FAIR VALUE DISCLOSURES (Tables)

6 Months Ended

Jun. 30, 2012

Estimated Fair Values of Financial Instruments

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The estimated fair values of First Financial’s financial instruments not measured at fair value on a recurring or nonrecurring basis in the consolidated financial statements were as follows:

	Carrying		Estimated Fair Value
(Dollars in thousands)	value		Total		Level 1		Level 2		Level 3
June 30, 2012
Financial assets
Cash and short-term investments	$	135,579	$	135,579	$	135,579	$	0	$	0
Investment securities held-to-maturity	873,538		877,832		0		877,832		0
Other investments	71,492		71,492		0		71,492		0
Loans held for sale	20,971		20,971		0		20,971		0
Loans, excluding covered loans	2,961,658		2,960,090		0		0		2,960,090
Covered loans	855,535		876,308		0		0		876,308
FDIC indemnification asset	146,765		129,485		0		0		129,485
Financial liabilities
Deposits
Noninterest-bearing	$	1,071,520	$	1,071,520	$	0	$	1,071,520	$	0
Interest-bearing demand	1,154,852		1,154,852		0		1,154,852		0
Savings	1,543,619		1,543,619		0		1,543,619		0
Time	1,331,758		1,336,579		0		1,336,579		0
Total deposits	5,101,749		5,106,570		0		5,106,570		0
Short-term borrowings	249,919		249,919		249,919		0		0
Long-term debt	75,120		79,365		0		79,365		0
	Carrying		Estimated Fair Value
(Dollars in thousands)	value		Total		Level 1		Level 2		Level 3
December 31, 2011
Financial assets
Cash and short-term investments	$	525,051	$	525,051	$	525,051	$	0	$	0
Investment securities held-to-maturity	2,664		2,893		0		2,893		0
Other investments	71,492		71,492		0		71,492		0
Loans held for sale	24,834		24,834		0		24,834		0
Loans, excluding covered loans	2,915,871		2,910,825		0		0		2,910,825
Covered loans	1,010,409		1,042,752		0		0		1,042,752
FDIC indemnification asset	173,009		151,114		0		0		151,114
Financial liabilities
Deposits
Noninterest-bearing	$	946,180	$	946,180	$	0	$	946,180	$	0
Interest-bearing demand	1,317,339		1,317,339		0		1,317,339		0
Savings	1,724,659		1,724,659		0		1,724,659		0
Time	1,654,662		1,664,457		0		1,664,457		0
Total deposits	5,642,840		5,652,635		0		5,652,635		0
Short-term borrowings	99,431		99,431		99,431		0		0
Long-term debt	76,544		81,168		0		81,168		0

Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis in the consolidated financial statements at June 30, 2012:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Netting Adjustments (1)			Assets/Liabilities at Fair Value
Assets
Derivatives	$	0	$	25,813	$	0	$	(25,813	)	$	0
Available-for-sale investment securities	130		724,388		0		0			724,518
Total	$	130	$	750,201	$	0	$	(25,813	)	$	724,518
Liabilities
Derivatives	$	0	$	29,015	$	0	$	(25,813	)	$	3,202

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

Summary of Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table summarizes financial assets and liabilities measured at fair value on a nonrecurring basis in the consolidated financial statements at June 30, 2012:

	Fair Value Measurements Using
(Dollars in thousands)	Level 1		Level 2		Level 3
Assets
Impaired loans (1)	$	0	$	0	$	28,612
OREO	0		0		4,056
Covered OREO	0		0		15,393

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