======================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NUMBER : 0-12499 FIRST FINANCIAL BANCORP (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 94-28222858 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 701 SOUTH HAM LANE, LODI, CALIFORNIA 95242 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (209)-367-2000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, NO PAR VALUE 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. [ X ] Yes [ ] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of March 3, 1997, there were 1,310,692 shares of Common Stock, no par value, outstanding. The aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $9,851,142 (based on the $10.12 average of bid and ask prices per share on March 7, 1997.) DOCUMENTS INCORPORATED BY REFERENCE PART OF FORM 10-K INTO WHICH ----------------------------------- ---------------------------- INCORPORATED ------------ Annual Report to Shareholders for the year ended December 31, 1996. Part II, Items 5, 6, 7 Proxy Statement for the Annual Meeting of Shareholders to be held on April 22, 1997. Part III, Items 10, 11, 12, 13 The Index to Exhibits is on page 21 ======================================================== FIRST FINANCIAL BANCORP 1996 FORM 10-K TABLE OF CONTENTS PART 1 - ------ ITEM 1. BUSINESS........................................................ 3 General......................................................... 3 The Bank........................................................ 3 Bank Services................................................... 3 Sources of Business............................................. 3 Competition..................................................... 4 Employees....................................................... 4 Supervision and Regulation...................................... 4 The Company............................................ 4 The Bank............................................... 5 Officers............................................... 6 Recent Legislation and Regulations Affecting Banking... 6 Average Balance Sheets.......................................... 9 Analysis of Net Interest Earnings............................... 10 Analysis of Changes in Interest Income & Expense................ 11 Interest Rate Sensitivity....................................... 12 Investment Portfolio............................................ 13 Loan Portfolio.................................................. 14 Summary of Loan Loss Experience................................. 15 Deposits........................................................ 16 Return on Average Equity and Assets............................. 16 ITEM 2. PROPERTIES...................................................... 17 ITEM 3. LEGAL PROCEEDINGS............................................... 17 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............. 17 PART II - ------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............................................. 17 ITEM 6. SELECTED FINANCIAL DATA......................................... 17 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................................... 18 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..................... 18 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE............................. 18 PART III - -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............. 18 ITEM 11. EXECUTIVE COMPENSATION.......................................... 18 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................................... 18 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................. 18 PART IV - ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K........................................................ 18 Signatures............................................................... 20 Index to Exhibits........................................................ 21 2 PART I ITEM 1. BUSINESS General: - ------- First Financial Bancorp (the "Company") was incorporated under the laws of the State of California on May 13, 1982, and operates principally as a bank holding company for its wholly owned subsidiary, Bank of Lodi, N.A. (the "Bank"). The Company is registered under the Bank Holding Company Act of 1956, as amended. The Bank is the sole subsidiary of the Company and its principal source of income. The Company also owns the land upon which the Bank's Woodbridge Branch is located. The Company receives income from the Bank from the lease associated with the Woodbridge branch. All references herein to the "Company" include the Bank, unless the context otherwise requires. The Bank: - -------- The Bank was organized on May 13, 1982 as a national banking association. The application to organize the Bank was accepted for filing by the Comptroller of the Currency (OCC) on September 8, 1981, and preliminary approval was granted on March 27, 1982. On July 18, 1983 the Bank received from the Comptroller a Certificate of Authority to Commence the Business of Banking. Effective February 22, 1997, the Bank acquired the real property, equipment and deposits of the Galt, Plymouth and San Andreas branches of Wells Fargo Bank, N.A. The Bank's main office is located at 701 South Ham Lane, Lodi, California, with branch offices in Woodbridge, Lockeford, Galt, Plymouth and San Andreas, California. The Bank's primary service area, from which the Bank attracts 75% of its business, is the city of Lodi and the surrounding area. This area is estimated to have a population approaching 70,000 persons, with a median annual family income of approximately $30,000. The area includes residential developments, neighborhood shopping centers, business and professional offices and manufacturing and agricultural concerns. Bank Services: - ------------- The Bank offers a wide range of commercial banking services to individuals and business concerns located in and around its primary service area. These services include personal and business checking and savings accounts (including interest-bearing negotiable order of withdrawal ("NOW") accounts and/or accounts combining checking and savings accounts with automatic transfers), and time certificates of deposit. The Bank also offers extended banking hours at its drive-through window, night depository and bank-by-mail services, and travelers' checks (issued by an independent entity). The Bank issues MasterCard credit cards and acts as a merchant depository for cardholder drafts under both VISA and MasterCard. In addition, it provides note and collection services and direct deposit of social security and other government checks. The Bank engages in a full complement of lending activities, including commercial, SBA, residential mortgage, consumer/installment, and short-term real estate loans, with particular emphasis on short and medium-term obligations. Commercial lending activities are directed principally towards businesses whose demand for funds falls within the Bank's lending limit, such as small to medium-sized professional firms, retail and wholesale outlets and manufacturing and agricultural concerns. Consumer lending is oriented primarily to the needs of the Bank's customers, with an emphasis on automobile financing and leasing. Consumer loans also include loans for boats, home improvements, debt consolidation, and other personal needs. Real estate loans include short-term "swing" loans and construction loans. Residential mortgages are generally sold into the secondary market for these loans. Small Business Administration (SBA) loans are made available to small to medium-sized businesses. Sources of Business: - ------------------- Management seeks to obtain sufficient market penetration through the full range of services described above and through the personal solicitation of the Bank's officers, directors and shareholders. All officers are responsible for making regular calls on potential customers to solicit business and on existing customers to obtain referrals. Promotional efforts are directed toward individuals and small to medium-sized businesses. The Bank's customers are able in their dealings with the Bank to be served by bankers who have commercial loan experience, lending authority, and the time to serve their banking needs quickly and competently. Bankers are assigned to customers and not transferred from office to office as in many major chain or regional banks. In order to expedite decisions on lending transactions, the Bank's loan committee meets on a regular basis and is available where immediate authorization is important to the customer. 3 The risk of non-payment (or deferred payment) of loans is inherent in commercial banking. Furthermore, the Bank's marketing focus on small to medium-sized businesses may involve certain lending risks not inherent in loans to larger companies. Smaller companies generally have shorter operating histories, less sophisticated internal record keeping and financial planning capabilities, and greater debt-to-equity ratios. Management of the Bank carefully evaluates all loan applicants and attempts to minimize its credit risk through the use of thorough loan application and approval procedures. Consistent with the need to maintain liquidity, management of the Bank seeks to invest the largest portion of the Bank's assets in loans of the types described above. Loans are generally limited to less than 75% of deposits and capital funds. The Bank's surplus funds are invested in the investment portfolio, made up of both taxable and non-taxable debt securities of the U.S. government, U.S. government agencies, states, and municipalities. On a day to day basis, surplus funds are invested in federal funds and other short-term money market instruments. Competition: - ----------- The banking business in California generally, and in the northern portion of San Joaquin County where the Bank is located, is highly competitive with respect to both loans and deposits and is dominated by a relatively small number of major banks with branch office networks and other operating affiliations throughout the State. The Bank competes for deposits and loans with these banks, as well as with savings and loan associations, thrift and loan associations, credit unions, mortgage companies, insurance companies and other lending institutions. Among the advantages certain of these institutions have over the Bank are their ability (i) to finance extensive advertising campaigns, (ii) to allocate a substantial portion of their investment assets in securities with higher yields (not available to the Bank if its investments are to be diversified) and (iii) to make funds available for loans in geographic regions with the greatest demand. In competing for deposits, the Bank is subject to the same regulations with respect to interest rate limitations on time deposits as other depository institutions. See "Supervision and Regulation" below. Many of the major commercial banks operating in the Bank's service area offer certain services, such as international banking and trust services, which are not offered directly by the Bank, and such banks, by virtue of their greater capitalization, have substantially higher lending limits than the Bank. In addition, other entities, both public and private, seeking to raise capital through the issuance and sale of debt and equity securities, compete with the Bank for the acquisition of funds for deposit. In order to compete with other financial institutions in its primary service area, the Bank relies principally on local promotional activities, personal contacts by its officers, directors, employees and shareholders, extended hours and specialized services. The Bank's promotional activities emphasize the advantages of dealing with a locally-owned and headquartered institution sensitive to the particular needs of the community. The Bank also assists customers in obtaining loans in excess of the Bank's lending limit or services not offered by the Bank by arranging such loans or services in participation with or through its correspondent banks. The State Bank Parity Act, effective January 1, 1996, eliminates certain existing disparities between California state chartered banks and national banking associations, such as the Bank, by authorizing the California Superintendent of Banks (the "Superintendent") to address such disparities through a streamlined rulemaking process. Employees: - --------- As of December 31, 1996, the Company employed 65 full-time equivalent employees, including three executive officers. On February 22, 1997 the Bank acquired the real property, equipment and deposits of the Galt, Plymouth and San Andreas branches of Wells Fargo Bank, N.A. and the number of full-time equivalent employees increased to 85. Management believes that the Company's relationship with its employees is good. SUPERVISION AND REGULATION The Company: - ----------- The common stock of the Company is subject to the registration requirements of the Securities Act of 1933, as amended, and the qualification requirements of the California Corporate Securities Law of 1968, as amended. The Bank's common stock, however, is exempt from such requirements. The Company is also subject to the periodic reporting requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, which include, but are not limited to, annual, quarterly and other current reports with the Securities and Exchange Commission. 4 The Company is a bank holding company registered under the Bank Holding Company Act of 1956 (the "Act") and is subject to supervision by the Board of Governors of the Federal Reserve System (the "Board"). As a bank holding company, the Company must file with the Board quarterly reports, annual reports, and such other additional information as the Board may require pursuant to the Act. The Board may also make examinations of the Company and its subsidiaries. The Act requires prior approval of the Board for, among other things, the acquisition by a bank holding company of direct or indirect ownership or control of more than 5% of the voting shares, or substantially all the assets, of any bank, or for a merger or consolidation by a bank holding company with any other bank holding company. The Act also prohibits the acquisition by a bank holding company or any of its subsidiaries of voting shares, or substantially all the assets, of any bank located in a state other than the state in which the operations of the bank holding company's banking subsidiaries are principally conducted, unless the statutes of the state in which the bank to be acquired is located expressly authorize such acquisition. With certain limited exceptions, a bank holding company is prohibited from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company that is not a bank or bank holding company and from engaging directly or indirectly in any activity other than banking or managing or controlling banks or furnishing services to, or performing services for, its authorized subsidiaries. A bank holding company may, however, engage in or acquire an interest in a company that engages in activities that the Board has determined to be so closely related to banking or to managing or controlling banks as to be properly incident thereto. In making such a determination, the Board is required to consider whether the performance of such activities reasonably can be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, which outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. The Board is also empowered to differentiate between activities commenced de novo and activities commenced by the acquisition, in whole or in part, of a going concern. Additional statutory provisions prohibit a holding company and any subsidiary banks from engaging in certain tie-in arrangements in connection with the extension of credit, sale or lease of property or furnishing of services. Thus, a subsidiary bank may not extend credit, lease or sell property, or furnish any services, or fix or vary the consideration for any of the foregoing on the condition that: (i) the customer must obtain or provide some additional credit, property or service from or to such bank other than a loan, discount, deposit or trust service; or (ii) the customer must obtain or provide some additional credit, property or service from or to the company or any other subsidiary of the company; or (iii) the customer may not obtain some other credit, property to service from competitors, except reasonable requirements to assure soundness of the credit extended. These anti-tying restrictions also apply to bank holding companies and their non-bank subsidiaries as if they were banks. The Company's ability to pay cash dividends is subject to restrictions set forth in the California General Corporation Law. See Item 5 below for further information regarding the payment of cash dividends by the Company and the Bank. The Company is a bank holding company within the meaning of Section 3700 of the California Financial Code. As such, the Company and its subsidiaries are subject to examination by, and may be required to file reports with, the Superintendent. Regulations have not yet been proposed or adopted to implement the Superintendent's powers under this statute. The Bank: - -------- The Bank, as a national banking association whose accounts are insured by the Federal Deposit Insurance Corporation (the "FDIC") up to the maximum legal limits and is subject to regulation, supervision, and regular examination by the OCC. The Bank is a member of the Federal Reserve System, and, as such, is subject to certain provisions of the Federal Reserve Act and regulations issued by the Board. The Bank is also subject to applicable provisions of California law, insofar as they are not in conflict with, or preempted by, federal law. The regulations of these various agencies govern most aspects of the Bank's business, including reserves against deposits, interest rates payable on deposits, loans, investments, mergers and acquisitions, borrowings, dividends and location of branch offices. 5 Officers: - -------- In addition to the directors and executive officers listed in the Proxy Statement for the Annual Meeting of Shareholders to be held on April 22, 1997, which is incorporated herein by reference in Part III of this report, Leon Zimmerman, age 54, is President and Chief Executive Officer of the Bank and of the Company; David M. Philipp, age 34, is Executive Vice-President, Chief Financial Officer and Secretary of the Bank and of the Company; and Richard K. Helton, age 47, is Senior Vice President and Chief Credit Officer of the Bank and of the Company. Prior to joining the Bank in April, 1990, Mr. Zimmerman was a general contractor building moderately priced homes and earlier served as Vice-President-Loan Administrator for Bank of Salinas. Mr. Zimmerman has nearly 30 years of banking experience at various levels of responsibility with institutions in the San Joaquin Valley. Mr. Zimmerman was promoted from Executive Vice President and Chief Credit Officer of the Bank to President and Chief Executive Officer of the Bank effective August 25, 1994. He was promoted from Executive Vice President of the Company to President and Chief Executive Officer of the Company effective August 24, 1995. Prior to joining the Company and the Bank in April, 1992, Mr. Philipp was the Budget Director and Financial Analyst for Merksamer Jewelers, Inc., at that time the eighth largest jewelry retailer in the United States, headquartered in Sacramento, California. Prior to joining Merksamer Jewelers, Inc., Mr. Philipp was a Supervising Senior Accountant in the audit department of the Sacramento office of KPMG Peat Marwick, LLP. While at KPMG Peat Marwick, LLP, Mr. Philipp specialized in providing audit and accounting services to financial institution, agribusiness, and broadcasting clients. Mr. Philipp is a CPA and holds a Bachelor of Science in Business Administration, Accountancy from California State University. Prior to joining the Bank in 1995, Mr. Helton was Senior Vice President and Credit Administrator with Central Sierra Bank. Prior to joining Central Sierra Bank in 1984, Mr. Helton was Vice President and Senior Credit Officer for Bay Area Bank (1981-1984) and he served in various positions with First Interstate Bank of California from 1973 until 1981. Recent Legislation and Regulations Affecting Banking: - ---------------------------------------------------- From time to time, new laws are enacted which increase the cost of doing business, limit permissible activities, or affect the competitive balance between banks and other financial institutions. Proposals to change the laws and regulations governing the operations and taxation of bank holding companies, banks and other financial institutions are frequently made in Congress, in the California legislature and before various bank holding company and bank regulatory agencies. The likelihood of any major changes and the impact such changes might have are impossible to predict. Certain significant recently proposed or enacted laws and regulations are discussed below. INTERSTATE BANKING. Since 1986, California has permitted California banks and bank holding companies to be acquired by banking organizations based in other states on a "reciprocal" basis (i.e., provided the other state's laws permit California banking organizations to acquire banking organizations in that state on substantially the same terms and conditions applicable to local banking organizations). Since October 2, 1995, California law implementing certain provisions of prior federal law has (1) permitted interstate merger transactions; (2) prohibited interstate branching through the acquisition of a branch business unit located in California without acquisition of the whole business unit of the California bank; and (3) prohibited interstate branching through de novo establishment of California branch offices. Initial entry into California by an out-of-state institution must be accomplished by acquisition of or merger with an existing whole bank which has been in existence for at least five years. CAPITAL REQUIREMENTS. Federal regulation imposes upon all FDIC-insured financial institutions a variable system of risk-based capital guidelines designed to make capital requirements sensitive to differences in risk profiles among banking organizations, to take into account off-balance sheet exposures and to aid in making the definition of bank capital uniform internationally. Under the Board's risk-based capital guidelines, the Bank is required to maintain capital equal to at least 8 percent of its assets, weighted by risk. Assets and off-balance sheet items are categorized by the guidelines according to risk, and certain assets considered to present less risk than others permit maintenance of capital at less than the 8 percent ratio. The guidelines establish two categories of qualifying capital: Tier 1 capital comprising core capital elements, and Tier 2 comprising supplementary capital requirements. At least one-half of the required capital must be maintained in the form of Tier 1 capital. For the Bank, Tier l capital includes only common stockholders' equity and retained earnings, but qualifying perpetual preferred stock would also be included without limit if the Bank were to issue such stock. Tier 2 capital includes, among other items, limited life (and in the case of banks, cumulative) preferred stock, mandatory convertible securities, subordinated debt and a limited amount of the allowance for loan and lease losses. 6 The guidelines also require all insured institutions to maintain a minimum leverage ratio of 3 percent Tier 1 capital to total assets (the "leverage ratio"). The Board emphasizes that the leverage ratio constitutes a minimum requirement for the most well-run banking organizations. All other banking organizations are required to maintain a minimum leverage ratio ranging generally from 4 to 5 percent. The Bank's required minimum leverage ratio is 4 percent. The federal banking agencies during 1996 issued a joint agency policy statement regarding the management of interest-rate risk exposure (interest rate risk is the risk that changes in market interest rates might adversely affect a bank's financial condition) with the goal of ensuring that institutions with high levels of interest-rate risk have sufficient capital to cover their exposures. This policy statement reflected the agencies' decision at that time not to promulgate a standardized measure and explicit capital charge for interest rate risk, in the expectation that industry techniques for measurement of such risk will evolve. However, the Federal Financial Institution Examination Counsel ("FFIEC") on December 13, 1996, approved an updated Uniform Financial Institutions Rating System ("UFIRS"). In addition to the five components traditionally included in the so-called "CAMEL" rating system which has been used by bank examiners for a number of years to classify and evaluate the soundness of financial institutions (including capital adequacy, asset quality, management, earnings and liquidity), UFIRS includes for all bank regulatory examinations conducted on or after January 1, 1997, a new rating for a sixth category identified as sensitivity to market risk. Ratings in this category are intended to reflect the degree to which changes in interest rates, foreign exchange rates, commodity prices or equity prices may adversely affect an institution's earnings and capital. The rating system henceforth will be identified as the "CAMELS" system. As of December 31, 1996, the Bank's total risk-based capital ratio was approximately 17.0% percent and its leverage ratio was approximately 10.8% percent. Subsequent to the February 22, 1997, aquisition of the real property, equipment and deposits of the Galt, Plymouth and San Andreas branches of Wells Fargo Bank, N.A., the total risk-based capital and leverage rations were 12.8% and 6.6%, respectively. The Bank does not presently expect that compliance with the risk-based capital guidelines or minimum leverage requirements will have a materially adverse effect on its business in the reasonably foreseeable future. Nor does the Bank expect that its sensitivity to market risk will adversely affect its overall CAMELS rating as compared with its previous CAMEL ratings by bank examiners. DEPOSIT INSURANCE ASSESSMENTS. In 1995, the FDIC, pursuant to Congressional mandate, reduced bank deposit insurance assessment rates to a range from $0 to $0.27 per $100 of deposits, dependent upon a bank's risk. The FDIC has continued these reduced assessment rates through the first semiannual assessment period of 1997. Based upon the above risk-based assessment rate schedule, the Bank's current capital ratios, the Bank's current level of deposits, and assuming no further change in the assessment rate applicable to the Bank during 1997, the Bank estimates that its annual noninterest expense attributed to the regular assessment schedule will not increase during 1997; however, the Bank expects to pay a special FICO assessment, applicable to all banks, at the rate of 1.29 cents per 100 dollars of deposits, or approximately $16,000 during 1997 (which includes the Bank's acquisition of an additional $34 million in deposits in connection with its February 22, 1997 acquisition of three branches from Wells Fargo Bank, N.A.). PROMPT CORRECTIVE ACTION. Prompt Corrective Action Regulations (the "PCA Regulations") of the federal bank regulatory agencies establish five capital categories in descending order (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized), assignment to which depends upon the institution's total risk-based capital ratio, Tier 1 risk-based capital ratio, and leverage ratio. Institutions classified in one of the three undercapitalized categories are subject to certain mandatory and discretionary supervisory actions, which include increased monitoring and review, implementation of capital restoration plans, asset growth restrictions, limitations upon expansion and new business activities, requirements to augment capital, restrictions upon deposit gathering and interest rates, replacement of senior executive officers and directors, and requiring divestiture or sale of the institution. The Bank has been classified as a well-capitalized bank since adoption of the PCA Regulations. COMMUNITY REINVESTMENT ACT. Community Reinvestment Act ("CRA") regulations effective as of July 1, 1995 evaluate banks' lending to low and moderate income individuals and businesses across a four-point scale from "outstanding" to "substantial noncompliance," and are a factor in regulatory review of applications to merge, establish new branches or form bank holding companies. In addition, any bank rated in "substantial noncompliance" with the CRA regulations may be subject to enforcement proceedings. 7 The Bank has a current rating of "satisfactory" CRA compliance, and is scheduled for further examination for CRA compliance during 1997. SAFETY AND SOUNDNESS STANDARDS. Federal bank regulatory agency safety and soundness standards for insured financial institutions establish standards for (1) internal controls, information systems and internal audit systems; (2) loan documentation; (3) credit underwriting; (4) interest rate exposure; (5) asset growth; (6) compensation, fees and benefits; and (7) excessive compensation. If an agency determines that an institution fails to meet any standard established by the guidelines, the agency may require the financial institution to submit to the agency an acceptable plan to achieve compliance with the standard. Agencies may elect to initiate enforcement action in certain cases where failure to meet one or more of the standards could threaten the safe and sound operation of the institution. The Bank has not been and does not expect to be required to submit a safety and soundness compliance plan because of a failure to meet any of the safety and soundness standards. The above description of the business of the Bank should be read in conjunction with Item 7 herein, Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 STATISTICAL INFORMATION The following selected information should be read in conjunction with the Company's entire consolidated financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations incorporated by reference into Items 7 and 8 herein. FIRST FINANCIAL BANCORP AND SUBSIDIARY AVERAGE BALANCE SHEETS For the Year Ended For the Year Ended For the Year Ended December 31, 1996 December 31, 1995 December 31, 1994 (in thousands) (in thousands) (in thousands) -------------------------- -------------------------- ------------------- Amount Percent Amount Percent Amount Percent ------ ------- ------ ------- ------ ------- ASSETS: Cash & Due from banks............................ 4,020 3.80% 3,582 3.54% 3,864 3.79% Federal funds sold............................... 3,790 3.58% 3,490 3.44% 3,306 3.24% Interest-bearing deposits in banks............... - 0.00% - 0.00% 59 0.06% Investment securities............................ 34,700 32.82% 29,709 29.33% 26,033 25.54% Loans (net of allowance for loan losses and...... 53,213 50.33% 55,428 54.71% 59,532 58.40% deferred income) Premises and equipment, net...................... 7,044 6.66% 6,552 6.47% 6,818 6.68% Other assets..................................... 2,966 2.81% 2,546 2.51% 2,331 2.29% ------- ------ ------- ------ ------- ------ TOTAL ASSETS..................................... 105,733 100.00% 101,307 100.00% 101,943 100.00% ======= ====== ======= ====== ======= ====== LIABILITIES & STOCKHOLDERS' EQUITY: Deposits......................................... 90,420 85.52% 86,080 84.97% 87,319 85.66% Note payable..................................... 2,440 2.31% 2,600 2.57% 2,632 2.58% Other liabilities................................ 1,113 1.05% 1,309 1.29% 1,071 1.05% Stockholders' equity............................. 11,760 11.12% 11,318 11.17% 10,921 10.71% ------- ------ ------- ------ ------- ------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY......... 105,733 100.00% 101,307 100.00% 101,943 100.00% ======= ====== ======= ====== ======= ====== 9 ANALYSIS OF NET INTEREST EARNINGS For the Year Ended For the Year Ended For the Year Ended December 31, 1996 December 31, 1995 December 31, 1994 (in thousands) (in thousands) (in thousands) ------------------------------- -------------------------------- --------------------------------- Average Income/ Average Income/ Average Income/ Balance Expenses Yield Balance Expenses Yield Balance Expense Yield ------- -------- ----- ------- -------- ----- ------- ------- ----- EARNING ASSETS: Interest-bearing deposits in banks.......... -- -- -- -- -- -- 59 3 5.08% Investment securities(a)... 34,700 2,233 6.44% 29,709 1,777 5.98% 26,033 1,415 5.44% Federal funds sold......... 3,790 199 5.25% 3,490 200 5.73% 3,306 134 4.05% Loans (b).................. 54,520 5,613 10.30% 56,450 6,112 10.83% 60,518 5,910 9.77% ------ ----- ----- ------ ----- ----- ------ ----- ---- 93,010 8,045 8.65% 89,649 8,089 9.02% 89,916 7,462 8.30% ====== ===== ===== ====== ===== ===== ====== ===== ==== (a) Income on tax-exempt securities has not been adjusted to a tax equivalent basis. (b) Nonaccrual loans are included in the loan totals for each year. LIABILITIES: Noninterest bearing deposits................... 8,280 -- -- 7,140 -- -- 6,107 -- -- Savings, money market, & NOW deposits............. 47,820 1,193 2.49% 46,370 1,187 2.56% 50,348 1,280 2.54% Time deposits.............. 34,320 1,799 5.24% 32,570 1,672 5.13% 30,864 1,205 3.90% Note payable............... 2,440 262 10.74% 2,600 279 10.73% 2,632 282 10.71% ------ ------ ----- ------ ----- ----- ------ ----- ----- TOTAL LIABILITIES.......... 92,860 3,254 3.50% 88,680 3,138 3.54% 89,951 2,767 3.08% ====== ====== ===== ====== ===== ===== ====== ====== ===== NET SPREAD................. 5.15% 5.48% 5.22% ===== ===== ===== Earning Income Earning Income Earning Income Assets (Expense) Yield Assets (Expense) Yield Assets (Expense) Yield ------ ------- ----- ------ ------- ----- ------ ------- ----- Yield on average earning assets............. 93,010 8,045 8.65% 89,649 8,089 9.02% 89,916 7,462 8.30% Cost of funds for average earning assets..... 93,010 (3,254) (3.50)% 89,649 (3,138) (3.50)% 89,916 (2,767) (3.08)% ------ ------ ----- ------ ------ ----- ------ ------ ----- NET INTEREST MARGIN........ 93,010 4,791 5.15% 89,649 4,951 5.52% 89,916 4,695 5.22% ====== ====== ===== ====== ====== ===== ====== ====== ===== 10 ANALYSIS OF CHANGES IN INTEREST INCOME & EXPENSE 1996 compared to 1995 1995 compared to 1994 1994 compared to 1993 (in thousands) (in thousands) (in thousands) ------------------------------ ------------------------------ ------------------------------ Change due to: Change due to: Change due to: INTEREST INCOME: Volume Rate Total Volume Rate Total Volume Rate Total ------ ---- ----- ------ ---- ----- ------ ---- ----- Interest-bearing deposits in banks........................ -- -- -- -- -- -- (2) -- (2) Investment securities........... 59 397 456 (5) 364 359 590 (74) 516 Federal funds sold.............. 13 (14) (1) 11 55 66 (74) 38 (36) Loans........................... 232 (731) (499) (44) 246 202 (324) 401 77 --- ---- ---- --- --- --- ---- --- -- TOTAL INTEREST INCOME........... 304 (348) (44) (38) 665 627 190 365 555 === ==== ==== === === === ==== === === INTEREST EXPENSE: Noninterest-bearing deposits.... -- -- -- -- -- -- -- -- -- Savings, money market, & NOW accounts..................... 51 (45) 6 (18) (75) (93) 122 (87) 35 Time deposits................... 92 35 127 (28) 495 467 (50) 20 (30) Note payable.................... 20 (37) (17) (3) (6) (3) (3) -- (3) --- ---- ---- --- --- --- ---- --- --- TOTAL INTEREST EXPENSE.......... 163 (47) 116 (43) 414 371 69 (67) 2 === ==== === === === === ==== === === Changes not solely attributable to volume or rate have been allocated to the rate component. 11 INTEREST RATE SENSITIVITY By Repricing Interval ---------------------------------------------------------------------------------------------- (in thousands) Within After three After six After one After five Noninterest Total December 31, 1996 three months, months, year, years bearing months within six within one within five funds months year years ------ ------ ---- ----- ----- ----- ----- ASSETS Federal funds sold........ 1,100 -- -- -- -- -- 1,100 Investment securities..... 14,373 253 -- 14,659 7,628 -- 36,913 Loans..................... 37,049 2,103 2,520 4,119 8,488 -- 54,279 Noninterest earning assets and allowance for loan losses............... -- -- -- -- -- 12,621 12,621 ------ ------ ------ ------ ------ ------ ------- TOTAL ASSETS.............. 55,522 2,356 2,520 18,778 16,116 12,621 104,913 LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest bearing deposits................. -- -- -- -- -- 9,066 9,066 Savings, money market & NOW deposits.............. 49,567 -- -- -- -- -- 49,567 Time deposits............. 16,086 5,924 5,387 6,168 9 -- 33,574 Other liabilities and stockholders' equity...... -- -- -- -- -- 12,706 12,706 ------ ------ ------ ------ ------ ------ ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...... 65,653 5,924 5,387 6,618 9 21,772 104,913 ------ ------ ------ ------ ------ ------ ------- Interest Rate Sensitivity Gap........... (13,131) (3,568) (2,867) 12,610 16,107 (9,151) -- ====== ====== ====== ====== ====== ====== ======= Cumulative Interest Rate Sensitivity Gap........... (13,131) (16,699) (19,566) (6,956) 9,151 -- -- ====== ====== ====== ====== ====== ====== ======= The interest rate gaps reported in the table arise when assets are funded with liabilities having different repricing intervals. Since these gaps are actively managed and change daily as adjustments are made in interest rate views and market outlook, positions at the end of any period may not be reflective of the Company's interest rate sensitivity in subsequent periods. Active management dictates that longer-term economic views are balanced against prospects for short-term interest rate changes in all repricing intervals. For purposes of the above analysis, repricing of fixed-rate instruments is based upon the contractual maturity of the applicable instruments. Actual payment patterns may differ from contractual payment patterns. 12 INVESTMENT PORTFOLIO Book Value at December 31 (in thousands): ---------------------------------------------------------------------- 1996 1995 1994 ---- ---- ---- Security Type Amount Yield(a) Amount Yield(a) Amount Yield(a) - ------------- ------ ------- ------ ------- ------ -------- U.S. TREASURY SECURITIES: Within 1 year........................................... 600 8.09% 999 5.54% 2,798 5.36% After 1 year, within 5 years............................ 3,972 5.93% 600 8.09% 1,594 6.81% After 5 years, within 10 years.......................... -- -- -- -- -- -- After 10 years.......................................... -- -- -- -- -- -- ------ ---- ------ ---- ------ ---- TOTAL U.S. TREASURY..................................... 4,572 6.21% 1,599 6.49% 4,392 5.89% U.S. AGENCY SECURITIES: Within 1 year........................................... 4,023 5.94% 8,265 5.65% 9,218 6.34% After 1 year, within 5 years............................ 8,537 6.71% 7,105 6.37% 6,218 5.07% After 5 years, within 10 years.......................... 5,038 7.04% 998 -- 255 5.43% After 10 years.......................................... 483 8.30% -- -- 592 5.05% ------ ---- ------ ---- ------ ---- TOTAL U.S. AGENCY....................................... 18,081 6.67% 16,368 6.00% 16,283 5.79% COLLATERALIZED MORTGAGE OBLIGATIONS: Within 1 year........................................... -- -- 1,142 5.89% 1,527 5.76% After 1 year, within 5 years............................ 329 5.65% 523 7.13% 980 5.70% After 5 years, within 10 years.......................... 376 5.84% 35 6.00% 41 6.00% After 10 years.......................................... 534 6.40% 603 7.97% 126 7.01% ------ ---- ------ ---- ------ ---- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS............... 1,239 6.03% 2,303 6.36% 2,674 5.80% MUNICIPAL SECURITIES: Within 1 year........................................... 250 6.33% 500 6.10% 396 6.19% After 1 year, within 5 years............................ 3,455 6.88% 1,987 6.74% 1,577 6.67% After 5 years, within 10 years.......................... 886 6.14% 3,109 6.96% 3,920 6.81% After 10 years.......................................... -- -- -- -- 103 6.30% ------ ---- ------ ---- ------ ---- TOTAL MUNICIPALS........................................ 4,591 6.71% 5,596 6.80% 5,996 6.72% OTHER DEBT SECURITIES: Within 1 year........................................... 27 8.57% 267 7.65% 249 6.25% After 1 year, within 5 years............................ 492 8.25% 8 8.20% -- -- After 5 years, within 10 years.......................... 1,097 7.33% 747 8.27% -- -- After 10 years.......................................... 33 8.15% 1,007 7.11% -- -- ------ ---- ------ ---- ------ ---- TOTAL OTHER DEBT SECURITIES............................. 1,649 7.64% 2,029 7.27% 249 6.25% MONEY MARKET MUTUAL FUND................................ 6,482 5.28% 8,640 5.77% 3,615 5.38% FEDERAL AGENCY STOCK.................................... 83 6.00% 83 6.00% 83 6.00% UNREALIZED HOLDING GAIN/(LOSS).......................... 216 -- 327 -- (192) -- ------ ---- ------ ---- ------ ---- 36,913 6.39% 36,945 6.18% 33,100 5.97% ====== ==== ====== ==== ====== ==== (a) The yields on tax-exempt obligations have not been computed on a tax-equivalent basis. 13 LOAN PORTFOLIO Types of Loans Outstanding at December 31 (in thousands): ----------------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Commercial and other real estate.. 45,322 41,538 44,847 48,478 47,217 Real estate construction.......... 5,802 7,549 9,809 10,182 15,656 Installment and other............. 3,155 2,757 2,656 2,804 3,259 ------ ------ ------ ------ ------ 54,279 51,844 57,312 61,464 66,132 ====== ====== ====== ====== ====== Maturities and Sensitivity to Changes in Interest Rates (in thousands) Due: Fixed Rate Floating Rate Total ---------- ------------- ----- In 1 year or less................................ 6,582 31,296 37,878 After 1 year through 5 years..................... 13,519 554 14,073 After 5 years.................................... 2,328 -- 2,328 ------ ------ ------ TOTAL LOANS...................................... 22,429 31,850 54,279 ====== ====== ====== Scheduled repayments are reported in the maturity category in which the payments are due. Nonaccrual and Past Due Loans at December 31 (in thousands): -------------------------------------------------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Nonaccrual loans............................... 898 987 765 714 1,373 Accruing loans past due more than 90 days...... 52 118 40 237 218 --- ----- --- --- ----- 950 1,105 805 951 1,591 === ===== === === ===== The company's nonaccrual policy is discussed in note 1(c) to the consolidated financial statements. Interest income recorded on these loans was approximately $7,000, $13,000, $14,000, $22,000 and $43,000 in 1996, 1995, 1994, 1993 and 1992, respectively. Interest income foregone on nonaccrual loans was approximately $149,000, $161,000, $74,000, $57,000 and $142,000 in 1996, 1995, 1994, 1993 and 1992, respectively. 14 SUMMARY OF LOAN LOSS EXPERIENCE Analysis of the Allowance for Loan Losses (in thousands) 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Balance at beginning of period................. 959 1,127 924 1,334 823 CHARGE-OFFS: Commercial................................... 237 357 98 676 232 Real estate.................................. -- 30 -- 41 14 Consumer..................................... 97 95 77 46 87 ----- ----- ----- ----- ----- TOTAL CHARGE-OFFS............................ 334 482 175 763 333 RECOVERIES: Commercial................................... 260 174 37 21 1 Real estate.................................. -- -- -- -- -- Consumer..................................... 12 25 18 5 7 -- -- -- -- -- TOTAL RECOVERIES............................. 272 199 55 26 8 ----- ----- ----- ----- ----- Net charge-offs................................ 62 283 120 737 325 Additions charged to operations................ 310 115 323 327 836 ----- ----- ----- ----- ----- BALANCE AT END OF PERIOD....................... 1,207 959 1,127 924 1,334 ===== ===== ===== ===== ===== RATIO OF NET CHARGE-OFFS TO AVERAGE LOANS OUTSTANDING.............................. 0.11% 0.50% 0.20% 1.15% 0.47% ===== ===== ===== ===== ===== Footnote 1(g) to the consolidated financial statement discusses the factors used in determining the provision for loan losses and the adequacy of the allowance for loan losses. ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES (IN THOUSANDS) December 31, 1996 December 31, 1995 December 31, 1994 December 31, 1993 December 31, 1992 ----------------- ----------------- ----------------- ----------------- ----------------- Loan Category Amount Amount Amount Amount Amount ------ % ------ % ------ % ------ % ------ % Loans Loans Loans Loans Loans ----- ----- ----- ----- ----- Commercial............. 490 91.41% 295 84.28% 376 78.25% 140 79.22% 617 71.40% Real estate............ 45 8.40% 38 10.86% 121 17.12% 45 16.20% 75 23.67% Consumer............... 1 0.19% 17 4.86% 4 4.63% 2 4.58% 47 4.93% Unallocated............ 671 N/A 609 N/A 626 N/A 737 N/A 595 N/A ----- ------ --- ------ ----- ------ --- ------ ----- ------ 1,207 100.00% 959 100.00% 1,127 100.00% 924 100.00% 1,334 100.00% ===== ====== === ====== ===== ====== === ====== ===== ====== 15 DEPOSITS Average amount and average rate paid on deposits (in thousands) For the Year Ended For the Year Ended For the Year Ended December 31, 1996 December 31, 1995 December 31, 1994 -------------------- ------------------- ------------------- Type Average Average Average Average Average Average ---- Amount Rate Amount Rate Amount Rate ------- ------- ------- ------- ------- ------- Demand - non-interest bearing......... 8,280 N/A 7,142 N/A 6,106 N/A NOW accounts.......................... 19,561 1.89% 18,019 2.01% 19,645 1.95% Money market accounts................. 12,469 2.95% 12,561 2.95% 14,464 2.89% Savings............................... 15,790 2.89% 15,791 2.87% 16,240 2.86% Time deposits......................... 34,320 5.24% 32,566 5.13% 30,864 3.56% ------ ---- ------ ---- ------ ---- 90,420 3.31% 86,079 3.32% 87,319 2.84% ====== ==== ====== ==== ====== ==== MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE AT DECEMBER 31 (IN THOUSANDS): 1996 ---- Three months or less................................. 5,357 Four months to six months............................ 1,989 Seven months to twelve months........................ 2,663 Over twelve months................................... 1,102 ------ TOTAL TIME DEPOSITS OF $100,000 OR MORE.............. 11,111 ====== RETURN ON AVERAGE EQUITY AND ASSETS For the Year Ended December 31: ------------------------------------------------------- 1996 1995 1994 ---- ---- ---- Return on average assets.............................. 0.60% 0.83% 0.33% Return on average equity.............................. 5.44% 7.45% 3.09% Dividend payout ratio................................. 42.55% 22.25% -- Average equity to average assets...................... 11.12% 11.13% 10.71% 16 ITEM 2. PROPERTIES The Bank owns a 0.861 acre lot located at the corner of Ham Lane and Tokay Street, Lodi, California. A 34,000 square foot, tri-level commercial building for the main branch and administrative offices of the Company and the Bank was constructed on the lot. The Company and the Bank use approximately 75% of the leasable space in the building and the remaining area is either leased or available for lease as office space to other tenants. All lease payments to the Company are tied to changes in the Consumer Price Index and are adjusted on an annual basis. This expansion in 1991 has enabled the Bank to better serve its customers with more teller windows, four drive-through lanes and expanded safe deposit box capacity. The Bank assumed a long-term ground lease on 1.7 acres of land at 19000 North Highway 88, Lockeford, California. The building previously occupying the Lodi site was moved to Lockeford, California, and has become the permanent branch office of the Bank at that location. A temporary office was opened by the Bank on January 8, 1990 at this location in a 1,100 square foot building. The permanent office was opened on April 1, 1991. The temporary office, along with a portion of the permanent building, are leased by the Bank to two tenants. On February 22, 1997, the Bank acquired the Galt, Plymouth and San Andreas branches of Wells Fargo Bank. The transaction included the assumption of the 6,000 square foot branch building lease in Galt with a remaining term of two years, and the purchase of the branch building and land for the Plymouth and San Andreas offices. The Plymouth and San Andreas offices are approximately 1,200 and 5,500 square feet, respectively. The Company owns a 10,000 square foot lot located on Lower Sacramento Road in the unincorporated San Joaquin County community of Woodbridge, California. The entire parcel has been leased to the Bank on a long term basis at market rates. The Bank has constructed, furnished and equipped a 1,437 square foot branch office on the parcel and commenced operations of the Woodbridge Branch on December 15, 1986. ITEM 3. LEGAL PROCEEDINGS There are no material proceedings adverse to the Company or the Bank to which any director, officer, affiliate of the Company or 5% shareholder of the Company or the Bank, or any associate of any such director, officer, affiliate or 5% shareholder of the Company or the Bank is a party, and none of the above persons has a material interest adverse to the Company or the Bank. Neither the Company nor the Bank is a party to any pending legal or administrative proceeding (other than ordinary routine litigation incidental to the Company's or the Bank's business) and no such proceedings are known to be contemplated. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information required by this item is contained under the caption "MARKET PRICE OF COMPANY'S STOCK" at page 13 of the Company's Annual Report to Shareholders for the year ended December 31, 1996, and is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is contained under the caption "SELECTED FINANCIAL DATA" at page 13 of the Company's Annual Report to Shareholders for the year ended December 31, 1996 and is incorporated herein by reference. 17 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is contained under the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" at page 4 of the Company's Annual Report to Shareholders for the year ended December 31, 1996 and is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Item 14(a) herein. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable PART III ITEMS 10, 11, 12 AND 13. The information required by these items is contained at pages 2 through 9 of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 22, 1997, and is incorporated herein by reference. The definitive Proxy Statement will be filed with the Commission within 120 days after the close of the Company's fiscal year pursuant to Regulation 14A of the Securities Exchange Act of 1934. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) FINANCIAL STATEMENTS AND SCHEDULES PAGE REFERENCE TO ANNUAL REPORT TO SHAREHOLDERS* Independent Auditors' Report 14 Consolidated Balance Sheets as of December 31, 1996 and 1995. 15 Consolidated Statements of Income Years Ended 1996, 1995, and 1994 17 Consolidated Statements of Stockholders' Equity Years Ended 1996, 1995, and 1994 16 Consolidated Statements of Cash Flows Years Ended 1996, 1995, and 1994 18 Notes to Consolidated Financial Statements 19 --------------------------- *The pages of the Company's Annual Report to Shareholders for the year ended December 31, 1996 listed above, are incorporated herein by reference in response to Item 8 of this report. (b) REPORTS ON FORM 8-K On October 18, 1996, the Company filed a Current Report on Form 8-K regarding the purchase of three branches from Wells Fargo Bank, N.A. by The Bank of Lodi. On October 25, 1996, the Company filed a Current Report on Form 8-K regarding its press release of the same date, reporting the Company's results of operations for the quarter ended September 30, 1996, and the declaration of a cash dividend of $.05 per share, payable November 29, 1996. 18 (C) EXHIBITS Exhibit No. Description 11 Statement re computation of earnings per share is incorporated herein by reference to page 26 of the Company's Annual Report to Shareholders for the year ended December 31, 1996. 13 First Financial Bancorp 1996 Annual Report to Shareholders - portions which have been incorporated by reference herein are filed with this report, and portions which have not been incorporated herein are provided for information purposes only. 23 Consent of Experts 27 Financial Data Schedule (D) FINANCIAL STATEMENT SCHEDULES No financial statement schedules are included in this report on the basis that they are either inapplicable or the information required to be set forth therein is contained in the financial statements incorporated herein by reference. 19 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, thereunto duly authorized, on the 31th day of March, 1997. FIRST FINANCIAL BANCORP /s/ LEON J. ZIMMERMAN ------------------------------------- Leon J. Zimmerman (President & Chief Executive Officer) Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. CAPACITY DATE -------- ---- /s/ BENJAMIN R. GOEHRING Director and Chairman of the Board March 31, 1997 - -------------------------------------------- Benjamin R. Goehring /s/ WELDON D. SCHUMACHER Director and Vice Chairman of the Board March 31, 1997 - -------------------------------------------- Weldon D. Schumacher /s/ BOZANT KATZAKIAN Director March 31, 1997 - -------------------------------------------- Bozant Katzakian /s/ ANGELO J. ANAGNOS Director March 31, 1997 - -------------------------------------------- Angelo J. Anagnos /s/ RAYMOND H. COLDANI Director March 31, 1997 - -------------------------------------------- Raymond H. Coldani /s/ MICHAEL D. RAMSEY Director March 31, 1997 - -------------------------------------------- Michael D. Ramsey /s/ FRANK M. SASAKI Director March 31, 1996 - -------------------------------------------- Frank M. Sasaki /s/ DENNIS SWANSON Director March 31, 1997 - -------------------------------------------- Dennis Swanson /s/ DAVID M. PHILIPP Executive Vice President, March 31, 1997 - -------------------------------------------- Chief Financial Officer and Secretary David M. Philipp (Principal Financial and Accounting Officer) 20 INDEX TO EXHIBITS Exhibit Page - ------- ---- 11 Statement re computation of earnings per share is incorporated herein by reference to page 24 of the Company's Annual Report to Shareholders for the year ended December 31, 1996. 13 First Financial Bancorp 1996 Annual Report to Shareholders - portions 27 which have been incorporated by reference herein are filed with this report, and portions which have not been incorporated herein are provided for information purposes only 23 Consent of Experts 59 27 Financial Data Schedule 60