Hello and welcome to the First Financial Bancorp first quarter 2011 earnings conference call and webcast. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions and instructions will follow at that time. Please note that the even is being recorded. (Operator Instructions). I now would like to turn over the conference to Mr. Kenneth Lovik, Vice President Investor Relations and Corporate Development. Mr. Lovick, please go ahead.

Thank you, [Keith]. Good morning, everyone, and thank you for joining us on today's conference call to discuss First Financial Bancorp's first quarter 2011 financial results. Discussing our operating and financial results today will be Claude Davis, President and Chief Executive Officer, and Frank Hall, Executive Vice President and Chief Financial Officer. Before we get started, I would like to mention that both the press release we issued yesterday announcing our financial results for the quarter the accompanying supplemental presentation are available on our website at www.bankatfirst.com under the Investor Relations section. Please refer to the forward-looking statement disclosure contained in the first quarter 2011 earnings release as well as our SEC filings for a full discussion of the company's risk factors. The information we will provide today is accurate as of March 31, 2011 and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I will now turn the call over to Claude Davis.

Thank you, Ken, and thank you to those joining the call today. We are pleased to announce another strong quarter performance reporting net income of $17.2 million or $0.29 per diluted common share representing a return on average assets of 1.11% and return on average shareholders equity of 10.04%. Our net interest margin remains strong increasing to 4.73% and our credit results on uncovered loans improved as both net charge-offs and the provision for loan losses were down significantly compared to the fourth quarter of 2010. I will take a few minutes to discuss certain strategic and operational highlights for the quarter and then turn the conversation over to Frank, who will address our financial results in greater detail. During the quarter, we remained focused on improving the efficiency of our operations in managing our costs. As of March 31, we closed five branches in Michigan and Louisville as a part of the previously announced exiting of those markets. We also consolidated seven banking centers located in our Ohio and Indiana strategic footprint. We expect these strategic decision to enhance efficiency going forward without sacrificing our operations in brand awareness in our core strategic markets. We began to realize the effects of cost management initiatives implemented last year as our operating costs net of non-strategic items and other items not expected to occur declined 15% on annualized basis compared to the prior quarter. The reduction in non-interest expenses were driven by lower compensation costs, data processing costs, marketing and communication expenses and professional services fees. Our provision for loan losses related to our legacy and originated portfolio was $647,000 for the quarter, down from $9.7 million during the fourth quarter of 2010. Net charge-offs were down 57% to $4.2 million from $9.8 million for the linked quarter. While total non-performing…

Thank you, Claude. I will start by providing a few comments on the operating results of the quarter and the major components of performance. We have also provided supplemental information furnished separately that is available on our website, bankatfirst.com, in the investor relations section or in the 8-K we filed this morning. As in previous quarters, this supplement is crucial to establishing and maintaining a clear understanding of our reported results as well as the concepts that have a material affect on our current and future performance. As many of you know from following our company, our operating results are materially impacted by unique accounting and reporting requirements and the strategic distinctions we have made related to our 2009 acquisitions. However, to aid in a clearer understanding of our strategic activities, we will focus primarily on the ongoing or strategic aspects of our business on this call. Our earnings release and our supplemental information should provide sufficient information and transparency into the purchase accounting details and the impact of non-strategic components of our results. These complexities have also been discussed at length in our previous earnings calls and the technical accounting call that we hosted on February 4 of this year. This information is also available on our website. First quarter 2011 GAAP earnings per diluted share were $0.29. The most significant items affecting our earnings for the first quarter as compared to the prior quarter were a lower provision for loan losses partially offset by higher credit costs related to acquired loans and the write down of an OREO property in the legacy portfolio that Claude mentioned in his comments. Looking at page 3 of the supplement, you will see a quarter progression of pretax, pre-provision income. You will see that we have produced a fairly consistent level of…

Great. Thanks, Frank. This concludes our prepared comments for the call and [Keith] will now open it up for questions. [Keith], we're now ready for questions.

(Operator Instructions). Your first question comes from the line of Jon Arfstrom - RBC Capital.

The OREO write down, can you give us an idea of what the status is on that credit? Is this something where you were preparing it to sell, getting it to a fair market value or what is the plan with that credit?

It was part of our standard OREO process where we had that property, which is primarily land, for close to a year and we went through a [be it] appraisal process and because there's some uniqueness related to that land, the appraisal declined fairly significantly, which resulted in the write down.

So it's not something that's imminently leaving the bank?

No. Obviously it's being marketed as all of our OREO properties are.

Frank, what's possible here on your efficiency initiatives? I know you've laid out some pretty good core declines and expenses but obviously the $3.1 million comes out and you have some branch expenses come out. What's possible here when you look forward?

Yes, we stay committed to the 55% to 60% target and feel that that is certainly achievable. I think the time to achieve that is going to be impacted by some revenue as well. But 55% to 60% remains the target and we'll get there.

But aside from the $3.1 million coming out, your expectation is that we'll see that continue to [inaudible] down in expenses in the core number?

We do continue to see opportunities reduce operating expenses, yes.

Then, Claude, one more question for you on lending. You talked about originations in some product lines increased and then you also talked about the pipeline increasing across it sounds like all product lines. Can you talk about what in particular was strong toward the end of the quarter?

What we saw is January and February were very slow and then March began to build and we saw an improvement similar to what we saw in the fourth quarter where we saw an improved pipeline, improved closing and I would say that the predominant area we've seen improvement is in the commercial segment and small business segments. So those would be the two main areas.

Pricing on those products you feel is fair? There's some mixed signals we hear from your peers that it's ultra competitive and others will say it's fair; just curious what your assessment would be.

I think from most of the press releases I've read thus far I think everybody's struggling with the fact that the market is slow and loan growth is slow. Certainly as you get into bidding or competing with other banks on what I would call A-quality credits, it's very competitive and I would say more competitive on pricing. But to the extent that people begin to get too concerned or overly concerned about lack of loan growth, then what we don't want to see happen, which we haven't seen to too much extent yet, is I would call it structural competitiveness return like it would have been in the '06, '07 timeframe. But thus far it's been more about pricing, a little bit of structure but it is competitive.

Your next question comes from the line of Scott Seifers -- Sandler O'Neill.

I guess, Claude, the first question is probably for you. Just in terms of capital management priorities, I guess, given the -- I understand your comments on the loan growth outlook but it's still a slow environment. I guess I'm just curious why not more aggressive or ambitious on share repurchase given the muted overall growth outlook?

Sure, no, understand, and that's why we've mentioned it, Scott, in terms of the -- we certainly feel like we have ample capital to continue the first two priorities we always have in capital management, which is support organic growth and make sure we have a growing and sustainable dividend. Putting those two aside I think it's not a secret. Our capital ratios are far in excess of peer, far in excess of our targets. So what the plan for that? I guess our outlook on it is to be patient. We think that's always served us well and to be patient it means to look for what are the right ways to deploy it long term. So we're not opposed to share repurchase when we think the time is right but I would say right now we're being patient to make sure we look at all opportunities for how we deploy the capital and certainly, if it makes sense, share repurchase might be one of those.

Then separately, either Claude or Frank, just the -- so the average commercial loans were up but at the end of the period were down. What was the dynamic that caused that higher average versus end of period? Anything in particular?

We had a strong end of fourth quarter, volume growth, and then we saw in January and February pretty slow on the origination front, Scott and then obviously some paydowns as we always see during the first part. Then the origination build didn’t occur back until like we talked about, the end of March, so it just resulted in a slightly higher average versus the end of period.

So largely it sounds like follow through from the fourth quarter then?

Yes, in terms of the beginning balance average.

Then final question for Frank, just in the non-interest expense table, what's the -- can you go through what the loss share and covered asset expenses? I think that one is a new disclosure and why was it up so much sequentially?

Yes, the loss share and covered asset expense we had an OREO write down in that line item.

Which would be different than the legacy OREO write.

That's correct. Coincidentally the same amount.

Yes.

So I guess just then it's a non-legacy one. In other words, that's from the deal.

That's correct. If you look at page 9 on the supplements you'll see that in that component of credit losses uncovered assets as well.

Your next question comes from the line of Chris McGratty - KBW.

Can you maybe just talk about deal flow in the market both traditional M&A -- are we seeing any signs of that -- and traditional I guess more recent FDIC deals?

Obviously we don't speak to anything specific but I think others have commented that there are conversations that are occurring in the market but we all see the announcements or lack thereof, so that's probably the best indicator of what's actually happening. As far as FDIC assisted transactions, again, the announcement that you've seen has been I would say fewer and smaller than I think early expectations may have been.

Frank, on the provisioning for the legacy book, obviously it came down quite materially given the improvement in credit. How should we think about future provisioning for the legacy book? Is there a chance that you have a negative provision going forward?

Again, provision is the fallout number of our allowance adequacy valuation or estimation and so depending on what charge-offs are, depending on what the HUR migration is quarter-to-quarter, that's really what's going to drive the provision number.

Then last, on the commercial line utilization, do you have a number for us?

Chris, we have not traditionally disclosed that number in terms of what our line utilization is. I don't know, Frank. I don't have that here in front of me.

Maybe directionally is it -- are we still at trough levels or have we seen any kind of improvement?

Yes, I think we're still at lower levels than we've seen. I don't know if I'd call it trough but I would describe our commercial client base as still in a pretty conservative posture as it relates to just the uncertainties they're worried about and see in the market. So, yes, we're at lower lining utilization levels than we've seen in the past.

Your next question comes from the line of David Long - Raymond James.

Most of my questions have been answered but just to follow up on the commercial loan growth and really the pipeline that you talked about seemed like it's ticking up here in March. Any geographies or specific industries that seem to stand out at this point?

I would tell you that we've seen more activity in our metro markets, which would be more Cincinnati, Dayton, Indianapolis, in terms of that activity. But there are some near markets too that have also seen some nice pipeline growth. I would say if I had to put it in a sector it's -- I think the manufacturing sector is healthier than some of the other sectors that we lend into. But there are some other sectors that are starting to show signs as well. We had some recent deal activity into some service companies and so it's a bit early to see that. I would say manufacturing is the strongest.

(Operator Instructions). Your next question comes from the line of Kenneth James - Sterne Agee.

I have a question. Frank, I apologize. You said you didn't want to discuss purchase accounting but my question is about loan yields, particularly acquired loan yields. If the portfolio continues to run off and I guess if the economy is getting a little better, the loans are performing. If the portfolio is getting smaller, the yield keeps going higher and higher. Is there any particular or theoretical maximum yield that this thing can reach or as it continues to get smaller can it theoretically the yield just keep going higher, 12%, 15%? Then I'm just -- ballpark numbers but I'm just asking if there's a limit to how high the covered portfolio could yield.

That's a good question. I don't know that I could answer it in the pure theory, I guess. Theoretically a lot is possible there but what's occurring over time and now within the final period, if you will, of these loans in the pools, as you think about exit adventure taking certain credits out of pools that were established on day one, you are seeing the impact of impairments that we're recognizing in the current period and pushing improvements out in the future period. So decoupling all of those events it would be difficult to really predict with any accuracy what those yields could go to but we have seen in some of the pools yields in the mid-20s, low 30s but whether or not that continues over time is yet to be seen.

But theoretically if the economy stable to better and the performance of those loans is stable to better there's still upside to that yield. Things would have to get worse economically from a credit perspective for that yield to go down I'm assuming.

It is theoretically possible for the yield to continue to increase, yes.

Your next question comes from the line of Joe Stieven - Stieven Capital.

If you look at the acquired book of loans there's a fear that the whole thing just runs off -- drops off the edge of the cliff. But take a step back. Can you give a guestimate -- because I'm sure it's just a guestimate -- of what percentage of those loans are loans that you guys are very happy to have on your books, will want to keep on your books because they are essentially the type of loans you'd want to make on a normal operating basis anyway? I know that's a tough question but can you just give us a number of what you just think you really just want to keep anyway?

Yes, for all the callers, listeners, page 7 of the supplement breakout what we view as the strategic loan book versus the non-strategic. So the strategic would include both our legacy portfolio but also those loans that are still covered that we view as loans that we want to retain. So that's about 83% or a little over $3.4 billion of the total book and about $700 million of which we view as non-strategic that will probably be a several year duration that they'll be with us but not clients that will pursue either new business with or look to renew existing loans. So that's how we tend to split it out if that's helpful.

There are no more questions at the present time, so I'd like to turn it back over to Claude Davis for any closing remarks.

Thanks, [Keith]. Again, I would just let everyone know appreciate your interest in First Financial and, again, we're pleased with the quarter's performance, pleased with the position of our balance sheet, our capacity for growth and the position of our earnings for the quarter. So appreciate your interest and thanks for being on our call today.

This concludes today's conference. You may now disconnect your phone lines. Thank you.