First Financial Bancorp to Acquire Flagstar Bank’s Indiana-Based Retail Branch Locations and Deposits

CINCINNATI, Aug. 16, 2011 /PRNewswire/ — First Financial Bancorp (Nasdaq: FFBC)
(“First Financial” or the “Company”) announced that its wholly-owned subsidiary,
First Financial Bank, has signed a purchase and assumption agreement to acquire
all 22 of the retail banking branches of Flagstar Bank, FSB (“Flagstar”) located
in Indiana. The deposits associated with Flagstar’s Indiana franchise totaled
approximately $525.9 million as of June 30, 2011.

Strategic highlights of the transaction include:

# Significantly enhances First Financial’s presence in the key market of
Indianapolis, IN
# Branches are located in demographically attractive areas within the
Indianapolis MSA
# High scarcity value – very few acquisition targets available in the
Indianapolis MSA with similar scale and branch footprint
# Provides service capabilities in other markets within the Company’s existing
Indiana footprint
# Provides immediate scale and earlier profitability compared to building a
similar branch network
# Franchise offers strong growth potential under the First Financial brand
# Positions First Financial as one of the largest community banks operating in
the Indianapolis market

Claude Davis, President and Chief Executive Officer commented, “The acquisition
of Flagstar’s Indiana-based franchise will assist in accelerating our growth
plans in Indianapolis as 18 of the branches are located in the metropolitan
area. We are excited by the opportunity this transaction presents due to the
high quality of the branch locations and the demographically attractive areas
they serve. We have been successful in building our commercial business in
Indianapolis and the addition of the branches and consumer relationships will
drive future growth not only in our retail banking business but across all
business lines.

“Indianapolis has experienced significant banking consolidation as the top seven
market share participants are all either regional or money center banks now
controlling over 75% of the deposit base. As a result, there are very few
potential acquisition prospects available to build market share in a meaningful
way. The Flagstar branches, which are concentrated in populated areas within the
market, represent one of the most attractive opportunities to continue building
our brand in this strategically important market.

“Furthermore, the transaction provides us with service capabilities for the
communities of Angola, Muncie, Richmond and Warsaw, adding to our banking center
network within our greater strategic operating markets.

“We do not expect the capital needed to support the Flagstar deposit portfolio
as well as the previously announced acquisition of Liberty Savings Bank, FSB’s
Ohio-based branches to inhibit our ability to continue paying the variable
dividend authorized by our board of directors under which we expect to payout
100% of quarterly earnings.”

Under the terms of the purchase and assumption agreement, First Financial will
pay a 4.37% premium on total deposits assumed, or approximately $23.0 million
based on the deposit balance mentioned above. The assumed deposits consist of
approximately $327.9 million of primarily retail accounts maintained in the
acquired branches and $197.9 million of deposits held by public entities
throughout the state.

First Financial expects the transaction to be accretive to 2013 diluted earnings
per share. However, the Company expects it to be modestly dilutive to 2012
diluted earnings per share excluding the effect of integration costs. The
Company also estimates that it will be approximately 3.7% dilutive to tangible
book value per share upon closing. Including the effect of the Liberty
acquisition, the Company estimates the combined dilution to tangible book value
to be approximately 7.3%.

Subsequent to the transaction and including the impact of the Liberty
acquisition, the Company estimates that its pro forma tangible common equity
ratio will be approximately 9.05% and total capital ratio will be 18.90%, down
from 11.11% and 21.43%, respectively, as of June 30, 2011.

The transaction is expected to close during the fourth quarter 2011 and is
subject to regulatory approval and other customary closing conditions.

Press Release and Additional Information on Website

This press release as well as an investor presentation related to this
transaction is available to the public through the Investor Relations section of
First Financial’s website at www.bankatfirst.com/investor.

Forward-Looking Statements

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

# management’s ability to effectively execute its business plan;
# the risk that the strength of the United States economy in general and the
strength of the local economies in which we conduct operations may continue to
deteriorate resulting in, among other things, a further deterioration in
credit quality or a reduced demand for credit, including the resultant effect
on our loan portfolio, allowance for loan and lease losses and overall
financial performance;
# the effects of the potential delay or failure of the U.S. federal government
to pay its debts as they become due or make payments in the ordinary course;
# the ability of financial institutions to access sources of liquidity at a
reasonable cost;
# the impact of recent upheaval in the financial markets and the effectiveness
of domestic and international governmental actions taken in response, such as
the U.S. Treasury’s TARP and the FDIC’s Temporary Liquidity Guarantee Program,
and the effect of such governmental actions on us, our competitors and
counterparties, financial markets generally and availability of credit
specifically, and the U.S. and international economies, including potentially
higher FDIC premiums arising from increased payments from FDIC insurance funds
as a result of depository institution failures;
# the effect of and changes in policies and laws or regulatory agencies (notably
the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection
Act);
# inflation and possible changes in interest rates;
# our ability to keep up with technological changes;
# our ability to comply with the terms of loss sharing agreements with the FDIC;
# mergers and acquisitions, including costs or difficulties related to the
integration of acquired companies and the wind-down of non-strategic
operations that may be greater than expected, such as the previous activities
of Irwin Union Bank & Trust Company and its former affiliates, including the
risks and uncertainties associated with the Irwin Mortgage Corporation
bankruptcy proceedings;
# the risk that exploring merger and acquisition opportunities may detract from
management’s time and ability to successfully manage our company;
# expected cost savings in connection with the consolidation of recent
acquisitions may not be fully realized or realized within the expected time
frames, and deposit attrition, customer loss and revenue loss following
completed acquisitions may be greater than expected;
# our ability to increase market share and control expenses;
# the effect of changes in accounting policies and practices, as may be adopted
by the regulatory agencies as well as the Financial Accounting Standards Board
and the SEC;
# adverse changes in the securities and debt markets;
# our success in recruiting and retaining the necessary personnel to support
business growth and expansion and maintain sufficient expertise to support
increasingly complex products and services;
# monetary and fiscal policies of the Board of Governors of the Federal Reserve
System (Federal Reserve) and the U.S. government and other governmental
initiatives affecting the financial services industry;
# our ability to manage loan delinquency and charge-off rates and changes in
estimation of the adequacy of the 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, 2010, 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.

About First Financial Bancorp

First Financial Bancorp is a Cincinnati, Ohio based bank holding company. As of
June 30, 2011, the Company had $6.0 billion in assets, $4.0 billion in loans,
$5.0 billion in deposits and $722 million in shareholders’ equity. The Company’s
subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and
financial services products through its three lines of business: commercial,
retail and wealth management. The commercial and retail units provide
traditional banking services to business and consumer clients. First Financial
Wealth Management provides wealth planning, portfolio management, trust and
estate, brokerage and retirement plan services and had approximately $2.4
billion in assets under management as of June 30, 2011. The Company’s strategic
operating markets are located in Ohio, Indiana and Kentucky where it operates
102 banking centers. Additional information about the Company, including its
products, services and banking locations is available at www.bankatfirst.com.

SOURCE First Financial Bancorp