Policy, without regard to the provisions of this Agreement.  Thereafter, neither the Executive nor any person claiming for or through him or her shall have any further interest in and to the Policy, either under the terms thereof or this Agreement.

VIII. PREMIUM WAIVER

If the Policy contains a premium waiver provision and such waiver becomes operative, such waived premium amounts shall be considered for all purposes of this Agreement as having been paid by the Bank.

IX. TERMINATION OF AGREEMENT

This Agreement shall terminate upon the final payment of death benefits as provided under Section VI hereof.  This Agreement also shall terminate upon the happening of any one of the following:

A. The Executive leaves the employ of the Bank and all Affiliated Employers (voluntarily or involuntarily) for a reason other than his or her death and prior to having met all of the requirements in Section VI(B)(ii) above.

B. The Executive (whether or not the Executive satisfied the requirements of Section VI(B)(ii) above) is discharged from employment with the Bank or an Affiliated Employer for cause.  Solely for purposes of this Agreement, "cause" shall mean gross negligence or gross neglect or the commission of a felony or gross misdemeanor involving moral turpitude, fraud, dishonesty, or willful violation of any law that results in any adverse effect on the Bank or an Affiliated Employer.

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C. The Executive notifies the Bank in writing that he or she irrevocably elects to terminate this Agreement and relinquish all of his or her rights thereunder.

If the Executive's employment is terminated for cause or if the Executive elects to terminate this Agreement, this Agreement shall terminate as of the earlier of the date of termination of employment or the date that the termination election is received by the Bank, respectively, and neither the Executive nor any person claiming for or through him shall have any further rights under this Agreement or under the Policy.  If the Executive's employment terminates for any reason except cause or the Executive's death, and if the Executive has not met all of the requirements in Section VI(B)(ii) above, the Bank shall notify the Executive through certified mail as soon as administratively practicable that he or she has an assignable option to receive from the Bank an absolute assignment of the Policy in consideration of a cash payment to the Bank, equal to the greater of:

A. The cash value of the Policy as of the date of such assignment, or

B. The amount of the premiums paid by the Bank prior to the date of such assignment plus interest thereon at the annual rate of six percent (6%).

The amounts in items A and B above shall be reduced by any outstanding loans or withdrawals from the Policy made by the Bank.

If the Executive does not provide written notice to the Bank that he or she elects to exercise this option within 14 calendar days after the date the Bank sends notice of such option, this Agreement and all of the Executive's rights, interest, and claims hereunder and in the Policy shall terminate and be irrevocably forfeited as of the end of such 14 day period.

If the Executive provides timely written notice of the exercise of such option, he or she shall have 30 calendar days from the date the Bank sent the notification to him or her of such option to make the required cash payment to the Bank or to notify the Bank in writing that he or she irrevocably elects to have such payment deducted from any amounts then owed to him or her by the Bank.  If the Executive timely pays for such assignment, this Agreement shall terminate as of the effective date of the assignment of the Policy.  If the Executive does not timely pay, this Agreement and all of the Executive's rights, interest, and claims hereunder and in the Policy shall terminate and be irrevocably forfeited as of the end of such 30 day period.

X. ASSIGNMENT

Notwithstanding any provision hereof to the contrary, the Executive may at any time during the term of this Agreement, with the Bank's written consent, absolutely and irrevocably assign by gift all of his or her right, title, and interest in and to this Agreement and the Policy to an assignee.  This right shall be exercisable by the execution and delivery to the Bank of a written assignment, on a form prepared or approved by the Bank.  Upon the Bank's consent to such written assignment executed by the Executive and duly accepted by the assignee thereof, the Bank shall indicate its consent thereto in writing and shall thereafter treat the Executive's assignee as the sole owner of all of the Executive's right, title, and interest in and to this Agreement and in and to the Policy.  Thereafter, the Employee shall have no right, title, or interest in and to this Agreement or the Policy.  Notwithstanding the foregoing, the provisions of Section VI(B)(i) and (ii) shall be applied by determining the employment status and/or pension eligibility of the Executive (the assignor), not the assignee.

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The Bank may pledge or assign the Policy, subject to the terms and conditions of this Agreement, for the sole purpose of securing a loan from the Insurer or from a third party.  The amount of such loan together with accumulated interest thereon shall not exceed the amount of premiums paid by the Bank on the Policy.

XI. AGREEMENT BINDING

This Agreement shall be binding upon and inure to the benefit of the Bank and its successors and assigns, and the Executive and his or her heirs, successors, personal representatives, executors, administrators, assigns, and beneficiaries.

XII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR

The Bank is hereby designated the "Named Fiduciary" under this Agreement.  As Named Fiduciary, the Bank shall be responsible for the management, control, and administration of the split dollar life insurance plan established herein.  The Named Fiduciary may allocate to others certain aspects of the management and operational responsibilities of the split dollar life insurance plan established herein, including the employment of advisors and the delegation of any ministerial duties to qualified individuals.

XIII. CLAIMS PROCEDURE

The Named Fiduciary hereby establishes a claims procedure, attached as Exhibit A hereto and incorporated herein as if fully rewritten, which is consistent with the requirements of section 503 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Executive or any Beneficiary claiming any benefit under this Agreement must exhaust such claims procedure before commencing action in any judicial or administrative forum.

XIV. GOVERNING LAW

The laws (other than laws governing conflicts of laws) of the State of Ohio shall govern this Agreement.

XV. AMENDMENT OF AGREEMENT

This Agreement may be altered, amended, or modified only by a written agreement signed by the Bank and the Executive.  It shall be the obligation of the Bank to notify the Insurer of any amendments or changes to this Agreement.  Notwithstanding the foregoing, (i) if the Insurer is replaced with another insurer, the Bank may, subject to applicable law, amend the Agreement without the consent of the Executive so long as the Part Two Share is not reduced and (ii) the Bank may amend the Agreement without the consent of the Executive to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Agreement to any present or future law relating to agreements of this or similar nature (including, but not limited to, Code section 409A), and to the administrative regulations and rulings promulgated thereunder.

XVI. INTERPRETATION OF AGREEMENT

The Bank, as the Named Fiduciary, shall have sole discretion to interpret each and all provisions of this Agreement and to determine the eligibility of any person for benefits under this Agreement.  All such determinations of the Bank shall be binding on all persons concerned.  Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine and vice versa.

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XVII. INSURER NOT A PARTY TO THIS AGREEMENT

The Insurer shall not be deemed a party to this Agreement.  The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefit to the beneficiary or beneficiaries named in the Policy, subject to the terms and conditions of the Policy.  No provision of this Agreement or any amendment or modification thereto shall in any way be construed as enlarging, changing, varying, or in any other way affecting the obligations of the Insurer except insofar as the provisions hereof are made a part of the Policy by the beneficiary designation executed by the Bank and filed with the Insurer in connection herewith.

Executed this _______ day of ____________________, _____.

	First Financial Bank, N.A.
Witness:	By:
	Name:	J. Franklin Hall
	Title:	Senior Vice President and Chief Financial Officer
	«executive»
Witness:	Signed:

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ENDORSEMENT METHOD SPLIT DOLLAR AGREEMENT

SCHEDULE A

Insurer: Sun Life Assurance Company of Canada (US)

Policy Number: On File

Bank: First Financial Bank, N.A.  (Owner of Policy)

300 High Street

Hamilton, OH  45011

Executive: «executive»

Relationship of

Bank to Executive: Employer

ENDORSEMENT METHOD SPLIT DOLLAR AGREEMENT

BENEFICIARY DESIGNATION FORM

Instructions:  The Executive (hereafter, "you") should complete this form in order to direct the Bank to designate your beneficiaries for purposes of the Endorsement Method Split Dollar Agreement (the "Agreement").  If you designate more than one primary beneficiary, please indicate below what percent of the policy proceeds you want each surviving primary beneficiary to receive.  If you designate more than one contingent beneficiary, please indicate what percent of the policy proceeds you want each surviving contingent beneficiary to receive if no primary beneficiary survives you.  If you designate more than one beneficiary but you do not indicate what percent each one should receive, the proceeds will be divided equally among each surviving primary beneficiary (or equally among each surviving contingent beneficiary if no primary beneficiary survives you).  Any percentages that you designate for primary beneficiaries will be increased proportionately for surviving primary beneficiaries if some primary beneficiaries die before you die and you do not file a new form.  The same rule will apply to contingent beneficiaries if no primary beneficiaries survive you.   When you die, the proceeds will be distributed to the primary beneficiaries you designated who survive you.  If no primary beneficiary survives you, the proceeds will be distributed to the contingent beneficiaries you designated who survive you.  If no designated primary or contingent beneficiary survives you, the proceeds will be distributed according to the applicable terms of the Agreement.

Primary Beneficiary:

Name:	Relationship	Percentage
________________________________	________________________	__________

________________________________ ________________________ __________

________________________________ ________________________ __________

________________________________ ________________________ __________

Contingent Beneficiary:

Name	Relationship	Percentage
________________________________	_________________________	__________

________________________________ _________________________ __________

________________________________ _________________________ __________

________________________________ _________________________ __________

I direct the Bank to designate the person(s) or entity named above to be my beneficiary(ies) for purposes of the Agreement.  I hereby revoke all prior directions regarding designations of primary and contingent beneficiaries for purposes of the Agreement.  I understand that this form applies only if I properly complete it and file it with the Bank before my death.  I reserve the right to revoke or change my beneficiary designation directions by filing a new properly completed form with the Bank before my death, which revocation or change shall be forwarded to the proper parties or entities, subject to the terms of the Agreement.

Name of Executive:  «executive»

____________________________________________	____________________________
Signature of Executive	Date

EXHIBIT A TO ENDORSEMENT METHOD SPLIT DOLLAR AGREEMENT

Benefit Claims.

[1]           Normally, the Executive need not present a formal claim for plan benefits in order to qualify for rights or benefits under this Agreement  (the “Plan”).  If, however, any person is not granted the rights or benefits to which the person believes himself or herself to be entitled, a formal claim for benefits must be filed in accordance with this section.  A claim by any person must be presented to the claims official appointed by the Plan Committee — the members of the Plan Committee are selected by the Bank from time to time and serve at the pleasure of the Bank — in writing (or, if none is appointed, to the Plan Committee) within the maximum time permitted by law or under regulations promulgated by the Secretary of Labor or his or her delegate pertaining to claims procedures.  The claims official will, within a reasonable time, and not later than the maximum period of time specified by law or under regulation, consider the claim and will issue his or her determination thereon in writing.  If the claim is granted, the appropriate distribution or payment will be made.  Before deciding the claim, the claims official will review the provisions of the Plan and other relevant Plan documents, including similar claims, to ensure and verify that the claim is made in accordance with those documents and that the decision is applied consistently with regard to similarly situated claimants.

[2]           If the claim is wholly or partially denied, the claims official will, within a reasonable period of time, and normally within 90 days of the receipt of such claim, or if the claim is a claim on account of Disability (as defined under the First Financial Bancorp Employees’ Pension Plan and Trust), within 45 days of the receipt of such claim, provide the claimant with written notice of the denial setting forth in a manner calculated to be understood by the claimant:

[a] The specific reason or reasons for the denial;

[b]           Specific references to pertinent Plan provisions on which the denial is based;

[c]           A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary;

[d]           An explanation of the Plan’s claim review procedure and the time limits applicable to such procedures; and a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse determination upon review; and

[e]           In the case of an adverse determination of a claim on account of Disability, the information to the claimant shall include, to the extent necessary, the information set forth in Employee Benefits Security Administration Regulation 2560.503-1(g)(1)(V).

If special circumstances require the extension of the 45-day or 90-day period described above, the claimant will be notified before the end of the initial period of the circumstances requiring the extension and the date by which the review official expects to reach a decision.  Any extension for deciding a claim will not be for more than an additional 90-day period, or if the claim is a claim on account of Disability, for not more than two additional 30-day periods.

[3]           Each claimant may appeal in writing the claims official’s denial of a claim to a review official designated by the Plan Committee for a full and fair review.  The claimant or his or her duly authorized representative may:

[a]           Request a review by filing a written application with the review official;

[b]           Review and receive copies of pertinent documents; and

[c]           Submit issues and comments in writing.

[4]           The Plan Committee may establish time limits within which a claimant may request review of a denied claim which are reasonable in relation to the nature of the benefit which is the subject of the claim and other attendant circumstances but which will not be less than 60 days (180 days in the case of a denial of a claim on account of Disability) after receipt by the claimant of written notice of the denial of his or her claim.

[5]           The decision by the review official upon review of a claim will be made normally not later than 60 days (45 days in the case of a claim on account of Disability) after his or her receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than 120 days (90 days in the case of a claim on account of Disability) after receipt of the request for review.  This notice to the claimant will indicate the special circumstances requiring the extension and the date by which the review official expects to render a decision and will be provided to the claimant prior to the expiration of the initial 45-day or 60-day period.

[6]           The decision on review will be in writing and will include specific reasons for the decision written in a manner calculated to be understood by the claimant, with specific references to the pertinent Plan provisions on which the decision is based.  The review official will consider all information submitted by the claimant, regardless of whether the information was part of the original claim.  The decision will also include a statement of the claimant’s right to bring an action under ERISA section 502(a).

In the case of a claim on account of Disability:  (a) the review of the denied claim shall be conducted by a named fiduciary who is neither the individual who made the benefit determination nor a subordinate of such person; and (b) no deference shall be given to the initial benefit determination.  For issues involving medical judgment, the named fiduciary must consult with an independent health care professional who may not be the health care professional who decided the initial claim.

[7]           To the extent permitted by law, the decision of the claims official (if no review is properly requested) or the decision of the review official on review, as the case may be, will be final and binding on all parties.  No legal action for benefits under the Plan will be brought unless and until the claimant has exhausted his or her remedies under this section.

EX-10.9

Exhibit 10.9

FIRST FINANCIAL BANCORP

DEFERRED COMPENSATION PLAN

As amended and restated effective as of January 1, 2009

SECTION 1

NAME AND PURPOSE OF PLAN

1.1         Name.  The plan set forth herein will be known as the First Financial Bancorp Deferred Compensation Plan (the "Plan").

1.2         Purpose.  The purpose of the Plan is to provide deferred compensation for eligible employees of First Financial Bancorp.  The Plan is intended to be an unfunded deferred compensation plan for a select group of management and highly compensated employees for federal income tax purposes and within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, and will be construed as such. It is also intended that the Plan comply with the requirements of Section 409A of the Code and the Treasury regulations issued thereunder.

SECTION 2

GENERAL DEFINITIONS; GENDER AND NUMBER

2.1         General Definitions.  For purposes of the Plan, the following terms will have the meanings hereinafter set forth unless the context otherwise requires:

2.1.1           "Administrator" means the committee appointed pursuant to Section 6 of this Plan.

2.1.2           "Beneficiary" means the person or entity designated by a Participant, on forms furnished and in the manner prescribed by the Administrator, to receive any benefit payable under the Plan after the Participant's death.  If a Participant does not designate a beneficiary or if, for any reason, such designation is not effective, his or her "Beneficiary" will be his or her surviving spouse or, if none, his or her estate.

2.1.3           "Code" means the Internal Revenue Code of 1986 as it now exists or is hereafter amended.

2.1.4           "Employee" means any person who is an employee of the Employer.

2.1.5           "Employer" means First Financial Bancorp.

2.1.6           "Participant" means, with respect to any Plan Year, an Employee who is a member of a select group of highly compensated or management Employees and is designated by a committee of the Board of Directors of the Employer as eligible to participate in this Plan.  The initial group of Participants as of the Plan's effective date will include each Executive Officer of First Financial Bancorp.

2.1.7           "Plan Year" means the twelve consecutive month period beginning on January 1 and ending on the following December 31.  However, the first Plan Year will be the period beginning with the initial effective date of the Plan and ending on December 31 of the year containing such initial effective date.

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2.2         Gender and Number.  For purposes of the Plan, words used in any gender will include all other genders, words used in the singular form will include the plural form, and words used in the plural form will include the singular form, as the context may require.

SECTION 3

DEFERRALS

3.1         Elective Deferral of Salary.  Subject to such rules as the Administrator may prescribe, a Participant may elect to defer up to 50% of his or her base salary for any Plan Year and 100% of his or her bonus or incentive pay for any Plan Year by completing a deferral form and filing such form with the Administrator prior to the first day of such Plan Year (or such earlier date as may be prescribed by the Administrator).  For purposes of the Plan, "base salary" means the salary payable to a Participant by the Employer, excluding any bonus or incentive compensation and excluding any part of a Participant's salary which is not includable in his or her gross income because it was contributed to a cafeteria plan, a flexible spending account, or a 401(k) plan (pursuant to sections 125 or 402(e)(3) of the Code) or pursuant to Section 3.5 of this Plan.

3.2         Changes in Elective Deferral Elections.  Subject to such rules as the Administrator may prescribe, a Participant who has elected to defer a portion of his or her base salary and/or bonus or incentive pay may change the amount of his or her deferral from one amount to another, or cease making deferrals, effective as of the first day of any Plan Year (but only with respect to amounts payable for services performed on or after the first day of that Plan Year), by completing and signing a new deferral form and filing such form with the Administrator prior to the first day of such Plan Year (or such earlier date as may be prescribed by the Administrator).

3.3         First Plan Year.  Notwithstanding the foregoing, in the year in which the Plan is first implemented, the Participant may make an election to defer amounts payable for services to be performed subsequent to the election within 30 days after the date the Plan is first effective for eligible Participants.

3.4         New Eligible Participants.  Also notwithstanding the foregoing, if an Employee first becomes a Participant who is eligible under this Plan after the date the Plan is first effective, he or she may elect to defer a portion of his or her salary for the remainder of the Plan Year after the date on which he or she becomes an eligible Participant by completing and signing a deferral form provided by the Administrator and filing such form with the Administrator within 30 days of the date on which he or she first becomes an eligible Participant.  Any election under the preceding sentence will be effective as of the first payroll period beginning after the date the election is filed.

3.5         Mandatory Deferrals.  Notwithstanding any other provision of the Plan, for any year in which a Participant is a "covered employee" as defined in Code section 162(m)(3), regarding limits on deductions for compensation to officers of publicly held corporations, the following mandatory deferral provisions will apply.

3.5.1           Prior to the end of the year, the Administrator will determine if the Participant's "applicable employee remuneration" from the Employer for the year, as defined in Code section 162(m)(4), will exceed the limit on deductions applicable to the Employer for that year pursuant to Code section 162(m)(1).  Any amount by which such applicable employee remuneration will exceed such limit is referred to herein as an "excess amount."

2

3.5.2           Any excess amount for a year will be credited to the Participant's Account as a mandatory deferral under this Plan for that year in lieu of being currently paid to the Participant.  The Administrator will have discretion to establish procedures for crediting such mandatory deferrals to an Account, including, without limitation, determining whether such deferrals are made from the Participant's regular salary, bonus, or incentive payments, or other compensation payable by the Employer.  The Administrator also will have discretion to determine the dates as of which such mandatory deferrals are credited to the Account for a year, provided that they will be credited not later than the dates they otherwise would have been paid to the Participant.

SECTION 4

MAINTENANCE AND VALUATION OF ACCOUNTS

4.1         Deferral Account.  Each Participant's Account will consist of the subaccount created and maintained under Section 4.1.1 for elective deferrals, if any, and the subaccount created and maintained under Section 4.1.2 for mandatory deferrals, if any.

4.1.1           There will be established for each Participant who has elected to defer a portion of his or her salary under Section 3.1 a separate subaccount which will reflect the amounts credited to this Plan on behalf of the Participant as elective deferrals and the assumed investment of those amounts.  Subject to such rules as the Administrator may prescribe, any amount deferred by a Participant from his or her salary under Section 3.1 will be credited to the Participant's elective deferral subaccount as of the day on which such deferred amount would have otherwise been paid to the Participant and will be assumed to have been invested on that date in the assumed investments requested by the Participant according to Section 4.2.

4.1.2           There will be established for each Participant for whom mandatory deferrals are made under Section 3.5 a separate subaccount which will reflect the amounts credited to this Plan on behalf of the Participant as mandatory deferrals and the assumed investment of those amounts.  Subject to such rules as the Administrator may prescribe, any amount deferred by a Participant as a mandatory deferral under Section 3.5 will be credited to the Participant's mandatory deferral subaccount as of the day on which such deferred amount would have otherwise been paid to the Participant and will be assumed to have been invested on that date in the assumed investments requested by the Participant according to Section 4.2.

4.2         Assumed Investments.  The Employer will designate in writing from time to time a limited number of "assumed investments" for purposes of the Plan and notify the Participants of such assumed investment options.  The credits to each Participant's Account made in accordance with Section 4.1 will be assumed to have been invested among those assumed investments, as requested in writing by the Participant.  Each Account will be adjusted as provided in Section 4.3 to reflect the investment returns or losses attributable to such assumed investments.  A Participant may request a change in the assumed investments of his or her Account to other available assumed investments effective as of the first day of each month, upon written notice to the Employer prior to such date (or such earlier date as may be established by the Administrator).  Some or all of the assumed investments may be changed by the Employer to other assumed investments, effective upon written notice from the Employer to all Participants.  No securities of any type issued by the Employer or an affiliate of the Employer may be included among the assumed investments.

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4.3         Valuation.  As of the end of each calendar year and such other dates as the Administrator may provide, each Participant or, in the event of his or her death, his or her Beneficiary, will be furnished a statement showing:  (i) the balance of the Participant's Account, (ii) the total credits to such Account during the preceding year from his or her salary, (iii) any assumed investment return or loss, and (iv) if amounts credited to his or her Account are assumed to have been invested in securities, a description of such securities including the number of shares assumed to have been purchased by the amounts credited to his or her Account.

4.4         Vesting.  The credits to each Participant's Account from his or her salary pursuant to Section 3.1 and the assumed earnings thereon will be 100% vested at all times.

SECTION 5

DISTRIBUTION

5.1         General.  Except as otherwise provided in this Section 5, no amount will be paid with respect to a Participant's Account while he or she remains an Employee.

5.2         Termination of Employment.  Subject to Section 5.7 below, payments of the vested portion then credited to a Participant's Account will be made in cash to him or her in one lump sum, or in monthly, quarterly, or annual installment payments over not more than ten years, commencing on the first day of the third month following the month in which he or she ceases to be an Employee, as timely elected by the Participant according to Section 5.2.2.

5.2.1           The amount of each installment payable under this Section 5.2 will be a fraction of the vested portion of the amounts credited to the Participant's Account as of the installment payment date, the numerator of which is 1 and the denominator of which is equal to the total number of installments remaining to be paid (including the installment to be paid on the subject installment payment date).  If the amount of any installment is less than $1,000, it will be increased to $1,000; provided that if the remaining amount of the vested portion credited to the Account on any installment date is less than $1,000, the payment will be the amount necessary to reduce the amount of the vested portion credited to the Account to $0.

5.2.2           Any election of a payment option under this Section 5.2 must be made in writing when the Participant is first eligible to participate in this Plan and before any amount is credited to his or her Account.  If a Participant does not properly elect a payment option, he or she will be deemed to have elected to receive his or her benefits in one lump sum payment.  A Participant may change his or her election under this Section 5.2 only by filing a written amended election with the Administrator at least one year before the amount to which the change relates becomes payable to him or her, and, with respect to a payment other than on account of the Participant’s death, payments under the new election may commence no sooner than five years from the date on which payment was scheduled to commence under the previous election.  Any such elections will apply to all amounts in the Account unless the Participant makes separate elections for the portions of his or her Account attributable to elective deferrals under Section 3.1 and mandatory deferrals under Section 3.5.

5.3         Death.  If a Participant ceases to be an Employee by reason of his or her death, or if a Participant dies after ceasing to be an Employee but before all of the amounts credited to his or her Account have been paid, the Employer will pay the Participant's Beneficiary the amounts credited to the Participant's Account in one lump sum within 90 days of the Participant’s death;provided, however, that if the Participant has elected to have any part of his or her Account distributed in installments and if he or she dies after distribution has commenced, any installments remaining unpaid as of the Participant's death will be paid to the Beneficiary in one lump sum within 90 days of the Participant's death.

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5.4         Disability.  Subject to Section 5.7 below, payments of a Participant's Account will be made to him or her in the event of his or her disability if he or she terminates employment with the Employer due to his or her disability, in the form and commencing at the time specified in Section 5.2.

5.5         Distributions for Payment of Taxes.  Notwithstanding any other provision of this Plan, if the Administrator or the Internal Revenue Service reasonably determines that a Participant is currently subject to income or other tax on any amount in his or her Account, the Employer will promptly pay to the Participant from his or her Plan Account in one lump sum that portion of the vested portion of the balance then in his or her Account that is necessary for the payment of federal, state, and local taxes (including taxes due to the distribution) that results from such determination, and the balance in the Participant's Account will immediately be reduced by the amount of such distribution.  No such distribution will exceed the vested portion of the balance in the Participant's Account immediately prior to the distribution.

5.6         Distribution of Mandatory Deferrals.  Notwithstanding any other provision of this Plan, amounts credited to a Participant's Account as mandatory deferrals and deemed earnings thereon will be distributed at the end of the second Plan Year beginning after the Plan Year for which the mandatory deferrals were credited to the Account.   However, if such payments would exceed the “applicable employee remuneration” for the year, as defined in Code section 162(m)(4), the payments will be delayed until the earlier of  (i) the Participant's termination of employment with the Employer, or (ii) the end of the first Plan Year for which the distribution of such mandatory deferrals and earnings will not cause the Participant's “applicable employee remuneration” for the year, as defined in Code section 162(m)(4), to exceed the limit on deductions applicable to the Employer for that year pursuant to Code section 162(m)(1).  Provided, however, no such distribution prior to termination of employment will be made to the extent it would cause the section 162(m)(1) limit to be exceeded.  Subject to Section 5.7 below, distributions made under this Section 5.6 due to the Participant’s termination of employment will be paid no later than the 15th day of the third month following such termination from employment.

5.7         Six-Month Delay of Payment.  A Participant’s account otherwise payable under Sections 5.2, 5.4, or due to termination of employment under Section 5.6 above shall not be paid prior to the earlier of: (i) the expiration of the six-month period commencing on the Participant’s date of termination or (ii) the Participant’s death.

SECTION 6

ADMINISTRATION OF THE PLAN

6.1         General.  The general administration of the Plan and the responsibility for carrying out its provisions will be placed in a committee of one or more members (the "Administrator"), who will be appointed from time to time by and serve at the pleasure of the Employer.  Any person who is appointed a member of the Administrator will signify his or her acceptance by filing a written acceptance with the Employer or by performing his or her duties as a member of the Administrator.  The initial members of the Administrator are Terri Ziepfel, Janie McCauley, and Gina Brackett.  Any member of the Administrator may resign by delivering his or her written resignation to the Employer and such resignation will become effective upon the date specified therein or the date of receipt, whichever is later.  A member of the Administrator who is an employee of the Employer will automatically cease to be such a member upon the termination of such employment.  No member of the Administrator who is a Participant will act on any matter involving his or her own account or interest under the Plan.

5

6.2         Expenses.  Expenses of administering the Plan will be borne by the Employer.

6.3         Compensation of Administrator.  The members of the Administrator will not receive compensation for their services as such, and, except as required by law, no bond or other security need be required of them in such capacity in any jurisdiction.

6.4         Rules of Plan.  Subject to the limitations of the Plan, the Administrator may, from time to time, establish rules for the administration of the Plan and the transaction of its business.  The Administrator may correct errors, however arising, and, as far as possible, adjust any benefit payments accordingly.  The determination of the Administrator as to the interpretation of the provisions of the Plan or any disputed question will be conclusive upon all interested parties.  The Administrator will establish a claims procedure for the Plan that is consistent with the requirements of section 503 of the Employee Retirement Income Security Act of 1974 and the regulations thereunder.  Participants must exhaust all claims and appeals procedures available to them under that claims procedure before commencing action relating to this Plan in any court or before any administrative agency.

6.5         Agents and Employees.  The Administrator may authorize one or more agents to execute or deliver any instrument.  The Administrator may appoint or employ such agents, counsel, auditors, physicians, clerical help, and actuaries as in the Administrator's judgment may seem reasonable or necessary for the proper administration of the Plan.

6.6         Indemnification.  The Employer will indemnify each member of the Administrator for all expenses and liabilities (including but not limited to attorney's fees) arising out of the administration of the Plan, other than any expenses or liabilities resulting from the Administrator's own gross negligence or willful misconduct.  The foregoing right of indemnification will be in addition to any other rights to which the members of the Administrator may be entitled as a matter of law.

SECTION 7

FUNDING OBLIGATION

This Plan constitutes a promise by the Employer to make benefit payments in the future according to the terms of the Plan.  The Employer will have no obligation to fund, either by the purchase or the investment in any account or by any other means, its obligation to Participants hereunder and will have no obligation to actually purchase any investment to reflect the assumed investment of any Participant's Account.  If, however, the Employer does elect to allocate assets to provide for any such obligation, the assets allocated for such purpose will be assets of the Employer subject to claims against the Employer, including claims of the Employer's creditors, to the same extent as are other corporate assets, and the Participants will have no right or claim against the assets so allocated, other than as general unsecured creditors of the Employer.

SECTION 8

AMENDMENT AND TERMINATION

The Employer may, without the consent of any Participant or Beneficiary, amend or terminate the Plan at any time and in any manner (including, without limitation, the payment of amounts due to the Plan's termination at times earlier than otherwise provided herein); provided that no amendment will be made or act of termination taken which divests any Participant of the right to receive payment under the Plan with respect to amounts credited to the Participant's Account immediately prior to the effective date of the amendment or termination.  This Plan is binding upon the heirs, executors, administrators, successors, and assigns of the parties hereto, including the Employer and each Participant and Beneficiary, present and future.  If the Employer merges or consolidates with any other entity, the continuing entity resulting from that merger or consolidation will be obligated to perform the duties and obligations of the Employer as set forth in this Plan. The Employer further agrees that if it will dissolve, liquidate, or sell substantially all of the assets of the business of the Employer, it will arrange to have the terms and provisions of this Plan fulfilled prior to the distribution, disposal, or sale of the assets of the Employer.

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SECTION 9

NON-ALIENATION OF BENEFITS

No Participant or Beneficiary will have any right to alienate, commute, anticipate, assign, pledge, encumber, transfer, or dispose of the right to receive the payments required to be made by the Employer hereunder (except the right to designate a Beneficiary or Beneficiaries as provided herein), which payments and the right to receive them are expressly declared to be nonassignable and nontransferable. In the event of any attempt to alienate, commute, anticipate, assign, pledge, encumber, transfer, or dispose of the right to receive the payments required to be made by the Employer hereunder, the Employer will have no further obligation to make any payments otherwise required of it hereunder.  The rights of a Participant or Beneficiary under this Plan will not be subject to the rights of creditors of the Participant or Beneficiary and will be exempt from execution, attachment, assignment, or any judicial relief or order for the benefit of any creditors or other third persons having claims against the Participant or Beneficiary.

SECTION 10

MISCELLANEOUS

10.1           Delegation.  Any matter or thing to be done by the Employer will be done by its Board of Directors, except that, from time to time, the Board by resolution may delegate to any person or committee certain of its rights and duties hereunder.  Any such delegation will be valid and binding on all persons and the person or committee to whom or which authority is delegated will have full power to act in all matters so delegated until the authority expires by its terms or is revoked by the Board, as the case may be.

10.2           No Contract of Employment.  Nothing in this Plan will be construed as conferring upon any Participant any right to continue, for any period of time, in the employ of the Employer, or to create a contract of employment.  The right of the Employer to discipline or discharge a Participant will not be affected by reason of the existence of this Plan or any of the provisions thereof.

10.3           Facility of Payment.  Any benefit payable to or for the benefit of a minor, an incompetent person, or other person incapable of receipting therefore may be paid to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment will fully discharge the Administrator and the Employer and all other parties with respect thereto.

10.4           Reliance on Data.  The Employer, the Administrator, and all other persons associated with the operation of the Plan may reasonably rely on the truth, accuracy, and completeness of all data provided by a Participant and/or Beneficiary, including, without limitation, data with respect to address, age, health, marital status, elections, and designations filed in connection with the Plan by any Participant or Beneficiary or the representatives of such persons, without duty to inquire into the genuineness thereof.  Each Participant and Beneficiary is responsible for advising the Administrator of any change in such data.

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10.5           Tax Consequences.  The Employer does not represent or guarantee that any particular federal or state income, estate, payroll, or other tax consequences will occur because of a Participant's participation in this Plan.  Each Participant or Beneficiary is solely responsible for obtaining advice regarding his or her federal, state, or local income, estate, payroll, or other tax responsibilities arising from participation in this Plan.

10.6           Withholding.  The Employer will withhold from payments or benefits hereunder any taxes required to be withheld from such payments or with respect to a Participant's Account under local, state, or federal law.  The Employer may withhold necessary amounts from a Participant's other compensation if amounts currently payable under this Plan are not adequate for such withholding.

10.7           QDROs.  To the extent required by a court order which meets the requirements for a qualified domestic relations order as defined in Code section 414(p), any portion of a Participant's vested benefits may be paid to (or a portion of a Participant's Account may be set aside for the benefit of) the Participant's spouse, former spouse, or other alternate payee.  This provision will be administered in accordance with Code Section 414(p) and guidance thereunder.

10.8           Applicable Law.  The Plan will be governed by applicable federal law and, to the extent not preempted by applicable federal law, the laws of the State of Ohio.

10.9           Separability of Provisions.  If any provision of the Plan is held invalid or unenforceable, such invalidity or unenforceability will not affect any other provision hereof, and the Plan will be construed and enforced as if such provision had not been included.

10.10         Headings.  Headings used throughout the Plan are for convenience only and will not be given legal significance.

10.11         Counterparts.  The Plan may be executed in any number of counterparts, each of which will be deemed an original.  All counterparts will constitute one and the same instrument, which will be sufficiently evidenced by any one thereof.

IN WITNESS WHEREOF, First Financial Bancorp has caused its name to be subscribed to this amendment and restatement of the Plan this 31st day of December, 2008, but effective for all purposes as of January 1, 2009.

FIRST FINANCIAL BANCORP

By:

Title:

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EX-10.31

Exhibit 10.31

EXECUTIVE SUPPLEMENTAL SAVINGS AGREEMENT

THIS AGREEMENT, made and entered into this 25th day of August, 2008 by and between First Financial Bancorp, an Ohio Corporation (hereinafter called the "BHC"), and Claude E. Davis (hereinafter called the "Executive").

WITNESSETH:

WHEREAS, the Executive has been and continues to be a valued employee of the BHC and its subsidiaries, and is now serving the BHC and its subsidiaries as its President and CEO of First Financial Bank and First Financial Bancorp;

WHEREAS, the Executive's services to the BHC and its subsidiaries in the past have been of merit and have constituted a valuable contribution to the operations of the BHC and its subsidiaries;

WHEREAS, certain tax rules limit the matching contributions that the Executive will have allocated to his account under the First Financial Bancorp 401(k) Savings Plan and Trust as amended from time to time (the "Savings Plan") and the BHC desires to supplement this limited savings benefit;

WHEREAS, it is the desire of the BHC and the Executive to enter into this Agreement under which the BHC will agree to make certain payments to the Executive or his beneficiary as provided herein;

WHEREAS, it is the intent of the parties hereto that this Agreement be considered an unfunded arrangement maintained primarily to provide supplemental benefits for the Executive, as a member of a select group of management or highly compensated employees of the BHC and its subsidiaries for the purposes of the Employee Retirement Income Security Act of 1974 (ERISA); and

WHEREAS, it is the intent of the BHC that this Agreement, together with any similar Executive Supplemental Savings Agreements entered into by the BHC with other executives of BHC comprise the First Financial Bancorp Executive Supplemental Savings Plan (the “Plan”) and such Plan is intended to be interpreted in such a manner as to comply with the requirements of Section 409A of the Code, and the regulations thereunder:

NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained it is agreed as follows:

1. IN GENERAL.

The supplemental savings benefits provided by this Agreement are granted by the BHC as a benefit to the Executive and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase.  The Executive has no option to take any current payment or bonus in lieu of these supplemental savings benefits.

2. SUPPLEMENTAL SAVINGS ACCOUNT.

The BHC shall, with respect to any calendar year, credit to an account established and maintained on BHC’s books for the benefit of the Executive (the “Supplemental Savings Account”) an amount equal to any matching contributions that otherwise would be credited to Executive’s account under the Savings Plan but are limited due to application of sections 401(a)(17), 402(g) and 415 of the Internal Revenue Code of 1986, as amended (the “Code”)(collectively, the “Code Limits”). The amount of any such credit to the Executive’s Supplemental Savings Account for any year shall be an amount equal to 4% (the maximum match available in the qualified Savings Plan) of the difference between: (i) the Executive’s total pay for such year and (ii) the IRS pay limit for the same year regardless of the Executive’s actual deferrals to the Savings Plan. The amounts credited to the Supplemental Savings Account shall be determined by an actuary selected by the BHC in its sole discretion. Such amounts shall be credited to the Executive’s Supplemental Savings Account on the same periodic basis as matching contributions are credited to participants’ accounts under the Savings Plan.

3.  CREDITING OF EARNINGS.

Executive’s Supplemental Savings Account shall be credited with earnings (or losses) as if the account was invested among the investment funds made available to participants under the Savings Plan as selected by the Administrator of the Plan (as defined in Section 21 below), provided however, the Executive may make recommendations to the Administrator regarding such investment selections.  The Supplemental Savings Account shall be credited with earnings (or losses) based on the actual performance of such funds regardless of whether the Supplemental Savings Account is actually invested in those funds.

4.  DISTRIBUTION OF SUPPLEMENTAL SAVINGS ACCOUNT.

Subject to Section (5) and (11) below and except for the Executive’s termination of employment for Cause (as defined below), the Executive’s Supplemental Savings Account shall be fully vested and nonforfeitable at all times and shall be paid in a single lump-sum payment as soon as administratively feasible following the Executive’s termination of employment.  If the Executive’s employment is terminated for Cause, the Executive shall forfeit his Supplemental Savings Account and not be entitled to any payment under this Agreement.

For purposes of this Agreement, “Cause” shall mean any one or more of the following:

(a)           any act constituting (i) a felony under the federal laws of the United States, the laws of any state, or any other applicable law, (ii) fraud, embezzlement, misappropriation of assets, willful misfeasance, or dishonesty, or (iii) other actions or criminal conduct which in any way materially and adversely affects the reputation, goodwill, or business position of BHC;

(b)           the failure of the Executive to perform and observe all material obligations and conditions to be performed and observed by the Executive under his employment agreement, or to perform the duties in accordance, in all material respects, with the policies, procedures, and directions established from time to time by the Board of Directors of BHC (the “Board”) or a duly authorized Board committee (any such failure, a “Performance Failure”), and to correct such Performance Failure promptly following notice from the Board to do so; or

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(c)           having corrected (or the BHC’s having waived the correction of ) a Performance Failure, the occurrence of any subsequent Performance Failure (whether of the same or different type of nature).

5.  SIX-MONTH DELAY OF PAYMENT.

Any Supplemental Savings Account otherwise payable under Section (4) above shall not be paid prior to the earlier of: (i) the expiration of the six-month period commencing on the Executive’s date of termination or (ii) the Executive’s death.

6.  DEATH BENEFIT IF DEATH OCCURS PRIOR TO BENEFIT PAYMENT.

If the Executive dies before receiving payment of his Supplemental Savings Account, the Executive’s designated beneficiary will receive the balance of Executive’s Supplemental Savings Account determined as of his date of death. Such benefit shall be paid to the Executive’s beneficiary in a single lump-sum payment as soon as administratively feasible following the Executive’s death.  Any designation of beneficiary shall be made by the Executive on an election form filed with the BHC and may be changed by the Executive at any time by filing another election form.  If no beneficiary is designated or no designated beneficiary survives the Executive, payment shall be made to the Executive’s estate.

7. BENEFIT ACCOUNTING.

The BHC shall account for the benefits under this Agreement using the regulatory accounting principles of the BHC's primary federal regulator as agreed to by the BHC’s independent certified public accounting firm.

8. PARTICIPATION IN OTHER PLANS.

The benefits provided hereunder shall be in addition to Executive's annual salary as determined by the Board, and shall not affect the right of the Executive to participate in any current or future bank retirement plan, group insurance, bonus, or in any supplemental compensation arrangement which constitutes a part of the regular compensation structure of the BHC or its subsidiaries.  Any benefits payable under this Agreement shall not be deemed salary or other compensation to the Executive for the purpose of computing benefits to which he or she may be entitled under any pension plan or other employee benefit plan of the BHC or its subsidiaries.

9. NO ASSIGNMENT OR ALIENATION.

The Executive, the Executive's spouse, and any other designee, assignee, or successor of the Executive, shall not have any right to commute, sell, assign, transfer, anticipate, alienate, or otherwise convey the right to receive any payments hereunder, which payments and the right thereto are expressly declared to be non-assignable and non-transferable.  In the event of any attempted assignment, transfer, or other action listed in the prior sentence, the BHC shall have no further liability to any person under this Agreement.

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10. NO FUNDING OBLIGATION.

The BHC shall have no obligation to set aside, earmark, or entrust any fund or money with which to pay its obligations under this Agreement.  The BHC reserves the absolute right at its sole discretion to either segregate assets to meet the obligations undertaken by this Agreement or to refrain from segregating such assets.

11. GENERAL ASSETS OF THE BHC.

The rights of the Executive under this Agreement and of any beneficiary of the Executive shall be solely those of an unsecured creditor of the BHC.  If the BHC shall acquire an insurance policy or any other asset in connection with the liabilities assumed by it hereunder, it is expressly understood and agreed that neither the Executive nor any beneficiary of the Executive shall have any right with respect to, or claim against, such policy or other asset.  Such policy or asset shall not be deemed to be held under any trust for the benefit of the Executive or his or her beneficiaries or to be held in any way as collateral security for the fulfilling of the obligations of the BHC under this Agreement.  It shall be, and remain, a general, unpledged, unrestricted asset of the BHC, and the Executive and his or her beneficiaries shall not have a greater claim to the insurance policy or other assets or any interest in either of them, than any other general creditor of the BHC.  Nothing in this Agreement shall be deemed to create any fiduciary relationship.

12. BINDING EFFECT.

This Agreement shall be binding upon and inure to the benefit of the BHC, its affiliates, successors, and assigns, and the Executive, and his or her heirs, executors, administrators, and legal representatives.  The BHC will not merge or consolidate with any other company or organization, or permit its business activities to be taken over by any other organization, unless the entity expressly acknowledges its obligations under this Agreement and agrees to abide by its terms.

13. AMENDMENT.

The Board or its delegate shall have the right to amend or modify the Agreement at any time in any manner whatsoever, in whole or in part; provided, however, that no amendment will directly or indirectly operate to reduce the benefit that has been earned by the Executive (or, in the case of a deceased Executive, his or her beneficiary) at the time the amendment is adopted, unless the Executive or beneficiary, as applicable, consents in writing to such amendment.  Any amendment which affects the time or form of payment of any benefit under this Agreement may not be effective less than 12 months before the payment of such benefit and will result in the deferral of the commencement date of such benefit payment by at least five years.

14. TERMINATION.

Continuance of the Agreement is completely voluntary and is not assumed as a contractual obligation of the BHC.  The BHC, by written resolution of the Board, will have the right to terminate the Agreement at any time; provided, however, that the termination will not directly or indirectly operate to reduce the benefit that has been earned by the Executive (or, in the case of a deceased Executive, his or her beneficiary) at the time the termination is approved.

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15. NOT A CONTRACT OF EMPLOYMENT.

This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the BHC and its subsidiaries to discharge the Executive or change the terms and conditions of his or her employment, or restrict the right of the Executive to terminate his or her employment.

16. TAXATION.

The BHC does not represent or guarantee that any particular federal or state income or other tax consequence will result from participation in this Agreement.  The Executive agrees that he or she will consult professional tax advisors if he or she desires information about the tax consequences of his or her participation.  If the BHC is required to withhold amounts under applicable federal, state, or local tax laws, rules, or regulations with respect to the benefits under this Agreement, the BHC shall be entitled to deduct and withhold such amounts from any cash payment made pursuant to this Agreement, and if such amounts are not adequate for the required withholding amount, from any other compensation due from the BHC or its affiliates to the Executive or the Executive's beneficiary.

17. PAYMENTS TO REPRESENTATIVES.

If the Executive or the Executive's beneficiary entitled to receive any benefit hereunder is determined by the Administrator or is adjudged to be legally incapable of giving valid receipt for such benefit, the benefit will be paid to a duly appointed and acting conservator or guardian or other legal representative of the Executive or beneficiary, if any, and if no such conservator, guardian, or legal representative is appointed and acting, to such person or persons as the Administrator may designate.  Such payments will, to the extent made, be deemed a complete discharge for such payments under this Agreement.

18. HEADINGS.

Headings and subheadings of this Agreement are inserted for reference and convenience only and shall not be deemed a part of this Agreement.

19. APPLICABLE LAW.

The validity and interpretation of this Agreement shall be governed by the laws of the State of Ohio.

20. EFFECTIVE DATE AND TERM.

The effective date of this agreement shall be effective as of the date first set forth herein.  This Agreement shall remain in effect until all benefits due hereunder have been paid, or until terminated by mutual consent of the parties.

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21. ADMINISTRATION AND CLAIMS PROCEDURE.

The Administrator of this plan shall be a committee consisting of members of the Board, as determined by the Board.  Except to the extent the time or form of payment of any benefit under this Agreement is affected, the Administrator shall have full discretion and authority to interpret and construe each and all provisions of the Agreement, determine the eligibility of any person for benefits hereunder, make factual determinations, correct defects, supply omissions, and reconcile inconsistencies hereunder, and the interpretation of the Administrator shall be binding on all interested parties.  The committee may delegate to others some or all of its authority and responsibility as Administrator, and may employ and rely on such legal counsel, actuaries, accountants, and agents as it may deem advisable to assist in the administration of the Agreement.

The Administrator will advise each Executive and beneficiary of any benefit to which he or she is entitled under the Agreement.  If any person believes that the Administrator has failed to advise him or her of any benefit to which he or she is entitled or to pay him or her any benefit then due under the Agreement, he or she may file a written claim with the Administrator.  The Administrator shall review the written claim and if the claim is denied, in whole or in part, shall provide in writing within sixty days of receipt of such claim the specific reasons for such denial, reference to the provisions of this Agreement upon which the denial is based and notice of any additional material or information necessary to perfect the claim.  Such written notice shall indicate the steps to be taken by claimants if an appeal of the claim denial is desired.  A claim shall be deemed denied if the Administrator fails to take any action within the aforesaid sixty-day period.

If claimants desire to appeal, they must file such appeal with the Administrator in writing within sixty days of the claim denial.  In connection with an appeal, claimants may review this Agreement or any documents relating thereto and submit any written issues and comments they may feel appropriate.  In its sole discretion, the Administrator shall then review the appeal and provide a written decision within sixty days of receipt of such appeal.  This decision shall state the specific reasons for the decision and shall include reference to specific provisions of this Agreement upon which the decision is based.

22. INDEMNIFICATION.

To the maximum extent permitted by law, the Administrator, and each person serving as a member of the committee which is the Administrator, will not be held liable by reason of any contract or other instrument executed by the Administrator or on the Administrator's behalf, nor for any determination hereunder made or action taken or not taken in good faith.  The Administrator, each member of the committee, and each other person to whom any duty or power with respect to the Agreement may be delegated will be indemnified and held harmless by the BHC against any claims, damages, and other liabilities, including without limitation all expenses (including attorneys' fees and costs), judgments, fines, and amounts paid in settlement and actually and reasonably incurred by him or her in connection with any action, suit, or proceeding arising out of the Administrator’s responsibilities with respect to the Agreement, provided, however, that this indemnification will not apply if the individual concerned did not act in good faith and in the manner he or she reasonably believed to be in (or not opposed to) the best interest of the BHC, or, with respect to any criminal action or proceeding, had reasonable cause to believe his or her conduct was unlawful.  This indemnification provision is in addition to any other indemnification provisions which may apply and shall not reduce any rights under such other provisions.

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IN WITNESS WHEREOF, the BHC has caused this Agreement to be signed in its corporate name by its duly authorized officer, and Executive has hereunto set his or her hand, all effective as of the day and year first above written.

	FIRST FINANCIAL BANCORP
	/s/Greg A. Gehlmann
	By:  Greg A. Gehlmann
/s/Kathleen Janssen	Title:  Senior Vice President, Corporate General Counsel
Witness
	EXECUTIVE:
	/s/Claude E. Davis
	Claude E. Davis, President and CEO

/s/ Terri J. Ziepfel

Witness

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EX-10.32

Exhibit 10.32

AMENDED AND RESTATED

AGREEMENT FOR RESTRICTED STOCK AWARD

This Amended and Restated Agreement for Restricted Stock Award (the "Agreement") is between FIRST FINANCIAL BANCORP., an Ohio corporation (the "Corporation"), and who, as of April 13, 2009, which is the effective date of this Agreement, is an employee of First Financial Bank, National Association (the "Employee"):

WHEREAS, the Corporation established the 1999 Stock Incentive Plan for Officers and Employees (the "Plan") and a Committee of the Board of Directors of the Corporation designated in the Plan (the "Committee") approved the execution of this Agreement containing the Restricted Stock Award to the Employee upon the terms and conditions hereinafter set forth:

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

1. Award of Restricted Stock.  The Corporation hereby awards to Employee as of the date of this Agreement shares of restricted common stock of the Corporation without par value ("Common Stock"), in consideration of services to be rendered.  The number of shares of restricted Common Stock is being adjusted to comply with 31 CFR Part 30 – TARP Standards for Compensation and Corporate Governance; Interim Final Rule, which became effective on June 15, 2010 (“TARP Rules”).

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

3. Restriction Period.

(a) The term “Restriction Period” as used in this Agreement shall mean the period that begins as of the date of this Agreement and ends with respect to the restricted Common Stock granted under this Agreement as of the applicable anniversary date(s) of the date of this Agreement (the "Anniversary Dates") as set forth in Schedule 3(a).

The Restriction Period is being adjusted to comply with the TARP Rules.

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

Schedule 3(a)

	Shares of Restricted Common Stock
Anniversary Date	First Eligible to Vest on
of this Agreement	Indicated Anniversary Date
1st Anniversary Date		0%
2nd Anniversary Date		50%
3rd Anniversary Date		25%
4th Anniversary Date		25%

(b) If, on the date of this Agreement, the Employee is subject to the limitations on bonus payments (“Bonus Limitations”) set forth in Section 111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008 and the regulations promulgated thereunder (“EESA”), then , notwithstanding Section 3(a), the shares of restricted Common Stock with respect to which the Restriction Period has lapsed shall  only become transferable (as defined in 26 C.F.R. 1.83-3(d)) based on the date on which the Corporation repays the percentage of aggregate financial assistance received under the Troubled Assets Relief Program (“TARP Funds”) as set forth in Schedule 3(b).

Schedule 3(b)

Amount of TARP Funds Repaid	Shares of Common Stock First Eligible to Become Transferable
25%		25%
50%		25%
75%		25%
100%		25%

Notwithstanding the foregoing:

(i) The Employee shall forfeit any restricted Common Shares for which the Restriction Period has lapsed or that have become transferable if the Employee does not continue performing substantial services for the Corporation for at least two years from the date of grant (other than due to the Employee’s earlier death, disability or the occurrence of a change in control event (as defined in 26 C.F.R. 1.409A-3(i)(5)(i));

(ii) If, prior to the date that any restricted Common Shares for which the Restriction Period has not lapsed, the Committee determines that there has been a Change in Control, the Restriction Period with respect to any shares of restricted Common Stock for which the Restriction Period has not yet ended shall be determined pursuant to Schedule 3(a) (disregarding any provisions relating to a Change in Control); and,

(iii)  If the Employee does not make an election under Internal Revenue Code Section 83(b), the Committee may make a portion of the restricted Common Stock transferable that is reasonably required for the Employee to pay the federal, state, local or foreign taxes that are anticipated to apply to the income recognized due to the restricted Common Stock being deemed to be substantially vested (as defined in 26 CFR 1.83-3(b)).  The portion of the restricted Common Stock made transferable for this purpose may occur at any time beginning with the date upon which the restricted Common Stock is deemed to be substantially vested and ending on December 31 of that calendar year.

(c) If on the date of this Agreement Employee is not subject to the Bonus Limitations, but, during the Restriction Period as defined in Section 3(a), Employee becomes subject to the Bonus Limitations, the provisions of Section 3(b) shall apply to the portion of the restricted Commons Shares for which  the “Restriction Period” has not yet ended (“Remaining Restricted Common Stock”) and the second column of Schedule 3(b) shall be applied to determine the transferability of such Remaining Restricted Common Stock rather than all shares of restricted Common Stock granted under this Agreement.

(d) The ending of the Restriction Period also may be referred to in this Agreement as the vesting of the restricted Common Stock or as when the Common Stock vests.  However, for any Employee to whom the Bonus Limitations apply, any reference to the ending of the Restriction Period shall mean the restricted Common Stock becoming substantially vested (as that term is defined in 26 C.F.R. 1.83-1(b))Subject to the provisions of Sections 3(b) and 3(c), the Committee may, at the time of the granting to the Employee of the restricted Common Stock or at any time thereafter, reduce or terminate the Restriction Period otherwise applicable to all or any portion of the restricted Common Stock, provided, however, that if the Employee is a Covered Employee (as defined in the Plan), any applicable Benchmarks have been satisfied, or the Covered Employee has terminated employment due to his or her death or Disability (as defined in the Plan).

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4. Forfeiture Provision.  Notwithstanding any other provision of this Agreement, Employee hereby agrees that if his or her employment with the Corporation is terminated for any reason, voluntarily or involuntarily, whether by retirement, death, disability, resignation or dismissal for cause or otherwise, and such termination is prior to the ending of the Restriction Period applicable to any shares of the restricted Common Stock, the Employee's ownership and all related rights with respect to all shares of Common Stock for which the Restriction Period has not ended as of the employment termination date will be forfeited automatically on the date of termination, and the Corporation automatically will become the sole owner of such shares as of such date.

References to the Corporation in this Section include the Corporation's subsidiaries and Affiliates.  A transfer of the Employee's employment between subsidiaries and/or Affiliates of the Corporation or between any subsidiary or Affiliate and the Corporation will not be considered a termination of employment for purposes of this Agreement.  Notwithstanding the foregoing, an Employee's employment will be considered terminated for purposes of this Agreement as of the date that the Employee's employing subsidiary or Affiliate ceases to be a subsidiary or Affiliate of the Corporation for any reason, unless prior to or as of such date the Employee's employment is transferred to the Corporation or to a remaining subsidiary or Affiliate of the Corporation.  For purposes of applying the Bonus Limitations, the Corporation’s Common Stock constitutes stock of an eligible issuer of service recipient stock (as defined in 26 C.F.R. 1.409A-1(b)(5)(iii)(E)).

5. Stock Certificates.

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

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

"The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the First Financial Bancorp. 1999 Stock Incentive Plan for Officers and Employees and an Agreement for Restricted Stock Award.  Copies of such Plan and Agreement are on file at the offices of First Financial Bancorp., Cincinnati, Ohio."

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

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

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

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(b) Cash dividends paid with respect to restricted Common Stock during the Restriction Period will be paid in cash to the Employee at the same time that cash dividends are paid to the Corporation’s other shareholders, except to the extent prohibited by the Bonus Limitations.

(c) Dividends payable in Common Stock with respect to the restricted Common Stock during the Restriction Period will be held subject to the vesting of the underlying restricted Common Stock and then automatically paid in the form of Common Stock to the Employee at the same time that the underlying Common Stock is transferred to the Employee.

7. Regulatory Compliance.  The issue of shares of restricted Common Stock and Common Stock will be subject to full compliance with all then-applicable requirements of law and the requirements of the exchange upon which Common Stock may be traded, as set forth in the Plan.

8. Withholding Tax.  The Employee agrees that, in the event that the award and receipt of the restricted Common Stock or the expiration of restrictions thereon results in the Employee's realization of income which for federal, state or local income tax purposes is, in the opinion of counsel for the Corporation, subject to withholding of tax at source by the Employee's employer, the Employee will pay to such Employee's employer an amount equal to such withholding tax or make arrangements satisfactory to the Corporation regarding the payment of such tax (or such employer on behalf of the Corporation may withhold such amount from Employee's salary or from dividends paid by the Corporation on shares of the restricted Common Stock or any other compensation payable to the Employee).

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

10. Federal Income Tax Election.  The Employee hereby acknowledges receipt of advice that, pursuant to current federal income tax laws, (i) he or she has thirty (30) days from the date the restricted Common Stock was granted, April 13, 2009, in which to elect to be taxed in the current taxable year on the fair market value of the restricted Common Stock in accordance with the provisions of Internal Revenue Code Section 83(b), and (ii) if no such election is made, the taxable event will occur upon expiration of restrictions on transfer at termination of the Restriction Period and the tax will be measured by the fair market value of the restricted Common Stock on the date of the taxable event.  Employee shall notify the Corporation immediately if he or she makes a Section 83(b) election.

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

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

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

12. Notices.  Each notice relating to this Agreement must be in writing and delivered in person or by registered mail to the Corporation at its office, 201 East Fourth Street, Suite 2000, Cincinnati, Ohio 45202, attention of the Secretary, or at such other place as the Corporation has designated by notice.  All notices to the Employee or other person or persons succeeding to his or her interest will be delivered to the Employee or such other person or persons at the Employee's address below specified or such other address as specified in a notice filed with the Corporation.

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

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

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

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

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

18. Entire Agreement.  This Agreement and the Plan supersede any other agreement, whether written or oral, that may have been made or entered into by the Corporation and/or any of its subsidiaries and the Employee relating to the shares of restricted Common Stock that are granted under this Agreement.  Therefore, the agreement as of April 13, 2009 between the Corporation and the Employee with respect to the grant of shares of restricted Common Stock is amended and restated in its entirety.   This Agreement and the Plan constitute the entire agreement by the parties with respect to such matters, and there are no agreements or commitments except as set forth herein and in the Plan.  The Employee hereby consents to any amendment to this Agreement to the extent required to comply with the Bonus Limitations or otherwise comply with the requirements of EESA.

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

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

FIRST FINANCIAL BANCORP.
By:
	Claude E. Davis
Title:	President & CEO
	Signature of Employee

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

Name of Employee

Street Address

City, State, and Zip Code

Social Security Number

Signature of Employee

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EX-14

Exhibit 14

CODE OF BUSINESS CONDUCT

AND ETHICS

TABLE OF CONTENTS

Introduction		1
Responsibilities to the Company		1
	Compliance with Laws, Rules and Regulations	1
	Reporting any Illegal or Unethical Behavior	2
	Investigation and Enforcement	2
	Protection and Proper Use of Company Assets	2
	Record-Keeping	3
Workplace Responsibilities		3
	Discrimination and Harassment	3
	Health and Safety	3
Representing the Company to Customers and Other External Constituencies		4
	Competition and Fair Dealing	4
	Payments to Government Personnel	4
	Political Activities and Contributions	4
	Media and Shareholder Inquiries	5
Privacy / Confidentiality		5
Investments and Outside Activities		5
	Insider Trading	5
	Corporate Opportunities	6
	Conflicts of Interest	6
Waivers of the Code of Business Conduct and Ethics		7
Compliance Procedures		7

Appendix A:  Code of Ethics for CEO and Senior Financial Officers

Appendix B:  Acknowledgement of Receipt of First Financial Bancorp. Code of

         Business Conduct and Ethics

INTRODUCTION

First Financial Bancorp.’s reputation for honesty, integrity and security depends upon the ethical conduct of each director, officer and employee of First Financial Bancorp. (the “Company”).  To protect this reputation, to assure uniformity in standards for ethical conduct, and in compliance with applicable laws and regulations, the Company has established this Code of Business Conduct and Ethics.  This Code covers a wide range of business practices and procedures.  It does not cover every issue that may arise, but it sets out basic principles to guide, and applies to all directors, officers and employees of the Company and its subsidiaries (collectively referred to as “Associates”).  All Associates must conduct themselves accordingly and seek to avoid even the appearance of improper behavior.

In addition to this Code, the Company has adopted a Code of Ethics for CEO and Senior Financial Officers, which establishes additional standards of conduct applicable to the Company’s chief executive officer and all of its senior financial officers.  The Code of Ethics for CEO and Senior Financial Officers is attached as Appendix A.

If a law conflicts with a policy in this Code, you must comply with the law.  Associates who have any questions about these conflicts should ask their supervisors how to handle the situation.  Directors and executive officers should refer any questions regarding such conflicts to the Company’s general counsel.  As used in this Code, executive officers means those officers covered by Rule 16a-1(f) under the Securities Exchange Act of 1934.

Those who violate the standards in this Code will be subject to disciplinary action, up to and including termination of employment.  If you are in a situation which you believe may violate or lead to a violation of this Code, follow the guidelines described under “Compliance Procedures” of this Code.

RESPONSIBILITIES TO THE COMPANY

Compliance with Laws, Rules and Regulations. The Company is subject to numerous federal, state and local laws, rules and regulations.  Obeying the law, both in letter and in spirit, is the foundation on which this Company’s ethical standards are built.  The Company has adopted various policies, guidelines and procedures to facilitate compliance with applicable laws and regulations. All Associates must respect and obey the laws of the cities, states and countries in which we operate.  Although not all Associates are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.

From time to time, and, if requested, the Company will hold information and training sessions to promote compliance with laws, rules and regulations, including insider-trading laws.

Customers, management, and shareholders expect responsible citizenship from all Associates.  A conviction for any unlawful act undermines personal professionalism and reflects negatively on the Company.  Consequently, any conviction is considered a violation of this Code and subjects Associates to the possibility of termination.

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Reporting any Illegal or Unethical Behavior.  Associates are encouraged to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation.  Note that failure to report a violation of the Code constitutes a violation of this Code.  Directors and executive officers, when faced with similar circumstances, are encouraged to consult with the Company’s general counsel.  The Company will not take any adverse action against any Associate in retaliation for proper, lawful, and good faith reporting of improprieties.

Associates must read the Company’s Whistleblower Policy, which describes the Company’s procedures for the confidential, anonymous submission to the Audit Committee of reports regarding improper activities, including violations of this Code, other legal or ethical violations, or questionable accounting, internal accounting controls, or auditing matters.  Any Associate may submit a good faith concern regarding questionable accounting or auditing matters or other improper activities without fear of dismissal or retaliation of any kind.

Investigation and Enforcement. Violations of this Code or potential violations that require investigation will be investigated by the Co-Managersof the Company’s Whistleblower Policy and reported to the Audit Committee of the Board of Directors in accordance with the procedures outlined in that policy.

The Company shall enforce this Code through appropriate means of discipline, which may include termination of employment.  Disciplinary measures may be taken against, in addition to the violator, others involved in the wrongdoing such as (a) persons who failed to use reasonable care to detect a violation, (b) persons who if requested to divulge information withheld material information regarding a violation, and (c) supervisors who approved or condoned the violations or attempted to retaliate against Associates for reporting violations or violators.

If any director or executive officer has allegedly violated this Code or if any alleged violation of this Code could have a material adverse effect on the Company, the Audit Committee shall determine the disciplinary measures to be taken with respect thereto.  In all other cases, Human Resources, in consultation with senior management and legal counsel, shall determine whether a violation of the Code has occurred and the appropriate disciplinary measures to be taken against any Associate.

Protection and Proper Use of Company Assets. All Associates should endeavor to protect the Company’s assets and ensure their efficient use.  Theft, carelessness, and waste have a direct impact on the Company’s profitability.  Any suspected incident of fraud or theft should be immediately reported for investigation.  Company equipment should not be used for non-Company business, though incidental personal use may be permitted.

The obligation of Associates to protect the Company’s assets includes its proprietary information.  Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, designs, databases, records, customer information, salary information and any unpublished financial data and reports.  Unauthorized use or distribution of this information would violate Company policy.  It could also be illegal and result in civil or even criminal penalties.

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Associates and officers must comply with the Company’s policies regarding the use of its communication systems, including its computer network, telephone/faxes, e-mail, and the Internet.  In particular, the Company’s policies prohibit the use of the Company’s information systems and equipment to transmit illegal, inappropriate or offensive or potentially offensive material.  As a general rule, you should not send any communication, including through the use of e-mail, voice mail or internal memo, that you would be uncomfortable or embarrassed seeing publicly disclosed in the media.

Record-Keeping. The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions.  For example, only the true and actual number of hours worked should be reported.

Many Associates regularly use business expense accounts, which must be documented and recorded accurately.  If you are not sure whether a certain expense is legitimate, you should ask your supervisor.

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls.  Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood.  This applies equally to e-mail, internal memos, and formal reports.  Records should always be retained or destroyed according to the Company’s record retention policies.  In accordance with those policies, in the event of litigation or governmental investigation, please consult the Company’s general counsel.

WORKPLACE RESPONSIBILITIES

Discrimination and Harassment. The diversity of the Company’s Associates is a tremendous asset.  We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind.  Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.

Health and Safety. The Company strives to provide a safe and healthy work environment.  All Associates have a responsibility for maintaining a safe and healthy workplace for each other by following safety and health rules and practices and by reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted.  Associates should report to work in condition to perform their duties free from the influence of illegal drugs or alcohol.  The use of illegal drugs in the workplace will not be tolerated.

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REPRESENTING THE COMPANY TO CUSTOMERS AND OTHER EXTERNAL CONSTITUENCIES

Competition and Fair Dealing. We seek to outperform our competition fairly and honestly.  Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present Associates of other companies is prohibited.  All Associates should endeavor to respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and their Associates.  No Associates should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers or vendors.  No gift or entertainment should ever be offered, given, provided or accepted by any Associates or any of their family members unless it:

(1) is not a cash gift;

(2) is consistent with customary business practices;

(3) is not excessive in value;

(4) cannot be construed as a bribe or payoff; and

(5) does not violate any laws or regulations.

Associates should discuss with their supervisor any gifts or entertainment which they are not certain are appropriate or which exceed $50 in value.  Directors and executive officers should discuss with the Company’s general counsel any gifts or entertainment which they are not certain are appropriate or which exceed $200 in value.

Payments to Government Personnel. The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business.  It is strictly prohibited to make illegal payments to government officials of any country.

In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel.  The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense.  State and local governments, as well as foreign governments, may have similar rules.  The Company’s general counsel can provide guidance to you in this area.

Political Activities and Contributions. The Company encourages political activity and participation in electoral politics by Associates where appropriate.  However, such activity must occur strictly in an individual and private capacity and not on behalf of the Company.  Associates may not conduct personal political activity on Company time or use Company property or equipment for this purpose.  Furthermore, no Associates may ever force, direct or in any way urge another Associate to make a political contribution.

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Federal and state laws and regulations govern the Company’s political activities, including the operation of its company-sponsored political action committees (“PACs”).  Generally, federal law and the laws of certain states prohibit the Company from making political contributions or expenditures.  Federal laws and most state laws, however, permit corporations to sponsor PACs, which are funded by voluntary contributions from eligible Associates, for the purpose of making political contributions or expenditures.  Any political contributions and other political activities, including lobbying or communicating with elected officials, for or on behalf of the Company must be approved by the Company’s Chief Executive Officer and must comply with applicable legal requirements.  The Company’s Chief Executive Officer shall consult with the Chair of the Corporate Governance and Nominating Committee prior to committing funds to a particular candidate.  Associates who are licensed or associated with a broker-dealer or who work in municipal finance may be subject to additional regulations and restrictions regarding political contributions.

Media and Shareholder Inquirers.   All inquiries from the media relating to the Company should be referred to the investor relations representative as designated by management.  Only officially designated spokespersons may provide comments to the media.  The Company has adopted a Disclosure Policy to ensure that Associates do not violate public disclosure requirements when communicating with investors, analysts or the press.

PRIVACY / CONFIDENTIALITY

Associates must maintain the confidentiality of confidential information entrusted to them by the Company, its customers or vendors, except when disclosure is authorized by the Legal Department or required by laws or regulations.  Confidential information includes all nonpublic information that might be of use to competitors, or harmful to the Company or its customers, if disclosed.  It also includes information that vendors and customers have entrusted to us.  The obligation to preserve confidential information continues even after your association with the Company ends.  The Company has adopted policies with respect to customer and/or consumer information and privacy regarding the protection of their nonpublic personal information.  All Associates are required to maintain the confidentiality of such information in accordance with these policies.

INVESTMENTS AND OUTSIDE ACTIVITIES

Insider Trading. Associates who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business.  All nonpublic information about the Company should be considered confidential information.  To use nonpublic information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal.  In order to assist with compliance with laws against insider trading, the Company has adopted a specific policy governing trading in the Company’s securities by Associates.  This policy has been distributed to every director and executive officer.  Copies of the policy are available upon request from the Company’s general counsel.  If you have any questions, please consult the Company’s general counsel.

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Corporate Opportunities. Associates are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors.  Associates may not use corporate property, information, or position for improper personal gain, and no Associates may compete with the Company directly or indirectly.  Associates owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

Conflicts of Interest. A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company.  A conflict situation can arise when Associates take actions or have interests that may make it difficult to perform their roles within the Company objectively and effectively.  Conflicts of interest may also arise when Associates or their family members receive improper personal benefits as a result of their relationship with the Company.  Loans to, or guarantees of obligations of, Associates and their family members may create conflicts of interest.  Associates are not permitted to process or approve any transactions between the Company and:

(1) themselves;

(2) any of their family members;

(3) any organization of which they or any of their family members are a sole proprietor, controlling shareholder, executive officer or partner; or

(4) any trust or other estate in which they or their family members have a substantial beneficial interest, or for which they or their family members serve as trustee or in a similar capacity.

For example, Associates are not permitted to process transactions involving accounts for which they are an authorized signer, to approve extensions of credit to themselves or to family members, or to authorize the use of a family member’s business to provide services to the Company.  This is not intended to be a complete list of examples.  Other, similar transactions may create a conflict of interest.

It is almost always a conflict of interest for Associates to work simultaneously for a competitor, customer or vendor.  You are not allowed to work for a competitor as an employee, consultant or board member.  Associates should never use their employment or position with the Company for personal advantage, or seek special terms or price concessions from customers or vendors to the Company.  Associates should not accept personal fiduciary positions or become an officer, director, owner, partner or controlling shareholder of any business without securing approval from the vice president in charge of their department.  Directors and executive officers should not accept personal fiduciary positions or become an officer, director, owner, partner or controlling shareholder of any business without securing approval from the Audit Committee of the Board of Directors.

Conflicts of interest are prohibited as a matter of Company policy, and they must be avoided unless it can be shown that (a) the Associates involved would receive no unfair advantages by virtue of their position within the Company and (b) the Company is in no way disadvantaged by the transaction. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with higher levels of management or the Company’s general counsel.  Associates who become aware of an actual or a potential conflict of interest should bring it to the attention of a supervisor, manager or other appropriate personnel by following the procedures described in “Compliance Procedures” of this Code.  Conflicts of interest and related party transactions involving directors and executive officers must be reviewed by the Audit Committee of the Board of Directors.

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WAIVERS OF THE CODE OF BUSINESS CONDUCT AND ETHICS

Any waiver of this Code for executive officers or directors may be made only by the Audit Committee of the Board of Directors and will be promptly disclosed as required by law or stock exchange regulation.

COMPLIANCE PROCEDURES

We must all work to ensure prompt and consistent action against violations of this Code.  However, in some situations it is difficult to know if a violation has occurred.  Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem.  These are the steps to keep in mind:

· Make sure you have all the facts.  In order to reach the right solutions, we must be as fully informed as possible.

· Ask yourself: What specifically am I being asked to do?Does it seem unethical or improper?  This willenable you to focus on the specific question you are faced with, and the alternatives you have.  Use your judgment and common sense; if something seems unethical or improper, it probably is.

· Clarify your responsibility and role.  In most situations, there is shared responsibility.  Are your colleagues informed?  It may help to get others involved and discuss the problem.

· Discuss the problem with your supervisor.  This is the basic guidance for all situations.  In many cases, your supervisor will be more knowledgeable about the question and will appreciate being brought into the decision-making process.  Remember that it is your supervisor’s responsibility to help solve problems.  Directors and executive officers should consult with the Company’s general counsel.

· Seek help from Company resources.  In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it locally with your department manager or your Human Resources manager, or report the matter to the Audit Committee of the Board of Directors by following the procedures outlined in the Company’s Whistleblower Policy.

· You may report ethical violations in confidence and without fear of retaliation.  If your situation requires that your identity be kept secret, your anonymity will be protected.  The Company does not permit retaliation of any kind against Associates for good faith reports of ethical violations.

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· Always ask first, act later:  If you are unsure of what to do in any situation, seek guidance before you act.

Adopted by the Board of Directors on January 27, 2004

Revised /Approved February 28, 2006

Revised/Approved January 23, 2007

Re-approved (no changes) January 29, 2008

Re-approved (no changes) February 24, 2009

Revised/Approved April 27, 2010

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Appendix A

CODE OF ETHICS

FOR

CEO AND SENIOR FINANCIAL OFFICERS

First Financial Bancorp. has a Code of Business Conduct and Ethics applicable to all directors, officers and employees of the Company and its subsidiaries (collectively referred to as “Associates”).  The Company’s chief executive officer (the “CEO”) and all senior financial officers, including the Company’s chief financial officer (the “CFO”) and principal accounting officer, are bound by the provisions set forth therein.  In addition to the Code of Business Conduct and Ethics, the CEO and senior financial officers are subject to the following additional specific policies:

1.      The CEO and all senior financial officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the Company with the Securities and Exchange Commission.  Accordingly, it is the responsibility of the CEO and each senior financial officer promptly to bring to the attention of the Disclosure Committee any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings.

2.      The CEO and each senior financial officer shall promptly bring to the attention of the Audit Committee any information he or she may have concerning (a) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other Associates who have a significant role in the registrant’s internal control over financial reporting.

3.      The CEO and each senior financial officer shall promptly bring to the attention of the general counsel or the CEO and to the Audit Committee any information that he or she may have concerning any violation of the Company’s Code of Business Conduct and Ethics or these additional policies.

4.      The CEO and each senior financial officer shall promptly bring to the attention of the general counsel or the CEO and to the Audit Committee any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof.

Appendix B

ACKNOWLEDGEMENT OF RECEIPT OF

FIRST FINANCIAL BANCORP.

CODE OF BUSINESS CONDUCT AND ETHICS

By signing below, I acknowledge that I have received a copy of the First Financial Bancorp. Code of Business Conduct and Ethics (the “Code”).  I acknowledge that I have read the Code and that I understand its contents.  I understand that a violation of the Code may result in disciplinary action up to and including the termination of my employment with First Financial Bancorp.

Signed

Name

Title

Date

EX-31.1

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

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

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

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

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

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

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

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

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

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

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

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

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

Date:	5/10/10	/s/ J. Franklin Hall
		J. Franklin Hall
		Executive Vice President and
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

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

In connection with the Form 10-Q for the quarterly period ended March 31, 2010, of First Financial Bancorp. (the “Company”), as filed with the Securities and Exchange Commission on May 10, 2009 (the “Report”), I, Claude E. Davis, President and Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

 /s/ Claude E. Davis

Claude E. Davis

President and Chief Executive Officer

May 10, 2010

EX-32.2

EXHIBIT 32.2

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

In connection with the Form 10-Q for the quarterly period ended March 31, 2010, of First Financial Bancorp. (the “Company”), as filed with the Securities and Exchange Commission on May 10, 2009 (the “Report”), I, J. Franklin Hall, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

 /s/ J. Franklin Hall

J. Franklin Hall

Executive Vice President and Chief Financial Officer

May 10, 2010