Hello, and welcome to the first quarter 2008 earnings conference for First Financial Bancorp. (Operator Instructions) Please note this conference is being recorded. Now I would like to turn the conference over to Mr. Claude Davis. Mr. Davis?

Thank you, Amy. Before we provide some additional commentary on the first quarter of 2008, Frank Hall, our Chief Financial Officer, will read the forward-looking statement. Frank?

Thank you, Claude. As we begin, I would like to remind everyone that our discussion today may involve certain forward-looking statements, which are not statements of historical fact. The first quarter earnings press release should be read in conjunction with the consolidated financial statements, notes, and tables attached and in the First Financial Bancorp Annual Report on Form 10-K for the year ended December 31, 2007. 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 U.S. economy in general and the strength of the local economies in which First Financial conducts operations may be different than expected; the effects of and changes in policies and laws of regulatory agencies, inflation, and interest rates. For further discussion of certain factors that may cause such forward-looking statements to differ materially from actual result, refer to the 2007 Form 10-K and other public documents filed with the SEC. These documents are available on the Investor Relations section of our website, bankatfirst.com and on the SEC's website at sec.gov. Additional information will also be provided in our quarterly report on Form 10-Q for the quarter ended March 31, 2008, which will be filed with the SEC by May 9, 2008. Claude?

Thanks, Frank. It has been another difficult quarter for the banking industry, but our strong balance sheet and capital position provides us the opportunity to grow loans prudently, price deposits appropriately, and manage credit proactively. As I noted in our discussion of 2007 results earlier this year, we continue to manage through the actions of the Federal Reserve and the aggressive interest rate reductions, now totaling 300 basis points in the Fed funds rate, since September. The pace of near-term economic growth remains an unknown, but we are committed the strategies and processes that we believe effectively manage our risk and still allow us to capitalize on opportunities and to position ourselves well for an economic recovery. Our return on average assets and return on average equity of 0.89% and 10.63% respectively, while below our long-term expectations, do include some points which we will build upon. We continue to generate solid commercial loan growth on both a year-over-year and linked quarter basis, and our credit quality metrics remain strong. We remain significantly well capitalized from a regulatory standpoint and believe we are opportunistically positioned. Greater efficiency and expense control are contributing in a positive way to the company's performance. While our non-performing asset level remains stable, our allowance for loan loss to loans increased from 1.12% to 1.14% from the fourth quarter of 2007. Even with stable credit quality metrics, we have a cautious view relative to current economic conditions and their potential impact on both commercial and consumer borrowers. The decision to shift from consumer to commercial-based lending, reduced our exposure to the residential mortgage and indirect auto loan sectors, and when combined with disciplined processes regarding land development and construction lending, we believe we will effectively manage our credit risk. The challenge of balancing market pricing and growth…

Thank you, Claude. There are a number of specifics I would like to highlight in our first quarter results of $0.20 per share. There were also some events from the quarter that will impact our performance going forward. And I will make some comments regarding those events in the context of our outlook for the balance of 2008. The net interest margin for the first quarter of 3.78% on a non-tax equivalent basis remained relatively stable with the fourth quarter of 2007 of 3.79%. Despite the negative effect of decreasing rates on the loan portfolio, the mixed shift and overall decrease in earning assets for the quarter, due to time deposit portfolio declines allowed us to maintain both a stronger margin and higher net interest income level than anticipated. This quarter's results demonstrate our ability and willingness to be disciplined in pricing our time deposits despite competitive pressures. As noted in our earnings release, we are increasing the size of our investment portfolio by approximately $100 to $150 million over 2008, and mostly conservative agency bank securities which will improve our net interest income, but put pressure on the net interest margin. We have estimated our full-year margin to be between 3.67% and 3.75% on a non-tax equivalent basis. There will be a more pronounced second and third quarter decrease in our net interest margin as our liabilities continue to re-price slower than our assets, though we expect to have a stable and increasing net interest income throughout the remainder of the year. Loan growth continues in the commercial and commercial real estate sectors. This is a consistent point of emphasis as we shift our asset mix from a consumer heavy weighting to one of commercial. We have experienced over 16% growth in average commercial, commercial real estate and construction…

(Operator Instructions) Our first question comes from Scott Siefers at Sandler O'Neill.

Good morning, guys.

Morning, Scott.

Hi, Scott.

Let's see. I guess, Frank, the first couple of questions might be for you. It's just on the increase and potential increase in the securities portfolio. I guess, if I look at the end of period numbers, the available for sale portfolio is up fairly substantially though the average numbers were down. So is it, I mean, fair to say that, you guys already started the strategy to increase that? And do you see this as something that occurs sort of evenly throughout the course of the year? Or would you front end load the timing of adding the $100 to $150 million?

Sure. We have started the purchase of the $100 to $150 million. We had approximately $20 million settled by the end of the quarter. And we do expect to front end load it. I expect most of these purchases to happen during the second quarter.

Okay. And can you give us a sense for typical yield on the kinds of instruments you're buying and the kind of costs to fund that as well?

We're seeing, I would say in the high 4's approximately on the yield on those securities.

Okay. And then on the cost of funds?

We're looking at the funding strategies right now. Overall, I would just say that to paint this picture correctly for you, we're expecting -- we call it around 200 basis point spread on the leverage strategy.

Okay. And then switching gears down to fee income, for a second. You made some comments on, I think it was the service charges just being, I guess unusually weak due to a couple unusual items. What are the kinds of things that give you confidence that those numbers will jump back up as we look through the remainder of the year?

Sure. As we said that, the seasonality is one that we've experienced before, but we're always a bit skeptical to make sure that it is just seasonality. And we do have early indications that the number of occurrences of the NSF fees are starting to come back out. So, that's what gives us confidence that seasonality is happening yet again.

And Scott, this is Claude. Really the one area where we have typically seen it, we're seeing-- we saw it again this first quarter was in the NSF fee area. Other service charges have been stable and in the commercial area they've actually been up slightly because of the decline in the earnings credit rate. So as we can continue to grow our commercial deposit base, we would hope to continue to see increases in that category.

Okay. And then if I can just jump back to the margin for one second. I guess there's a growing sentiment that we'll get some sort of an extended pause if the fed cuts rates today. What kind of interest rate forecast have you guys baked into your own modeling for the remainder of the year?

Yeah. At this point, we've accounted for the most recent rate changes.

Stable from where we're at.

Right.

Okay. Perfect. Thank you very much.

Thanks, Scott.

Our next question comes from Christopher McGratty at KBW.

Good morning. Just a quick question on your margin guidance, I think you said 3.67 to 3.75. And if I convert that to an STE, I'm coming up with like 3.74 to 3.82. Is that about right for the full year?

Again, our margin guidance is on a non-tax equivalent basis. So I'll stand by the numbers that are in there.

Okay. And in terms of the net interest income, in terms of next quarter, you said it's going to stabilize. Does that mean grow from first quarter or are we going to see a decline in the second quarter before rebounding?

Stable or flat.

Okay. And then my last question is on credit. You guys maintain your charge-off guidance. But in terms of home equity, can you maybe discuss what happened this quarter? You know, charge-offs were a lot higher than they were the last few quarters. I'm just wondering if this is a concern or if any parts of the portfolio, you guys are concerned about at this point?

Chris, this is Claude. As we mentioned in the release, the spike we saw on home equity this quarter was related to four specific home equity loans all in excess of $100,000. And as we pointed out and I mentioned in my comments, the rest of the portfolio is actually continued to perform as it has in the last several quarters. So one of the things that we're evaluating is certainly, being mindful of the whole portfolio but also being sensitive to look at larger balance home equity loans to make sure that we're managing those effectively. But the balance of the portfolio has performed as expected.

Thank you.

(Operator Instructions) Mr. Davis, it seems we have no further questions.

Okay. Amy, I thought I'd just kind of end with a couple of key points for us that we feel like are important to emphasize as to where we are focusing as a management team. First is in credit management, we're continuing to manage that effectively being mindful of our pricing discipline and hopefully growing and maintaining our funding base, a strong capital position, managing expenses effectively, and most importantly positioning ourselves well for an economic recovery, while still growing the business. And we feel like if we execute on those key points, we'll return to our targeted return levels. But we appreciate everyone's interest in our company. And we look forward to next quarter's call. Thank you.

Thank you for attending. You may now disconnect.