FIRST FINANCIAL BANCORP /OH/
S-4, 1999-03-03
NATIONAL COMMERCIAL BANKS
Previous: NATIONAL PROPERTY INVESTORS 6, SC 13D/A, 1999-03-03
Next: SELIGMAN COMMUNICATIONS & INFORMATION FUND INC, N-30D, 1999-03-03



<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                    ----------------------------------------

                                    FORM S-4
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933
                    ----------------------------------------

                            FIRST FINANCIAL BANCORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                    ----------------------------------------

<TABLE>
<S>                                          <C>                                      <C>

                Ohio                                     6711                                31-1042001
   (State or other jurisdiction of           (Primary Standard Industrial                   (IRS Employer
   incorporation or organization)             Classification Code Number)                Identification No.)
</TABLE>

                           -------------------------
                             THIRD AND HIGH STREETS
                              HAMILTON, OHIO 45011
                                 (513) 867-4700
               (Address, including zip code, and telephone number,
        including area code, of registrant's principal executive offices)

                           -------------------------

                                Michael R. O'Dell
          Senior Vice President, Chief Financial Officer and Secretary
                            First Financial Bancorp.
                             Third and High Streets
                              Hamilton, Ohio 45011
                                 (513) 867-4700
                (Name, address, including zip code, and telephone
               number, including area code, of agent for service)
                           -------------------------

                                   Copies to:
    Neil Ganulin                                       John A. Burgess
  Frost & Jacobs LLP                                  Barnes & Thornburg
   2500 Pnc Center                                600 1St Source Bank Center
201 East Fifth Street                                 100 North Michigan
Cincinnati, Ohio 45202                         South Bend, Indiana  46601-1632
     (513) 651-6800                                         (219) 237-1156
                           -------------------------


        Approximate date of commencement of proposed sale to the public:
      As soon as practicable after the effective date of this Registration
                                   Statement.
                           -------------------------



If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: [ ]

                       CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================  ========================  =======================  ========================  =======================


TITLE OF EACH CLASS                             PROPOSED MAXIMUM         PROPOSED MAXIMUM          AMOUNT OF
OF SECURITIES TO BE       AMOUNT TO BE          OFFERING PRICE PER       AGGREGATE OFFERING        REGISTRATION
REGISTERED                REGISTERED            UNIT (1)                 PRICE (1)                 FEE

=====================  ========================  =======================  ========================  =======================
<S>                    <C>                       <C>                      <C>                       <C>       
Common Stock, no
par value              5,115,000                 $8.79765                 $45,000,000               $12,510.00
=====================  ========================  =======================  ========================  =======================
</TABLE>

(1) Estimated in accordance with Rule 457(f)(1) solely for the purpose of
    calculating the registration fee.

    The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
===============================================================================
<PAGE>   2


                 FIRST FINANCIAL BANCORP. CROSS REFERENCE SHEET


<TABLE>
<CAPTION>

         FORM S-4 ITEM                                    PROXY STATEMENT CAPTION
         -------------                                    -----------------------
<S>                                                       <C>
 1.      Forepart of Registration Statement and           Facing Page of Registration Statement; Cross Reference Sheet; Outside
         Outside Front Cover Page of Prospectus           Front Cover Page of Proxy Statement-Prospectus; Summary

 2.      Inside Front and Outside Back Cover Pages        Table of Contents; Where You Can Find More Information
         of Prospectus

 3.      Risk Factors, Ratio of Earnings to Fixed         Summary; Comparative Market and Dividend Information; Principal
         Charges and Other Information                    Shareholders and Ownership By Management

 4.      Terms of the Transaction                         Summary; The Merger;  The Merger Agreement; Comparison of Common
                                                          Stock and Shareholders' Rights

 5.      Pro Forma Financial Information                  Pro Forma Unaudited Consolidated Balance Sheet; Pro Forma Unaudited
                                                          Consolidated Statements of Earnings

 6.      Material Contacts with the Company Being         Summary; The Merger; The Merger Agreement
         Acquired

 7.      Additional Information Required for              Not Applicable
         Reoffering by Persons and Parties Deemed to
         Be Underwriters

 8.      Interests of Named Experts and Counsel           Not Applicable

 9.      Disclosure of Commission Position on             Not Applicable
         Indemnification for Securities Act
         Liabilities

10.      Information with Respect to S-3 Registrants      Not Applicable

11.      Incorporation of Certain Information by          Not Applicable
         Reference

12.      Information with Respect to S-2 or S-3           Information About First Financial; Comparative Market And Dividend
         Registrants                                      Information; Where You Can Find More Information

13.      Incorporation of Certain Information by          Where You Can Find More Information
         Reference

14.      Information with Respect to Registrants          Not Applicable
         Other Than S-3 or S-2 Registrants

15.      Information with Respect to  S-3 Companies       Not Applicable

16.      Information with Respect to S-2 or  S-3          Not Applicable
         Companies

17.      Information with Respect to Companies Other      Information About the Business of Sand Ridge Financial; Sand Ridge
         than                                             Financial's Consolidated Financial Statements; Management's
         S-3 or S-2 Companies                             Discussion and Analysis of Financial Condition and Results of
                                                          Operations of Sand Ridge Financial; Comparative Market and Dividend
                                                          Information; Comparison of Common Stock and Shareholders' Rights

18.      Information if Proxies, Consents or              Notice of Special Meeting of Shareholders; Summary; The Special
         Authorizations are to be Solicited               Meeting;  The Merger; The Merger Agreement; Principal Shareholders
                                                          and Ownership By Management; Information About the Business of Sand
                                                          Ridge Financial; Where You Can Find More Information

19.      Information if Proxies, Consents or              Not Applicable
         Authorizations are not to be Solicited or
         in an Exchange Offer
</TABLE>


<PAGE>   3


SAND RIDGE FINANCIAL CORPORATION
- -------------------------------------------------------------------------------
                                                        2611 Highway Avenue
                                                        Highland, Indiana 46322
                                                        Phone:(219) 865-9500
                                                        Fax:  (219) 864-4204

                  MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT

The Board of Directors of Sand Ridge Financial Corporation has approved a merger
agreement which will result in Sand Ridge Financial Corporation merging into
First Financial Bancorp. and Sand Ridge Bank becoming a wholly owned subsidiary
of First Financial Bancorp. Before we can complete this merger, the merger
agreement must be approved by Sand Ridge shareholders.

First Financial Bancorp. is a bank holding company and savings and loan holding
company owning community banks and savings and loans in various communities in
Ohio, Indiana and Michigan. At September 30, 1998, First Financial had total
assets of approximately $2.8 billion, deposits of approximately $2.2 billion and
shareholders' equity of approximately $302 million.

We expect that, for each share of Sand Ridge Financial common stock which you
own just before the merger, you will be entitled to receive 85.25 shares of
First Financial common stock. This exchange ratio may change, however, under
certain circumstances as explained in the Summary in the accompanying Proxy
Statement-Prospectus. First Financial common stock trades on the NASDAQ National
Market (Symbol "FFBC"). Sand Ridge Financial common stock does not trade on any
stock exchange or national market. You can obtain current stock prices for First
Financial from a newspaper, on the Internet or by calling your broker.

YOUR VOTE IS VERY IMPORTANT. Please take the time to vote, whether or not you
plan to attend the Sand Ridge Financial Special Meeting of Shareholders. If you
sign, date and mail your proxy card without indicating how you want to vote, we
will vote your proxy in favor of the merger. If you do not return your card, or
if you do not instruct your broker how to vote any shares held for you in
"street name," the effect will be a vote against the merger.

The Special Meeting of Shareholders will be: April 22, 1999, 9:00 a.m. local
time, at the main office of Sand Ridge Bank, 2611 Highway Avenue, Highland,
Indiana.

This Proxy Statement-Prospectus provides you with detailed information about the
proposed merger. We encourage you to read it carefully.

We are very enthusiastic about the merger and the opportunity to become part of
First Financial Bancorp. The Board of Directors of Sand Ridge recommends that
you vote FOR the Merger Agreement.

                                               Sincerely,



                                               Bruce E. Leep
                                               Chairman of the Board, President
                                               and Chief Executive Officer

- ------------------------------------------------------------------------------

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
     COMMISSION HAS APPROVED THE SECURITIES TO BE ISSUED UNDER THIS PROXY
     STATEMENT-PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS
     ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
     OFFENSE.
- -------------------------------------------------------------------------------

This Proxy Statement-Prospectus is dated March __, 1999 and was first mailed to
shareholders on or about March __, 1999.


<PAGE>   4


                        SAND RIDGE FINANCIAL CORPORATION
                              ---------------------

                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

                          TO BE HELD ON APRIL 22, 1999
                               ------------------

Sand Ridge Financial Corporation will hold a Special Meeting of Shareholders at
the main office of Sand Ridge Bank, 2611 Highway Avenue, Highland, Indiana
46322, at 9:00 a.m. local time on April 22, 1999 to vote on:

1.       The Plan and Agreement of Merger dated December 16, 1998 by and between
         First Financial Bancorp. and Sand Ridge Financial Corporation providing
         for the merger of Sand Ridge Financial into First Financial Bancorp.
         with the result that Sand Ridge Bank (a wholly owned subsidiary of Sand
         Ridge Financial Corporation) will become a wholly owned subsidiary of
         First Financial.

2.       A proposal to permit the Special Meeting to be adjourned or postponed,
         in the discretion of the proxies, for the purpose, among others, of
         allowing additional time for the solicitation of votes to approve the
         merger agreement.

3.       Any other matters that properly come before the Special Meeting or any
         adjournment or postponement of the Special Meeting.

Sand Ridge Financial stockholders at the close of business on March 8, 1999 are
receiving notice of and may vote at the Special Meeting. The approval of the
Plan and Agreement of Merger requires the affirmative vote of at least
two-thirds of the outstanding shares of Sand Ridge Financial common stock.
Shareholders of Sand Ridge Financial entitled to vote at the Special Meeting are
or may be entitled to assert dissenters' rights under the Indiana Business
Corporation Law (I.C. 23-1-44), which is attached to this Proxy
Statement-Prospectus as Appendix C.

PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE PROMPTLY, whether or not you plan to attend the Special Meeting. If you
attend the Special Meeting, you may vote in person if you wish, even if you
previously returned your proxy card.



                                             ---------------------------------
                                             Terry L. Saxsma, Vice President,
                                             Secretary/Treasurer

March ___, 1999

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF
THE PLAN AND AGREEMENT OF MERGER.

- -------------------------------------------------------------------------------
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. IF WE COMPLETE THE
MERGER, WE WILL SEND YOU INSTRUCTIONS ON HOW TO EXCHANGE YOUR STOCK
CERTIFICATES.
- -------------------------------------------------------------------------------


<PAGE>   5


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                           <C>
SUMMARY
         The Companies.........................................................................3
         The Merger............................................................................3

SUMMARY OF SELECTED UNAUDITED CONSOLIDATED FINANCIAL DATA AND PER SHARE DATA...................7
NOTES TO SELECTED UNAUDITED CONSOLIDATED FINANCIAL DATA AND PER SHARE DATA.................... 9

SUMMARY OF PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL INFORMATION.............................10
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET................................................11
PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS.......................................12
NOTES TO THE PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS............................17

THE SPECIAL MEETING
         Time And Place; Purpose............................................................. 19
         Voting And Revocation Of Proxies.....................................................19
         Solicitation Of Proxies..............................................................20
         Record Date And Voting Rights........................................................20

THE MERGER
         Background Of And Reasons For The Merger.............................................22
         Opinion Of Financial Advisor To Sand Ridge Financial.................................25
         Management Following The Merger......................................................30
         Interest Of Certain Persons In The Merger............................................31
         Dissenters' Rights...................................................................33
         Federal Income Tax Consequences Of The Merger .......................................36
         Accounting Treatment.................................................................37
         Restrictions On Resale Of First Financial Common Stock...............................38
         Regulatory Considerations ...........................................................39

THE MERGER AGREEMENT
         Structure Of The Merger .............................................................40
         Surrender Of Stock Certificates .....................................................40
         Effective Time Of The Merger.........................................................41
         Fractional Interests ................................................................41
         Conditions To Consummation Of The Merger.............................................41
         Termination Of The Merger ...........................................................43
         First Financial Average Closing Price And Termination Of The Merger..................43

INFORMATION ABOUT FIRST FINANCIAL
         Recent Developments..................................................................46
         General .............................................................................47

INFORMATION ABOUT THE BUSINESS OF SAND RIDGE FINANCIAL
         General..............................................................................48
         Competition..........................................................................48
         Regulation ..........................................................................49
         Properties ..........................................................................49
         Legal Proceedings....................................................................49
         Certain Transactions With Sand Ridge Financial.......................................49
         Selected Financial Data..............................................................50
         Analysis Of Net Interest Income......................................................51
         Interest Income And Expense Rate/Volume Analysis.....................................52
         Investment Securities................................................................53
         Loan Portfolio.......................................................................54
         Deposits.............................................................................57
         Return On Equity And Assets..........................................................58
         Short-Term Borrowings................................................................58

PRINCIPAL SHAREHOLDERS AND OWNERSHIP BY MANAGEMENT............................................59
</TABLE>

                                       1
<PAGE>   6

                          TABLE OF CONTENTS, CONTINUED

<TABLE>
<S>                                                                                           <C>
COMPARATIVE MARKET AND DIVIDEND INFORMATION
         Nature of Trading Market.............................................................61
         Dividends............................................................................62

COMPARISON OF COMMON STOCK AND SHAREHOLDERS' RIGHTS
         Authorized But Unissued Shares.......................................................64
         Dividend Rights......................................................................64
         Directors............................................................................65
         Quorum For Shareholders' Meetings....................................................66
         Meeting Participation By Use of Communication Equipment..............................66
         Voting Rights........................................................................66
         Special Meetings.....................................................................67
         Notice Of Shareholder Meetings.......................................................67
         Preemptive Rights....................................................................67
         Redemption And Assessment............................................................67
         Two-Thirds Majority Vote Required....................................................68
         Amendments To Articles And Regulations/Code Of By-Laws...............................68
         Provisions Affecting Business Combinations And Changes In Control....................69
         First Financial Shareholder Rights Plan..............................................71
         Transfer Agent And Registrar.........................................................71

ADJOURNMENT OF THE SPECIAL MEETING............................................................72

EXPERTS.......................................................................................73

LEGAL MATTERS.................................................................................73

WHERE YOU CAN FIND MORE INFORMATION...........................................................74

SAND RIDGE FINANCIAL CORPORATION--MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995................................................ F-1

SAND RIDGE FINANCIAL CORPORATION CONSOLIDATED FINANCIAL STATEMENTS
         Report Of Independent Auditors.................................................... F-13
         Consolidated Balance Sheets - December 31, 1997 and 1996...........................F-14
         Consolidated Statements Of Income -
           Years Ended December 31, 1997, 1996 and 1995.....................................F-15
         Consolidated Statements Of Changes In Shareholders' Equity -
           Years Ended December 31, 1997, 1996 and 1995.....................................F-16
         Consolidated Statements Of Cash Flows -
           Years Ended December 31, 1997, 1996 and 1995.....................................F-17
         Notes To Consolidated Financial Statements.........................................F-19

SAND RIDGE FINANCIAL CORPORATION--MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997...............................................F-36

SAND RIDGE FINANCIAL CORPORATION UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
         Consolidated Balance Sheet - September 30, 1998 (Unaudited) 
          and December 31, 1997.............................................................F-42

         Consolidated Statements Of Income -
           Nine Months Ended September 30, 1998 and 1997....................................F-43
         Consolidated Statements of Comprehensive Income -
           Nine Months Ended September 30, 1998 and 1997....................................F-44
         Consolidated Statements Of Cash Flows -
           Nine Months Ended September 30, 1998 and 1997....................................F-45
         Notes To Consolidated Financial Statements.........................................F-47

APPENDICES
         Plan and Agreement of Merger.................................................Appendix A
         Fairness Opinion.............................................................Appendix B
         Indiana Code Chapter 44.  Dissenters' Rights.................................Appendix C
</TABLE>

                                       2

<PAGE>   7


- -------------------------------------------------------------------------------

                                     SUMMARY

   This summary highlights selected information from this document. It does not
   contain all the information that is important to you. You should read this
   entire document carefully. For additional information, see "Where You Can
   Find More Information" (page 74).

   We call this document a Proxy Statement-Prospectus. It is a Proxy Statement
   sent by Sand Ridge Financial to you and the other shareholders of Sand Ridge
   Financial. It also is a Prospectus of First Financial Bancorp. covering the
   shares of First Financial common stock which you and the other shareholders
   of Sand Ridge Financial will receive if the merger is completed. These First
   Financial Bancorp. shares have been registered with the Securities and
   Exchange Commission. Sand Ridge Financial has supplied the information in
   this document which relates to it, and First Financial Bancorp. has supplied
   the information which relates to it.

THE COMPANIES (PAGES 46 AND 48)                                

FIRST FINANCIAL BANCORP.                                       
300 High Street                                                
P.O. Box 476                                                   
Hamilton, Ohio  45012-0476                                     
(513) 867-4700                                                 
                                                               
First Financial is a bank holding company and savings and loan holding company
that, through its subsidiaries, provides a full range of banking services to its
customers located in selected communities in Ohio, Indiana and Michigan. First
Financial has 105 offices in those three states and at September 30, 1998 had
total assets of approximately $2.8 billion, deposits of approximately $2.2
billion and shareholders equity of approximately $302 million.
                                                               
SAND RIDGE FINANCIAL CORPORATION 
2611 Highway Avenue
Highland, Indiana  46322                                       
(219) 838-9500                                                 
                                                               
Sand Ridge Financial is a one-bank holding company whose only subsidiary is an
Indiana state chartered bank which operates in Highland, Indiana, which is
approximately 20 miles southeast of Chicago. Sand Ridge Bank offers a
diversified selection of loan and investment products to its customers.
                                                               
THE MERGER (PAGE 40)                                           
                                                               
GENERAL                                                        
                                                               
We propose a merger as a result of which Sand Ridge Financial will be acquired
by and merged into First Financial, and Sand Ridge Financial's wholly owned
subsidiary, Sand Ridge Bank, will become a wholly owned subsidiary of First
Financial. We hope to complete the merger by the end of July 1999. The merger   
agreement is the document that governs the merger. We have attached this
agreement as Appendix A to this Proxy Statement-Prospectus, and we encourage
you to read it.


WHAT YOU WILL RECEIVE IN THE MERGER

The merger agreement provides that you will receive 85.25 shares of First
Financial common stock for each share of Sand Ridge Financial common stock which
you own just before the merger. If (i) the value of First Financial common stock
falls below a certain level, (ii) the value of the index of peer banking
companies falls below a certain level and (iii) First Financial agrees to issue
additional shares, the number of shares of First Financial common stock set
forth in the preceding sentence that you will receive as a result of the merger
will increase. If the conditions set forth in subclauses (i) and (ii) above are
satisfied and First Financial does not agree to issue additional shares, the
Sand Ridge Financial Board of Directors may cancel the merger as provided in the
merger agreement. The Sand Ridge Financial Board of Directors has not decided
yet whether it will cancel the merger in this event.

You will receive only whole shares of First Financial stock and cash in payment
for any fractional share. First Financial's stock trades on the Nasdaq National
Market System under the symbol "FFBC". On March ____, 1999, the last reported
sale of First Financial common stock as reported on the Nasdaq National Market
System was $_________ per share.

The Sand Ridge Financial common stock is not traded on an established public
market. The last known trading price of Sand Ridge Financial was $1,100 per
share on December 8, 1998. Since there is not an established public trading
market for the shares of Sand Ridge Financial common stock, the stock is not
liquid and the price indicated above may not reflect the prices which would be
paid for such shares on an active market.

You can obtain current stock price quotations for First Financial common stock
("FFBC") from a newspaper, on the Internet or by calling your broker.


- ------------------------------------------------------------------------------


<PAGE>   8

- --------------------------------------------------------------- 
REASONS FOR THE MERGER (Page 22)                                

The Sand Ridge Financial Board of Directors believes the merger will benefit
both you and Sand Ridge Financial for a number of reasons, including:
                                                                
1.   First Financial's offer was valued at 310% of book value by Hovde
     Financial, Inc., Sand Ridge Financial's investment advisor.
                                                                
2.   First Financial's stock is actively traded on the Nasdaq National Market
     System; Sand Ridge Financial's stock is not actively traded.

3.   First Financial's offer does not have any current, adverse tax consequences
     to Sand Ridge Financial shareholders, except for cash received for
     fractional shares and cash paid dissenting shareholders who exercise
     dissenters' rights.
                                                                
4.   Sand Ridge Financial shareholders will receive higher dividends after the
     merger than Sand Ridge Financial is currently paying.
                                                                
5.   The banking philosophy of First Financial emphasizes community banking and
     autonomy of its subsidiaries; Sand Ridge Bank will continue to operate as a
     separate subsidiary with minimal changes to employees.
                                                                
THE SPECIAL MEETING OF SHAREHOLDERS (Page19)
                                                                
We will hold a special meeting of Sand Ridge Financial shareholders at the main
office of Sand Ridge Bank, 2611 Highway Avenue, Highland, Indiana 46322, at 9:00
a.m. local time, on April 22, 1999. At this meeting, we will ask you:

1.   To approve the merger agreement;                           
                                                                
2.   To permit the Special Meeting to be adjourned or postponed for the purpose
     of allowing additional time for the solicitation of votes to approve the
     merger agreement, if necessary; and

3.   To act on any other matters that properly may be presented for a vote.
     Currently, we know of no other matters to be presented at the meeting.

OUR RECOMMENDATION (Page22)

The Board of Directors of Sand Ridge Financial believes that the merger is fair
to you and in your best interests. The Board unanimously recommends that you
vote "FOR" approval of the merger agreement

RECORD DATE; VOTING POWER (Page20)

You may vote at the Special Meeting if you owned Sand Ridge Financial shares as
of the close of business on March 8, 1999. You will have one vote for each share
of Sand Ridge Financial common stock owned on that date.

VOTING REQUIRED AND VOTING AGREEMENT (Page20)

To approve the merger, Sand Ridge Financial shareholders holding at least
two-thirds of the outstanding shares of Sand Ridge Financial common stock must
vote to approve the merger agreement.

Together the directors and executive officers of Sand Ridge Financial can vote
28.2% of the shares entitled to vote at the Special Meeting. Based upon the
unanimous recommendations of the Board, we expect Sand Ridge Financial's
directors and officers to vote all of their shares to approve the merger
agreement.

EXCHANGE OF CERTIFICATES (Page 40)

If the merger is completed, your shares of Sand Ridge Financial common stock
will be converted into shares of First Financial common stock, and you will need
to exchange your Sand Ridge Financial stock certificates for First Financial
stock certificates.

If we complete the merger, we will send you detailed instructions on how to
exchange your stock certificates. Please do not send us any stock certificates
until you receive these instructions.


- -------------------------------------------------------------------------------

                                       4
<PAGE>   9
- ---------------------------------------------------------------
WHAT WE NEED TO DO TO COMPLETE THE MERGER                      
(Page 41 )                                                     
                                                               
The completion of the merger depends on a number of conditions being met. These
conditions are set forth in the merger agreement. Some of the conditions are:
                                                               
1.   Sand Ridge Financial shareholders must approve the merger agreement.
                                                               
2.   Sand Ridge Financial and First Financial must receive all required
     regulatory approvals and certain waiting periods required by law must have
     passed;
                                                               
3.   There must be no governmental order blocking completion of the merger, and
     no governmental proceeding trying to block the merger;
                                                               
4.   Sand Ridge Financial and First Financial must receive legal opinions
     confirming that the merger will be treated as a reorganization for U.S.
     federal income tax purposes; and
                                                               
5.   Sand Ridge Financial and First Financial must receive a letter from its
     independent accountants stating that the merger will qualify for "pooling
     of interests" accounting treatment.
                                                               
Unless prohibited by law, either First Financial or Sand Ridge Financial could
waive a condition to the merger that has not been satisfied and complete the
merger anyway.
                                                               
We cannot be certain whether or when any of these conditions will be satisfied
or waived if permissible. We cannot be certain that we will complete the merger.
                                                               
TERMINATION OF THE MERGER AGREEMENT (PAGE 43)                  
                                                               
The two companies can agree at any time to terminate the merger agreement
without completing the merger, even if the Sand Ridge Financial shareholders
have already approved the merger. Either company also can terminate the merger
agreement for a number of reasons, including:
                                                               
1.   if any court or governmental body has issued a final order prohibiting the
     merger;

2.   if the merger is not completed by July 31, 1999;

3.   if the Sand Ridge Financial shareholders do not approve
     the merger; or

4.   if the other company materially violates any of its representations,
     warranties or obligations under the merger agreement.

First Financial can terminate the merger agreement if the holders of 7.5% or
more of the outstanding shares of Sand Ridge Financial common stock will be
entitled to receive cash in exchange for their Sand Ridge Financial shares
pursuant to perfected dissenters' rights under the Indiana law.

Sand Ridge Financial can terminate the merger agreement if:

1.   The average trading price of First Financial common stock drops below
     $23.2671 per share; and

2.   The ratio obtained by dividing First Financial's average trading price by
     $26.5909 is less than the specified ratio for a group of peer institutions;
     and

3.   First Financial chooses not to issue additional shares of common stock
     within the limits required by the merger agreement.

FEDERAL INCOME TAX CONSEQUENCES (PAGE 36)

We expect that neither of the two companies nor the shareholders of Sand Ridge
Financial will recognize any gain or loss for U.S. federal income tax purposes
in the merger, except in connection with any cash that Sand Ridge Financial
shareholders receive instead of fractional shares. Sand Ridge Financial and
First Financial will each receive a legal opinion that this is the case.

However, these opinions do not bind the Internal Revenue Service, which could
take a different view. This tax treatment will not apply to any Sand Ridge
Financial shareholder who exercises dissenters' rights under Indiana law.

Determining the actual tax consequences of the merger to you as a taxpayer can
be complicated. The tax treatment will depend on your specific situation and on
many variables not within our control. You should consult your tax advisor for a
full understanding of the merger's tax consequences.


                                       5
<PAGE>   10

ACCOUNTING TREATMENT (PAGE 37)                                 

We expect the merger to qualify as a "pooling of interests," which means that,
for accounting and financial reporting purposes, First Financial will treat Sand
Ridge Financial as if it had always been a part of First Financial.
                                                               
OPINION OF FINANCIAL ADVISOR (PAGE 25)                         
                                                               

Among the other factors considered in deciding to approve the merger, Sand Ridge
Financial's Board of Directors considered the opinion of its financial advisor,
Hovde Financial, Inc., that the value of the First Financial shares to be
received for each share of Sand Ridge Financial common stock is fair to the
holders of Sand Ridge Financial common stock from a financial point of view. We
have attached this opinion to this Proxy Statement-Prospectus as Appendix B.
                                                               
                                                               
You should read the opinion carefully to understand the procedures followed,
assumptions made, matters considered and limitations on the review undertaken by
Hovde Financial, Inc., in rendering its opinion.
                                                               
MANAGEMENT OF FIRST FINANCIAL AFTER THE MERGER
(PAGE 30)                                                      

                                                               
The current directors and executive officers of First Financial will remain
unchanged after the merger except that First Financial will appoint Bruce E.
Leep, a member of the Board of Directors of Sand Ridge Bank, as a director of
First Financial promptly after the effective time of the merger.
                                                               
                                                               

INTERESTS OF SAND RIDGE FINANCIAL'S DIRECTORS AND EXECUTIVE
OFFICERS IN THE MERGER (PAGE 31)                               

Some directors and officers of Sand Ridge Financial have interests in the merger
that are different from your interests. The merger agreement contains certain
provisions regarding the continuation or modification of benefits available to
employees of Sand Ridge Financial. These modifications apply to all of Sand
Ridge Financial's employees. The Board of Directors of Sand Ridge Financial was
aware of these interests and took them into account in approving the merger
agreement.
                                                               
DIFFERENCES IN RIGHTS OF SHAREHOLDERS (PAGE 64)

The Indiana Business Corporation Law and Sand Ridge Financial's Certificate of
Incorporation and Bylaws currently govern your rights as a shareholder of Sand
Ridge Financial. First Financial is an Ohio corporation and, if the merger is
completed, the Ohio General Corporation Law and First Financial's Articles of
Incorporation and Regulations will govern your shareholder rights.

DISSENTERS' RIGHTS (PAGE 33)

Indiana law permits holders of Sand Ridge Financial common stock to dissent from
the merger and to have the fair value of their stock appraised by a court and
paid to them in cash. To do this, holders of dissenting shares must follow
required procedures, including filing notices with us and either abstaining or
voting against the merger. If you dissent from the merger and follow the
required procedures, your shares of Sand Ridge Financial common stock will not
become shares of First Financial common stock. Instead, your only right will be
to receive the appraised value of your shares in cash. We have attached the
applicable provisions of Indiana law related to dissenters' rights to this Proxy
Statement-Prospectus as Appendix C.

REGULATORY APPROVALS (PAGE 39)

We cannot complete the merger until the proposed transaction receives the
approval of the Federal Reserve Board and 15 days expire after the receipt of
such approval. Such 15 day period will become a 30 day period, however, if the
United States Department of Justice issues an adverse comment relating to
competitive factors. In addition, the merger is also subject to approval by the
Indiana Department of Financial Institutions.


RECENT DEVELOPMENTS (PAGE 46)

First Financial signed a plan and agreement of merger with Hebron Bancorp, Inc.,
Hebron, Kentucky ("Hebron Bancorp") on December 31, 1998. Shareholders of Hebron
Bancorp will receive 20.3775 shares of First Financial Common Stock for each
share of Hebron Bancorp stock. After the merger, Hebron Deposit Bank, Hebron
Bancorp's only subsidiary, will become a wholly owned subsidiary of First
Financial. Subject to numerous conditions, including shareholder and regulatory
approval, the completion of this merger is not certain.

First Financial's annual report for the year ended December 31, 1998 was not
available when this Proxy Statement-Prospectus was mailed to Sand Ridge
Financial's shareholders. Its earnings for 1998 were $44,106,000, or $1.21 per
share on a diluted basis. This compares with 1997 earnings of $40,308,000, or
$1.10 per diluted share.

- -------------------------------------------------------------------------------

<PAGE>   11


  SUMMARY OF SELECTED UNAUDITED CONSOLIDATED FINANCIAL DATA AND PER SHARE DATA
<TABLE>
<CAPTION>

                                                            NINE MONTHS ENDED
                                                              SEPTEMBER 30,                  YEARS ENDED DECEMBER 31,
                                                    ------------------------------  ----------------------------------------------
                                                         1998               1997             1997       1996            1995      
                                                         ----               ----             ----       ----            ----      
                                                                                   (Dollars in thousands, except per share data)
<S>                                                <C>             <C>             <C>             <C>             <C>            
SAND RIDGE FINANCIAL (HISTORICAL)
  Net earnings (A)                                 $      4,019    $      3,571    $      4,993    $      4,884    $      4,158   
  Total assets (period end)                             527,256         428,343         456,094         416,544         393,138   
  Long-term borrowings (period end)                      13,898           4,686           4,686           3,500               0   
  Net earnings per common share - basic (A)(1)            66.99           59.51           83.21           81.39           69.30   
  Net earnings per common share - diluted (A)(1)          66.99           59.51           83.21           81.39           69.30   
  Dividends declared per share                             0.00            0.00           17.00           16.00           15.00   
  Book value per share (period end) (2)                  746.13          645.39          661.34          576.49          516.70   
  Average shares outstanding (B)                         60,000          60,000          60,000          60,000          60,000   
  Shares outstanding (period end) (B)                    60,000          60,000          60,000          60,000          60,000   

HEBRON BANCORP, INC. (HISTORICAL)
  Net earnings (A)                                 $      1,158    $      1,204    $      1,531    $      1,263    $      1,027   
  Total assets (period end)                             105,568          96,851          99,114          96,017          90,844   
  Long-term borrowings (period end)                       1,874           1,144           1,127           1,194           1,260   
  Net earnings per common share - basic (A)(1)            19.79           20.58           26.17           21.59           17.56   
  Net earnings per common share - diluted (A)(1)          19.79           20.58           26.17           21.59           17.56   
  Dividends declared per share                             0.00            0.00            5.00            4.00            2.50   
  Book value per share (period end) (2)                  198.52          174.70          176.36          152.21          134.24   
  Average shares outstanding (B)(4)                      58,500          58,500          58,500          58,500          58,500   
  Shares outstanding (period end) (B)(4)                 58,500          58,500          58,500          58,500          58,500   

FIRST FINANCIAL (HISTORICAL)
  Net earnings (A)                                 $     32,347    $     29,658    $     40,308    $     33,940    $     31,789   
  Total assets (period end)                           2,809,717       2,421,096       2,636,111       2,261,711       2,103,375   
  Long-term borrowings (period end)                     101,216          12,133          41,054           6,506           2,820   
  Net earnings per common share - basic (A)(1)             0.89            0.81            1.11            0.96            0.95   
  Net earnings per common share - diluted (A)(1)           0.88            0.81            1.10            0.96            0.95   
  Dividends declared per share (3)                         0.41            0.39            0.52            0.46            0.41   
  Book value per share (period end) (2)                    8.31            7.70            7.86            7.27            6.76   
  Average shares outstanding (B)(5)                  36,418,481      36,395,752      36,402,415      35,359,522      33,243,500   
  Shares outstanding (period end) (B)(5)             36,396,062      36,427,457      36,424,937      35,578,513      34,641,729   



<CAPTION>

                                                              
                                                       YEARS ENDED DECEMBER 31,
                                                     ----------------------------
                                                           1994          1993
                                                           ----          ----  
                                                    (Dollars in thousands, except
                                                             per share data)
<S>                                                  <C>             <C>         
SAND RIDGE FINANCIAL (HISTORICAL)
  Net earnings (A)                                   $      3,639    $      3,628
  Total assets (period end)                               363,566         318,596
  Long-term borrowings (period end)                             0               0
  Net earnings per common share - basic (A)(1)              60.66           60.47
  Net earnings per common share - diluted (A)(1)            60.66           60.47
  Dividends declared per share                              14.00           13.00
  Book value per share (period end) (2)                    404.64          388.15
  Average shares outstanding (B)                           60,000          60,000
  Shares outstanding (period end) (B)                      60,000          60,000

HEBRON BANCORP, INC. (HISTORICAL)
  Net earnings (A)                                   $        816    $        747
  Total assets (period end)                                82,063          79,549
  Long-term borrowings (period end)                         1,320           1,329
  Net earnings per common share - basic (A)(1)              13.95           12.77
  Net earnings per common share - diluted (A)(1)            13.95           12.77
  Dividends declared per share                               2.20            2.10
  Book value per share (period end) (2)                    120.50          109.04
  Average shares outstanding (B) (4)                       58,500          58,500
  Shares outstanding (period end) (B)(4)                   58,500          58,500

FIRST FINANCIAL (HISTORICAL)
  Net earnings (A)                                   $     28,173    $     25,194
  Total assets (period end)                             1,922,643       1,810,673
  Long-term borrowings (period end)                             0           3,983
  Net earnings per common share - basic (A)(1)               0.87            0.78
  Net earnings per common share - diluted (A)(1)             0.86            0.77
  Dividends declared per share (3)                           0.37            0.31
  Book value per share (period end) (2)                      5.99            5.87
  Average shares outstanding (B)(5)                    32,505,024      32,506,760
  Shares outstanding (period end) (B)(5)               32,488,579      30,877,596
</TABLE>


                                       7



<PAGE>   12

<TABLE>
<CAPTION>

                                    SUMMARY OF SELECTED UNAUDITED CONSOLIDATED FINANCIAL DATA AND PER SHARE DATA, CONTINUED

                                                           NINE MONTHS ENDED
                                                              SEPTEMBER 30,                 YEARS ENDED DECEMBER 31,
                                                  ---------------------------------     -----------------------------------
                                                          1998              1997              1997              1996       
                                                          ----              ----              ----              ----       
                                                                                      (Dollars in thousands, except per share data)
<S>                                                <C>               <C>                <C>               <C>              
PRO FORMA FIRST FINANCIAL & SAND RIDGE
FINANCIAL (6)
  Net earnings (A)                                 $       36,366    $       33,229     $       45,301    $       38,824   
  Net earnings per common share - basic (A)(1)               0.88              0.80               1.09              0.96   
  Net earnings per common share - diluted (A)(1)             0.87              0.80               1.08              0.96   
  Dividends declared per share - First
    Financial                                                0.41              0.39               0.52              0.46   
  Book value per share (period end) (2)                      8.36              7.68               7.85              7.21   
  Average shares outstanding (B)                       41,533,481        41,510,752         41,517,415        40,474,522   
  Shares outstanding (period end) (B)                  41,511,062        41,542,457         41,539,937        40,693,513   

PRO FORMA SAND RIDGE FINANCIAL ONE SHARE
EQUIVALENT ASSUMING MERGER OF FIRST FINANCIAL
& SAND RIDGE FINANCIAL AND 85.25 EXCHANGE
RATIO (7)
  Net earnings per common share - basic (A)(1)     $        75.02    $        68.20     $        92.92    $        81.84   
  Net earnings per common share - diluted (A)(1)            74.17             68.20              92.07             81.84   
  Dividends declared per share                              34.95             33.25              44.33             39.22   
  Book value per share (2)                                 712.69            654.72             669.21            614.65   

PRO FORMA FIRST FINANCIAL, SAND RIDGE
FINANCIAL &  HEBRON BANCORP, INC. (8)
  Net earnings (A)                                 $       37,524    $       34,433     $       46,832    $       40,087   
  Net earnings per common share - basic (A)(1)               0.88              0.81               1.10              0.96   
  Net earnings per common share - diluted (A)(1)             0.87              0.80               1.09              0.96   
  Dividends declared per share - First
     Financial                                               0.41              0.39               0.52              0.46   
  Book value per share (period end) (2)                      8.40              7.70               7.86              7.21   
  Average shares outstanding (B)                       42,756,131        42,733,402         42,740,065        41,697,172   
  Shares outstanding (period end) (B)                  42,733,712        42,765,107         42,762,587        41,916,163   

PRO FORMA SAND RIDGE FINANCIAL ONE SHARE
EQUIVALENT ASSUMING MERGER OF  FIRST
FINANCIAL, SAND RIDGE FINANCIAL & HEBRON
BANCORP AND 85.25 EXCHANGE RATIO (7)
  Net earnings per common share - basic (A)(1)     $        75.02    $        69.05     $        93.78    $        81.84   
  Net earnings per common share - diluted (A)(1)            74.17             68.20              92.92             81.84   
  Dividends declared per share                              34.95             33.25              44.33             39.22   
  Book value per share (2)                                 716.10            656.43             670.07            614.65   


<CAPTION>


                                                                      YEARS ENDED DECEMBER 31,
                                                  ----------------------------------------------------------
                                                          1995              1994               1993
                                                          ----              ----               ---- 
                                                         (Dollars in thousands, except per share data)
<S>                                                  <C>               <C>               <C>           
PRO FORMA FIRST FINANCIAL & SAND RIDGE
FINANCIAL (6)
  Net earnings (A)                                   $       35,947    $       31,812    $       28,822
  Net earnings per common share - basic (A)(1)                 0.94              0.85              0.77
  Net earnings per common share - diluted (A)(1)               0.93              0.84              0.76
  Dividends declared per share - First
   Financial                                                   0.41              0.37              0.31
  Book value per share (period end) (2)                        6.67              5.82              5.68
  Average shares outstanding (B)                         38,358,500        37,620,024        37,621,760
  Shares outstanding (period end) (B)                    39,756,729        37,603,579        35,992,596

PRO FORMA SAND RIDGE FINANCIAL ONE SHARE
EQUIVALENT ASSUMING MERGER OF FIRST FINANCIAL
& SAND RIDGE FINANCIAL AND 85.25 EXCHANGE
RATIO (7)
  Net earnings per common share - basic (A)(1)       $        80.14    $        72.46    $        65.64
  Net earnings per common share - diluted (A)(1)              79.28             71.61             64.79
  Dividends declared per share                                34.95             31.54             26.43
  Book value per share (2)                                   568.62            496.16            484.22

PRO FORMA FIRST FINANCIAL, SAND RIDGE
FINANCIAL &  HEBRON BANCORP, INC. (8)
  Net earnings (A)                                   $       36,974    $       32,628    $       29,569
  Net earnings per common share - basic (A)(1)                 0.93              0.84              0.76
  Net earnings per common share - diluted (A)(1)               0.93              0.83              0.76
  Dividends declared per share - First
    Financial                                                  0.41              0.37              0.31
  Book value per share (period end) (2)                        6.66              5.82              5.67
  Average shares outstanding (B)                         39,581,150        38,842,674        38,844,410
  Shares outstanding (period end) (B)                    40,979,379        38,826,229        37,215,246

PRO FORMA SAND RIDGE FINANCIAL ONE SHARE
EQUIVALENT ASSUMING MERGER OF  FIRST
FINANCIAL, SAND RIDGE FINANCIAL & HEBRON
BANCORP AND 85.25 EXCHANGE RATIO (7)
  Net earnings per common share - basic (A)(1)       $        79.28    $        71.61    $        64.79
  Net earnings per common share - diluted (A)(1)              79.28             70.76             64.79
  Dividends declared per share                                34.95             31.54             26.43
  Book value per share (2)                                   567.77            496.16            483.37
</TABLE>

- ------------------
(A)  Before cumulative effect of changes in accounting principles. 
(B)  Average and period end shares outstanding are not rounded to the nearest
     thousand.

                                       8

<PAGE>   13


NOTES TO SELECTED UNAUDITED CONSOLIDATED FINANCIAL DATA AND PER SHARE DATA

(1)      Earnings per common share - basic is calculated by dividing net
         earnings for the period by the average number of common shares
         outstanding for the period. Earnings per common share - diluted for
         First Financial includes the assumed exercise of outstanding stock
         options. Sand Ridge Financial and Hebron Bancorp do not have any
         potentially dilutive instruments outstanding.

(2)      Book value per share is calculated by dividing total shareholders'
         equity at the end of the period by the number of shares outstanding at
         the end of the period.

(3)      Dividend information on First Financial's subsidiaries, which have
         merged with First Financial under the pooling-of-interests method after
         January 1, 1993 has not been recalculated or added to First Financial's
         historical dividend information. First Financial has adjusted
         historical information to reflect the issuance of stock splits and
         dividends.

(4)      At the dates indicated, Hebron Bancorp owned 97.5% of the outstanding
         stock of Hebron Deposit Bank. As of December 31, 1998, the minority
         shareholders of Hebron Deposit Bank had traded their bank stock for
         shares of Hebron Bancorp, thereby increasing the total outstanding
         stock of Hebron Bancorp to 60,000 shares and making Hebron Deposit Bank
         a wholly owned subsidiary of Hebron Bancorp. The proforma financial
         data assumes 60,000 shares of Hebron Bancorp were outstanding at
         January 1, 1993.

(5)      The shares outstanding data for First Financial has been adjusted to
         reflect treasury stock transactions.

(6)      The PRO FORMA FIRST FINANCIAL & SAND RIDGE FINANCIAL reflects the
         combined results of First Financial and Sand Ridge Financial after
         giving effect to the pooling-of-interests method of accounting. For
         illustrative purposes, the combined results assume the merger was
         consummated on January 1, 1993.

         The per share data, average shares outstanding and shares outstanding
         (period end) were calculated assuming the issuance of 5,115,000 shares
         of First Financial Common Stock for all outstanding shares of Sand
         Ridge Financial.

(7)      Upon consummation of the Merger, each Sand Ridge Financial shareholder
         will be entitled to receive First Financial shares equal to the total
         number of shares of Sand Ridge Financial Common Stock owned by such
         shareholder multiplied by the Exchange Ratio. The Exchange Ratio will
         be appropriately adjusted in the event of the subdivision or split of
         the outstanding First Financial Common Stock, a capital reorganization,
         or a reclassification or recapitalization affecting First Financial
         Common Stock. Since the Exchange Ratio is not determinable at the
         printing of this Proxy Statement-Prospectus, the one share equivalent
         pro forma net earnings, dividends and book value per share for Sand
         Ridge Financial was calculated assuming an Exchange Ratio of 85.25 and
         are shown for illustrative purposes only.

(8)      The PRO FORMA FIRST FINANCIAL, SAND RIDGE FINANCIAL & HEBRON BANCORP,
         INC. reflects the combined results of First Financial, Sand Ridge
         Financial and Hebron Bancorp, Inc. after giving effect to the
         pooling-of-interests method of accounting. For illustrative purposes,
         the combined results assume the merger was consummated on January 1,
         1993.

         The per share data, average shares outstanding and shares outstanding
         (period end) were calculated assuming the issuance of 5,115,000 shares
         of First Financial Common Stock for all outstanding shares of Sand
         Ridge Financial and the issuance of 1,222,650 shares of First Financial
         Common Stock for all outstanding shares of Hebron Bancorp, Inc.

                                       9
<PAGE>   14


        SUMMARY OF PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL INFORMATION

         The following pro forma unaudited consolidated balance sheet as of
September 30, 1998 and the pro forma unaudited consolidated statements of
earnings for the nine months ended September 30, 1998 and 1997 and the years
ended December 31, 1997, 1996 and 1995 indicate the pro forma effects of the
mergers of Sand Ridge Financial and Hebron Bancorp, Inc. ("Hebron Bancorp") into
First Financial and the issuance of shares of First Financial Common Stock in
exchange for all of the outstanding shares of Sand Ridge Financial and Hebron
Bancorp common stock using the pooling-of-interests method of accounting. Each
share of Sand Ridge Financial Common Stock and Hebron Bancorp Common Stock will
be canceled and extinguished in consideration and exchange for a number of
shares of First Financial Common Stock equal to their respective exchange
ratios. The pro forma information has been calculated assuming the issuance of
5,115,000 shares of First Financial Common Stock for Sand Ridge Financial Common
Stock and the issuance of 1,222,650 shares of First Financial Common Stock for
Hebron Bancorp Common Stock. These are the aggregate number of shares to be
issued according to the respective merger agreements.

         The pro forma information for First Financial and Sand Ridge Financial
is based on their historical financial statements, giving effect to the
accounting method proposed and the assumptions and adjustments in the
accompanying notes to the pro forma financial statements. Hebron Bancorp uses a
June 30 fiscal year. For purposes of the pro forma unaudited consolidated
financial statements, their statements of earnings have been adjusted to reflect
the nine months ended September 30 and the years ended December 31. Even though
Hebron Bancorp uses a June 30 fiscal year for reporting purposes, its internal
books and records are maintained on a calendar year basis. Hebron Bancorp's
internal financial statements were therefore used for the pro forma financial
information on the following pages.

         These pro forma unaudited statements are presented for illustrative
purposes only and may not be indicative of the results that actually would have
occurred if the combination had been in effect on the dates indicated or which
may be obtained in the future. The pro forma unaudited financial statements
should be read in conjunction with the audited and unaudited financial
statements and related notes set forth or incorporated by reference in this
Proxy Statement-Prospectus.

                                       10
<PAGE>   15


<TABLE>
<CAPTION>
                 PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
                              AT SEPTEMBER 30, 1998



                                 First     Sand Ridge                          Consolidated
                               Financial    Financial           Hebron           Pro Forma
                               ---------   ----------           ------          -----------
                                                  (Dollars in thousands)

<S>                         <C>             <C>               <C>               <C>        
ASSETS
Cash and due from banks     $   123,398     $    22,727       $     2,925       $   149,050
Interest-bearing
  deposits with other
  banks                           2,677             100                 0             2,777
Federal funds sold and
  securities purchased
  under agreements to
  resell                          4,850               0             4,097             8,947
Investment securities           371,415         202,824            27,699           601,938
Loans, net of unearned
  income and allowance
  for loan losses             2,164,039         290,153            68,240         2,522,432
Premises and equipment           48,602           5,750             1,154            55,506
Accrued interest and
  other assets                   94,736           5,702             1,453           101,891
                            -----------     -----------       -----------       -----------
TOTAL ASSETS                $ 2,809,717     $   527,256       $   105,568       $ 3,442,541
                            ===========     ===========       ===========       ===========

LIABILITIES
Deposits                    $ 2,248,602     $   437,587       $    89,566       $ 2,775,755
Short term borrowings           130,208          25,981             1,694           157,883
Long term borrowings            101,216          13,898             1,874           116,988
Accrued interest and
  other liabilities              27,307           5,022               821            33,150
                            -----------     -----------       -----------       -----------
TOTAL LIABILITIES             2,507,333         482,488            93,955         3,083,776

SHAREHOLDERS' EQUITY
Common stock                    231,767             600(B)            117(D)        239,892
Surplus                               0           4,600(B)          2,808(D)              0
Retained earnings                69,422          36,062             8,452           113,936
Treasury stock, at cost          (1,068)              0                 0            (1,068)
Unrealized net gain
  (losses) on securities
  available-for-sale,
  net of deferred income
  taxes                           2,707           3,506               236             6,449
Restricted stock awards            (444)              0                 0              (444)
                            -----------     -----------       -----------       -----------
TOTAL SHAREHOLDERS
  EQUITY                        302,384          44,768            11,613           358,765
                            ===========     ===========       ===========       ===========
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY      $ 2,809,717     $   527,256       $   105,568       $ 3,442,541
                            ===========     ===========       ===========       ===========
</TABLE>

- --------------------
See Notes to the Pro Forma Unaudited Consolidated Financial Statements on page
17.

                                       11
<PAGE>   16


             PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
                                              First                Sand Ridge                                Consolidated
                                            Financial              Financial                Hebron             Pro Forma
                                            ---------              ---------                ------             ---------
                                                            (Dollars in thousands, except per share data)

<S>                                         <C>                     <C>                     <C>                 <C>     
INTEREST INCOME:
  Loans, including fees                     $143,294                $18,029                 $4,787              $166,110
  Investment securities                       19,230                  8,152                    938                28,320
  Other                                          583                     83                    170                   836
                                            --------                -------                 ------               -------
  Total interest income                      163,107                 26,264                  5,895               195,266

INTEREST EXPENSE:
  Deposits                                    60,213                 12,245                  2,755                75,213
  Short-term borrowings                        3,311                    498                     58                 3,867
  Long-term borrowings                         2,400                    636                     89                 3,125
                                            --------                -------                 ------               -------
  Total interest expense                      65,924                 13,379                  2,902                82,205
                                            --------                -------                 ------               -------
  Net interest income                         97,183                 12,885                  2,993               113,061
  Provision for loan
    losses                                     4,066                  1,750                     80                 5,896
                                            --------                -------                 ------               -------
  Net interest income
    after provision for
    loan losses                               93,117                 11,135                  2,913               107,165
NONINTEREST INCOME                            24,176                  3,349                    436                27,961
NONINTEREST EXPENSES                          68,348                  9,200                  1,744                79,292
                                            --------                -------                 ------               -------
INCOME BEFORE INCOME
  TAXES                                       48,945                  5,284                  1,605                55,834
Income tax expense                            16,598                  1,265                    447                18,310
                                            --------                -------                 ------               -------
NET EARNINGS                                $ 32,347                $ 4,019                 $1,158               $37,524
                                            ========                =======                 ======               =======

NET EARNINGS PER COMMON SHARE
  Basic                                       $ 0.89                 $66.99                 $19.79                 $0.88
                                            ========                =======                 ======               =======
  Diluted                                      $0.88                 $66.99                 $19.79                 $0.87
                                            ========                =======                 ======               =======

AVERAGE SHARES
  OUTSTANDING                             36,418,481                 60,000  (A)            58,500  (C)       42,756,131
                                          ==========                 ======                 ======            ==========
</TABLE>


- --------------------
See Notes to the Pro Forma Unaudited Consolidated Financial Statements on page
17.


                                       12
<PAGE>   17


             PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
                                          First                Sand Ridge                                  Consolidated
                                        Financial              Financial                Hebron               Pro Forma
                                        ---------             -----------               ------             ------------
                                                            (Dollars in thousands, except per share data)

INTEREST INCOME:
<S>                                       <C>                       <C>                     <C>                 <C>     
  Loans, including fees                   $  122,298                $16,808                 $4,753              $143,859
  Investment securities                       18,696                  6,134                    880                25,710
  Other                                          560                    721                    126                 1,407
                                          ----------                -------                 ------              --------
  Total interest income                      141,554                 23,663                  5,759               170,976

INTEREST EXPENSE:
  Deposits                                    51,810                 11,553                  2,407                65,770
  Short-term borrowings                        4,304                     13                    108                 4,425
  Long-term borrowings                           489                    396                     61                   946
                                          ----------                -------                 ------              --------
  Total interest expense                      56,603                 11,962                  2,576                71,141
                                          ----------                -------                 ------              --------
  Net interest income                         84,951                 11,701                  3,183                99,835
  Provision for loan
    losses                                     3,059                  1,350                     90                 4,499
                                          ----------                -------                 ------              --------
  Net interest income
    after provision for
    loan losses                               81,892                 10,351                  3,093                95,336
NONINTEREST INCOME                            19,507                  2,800                    287                22,594
NONINTEREST EXPENSES                          57,377                  8,385                  1,612                67,374
                                          ----------                -------                 ------              --------
INCOME BEFORE INCOME
  TAXES                                       44,022                  4,766                  1,768                50,556
Income tax expense                            14,364                  1,195                    564                16,123
                                          ==========                =======                 ======              ========
NET EARNINGS                              $   29,658                $ 3,571                 $1,204             $  34,433
                                          ==========                =======                 ======             =========

NET EARNINGS PER COMMONSHARE
  Basic                                       $ 0.82                 $59.51                 $20.58                 $0.81
                                          ==========                =======                 ======              ========
  Diluted                                     $ 0.81                 $59.51                 $20.58                 $0.80
                                          ==========                =======                 ======              ========

AVERAGE SHARES OUTSTANDING
                                          36,395,752                 60,000  (A)            58,500  (C)       42,733,402
                                      ===============        ===============        ===============        ==============
</TABLE>

- --------------------
See Notes to the Pro Forma Unaudited Consolidated Financial Statements on page
17.

                                       13
<PAGE>   18


             PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
                      FOR THE YEAR ENDED DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                          First                Sand Ridge                                  Consolidated
                                        Financial              Financial                Hebron               Pro Forma
                                        ---------              ---------                ------               ---------
                                                    (Dollars in thousands, except per share data)

<S>                                       <C>                       <C>                     <C>                 <C>     
INTEREST INCOME:
  Loans, including fees                   $  166,336                $22,642                 $6,443              $195,421
  Investment securities                       24,997                  8,498                  1,180                34,675
  Other                                          852                    982                    146                 1,980
                                      ---------------        ---------------        ---------------        --------------
  Total interest income                      192,185                 32,122                  7,769               232,076

INTEREST EXPENSE:
  Deposits                                    70,311                 15,719                  3,273                89,303
  Short-term borrowings                        5,518                     69                    133                 5,720
  Long-term borrowings                         1,004                    469                     80                 1,553
                                      ---------------        ---------------        ---------------        --------------
  Total interest expense                      76,833                 16,257                  3,486                96,576
                                      ---------------        ---------------        ---------------        --------------
  Net interest income                        115,352                 15,865                  4,283               135,500
  Provision for loan
    losses                                     4,736                  1,800                    120                 6,656
                                      ---------------        ---------------        ---------------        --------------
  Net interest income
    after provision for
    loan losses                              110,616                 14,065                  4,163               128,844
NONINTEREST INCOME                            26,977                  3,851                    384                31,212
NONINTEREST EXPENSES                          77,677                 11,229                  2,323                91,229
                                      ---------------        ---------------        ---------------        --------------
INCOME BEFORE INCOME
  TAXES                                       59,916                  6,687                  2,224                68,827
Income tax expense                            19,608                  1,694                    693                21,995
                                      ===============        ===============        ===============        ==============
NET EARNINGS                              $   40,308                $ 4,993                 $1,531             $  46,832
                                      ===============        ===============        ===============        ==============

NET EARNINGS PER COMMON SHARE
  Basic                                        $1.11                 $83.21                 $26.17                 $1.10
                                      ===============        ===============        ===============        ==============
  Diluted                                      $1.10                 $83.21                 $26.17                 $1.09
                                      ===============        ===============        ===============        ==============

AVERAGE SHARES OUTSTANDING
                                          36,402,415                 60,000  (A)            58,500  (C)       42,740,065
                                      ===============        ===============        ===============        ==============
</TABLE>


- --------------------
See Notes to the Pro Forma Unaudited Consolidated Financial Statements on page
17.



                                       14
<PAGE>   19


             PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
                      FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                          First                Sand Ridge                                  Consolidated
                                        Financial              Financial                Hebron               Pro Forma
                                        ---------              ---------                ------               ---------
                                                            (Dollars in thousands, except per share data)

<S>                                       <C>                       <C>                     <C>                 <C>     
INTEREST INCOME:
  Loans, including fees                   $  144,941                $21,149                 $5,707              $171,797
  Investment securities                       25,377                  7,448                  1,474                34,299
  Other                                          957                    335                    151                 1,443
                                      ---------------        ---------------        ---------------        --------------
  Total interest income                      171,275                 28,932                  7,332               207,539

INTEREST EXPENSE:
  Deposits                                    65,907                 14,052                  3,419                83,378
  Short-term borrowings                        3,521                    271                    148                 3,940
  Long-term borrowings                           279                    149                     81                   509
                                      ---------------        ---------------
                                                                                    ---------------        --------------
  Total interest expense                      69,707                 14,472                  3,648                87,827
                                      ---------------        ---------------        ---------------        --------------
  Net interest income                        101,568                 14,460                  3,684               119,712
  Provision for loan
    losses                                     3,433                  1,440                    156                 5,029
                                      ---------------        ---------------        ---------------        --------------
  Net interest income
    after provision for
    loan losses                               98,135                 13,020                  3,528               114,683
NONINTEREST INCOME                            22,097                  3,277                    373                25,747
NONINTEREST EXPENSES                          71,261                  9,499                  2,057                82,817
                                      ---------------        ---------------        ---------------        --------------
INCOME BEFORE INCOME
  TAXES                                       48,971                  6,798                  1,844                57,613
Income tax expense                            15,031                  1,914                    581                17,526
                                      ===============        ===============        ===============        ==============
NET EARNINGS                              $   33,940                $ 4,884                 $1,263             $  40,087
                                      ===============        ===============        ===============        ==============

NET EARNINGS PER COMMON SHARE
  Basic                                        $0.96                 $81.39                 $21.59                 $0.96
                                      ===============        ===============        ===============        ==============
  Diluted                                      $0.96                 $81.39                 $21.59                 $0.96
                                      ===============        ===============        ===============        ==============

AVERAGE SHARES OUTSTANDING
                                          35,359,522                 60,000  (A)            58,500  (C)       41,697,172
                                      ===============        ===============        ===============        ==============
</TABLE>

- --------------------
See Notes to the Pro Forma Unaudited Consolidated Financial Statements on page
17.

                                       15
<PAGE>   20


             PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
                      FOR THE YEAR ENDED DECEMBER 31, 1995



<TABLE>
<CAPTION>
                                          First                Sand Ridge                                  Consolidated
                                        Financial              Financial                Hebron               Pro Forma
                                        ---------              ---------                ------               ---------
                                                            (Dollars in thousands, except per share data)

<S>                                       <C>                       <C>                     <C>                 <C>     
INTEREST INCOME:
  Loans, including fees                   $  129,058                $20,072                 $5,335              $154,465
  Investment securities                       24,024                  6,577                  1,208                31,809
  Other                                          769                    705                    130                 1,604
                                      ---------------        ---------------        ---------------        --------------
  Total interest income                      153,851                 27,354                  6,673              $187,878

INTEREST EXPENSE:
  Deposits                                    59,413                 12,994                  3,040                75,447
  Short-term borrowings                        4,051                    385                    101                 4,537
  Long-term borrowings                            52                    679                     87                   818
                                      ---------------        ---------------        ---------------        --------------
  Total interest expense                      63,516                 14,058                  3,228                80,802
                                      ---------------        ---------------        ---------------        --------------
  Net interest income                         90,335                 13,296                  3,445               107,076
  Provision for loan
    losses                                     2,108                  1,040                    288                 3,436
                                      ---------------        ---------------        ---------------        --------------
  Net interest income
    after provision for
    loan losses                               88,227                 12,256                  3,157               103,640
NONINTEREST INCOME                            20,558                  2,999                    433                23,990
NONINTEREST EXPENSES                          63,345                  9,567                  2,103                75,015
                                      ---------------        ---------------        ---------------        --------------
INCOME BEFORE INCOME
  TAXES                                       45,440                  5,688                  1,487                52,615
Income tax expense                            13,651                  1,530                    460                15,641
                                      ===============        ===============        ===============        ==============
NET EARNINGS                              $   31,789                $ 4,158                 $1,027             $  36,974
                                      ===============        ===============        ===============        ==============

NET EARNINGS PER COMMON SHARE
  Basic                                        $0.95                 $69.30                 $17.56                 $0.93
                                      ===============        ===============        ===============        ==============
  Diluted                                      $0.95                 $69.30                 $17.56                 $0.93
                                      ===============        ===============        ===============        ==============

AVERAGE SHARES OUTSTANDING
                                          33,243,500                 60,000  (A)            58,500  (C)       39,581,150
                                      ===============        ===============        ===============        ==============
</TABLE>

- --------------------
See Notes to the Pro Forma Unaudited Consolidated Financial Statements on page
17.

                                       16
<PAGE>   21


       NOTES TO THE PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


GENERAL

         Reclassification of information has been made at times to provide
consistency in the presentation of financial information for the corporations
involved. These reclassifications are not material in nature and had no effect
on net earnings.

         Listed below are certain costs that are directly attributable to the
Merger with Sand Ridge Financial and some of these can reasonably be expected to
be included in the expenses of First Financial during the next 12 months. At
September 30, 1998, Sand Ridge Financial had not expensed any costs related to
the Merger. The following costs were NOT considered in the preparation of the
Pro Forma Unaudited Consolidated Financial Statements.

<TABLE>
<CAPTION>
                   Classification                             Amount
                   --------------                             ------
                                   (Dollars in thousands)
<S>                                                             <C>     
                   Legal                                        $    245
                   Accounting                                        155
                   Financial advisor                               2,000
                   Regulatory filing fees                             25
                   Other                                              70
                                                                  ------
                   Total                                          $2,495
                                                                  ======
</TABLE>


(A)      First Financial is offering to exchange an aggregate total of 5,115,000
         shares of First Financial Common Stock for outstanding shares of Sand
         Ridge Financial Common Stock. The exact number of First Financial
         shares to be issued for each share of Sand Ridge Financial Common Stock
         will be calculated by dividing 5,115,000 by the aggregate number of
         shares of Sand Ridge Financial Common Stock issued and outstanding
         immediately prior to the Effective Time. The Exchange Ratio will be
         appropriately adjusted in the event of the subdivision or split of the
         outstanding First Financial Common Stock, a capital reorganization, or
         a reclassification or recapitalization affecting First Financial Common
         Stock.

         If the Merger was consummated on __________ __, 1999, the Exchange
         Ratio would be 85.25 shares of First Financial Common Stock for each
         share of Sand Ridge Financial Common Stock.

(B)      First Financial Common Stock and Sand Ridge Financial Common Stock do
         not have par values. Sand Ridge Financial Common Stock, however, has a
         stated value of $10.00 per share, while First Financial Common Stock
         does not have a stated value. Since First Financial Common Stock does
         not have a stated value, its capital accounts do not include an
         "additional paid-in capital" or "surplus" account. As a result, Sand
         Ridge Financial's additional paid in capital was transferred to its
         "common stock" account in the "consolidated pro forma" column, as shown
         in the table below:

<TABLE>
<CAPTION>
                                                        Sand Ridge         Transfer         Sand Ridge
                                                         Financial           from           Financial
                                                          Actual           Surplus          Pro Forma
                                                          ------           -------          ---------
                                                                    (Dollars in thousands)

<S>                                                       <C>               <C>             <C>     
                   Common stock                           $     600         $ 4,600         $  5,200
                   Surplus                                    4,600          (4,600)               0
                                                           --------      ----------         --------
                   Total common stock and surplus          $  5,200      $        0         $  5,200
                                                           ========      ==========         ========
</TABLE>

                                       17
<PAGE>   22

         The consolidated pro forma shareholders' equity per share was
         calculated assuming the issuance of 5,115,000 shares of First Financial
         Common Stock, which is the number of shares that would have been issued
         if the Merger was effective __________ __, 1999. The use of the number
         of shares is for illustrative purposes only and does not attempt to
         predict the actual number of shares that will be exchanged in the
         Merger.

(C)      First Financial is offering to exchange an aggregate total of 1,222,650
         shares of First Financial Common Stock for outstanding shares of Hebron
         Bancorp Common Stock. The exact number of First Financial shares to be
         issued for each share of Hebron Bancorp Common Stock will be calculated
         by dividing 1,222,650 by the aggregate number of shares of Hebron
         Bancorp Common Stock issued and outstanding immediately prior to the
         Effective Time for this merger. The Exchange Ratio will be
         appropriately adjusted in the event of the subdivision or split of the
         outstanding First Financial Common Stock, a capital reorganization, or
         a reclassification or recapitalization affecting First Financial Common
         Stock.

         If the Merger was consummated on __________ __, 1999, the Exchange
         Ratio would be 20.3775 shares of First Financial Common Stock for each
         share of Hebron Bancorp Common Stock.

(D)      First Financial Common Stock and Hebron Bancorp Common Stock do not
         have par values. Hebron Bancorp Common Stock, however, has a stated
         value of $2.00 per share, while First Financial Common Stock does not
         have a stated value. Since First Financial Common Stock does not have a
         stated value, its capital accounts do not include an "additional
         paid-in capital" or "surplus" account. As a result, Sand Ridge
         Financial's additional paid in capital was transferred to its "common
         stock" account in the "consolidated pro forma" column, as shown in the
         table below:

<TABLE>
<CAPTION>
                                                          Hebron           Transfer           Hebron
                                                          Bancorp            from            Bancorp
                                                          Actual           Surplus          Pro Forma
                                                          ------           -------          ---------
                                                                    (Dollars in thousands)

<S>                                                         <C>            <C>                  <C>     
                   Common stock                             $     117      $   2,808             $  2,925
                   Surplus                                      2,808         (2,808)                   0
                                                             --------      ----------            --------
                   Total common stock and surplus            $  2,925      $        0            $  2,925
                                                             ========      ==========            ========
</TABLE>



                                       18
<PAGE>   23




                               THE SPECIAL MEETING


         Sand Ridge Financial Corporation, an Indiana corporation ("Sand Ridge
Financial"), is mailing this Proxy Statement-Prospectus to holders of shares of
its common stock ("Sand Ridge Financial Common Stock") on or about March __,
1999, together with a notice of a Special Meeting of Shareholders (the "Special
Meeting") and a form of proxy solicited by the Board of Directors of Sand Ridge
Financial (the "Sand Ridge Board") for use at the Special Meeting.


TIME AND PLACE; PURPOSE

         The Special Meeting will be at the main office of Sand Ridge Bank, 2611
Highway Avenue, Highland, Indiana 46322, starting at 9:00 a.m., local time, on
April 22, 1999. At the Special Meeting, you will be asked to consider and vote
upon a proposal to approve a Plan and Agreement of Merger (the "Merger
Agreement") dated December 16, 1998 by and between First Financial Bancorp., an
Ohio corporation ("First Financial"), and Sand Ridge Financial. Pursuant to the
Merger Agreement, Sand Ridge Financial will be merged into First Financial (the
"Merger") and Sand Ridge Bank will become a wholly owned subsidiary of First
Financial.


VOTING AND REVOCATION OF PROXIES

         You may use the accompanying proxy card if you are unable to attend the
Special Meeting in person or wish to have your shares voted by proxy even if you
do attend the Special Meeting. You may revoke any proxy that you give at any
time before it is exercised, either by submitting a written notice of revocation
or a properly executed proxy of a later date, or by attending the Special
Meeting and voting in person. You should address the written notice of
revocation and other communications with respect to the revocation of Sand Ridge
Financial proxies to Sand Ridge Financial Corporation, 2611 Highway Avenue,
Highland, Indiana 46322, Attention "Secretary."

         All shares of Sand Ridge Financial Common Stock represented by properly
executed proxies received prior to or at the Special Meeting and not revoked
before they are exercised will be voted in accordance with the instructions
indicated in such proxies. If you do not specify how your proxy is to be voted,
it will be voted "FOR" the Merger Agreement.


                                       19
<PAGE>   24







SOLICITATION OF PROXIES

         Sand Ridge Financial will pay the expenses of solicitation of proxies
for the Special Meeting. In addition to solicitation by mail, proxies may be
solicited in person by directors, officers and employees of Sand Ridge without
additional compensation and by telephone, teletype, facsimile or similar method.
Sand Ridge will also make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to beneficial owners
and to secure their voting instructions, if necessary. Sand Ridge Financial will
reimburse these record holders for their reasonable expenses in forwarding such
materials.


RECORD DATE AND VOTING RIGHTS

         RECORD DATE. The Sand Ridge Financial Board has fixed the close of
business on March 8, 1999 as the record date for determining the Sand Ridge
Financial shareholders entitled to notice of and to vote at the Special Meeting
(the "Record Date"). You will be entitled to vote at the Special Meeting if you
are a shareholder of record on the close of business on the Record Date. As of
the Record Date, there were 60,000 shares of Sand Ridge Financial Common Stock
outstanding and entitled to vote.

         VOTING RIGHTS. Each share of Sand Ridge Financial Common Stock entitles
its holder to one vote.

         VOTE REQUIRED. As permitted by the Indiana Business Corporation Law
(the "IBCL") and the Sand Ridge Financial Certificate of Incorporation, the
affirmative vote of the holders of two-thirds of the shares of Sand Ridge
Financial Common Stock outstanding on the Record Date is required to approve and
adopt the Merger Agreement.

         As of the close of business on the Record Date, there were 60,000
shares of Sand Ridge Financial Common Stock outstanding and entitled to vote,
and there were 337 holders of record of shares of Sand Ridge Financial Common
Stock. On such date, the directors and executive officers of Sand Ridge
Financial as a group beneficially owned 16,918 shares of Sand Ridge Financial
Common Stock, an amount equal to 28.2% of the shares of Sand Ridge Financial
Common Stock issued and outstanding on such date. The directors and executive
officers have indicated their intention to vote for the Merger.

         If less than two-thirds of the outstanding shares of Sand Ridge
Financial Common Stock are present at the Special Meeting, we expect that the
Special Meeting will be postponed or adjourned for the purpose of allowing
additional time for soliciting and obtaining additional proxies or votes. At any
subsequent reconvening of the Special Meeting, we will vote all proxies in the
same manner as they would have been voted at the original convening of the
Special Meeting, except for any proxies that have been revoked or withdrawn.

                                       20
<PAGE>   25

         ABSTENTIONS AND BROKER NON-VOTES. A properly executed proxy marked
"Abstain" will not be voted on the Merger Agreement proposal. Also, brokers who
hold Sand Ridge Financial Common Stock in "street" name for customers can not
vote these shares on the Merger Agreement proposal without specific instructions
from their customers.

         SINCE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF
AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES OF SAND RIDGE FINANCIAL COMMON
STOCK, YOUR FAILURE TO VOTE, YOUR ABSTENTION OR, IF YOUR SHARES ARE HELD IN
"STREET" NAME, YOUR FAILURE TO INSTRUCT YOUR BROKER ALL WILL HAVE THE SAME
EFFECT AS A VOTE AGAINST THE MERGER. ACCORDINGLY, THE SAND RIDGE FINANCIAL BOARD
URGES YOU TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.



                                       21
<PAGE>   26


                                   THE MERGER


         This section of the Proxy Statement-Prospectus describes certain of the
more important aspects of the Merger. The following description does not purport
to be complete and is qualified in its entirety by reference to the Merger
Agreement which is set forth in Appendix A to this Proxy Statement-Prospectus.
All shareholders are urged to read the Merger Agreement in its entirety.


BACKGROUND OF AND REASONS FOR THE MERGER

         As part of its continuing efforts to maximize shareholder value, Sand
Ridge Financial's Board of Directors has considered various strategic options
from time to time, including the possibility of seeking a merger with another
financial institution.

         In recent years, there has been, and there continues to be, substantial
consolidation in the United States banking and financial services industry. This
trend is necessarily of concern to smaller institutions like Sand Ridge
Financial because larger entities that emerge from consolidations may acquire
substantial competitive advantages. Sand Ridge Financial has been dedicated to
the goal of providing superior banking services, and in analyzing strategic
alternatives has always sought to ensure that the alternatives being considered
can reasonably be expected to result in improved services as well as enhanced
shareholder value.

         In May of 1998, the Sand Ridge Financial Board decided to obtain
independent assistance in a strategic review of available options. The Sand
Ridge Financial Board retained outside financial advisors, Hovde Financial, Inc.
("Hovde"), to assist Sand Ridge Financial in reviewing market conditions and in
evaluating strategic alternatives. Prior to retaining Hovde, some of the
directors of the Sand Ridge Financial Board interviewed members of an unrelated
client to whom Hovde had provided investment banking services. In making its
selection, the Sand Ridge Financial Board determined to its satisfaction that
Hovde had extensive experience in advising financial institutions regarding
strategic alternatives, had a sizeable staff with the desired qualifications and
provided a fee estimate that was fair and reasonable.

         Hovde presented its strategic review materials to Sand Ridge
Financial's Board on June 4, 1998. After careful and thorough discussion of the
various alternatives, Sand Ridge Financial's Board determined to consider the
merger of Sand Ridge Financial.

         In seeking potential acquirers, Sand Ridge Financial's Board had a
number of criteria for selecting a merger partner. The criteria included:

         a.       active and broad marketability of acquirer's stock;
         b.       a control premium that reflected Sand Ridge Financial's
                  financial condition;
         c.       attractive relative valuation of acquirer's stock with
                  prospects for price appreciation better than those for Sand
                  Ridge Financial's stock;
         d.       a transaction with little or no adverse tax consequences for
                  the shareholders;
         e.       possible higher dividends for shareholders;

                                       22
<PAGE>   27

         f.       a sizeable acquirer with a diversified product base and
                  revenue stream;
         g.       benefit plans which were comparable to Sand Ridge Financial's
                  plans;
         h.       minimal dislocation of employees;
         i.       a willingness to retain Sand Ridge Bank as a separate
                  subsidiary;
         j.       an acquirer which was a good corporate citizen;
         k.       an acquirer which would maintain a diverse and competitive
                  source of commercial bank products and services for Sand Ridge
                  Financial's customers; and
         l.       as few contingencies as possible to closing.

         The Board authorized Hovde to contact a number of other bank holding
companies to assess their interest in pursuing a strategic affiliation with Sand
Ridge Financial. Institutions contacted included companies which Sand Ridge
Financial and Hovde believed would have strategic interest in Sand Ridge
Financial and the financial ability to acquire Sand Ridge Financial. After
receipt of written preliminary indications of interest from five companies,
subject to due diligence, three companies were offered the opportunity to
conduct a detailed business review of Sand Ridge Financial in order to formulate
a firm offer which would not be conditional upon the performance of a further
business review by the offeror. All three companies availed themselves of this
opportunity. In October, 1998, each of the three conducted in-depth examinations
of the books, records and operations of Sand Ridge Financial and had discussions
with executive management and the Board of Directors.

         Upon conclusion of their examinations, each of the companies that had
conducted a business review submitted offers for stock.

         After careful review of the consideration offered and of the merger
selection criteria, the Sand Ridge Financial Board determined on November 3,
1998, that the stock offer from First Financial was the most attractive offer.
The stock offer from First Financial was at a fixed Exchange Ratio, except in
certain limited circumstances, of 85.25 shares of First Financial common Stock
for each share of Sand Ridge Financial's Common Stock, producing a price of
approximately $2,266.00 per Sand Ridge Financial share, based on First
Financial's share price on October 29, 1998.

         In addition to determining that the consideration offered by First
Financial was superior to other offers, the Sand Ridge Financial Board
determined that First Financial and First Financial's offer favorably satisfied
the merger criteria previously established by the Sand Ridge Financial Board.
Specifically, the Sand Ridge Financial Board found that, among favorable
criteria, First Financial's offer would:

         a.       afford a control premium to the shareholders of Sand Ridge
                  Financial because the offer was valued by Hovde at
                  approximately 310% of book value;
         b.       provide a marketable security to Sand Ridge Financial
                  shareholders because First Financial stock is actively traded
                  on the Nasdaq National Market System;
         c.       provide no current, adverse tax consequence to Sand Ridge
                  Financial shareholders, except for cash received for
                  fractional shares and cash paid to dissenting shareholders who
                  exercise dissenter's rights;
         d.       provide higher dividends for Sand Ridge Financial
                  shareholders;

                                       23
<PAGE>   28



         e.       provide for a merger with a bank holding company with $2.8
                  billion in assets and which operates five Ohio, one Michigan
                  and nine Indiana financial institution affiliates with a total
                  of 105 banking office locations;
         f.       provide benefit plans comparable to Sand Ridge Financial
                  plans;
         g.       maintain a diverse and competitive source of commercial bank
                  products and services for Sand Ridge Financial's customers;
         h.       retain Sand Ridge Bank as a separate subsidiary which would
                  allow autonomy in Sand Ridge Bank's operations thereby also
                  probably resulting in minimal dislocation of employees;
         i.       provide for only one business contingency, other than
                  contingencies that would be required in the normal course for
                  any merger transaction, that the transaction be treated as a
                  pooling-of-interests for accounting purposes; and
         j.       provide a price protection mechanism, permitting Sand Ridge
                  Financial to terminate the merger if there is a sustained
                  decline in First Financial's Common Stock value relative to a
                  peer group of comparable companies, unless First Financial
                  elects to adjust the Exchange Ratio to increase the number of
                  First Financial shares exchanged for each share of Sand Ridge
                  Financial Common Stock.

         In addition, the banking philosophy of First Financial, emphasizing
community banking and the autonomy of its subsidiaries, was of major importance
to the Sand Ridge Financial Board.

         In reviewing its initial merger criteria as well as the consideration
offered by each potential merger party, the Sand Ridge Financial Board
determined that the offer from First Financial was superior because it provided
a higher consideration and favorably met more of the criteria considered by the
Sand Ridge Financial Board.

         After these deliberations, the Sand Ridge Financial Board, with the
assistance of Hovde and Barnes & Thornburg, general legal counsel, entered into
negotiations toward a definitive agreement with First Financial. Following
negotiation of the Merger Agreement, the Sand Ridge Financial Board concluded
that the Merger would be in the best interest of Sand Ridge Financial and its
shareholders. On December 16, 1998, the Sand Ridge Financial Board approved the
Merger and the Merger Agreement. Based on its review, the Sand Ridge Financial
Board concluded the proposed Merger would be in the best interests of the
shareholders of Sand Ridge Financial and its customers, and of the communities
which Sand Ridge Financial serves. Accordingly, the Sand Ridge Financial Board
recommends that Sand Ridge Financial shareholders vote "FOR" the Merger.



                                       24
<PAGE>   29



OPINION OF FINANCIAL ADVISOR TO SAND RIDGE FINANCIAL

         In addition to the December 16, 1998 preliminary fairness opinion,
Hovde Financial, Inc. ("Hovde") has delivered to the Sand Ridge Financial Board
its updated fairness opinion, dated as of the date of this Proxy
Statement-Prospectus that, based upon and subject to the various considerations
set forth in such opinion, the Exchange Ratio is fair from a financial point of
view to the holders of Sand Ridge Financial Common Stock as of such date. In
requesting Hovde's advice and opinion, no limitations were imposed by Sand Ridge
Financial upon Hovde with respect to the investigations made or procedures
followed by it in rendering its opinion. The full text of the updated fairness
opinion of Hovde, which describes the procedures followed, assumptions made,
matters considered and limitations on the review undertaken, and which does not
materially differ from the December 16, 1998 preliminary fairness opinion, is
attached hereto as Appendix B. Holders of Sand Ridge Financial Common Stock
should read this opinion in its entirety.

         Hovde is a nationally recognized investment banking firm and, as part
of its investment banking business, is continually engaged in the valuation of
financial institutions in connection with mergers and acquisitions, private
placements and valuations for other purposes. As a specialist in securities of
financial institutions, Hovde has experience in, and knowledge of, banks,
thrifts and bank and thrift holding companies. Sand Ridge Financial's Board of
Directors selected Hovde to act as its financial advisor in connection with the
Merger on the basis of the firm's reputation and expertise in transactions such
as the Merger.

         Hovde will receive a fee contingent upon the completion of the Merger
for services rendered in connection with advising Sand Ridge Financial regarding
the Merger, including the fairness opinion and financial advisory services
provided to Sand Ridge Financial, plus reimbursement of out-of-pocket expenses.
As of the date of the preliminary fairness opinion, such fee would be
approximately $2.0 million and Hovde has received approximately $400,000 of such
fee.

         HOVDE'S OPINION IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL
POINT OF VIEW, OF THE EXCHANGE RATIO, AND DOES NOT CONSTITUTE A RECOMMENDATION
TO ANY HOLDER OF SAND RIDGE FINANCIAL COMMON STOCK AS TO HOW SUCH HOLDER SHOULD
VOTE AT THE SAND RIDGE FINANCIAL MEETING. THE SUMMARY OF THE OPINION OF HOVDE
SET FORTH IN THIS PROXY STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION.

         The following is a brief summary of the analyses performed by Hovde in
connection with its fairness opinion:

         During the course of its engagement, and as a basis for arriving at its
opinion, Hovde reviewed and analyzed material bearing upon the financial and
operating condition of Sand Ridge Financial and First Financial and material
prepared in connection with the Merger, including, among other things, the
following: (i) the Merger Agreement; (ii) certain historical publicly available
information concerning Sand Ridge Financial and First Financial; (iii) the
nature and terms of recent merger transactions; and (iv) financial and other
information provided to Hovde by

                                       25
<PAGE>   30


the management of Sand Ridge Financial and First Financial. Hovde conducted
meetings and had discussions with members of senior management of Sand Ridge
Financial and First Financial for purposes of reviewing the future prospects of
Sand Ridge Financial and First Financial. Hovde also took into account its
experience in other transactions, as well as its knowledge of the commercial
banking and thrift industries and its general experience in securities
valuations.

         In rendering its opinion, Hovde assumed, without independent
verification, the accuracy and completeness of the financial and other
information and relied upon the accuracy of the representations of the parties
contained in the Merger Agreement. Hovde has not made any independent evaluation
or appraisal of any properties, assets or liabilities of Sand Ridge Financial.
Hovde assumed and relied upon the accuracy and completeness of the publicly
available and other financial and other information provided to it, relied upon
the representations and warranties of Sand Ridge Financial and First Financial
made pursuant to the Merger Agreement, and did not independently attempt to
verify any of such information.

         In connection with its opinion, Hovde performed various analyses with
respect to Sand Ridge Financial. The following is a brief summary of such
analyses, certain of which were presented to the Sand Ridge Financial Board by
Hovde on December 16, 1998.

         IMPLIED OFFER VALUE ANALYSIS BASED ON FIRST FINANCIAL HISTORICAL
TRADING VALUATION. Hovde reviewed the implied offer value per share to Sand
Ridge Financial Common Stock based on the price of First Financial Common Stock
at different intervals during the period commencing 90 trading days prior to
December 14, 1998, using the 5-day, 10-day, 15-day, 20-day, 30-day, 60-day and
90-day average closing price of First Financial Common Stock during such period.
Using such average closing prices, Hovde observed that the implied value per
share to Sand Ridge Financial Common Stock was between $2,250.47 and $2,595.33
during such period.

         ANALYSIS OF SELECTED MERGERS. As part of its analysis, Hovde reviewed
comparable mergers involving banks headquartered in the Midwest announced since
January 1, 1997, in which the total assets of the seller were between $250
million and $1 billion and the tangible equity to assets ratio of the seller was
between 6.0% and 12.0% (15 transactions) (the "Midwest Merger Group"). For each
transaction in the Midwest Merger Group, Hovde calculated the multiple of the
Offer Value to the acquired company's earnings per share ("EPS") for the twelve
months preceding ("LTM") the announcement date of the transaction; the multiple
of the Offer Value to the acquired company's book value per share and tangible
book value per share; and the tangible book value premium to core deposits, each
as of the announcement date of the transaction.

         The calculations for the Midwest Merger Group yielded a range of
multiples of offer value to LTM EPS of 15.5x to 30.2x, with an average of 20.7x
and a median of 21.0x; a range of multiples of offer value to book value of
1.39x to 3.78x, with an average of 2.53x and a median of 2.62x; a range of
multiples of offer value to tangible book value of 1.43x to 4.03x, with an
average of 2.68x and a median of 2.74x; and a range of tangible book value
premium to core deposits of 5.19% to 31.38%, with an average of 18.65% and a
median of 19.66%.

                                       26
<PAGE>   31

         Hovde compared these multiples with the corresponding multiples for the
Merger, valuing the shares of First Financial Common Stock that would be
received pursuant to the Merger Agreement at $2,514.88 per share of Sand Ridge
Financial Common Stock. In calculating the multiples for the Merger, Hovde used
Sand Ridge Financial's EPS for the 12 months ended September 30, 1998, and Sand
Ridge Financial's book value per share, tangible book value per share, and total
deposits as of September 30, 1998, and Hovde calculated that Sand Ridge
Financial's LTM EPS for such 12 month period, book value per share, tangible
book value per share and tangible book value premium to core deposits as of
September 30, 1998 were 25.5 times, 3.35 times, 3.35 times, and 26.38%,
respectively.

         DISCOUNTED CASH FLOW ANALYSIS. Hovde performed a discounted cash flow
analysis to determine a present value per share of Sand Ridge Financial Common
Stock assuming Sand Ridge Financial continued to operate as a stand-alone entity
and was acquired at a later date. This present value was determined by
projecting Sand Ridge Financial's after-tax net income for the five years ended
December 31, 1998 through 2002. The "terminal value" per share (i.e., the
projected 2002 value per share) of Sand Ridge Financial Common Stock was
determined by applying a price to earnings multiple of 20.7 times against Sand
Ridge Financial's projected earnings at December 31, 2002. The present value of
the terminal value was then determined using an annual discount rate of 11.0%.
The above calculations resulted in a net present value per fully diluted share
of Sand Ridge Financial Common Stock of $1,926.44 per share.

         CONTRIBUTION ANALYSIS. Hovde prepared a contribution analysis showing
percentages of assets, loans, deposits and common equity at September 30, 1998,
and estimated 1998 net income and estimated 1999 net income that would be
contributed to the combined company on a pro-forma basis by Sand Ridge Financial
and First Financial. This analysis showed, assuming an Exchange Ratio of 85.25,
that Sand Ridge Financial, as of September 30, 1998, would contribute 15.85% of
pro forma consolidated total assets, 11.71% of net loans, 16.36% of total
deposits, 12.96% of common equity, 11.90% of estimated 1998 net income and
12.00% of estimated 1999 net income. This analysis showed that holders of Sand
Ridge Financial Common Stock would own approximately 12.32% of the pro-forma
common shares outstanding of First Financial.

         FINANCIAL IMPLICATIONS TO HOLDERS OF SAND RIDGE FINANCIAL COMMON STOCK.
Hovde prepared an analysis of the financial implications of the First Financial
offer to a holder of Sand Ridge Financial Stock. This analysis indicated that on
a pro forma equivalent basis, assuming the Exchange Ratio of 85.25 and excluding
any potential cost saving and revenue enhancement opportunities, a stockholder
of Sand Ridge Financial would achieve approximately 3.5% accretion in earnings
per share, an increase in dividends per share of approximately 170.0% and a
decrease in book value per share of approximately 5.4% in 1998 as a result of
the consummation of the Merger. Assuming that the projected earnings per share
and dividends per share do not materially change from historical growth rate
levels, the holders of Sand Ridge Financial Common Stock will experience an
increase of approximately 14.7% in earnings per share, an increase of
approximately 212.6% in dividends per share, and a decrease of approximately
14.5% in book value per share in 2002 as a result of the consummation of the
Merger.

                                       27
<PAGE>   32

         COMPARATIVE SHAREHOLDER RETURNS. Hovde presented an analysis of
comparative theoretical stockholder returns in several scenarios, including Sand
Ridge Financial remaining independent, Sand Ridge Financial being acquired in
2002, Sand Ridge Financial being acquired by First Financial through the Merger
and Sand Ridge Financial being acquired by First Financial through the Merger
with First Financial in turn being acquired in 2002. This analysis, which was
based on the net present value of projected dividend streams and projected
common stock valuations (using the current price-to-earnings multiples),
indicated total shareholder returns of 13.99% if Sand Ridge Financial remained
independent, 27.58% for a merger in 2002, 37.07% based on the acceptance of the
offer from First Financial at the Exchange Ratio of 85.25 First Financial shares
per Sand Ridge Financial share, and 43.65% based on the acceptance of the offer
from First Financial at the Exchange Ratio of 85.25 First Financial shares per
Sand Ridge Financial share and First Financial in turn being acquired in 2002.

         Although the summary set forth above does not purport to be a complete
description of the analyses performed by Hovde, the most material aspects of the
analyses performed by Hovde in rendering its opinion have been summarized above.
However, the preparation of a fairness opinion is not necessarily susceptible to
partial analysis or summary description. Hovde believes that its analysis and
the summary set forth above must be considered as a whole and that selecting
portions of its analysis, without considering all factors and analysis, would
create an incomplete view of the process underlying the analysis by which Hovde
reached its opinion. In addition, Hovde may have given various analyses more or
less weight than other analyses. Also, Hovde may have deemed various assumptions
more or less probable than other assumptions so that the ranges of valuations
resulting from any particular analysis described above should not be taken to be
Hovde's view of the actual value of Sand Ridge Financial or the combined
company.

         In performing its analysis, Hovde made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Sand Ridge Financial and
First Financial. The analysis performed by Hovde is not necessarily indicative
of actual value or actual future results, which may be significantly more or
less favorable than suggested by such analysis. Such analysis was prepared
solely as part of Hovde's analysis of the fairness of the Exchange Ratio, from a
financial point of view, to the holders of Sand Ridge Financial Common Stock.
The analysis does not purport to be an appraisal or to reflect the prices at
which a company might actually be sold or the prices at which any securities may
trade at the present time or at any time in the future. Hovde used in its
analysis various projections of future performance prepared by the management of
Sand Ridge Financial. The projections are based on numerous variables and
assumptions, which are inherently unpredictable and must be considered not
certain of occurrence as projected. Accordingly, actual results could vary
significantly from those assumed in the projections and any related analysis.
Hovde's opinion does not address the relative merits of the Merger as compared
to any other business combination in which Sand Ridge Financial might engage. In
addition, as described above, Hovde's opinion to the Sand Ridge Financial Board
was one of many factors taken into consideration by the Sand Ridge Financial
Board in making its determination to approve the Merger Agreement.

                                       28

<PAGE>   33

         Based upon the foregoing analyses and other investigations and
assumptions set forth in its opinion, without giving specific weightings to any
one factor or comparison, Hovde determined that the Exchange Ratio was fair from
a financial point of view to the holders of Sand Ridge Financial Common Stock.
Hovde's fairness opinion does not take into account any adjustment to the Merger
Consideration that may be provided for in the Merger Agreement.

         THE SUMMARY OF THE PRESENTATION BY HOVDE TO THE SAND RIDGE FINANCIAL
BOARD AS SET FORTH ABOVE DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF SUCH
PRESENTATION. THE PREPARATION OF A FAIRNESS OPINION INVOLVES VARIOUS
DETERMINATIONS AS TO THE MOST APPROPRIATE AND RELEVANT METHODS OF FINANCIAL
ANALYSES AND THE APPLICATION OF THOSE METHODS TO THE PARTICULAR CIRCUMSTANCES,
AND, THEREFORE, SUCH AN OPINION IS NOT READILY SUSCEPTIBLE TO SUMMARY
DESCRIPTION. FURTHERMORE, IN ARRIVING AT ITS OPINION, HOVDE DID NOT ATTRIBUTE
ANY PARTICULAR WEIGHT TO ANY ANALYSIS OR FACTOR CONSIDERED BY IT, BUT RATHER
MADE QUALITATIVE JUDGMENTS AS TO THE SIGNIFICANCE AND RELEVANCE OF EACH ANALYSIS
AND FACTOR. ACCORDINGLY, HOVDE BELIEVES THAT ITS ANALYSES AND THE SUMMARY SET
FORTH ABOVE MUST BE CONSIDERED AS A WHOLE AND THAT SELECTING PORTIONS OF ITS
ANALYSES, WITHOUT CONSIDERING ALL FACTORS AND ANALYSES, COULD CREATE AN
INCOMPLETE VIEW OF THE PROCESS UNDERLYING THE ANALYSES SET FORTH IN ITS REPORT
TO THE SAND RIDGE FINANCIAL BOARD AND ITS FAIRNESS OPINION. IN PERFORMING ITS
ANALYSES, HOVDE MADE NUMEROUS ASSUMPTIONS WITH RESPECT TO INDUSTRY PERFORMANCE,
GENERAL BUSINESS AND ECONOMIC CONDITIONS AND OTHER MATTERS, MANY OF WHICH ARE
BEYOND THE CONTROL OF SAND RIDGE FINANCIAL OR FIRST FINANCIAL. THE ANALYSES
PERFORMED BY HOVDE ARE NOT NECESSARILY INDICATIVE OF ACTUAL VALUES OR ACTUAL
FUTURE PERFORMANCE.



                                       29
<PAGE>   34


MANAGEMENT FOLLOWING THE MERGER

         If the Merger is consummated, Sand Ridge Financial and First Financial
will merge into a single corporation and First Financial will be the surviving
corporation. The directors of First Financial at the Effective Time of the
Merger will be the directors of the surviving corporation until their respective
successors are duly elected and qualified. The Merger Agreement includes an
agreement by First Financial to appoint promptly after the Effective Time a
mutually agreeable member of Sand Ridge Bank's Board of Directors to First
Financial's Board of Directors. First Financial intends to appoint Mr. Bruce E.
Leep and Mr. Leep has agreed to accept the appointment. Subject to the authority
of the Board of Directors as provided by law and the Regulations of the
surviving corporation, the officers of First Financial at the Effective Time
will be the officers of the Surviving Corporation.

         If the Merger is consummated, Sand Ridge Bank, Sand Ridge Financial's
only subsidiary, will become a wholly owned subsidiary of First Financial. The
directors of Sand Ridge Bank at the Effective Time will continue to be directors
until their successors are duly elected and qualified by First Financial as sole
shareholder. Subject to the authority of the Board of Directors of Sand Ridge
Bank as provided by its Code of By-Laws and as provided by law, the officers of
Sand Ridge Bank at the Effective Time will continue to be the officers of Sand
Ridge Bank until their successors are duly elected and qualified.

         Effective January 18, 1999, Mr. James C. Hall was appointed
president-elect of Sand Ridge Bank. Prior to joining Sand Ridge Bank, Mr. Hall
was president and chief executive officer of Fidelity Federal Savings Bank
("Fidelity"), a wholly owned subsidiary of First Financial. Mr. Hall is still an
employee and a director of Fidelity. Upon completion of the Merger, Mr. Leep,
who is currently chairman, president and chief executive officer of Sand Ridge
Bank, will retire from the office of president, but continue as chairman and
chief executive officer, and Sand Ridge Bank will elect Mr. Hall as a director
and president and chief operating officer of Sand Ridge Bank. At that time, Mr.
Hall will resign as a director of Fidelity. However, Mr. Hall will remain an
employee of Fidelity while serving as an officer of Sand Ridge Bank, until the
First Financial Bancorp. Thrift Plan is extended to eligible employees of Sand
Ridge Bank, pursuant to the terms of the Merger Agreement. It is anticipated
that this will take place on January 1, 2000. Until the Effective Time, First
Financial will reimburse Fidelity's expenses for employing Mr. Hall.

         First Financial and Sand Ridge Bank have entered into the foregoing
arrangement in anticipation of the retirement of Mr. Leep. First Financial and
Sand Ridge Bank agree that, if the Merger is completed, Mr. Hall will be the
appropriate person to succeed Mr. Leep. In order to ensure a smooth transition
between Mr. Leep and Mr. Hall, it is the desire of both First Financial and Sand
Ridge Bank that Mr. Hall become acquainted with the operations, employees and
customers of Sand Ridge Bank as soon as possible. In order to maintain Mr.
Hall's employment should the Merger be terminated, and in order to preserve Mr.
Hall's benefits as an employee of First Financial, Mr. Hall will remain an
employee of Fidelity until the time specified above.

                                       30
<PAGE>   35
INTEREST OF CERTAIN PERSONS IN THE MERGER

         The directors and officers of Sand Ridge Financial and Sand Ridge Bank
have certain interests in the Merger in addition to their interests as
shareholders of Sand Ridge Financial generally. The Board of Directors of Sand
Ridge Financial was aware of these interests and considered them, among others,
in approving the Merger Agreement.

         The Merger Agreement contains certain provisions regarding employee
benefits. As soon as practicable after the Effective Date of the Merger, First
Financial will make available to eligible employees and officers of Sand Ridge
Bank employee benefit plans comparable to the plans then made available to
similarly situated employees of other First Financial subsidiaries. Employee
benefit plans, fringe benefits and other employee practices and policies in
effect at Sand Ridge Bank immediately prior to the Effective Time will continue
in effect until modified or terminated by First Financial.


                                       31
<PAGE>   36



         The First Financial Bancorp. Thrift Plan (the "Thrift Plan"), which is
a 401-K Plan, and the First Financial Bancorp. Employees' Pension Plan (the
"First Financial Pension Plan") cover the majority of the employees of First
Financial and its subsidiaries. All employees who are 21 years of age and have
completed one year of service are covered. The Thrift Plan is voluntary and
participants may contribute up to 12.0% of base salary to the plan. Subject to
the limitation described below, First Financial subsidiaries contribute $0.50
for each $1.00 a participant contributes. The matching contribution by First
Financial subsidiaries is limited to 3.00% of each participant's base salary and
all contributions become fully vested when made. Participants are 100% vested in
the Pension Plan after five years of credited service. For more information
about First Financial's Thrift Plan and Pension Plan, see First Financial's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
previously incorporated by reference.

         The Sand Ridge Bank Profit Sharing and 401(k) Plan contains provisions
for a 401(k) plan (the "Sand Ridge Bank 401(k) Plan") and a profit sharing plan
(the "Sand Ridge Bank Profit Sharing Plan"). The Sand Ridge Bank 401(k) Plan
will continue in effect until the first January 1 or July 1 coinciding with or
next following the Effective Time (the "Initial Entry Date"), at which time
participants in the Sand Ridge Bank 401(k) Plan will become fully vested in
their plan accounts to the extent required by Law. No contributions will be
permitted to the Sand Ridge Bank 401(k) Plan with respect to compensation paid
after the Initial Entry Date. Contributions to the Sand Ridge Bank Profit
Sharing Plan will be made, but only with respect to operations before the
Initial Entry Date. On or after the Initial Entry Date, the Sand Ridge Bank
401(k) Plan may be maintained as a frozen plan for an indefinite period or
merged into First Financial's Thrift Plan. As of the Initial Entry Date, Sand
Ridge Bank employees and officers may participate in First Financial's Thrift
Plan. Service with Sand Ridge Bank prior to the Effective Time will be counted
for eligibility and vesting purposes under the Thrift Plan.

         If the Merger is consummated, Sand Ridge Bank employees will be
eligible to participate in the First Financial Pension Plan. The Sand Ridge Bank
Profit Sharing Plan will either continue as a frozen plan or will be terminated
and participants' accounts distributed in accordance with the terms of the Sand
Ridge Bank Profit Sharing Plan, the Internal Revenue Code, and the Employee
Retirement Income Security Act of 1974 ("ERISA").

         If any employee of Sand Ridge Financial or Sand Ridge Bank at the
Effective Time is terminated without cause within one year of the Effective
Time, Sand Ridge Bank, as a subsidiary of First Financial, will pay the
employee, upon receipt of a release of all claims in a form satisfactory to Sand
Ridge Bank and First Financial, a termination fee equal to the greater of four
weeks' salary or one week's salary multiplied by the number of full years of
service with Sand Ridge Bank.

         The directors and executive officers of Sand Ridge Financial have
indicated their intention to vote the shares of Sand Ridge Financial Common
Stock held by them in favor of the Merger Agreement. On the Record Date, such
directors and executive officers as a group beneficially owned an aggregate of
16,918 shares of Sand Ridge Financial Common Stock, which represented 28.2% of
the shares issued and outstanding at that date.


                                       32
<PAGE>   37

DISSENTERS' RIGHTS

         Under Indiana Code Chapter 23-1-44, any holder of record of Sand Ridge
Financial Common Stock who does not vote in favor of the Merger may exercise
dissenting shareholder rights and demand payment in cash for the fair value of
such holder's shares by complying with the requirements of Chapter 23-1-44. For
purposes of Chapter 23-1-44, the fair value of a dissenting shareholder's shares
is the value of the shares immediately before the effectuation of the Merger,
excluding any appreciation or depreciation in anticipation of the Merger unless
the exclusion would be inequitable.

         Set forth below is a summary of the procedures relating to the exercise
of statutory dissenters' rights ("Dissenters' Rights"). THIS SUMMARY DOES NOT
PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY EXPRESS REFERENCE TO
APPLICABLE INDIANA LAW, INCLUDING INDIANA CODE CHAPTER 23-1-44, A COPY OF WHICH
IS APPENDED AS APPENDIX C TO THIS PROXY STATEMENT AND INCORPORATED HEREIN. ANY
SHAREHOLDER OF SAND RIDGE FINANCIAL CONTEMPLATING EXERCISING DISSENTERS' RIGHTS
WITH RESPECT TO SAND RIDGE FINANCIAL COMMON STOCK IS URGED TO REVIEW CAREFULLY
SUCH PROVISIONS AND TO CONSULT AN ATTORNEY, BECAUSE DISSENTERS' RIGHTS WILL BE
LOST IF THE PROCEDURAL REQUIREMENTS UNDER CHAPTER 23-1-44 ARE NOT FULLY AND
PRECISELY SATISFIED. EACH STEP MUST BE TAKEN IN STRICT COMPLIANCE WITH THE
APPLICABLE PROVISIONS OF CHAPTER 23-1-44 IN ORDER FOR HOLDERS TO PERFECT
DISSENTERS' RIGHTS.

         Under Chapter 23-1-44, a Sand Ridge Financial shareholder of record for
the Special Meeting who desires to assert Dissenters' Rights must (i) deliver to
Sand Ridge Financial before the shareholder vote is taken written notice of the
shareholder's intent to demand payment in cash for shares owned if the Merger is
effectuated, AND (ii) not vote the shareholder's shares in favor of the Merger,
either in person or by proxy. Dissenting shareholders cannot dissent as to only
some but not all of the shares of Sand Ridge Financial Common Stock registered
in their names, except in limited circumstances. Dissenting shareholders may
send their written notice to Terry L. Saxsma, Vice President,
Secretary/Treasurer, Sand Ridge Financial Corporation, 2611 Highway Avenue, P.O.
Box 1929, Highland, IN 46322.

         In the event the Merger is approved by the Sand Ridge Financial
shareholders, Sand Ridge Financial (hereinafter sometimes referred to for
purposes of this section as the "Corporation") must mail or deliver a written
notice of dissenters' rights (the "Notice to Dissenters") to each dissenting
shareholder satisfying the above conditions within ten (10) days after
shareholder approval has occurred, which Notice to Dissenters must:

         (a)      state where the payment demand must be sent and where and when
                  certificates for certificated shares must be deposited;

         (b)      inform holders of uncertificated shares to what extent
                  transfer of the shares will be restricted after the payment
                  demand is received;

                                       33
<PAGE>   38

         (c)      supply a form for demanding payment that includes the date of
                  the first announcement to news media or to shareholders of the
                  terms of the proposed Merger, which was December 16, 1998, and
                  requires that the dissenting shareholder certify whether or
                  not that shareholder acquired beneficial ownership of the
                  shares before that date;

         (d)      set a date by which the Corporation must receive the payment
                  demand, which date may not be fewer than thirty (30) nor more
                  than sixty (60) days after the date the Notice to Dissenters
                  is delivered; and

         (e)      be accompanied by a copy of Indiana Code Chapter 23-1-44.


         A Sand Ridge Financial shareholder who is sent such a Notice to
Dissenters must then (i) demand payment for the shareholder's shares of Sand
Ridge Financial Common Stock, (ii) certify whether the shareholder acquired
beneficial ownership of the Sand Ridge Financial Common Stock before the date
set forth in the Notice to Dissenters and (iii) deposit the shareholder's
certificates representing shares of Sand Ridge Financial Common Stock in
accordance with the terms of the Notice to Dissenters. IF THE SAND RIDGE
FINANCIAL SHAREHOLDER FAILS TO TAKE THESE STEPS, HE OR SHE WILL NOT BE ENTITLED
TO PAYMENT FOR THE SHAREHOLDER'S SHARES THROUGH THE DISSENTERS' RIGHTS PROCESS
AND WILL BE CONSIDERED TO HAVE VOTED HIS OR HER SHARES IN FAVOR OF THE MERGER.

         A SAND RIDGE FINANCIAL SHAREHOLDER WHO DESIRES TO EXERCISE DISSENTERS'
RIGHTS CONCERNING THE MERGER BUT WHO DOES NOT COMPLY WITH THE PRELIMINARY
CONDITIONS DESCRIBED ABOVE WILL BE CONSIDERED NOT TO BE ENTITLED TO RIGHTS UNDER
INDIANA CODE CHAPTER 23-1-44. SHAREHOLDERS WHO EXECUTE AND RETURN THE ENCLOSED
PROXY BUT DO NOT SPECIFY A CHOICE ON THE MERGER PROPOSAL WILL BE DEEMED TO HAVE
VOTED IN FAVOR OF THE MERGER AND ACCORDINGLY TO HAVE WAIVED THEIR DISSENTER'S
RIGHTS, UNLESS THE SHAREHOLDER REVOKES THE PROXY PRIOR TO ITS BEING VOTED AND
SATISFIES THE OTHER REQUIREMENTS OF INDIANA CODE CHAPTER 23-1-44.

         Upon consummation of the Merger, the Corporation will pay each
dissenting shareholder who has complied with all statutory requirements and the
dissenter's notice, and who was the beneficial owner of Sand Ridge Financial
Common Stock prior to December 16, 1998 (the date the Merger proposal was first
publicly announced), the Corporation's estimate of the fair value of the shares
as of the time immediately prior to the Merger, excluding any appreciation in
value in anticipation of the Merger. For those dissenters who became beneficial
owners of shares on or after December 16, 1998, the Corporation will upon
consummation of the Merger provide the Corporation's estimate of fair value, but
may withhold payment of the fair value of the shares until the dissenting
shareholder agrees to accept the estimated fair value amount in full
satisfaction of the dissenting shareholder's demand or until the Corporation is
otherwise directed by a court of competent jurisdiction.

                                       34
<PAGE>   39

         If the dissenting shareholder believes the amount paid or estimated by
the Corporation is less than the fair value for his or her shares of Sand Ridge
Financial Common Stock or if the Corporation fails to make payment to the
dissenting shareholder within sixty (60) days after the date set for demanding
payment, the dissenting shareholder may notify the Corporation in writing of the
shareholder's own estimate of the fair value of his or her shares and demand
payment of his or her estimate (less the amount of any payment made by the
Corporation for the shares to the dissenting shareholder). Such a demand for
payment must be made in writing within thirty (30) days after the Corporation
has made payment for the dissenting shareholder's shares or has offered to pay
the Corporation's estimate of fair value for the dissenting shareholder's
shares. The Corporation will not give further notice to the dissenting
shareholder of this deadline. A dissenting shareholder who fails to make the
demand within this time waives the right to demand payment for the shareholder's
shares.

         The Corporation can elect to agree with the dissenting shareholder's
fair value demand or if a demand for payment remains unsettled, the Corporation
must commence a proceeding in the circuit or superior court of Lake County
within sixty (60) days after receiving the payment demand from the dissenting
shareholder and petition the court to determine the fair value of the shares. If
the Corporation fails to commence the proceeding within the sixty (60) day
period, it must pay each dissenting shareholder whose demand remains unsettled
the amount demanded. The Corporation must make all dissenting shareholders whose
demands remain unsettled parties to the proceeding and all parties must be
served a copy of the petition. The court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. Each dissenting shareholder made a party to the proceeding is entitled to
judgment for the amount, if any, by which the court finds the fair value of the
dissenting shareholder's shares, plus interest, exceeds the amount paid by the
Corporation.

         The court in an appraisal proceeding shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court, and shall assess these costs and the fees and expenses
of counsel and experts for the respective parties against the parties in amounts
the court finds equitable.

         Every Sand Ridge Financial shareholder who does not deliver a notice of
intent to demand payment for his or her shares as aforesaid, or who votes in
favor of the Merger, is bound by the vote of the assenting shareholders and will
have no right to dissent and to demand payment of the fair value of the
shareholder's shares of Sand Ridge Financial Common Stock as a result of the
Merger. Such a shareholder will only be entitled to the same consideration
described herein to be offered to every other assenting Sand Ridge Financial
shareholder as a result of the Merger. Voting against the Merger does not in
itself constitute the notice of intent to demand payment required by Indiana
Code Chapter 23-1-44.

         The Board of Directors of Sand Ridge Financial has determined that the
Merger is advisable and in the best interest of Sand Ridge Financial's
shareholders and has recommended that the Sand Ridge Financial shareholders vote
in favor of the Merger.

                                       35
<PAGE>   40

FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

         Assuming that (i) the Merger constitutes a reorganization within the
meaning of Section 368(a)(1)(A) of the Internal Revenue Code; (ii) after the
transaction, First Financial, as successor of Sand Ridge Financial, will hold
substantially all of Sand Ridge Financial's assets; and (iii) in the
transaction, the Sand Ridge Financial shareholders will exchange an amount of
stock constituting control of Sand Ridge Financial solely for First Financial
Common Stock; the following is a summary of the tax consequences which will
result:

         (1)      No gain or loss will be recognized by Sand Ridge Financial
                  shareholders who exchange all of their Sand Ridge Financial
                  Common Stock for First Financial Common Stock pursuant to the
                  Merger, except to the extent of any cash received in lieu of
                  receipt of a fractional share of First Financial Common Stock.

         (2)      The basis of the First Financial Common Stock (including
                  fractional share interests) received by Sand Ridge Financial
                  shareholders who exchange all of their Sand Ridge Financial
                  Common Stock for First Financial Common Stock will be the same
                  as the basis of the Sand Ridge Financial Common Stock
                  surrendered in exchange therefor.

         (3)      The holding period of the First Financial Common Stock
                  (including fractional share interests) received by Sand Ridge
                  Financial shareholders who exchange all of their Sand Ridge
                  Financial Common Stock for First Financial Common Stock will
                  include the period during which the Sand Ridge Financial
                  Common Stock was held, provided the Sand Ridge Financial
                  Common Stock was held as a capital asset on the date of the
                  exchange.

         (4)      Where a cash payment is received by a Sand Ridge Financial
                  shareholder in lieu of fractional shares of First Financial
                  Common Stock, the cash payment will be treated as a
                  distribution in redemption of the fractional share interest by
                  First Financial.

         (5)      Any Sand Ridge Financial shareholder who perfects dissenters'
                  rights and receives solely cash in exchange for such
                  shareholder's Sand Ridge Financial Common Stock shall be
                  treated as having received such cash as a distribution in
                  redemption of the Sand Ridge Financial Common Stock subject to
                  the provisions and limitations of Section 302 of the Internal
                  Revenue Code.

         (6)      No gain or loss will be recognized by Sand Ridge Financial or
                  First Financial in connection with the transaction.


                                       36

<PAGE>   41



         Receipt of a favorable ruling from the Internal Revenue Service or an
opinion of tax counsel with respect to the above is a condition precedent to
consummation of the Merger. Any such opinion will be subject to certain
representations of Sand Ridge Financial, First Financial and certain Sand Ridge
Financial shareholders. Further, any such opinion will be based on current law,
which could be amended, revoked or modified with or without retroactive effect
in a manner which would change such opinion. Such opinion will not be binding on
the IRS, nor will the IRS be precluded from taking a contrary position. If
litigated by the IRS, there can be no assurances that a court will agree with
any such opinion.

         THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS BASED UPON THE
CODE, TREASURY REGULATIONS, CASE LAW AND INTERNAL REVENUE SERVICE RULINGS AS IN
EFFECT ON THE DATE HEREOF WITHOUT CONSIDERATION OF THE FACTS AND CIRCUMSTANCES
OF ANY PARTICULAR SITUATION OF ANY SAND RIDGE FINANCIAL SHAREHOLDER. THIS
DISCUSSION ASSUMES THAT SAND RIDGE FINANCIAL SHAREHOLDERS HOLD THEIR SAND RIDGE
FINANCIAL COMMON STOCK AS CAPITAL ASSETS WITHIN THE MEANING OF SECTION 1221 OF
THE CODE. SPECIAL TAX CONSIDERATIONS NOT DISCUSSED HEREIN MAY BE APPLICABLE TO
PARTICULAR CLASSES OF TAXPAYERS, SUCH AS BROKER-DEALERS, INSURANCE COMPANIES,
TAX EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS, FOREIGN CORPORATIONS, OR TO
ANY SHAREHOLDER WHO ACQUIRED SAND RIDGE FINANCIAL COMMON STOCK THROUGH THE
EXERCISE OF AN EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION. EACH
SHAREHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR HER, INCLUDING THE APPLICATION
AND EFFECT OF EXISTING AND PROPOSED FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS.


ACCOUNTING TREATMENT

         It is anticipated that the Merger will be accounted for as a
pooling-of-interests. First Financial and Sand Ridge Financial shall receive
letters at the Effective Time from Ernst & Young LLP and Crowe, Chizek and
Company LLP regarding the appropriateness of pooling-of-interests accounting for
the Merger under Accounting Principles Board Opinion 16 if the Merger is closed
and consummated in accordance with the terms of the Merger Agreement.




                                       37

<PAGE>   42





RESTRICTIONS ON RESALE OF FIRST FINANCIAL COMMON STOCK

         The issuance of the shares of First Financial Common Stock in
connection with the Merger has been registered under the Securities Act. Such
shares may be traded freely and without restriction under federal and state
securities laws by those shareholders not deemed to be "affiliates" of Sand
Ridge Financial as that term is defined in Rules 144 and 145 under the
Securities Act. "Affiliates" are generally defined as persons who control, are
controlled by, or are under common control with Sand Ridge Financial at the time
of the Sand Ridge Financial Special Meeting. Accordingly, affiliates of Sand
Ridge Financial will generally include the directors and executive officers of
Sand Ridge Financial as well as Sand Ridge Financial's largest shareholders. In
general, shares of First Financial Common Stock received by affiliates of Sand
Ridge Financial pursuant to the Merger may not be publicly resold without
registration under the Securities Act except pursuant to the volume and manner
of sale limitations and other requirements provided in Rules 144 and 145. This
Proxy Statement-Prospectus does not cover any resales of First Financial Common
Stock received by affiliates of Sand Ridge Financial. Any owner of Sand Ridge
Financial Common Stock who becomes an affiliate of First Financial will be
subject to similar restrictions under Rule 144.

         Pursuant to the terms of the Merger Agreement, in order for the Merger
to qualify for pooling-of-interests accounting treatment, none of the shares
First Financial Common Stock held by shareholders who are affiliates of First
Financial or Sand Ridge Financial may be sold until such time as financial
results covering at least thirty days of post-Merger combined operations of
First Financial and Sand Ridge Financial have been published (the "Publication
Date"). As a result, no shareholder who is an affiliate of First Financial or
Sand Ridge Financial will be permitted to sell any shares of First Financial
Common Stock for the period from the Effective Time to the Publication Date.

         In addition, in order to preserve the proposed tax-free status of the
Merger and in order to ensure that the continuity of shareholder interest
requirements related thereto, and set forth in Treasury Regulation Section
1.368-1, will be satisfied with respect to the Merger, certain shareholders of
Sand Ridge Financial participating in the Merger and First Financial will be
required to execute letters indicating that such shareholders have no present
plans or intentions to sell or dispose of the First Financial common shares
received by such shareholders in connection with the merger to any person
"related," as defined in Treasury Regulation Section 1.368-1(e)(3), to First
Financial and that First Financial and any such "related" person has no
intention to acquire any shares of such First Financial Common Stock.

         Except as provided above, there will be no restrictions on the transfer
of shares of First Financial Common Stock issued by First Financial pursuant to
the Merger.


                                       38


<PAGE>   43


REGULATORY CONSIDERATIONS

         The proposed transaction requires the approval of the Federal Reserve
Board under section 3(a)(5) of the Bank Holding Company Act of 1956, as amended.
The Bank Holding Company Act provides that the Federal Reserve Board may not
approve any transaction which would result in a monopoly or which would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States, or any
transaction the effect of which in any section of the United States may be
substantially to lessen competition or to tend to create a monopoly or which in
any other manner might restrain trade, unless the Federal Reserve Board
determines that the anti-competitive effects of the proposed merger are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the community to be served.

         The Merger may generally not be consummated for fifteen days after the
receipt of Federal Reserve Board approval. Such fifteen day period will become
thirty days, however, if the United States Department of Justice issues an
adverse comment relating to competitive factors. During such fifteen or thirty
day period, the United States Department of Justice may commence legal action
challenging the Merger under the Federal anti-trust Laws. If the Justice
Department does not commence a legal action during such period, the Merger may
be consummated and the Justice Department may not thereafter challenge the
transaction except in an action commenced under Section 2 of the Sherman
Anti-Trust Act.

         The Merger is also subject to approval by the Indiana Department of
Financial Institutions under Chapter 28-2-16 of the Indiana Code, which provides
for foreign bank holding company acquisitions.

         Applications requesting approval were submitted to the Federal Reserve
Board on February 1, 1999, and to the Indiana Department of Financial
Institutions on February 4, 1999. First Financial and Sand Ridge Financial
anticipate that the Merger will be approved by the Federal Reserve Board and the
Indiana Department of Financial Institutions and will not be challenged by the
Justice Department under the anti-trust laws. However, there can be no assurance
that such approvals will be given or whether conditions, if any, will be imposed
on the approvals or that the Justice Department will not challenge the Merger.

         The approvals of the Federal Reserve Board and the Indiana Department
of Financial Institutions are not to be interpreted as the opinion of the
regulatory authorities that the Merger is favorable to Sand Ridge Financial
shareholders, including from a financial point of view, or that these regulatory
authorities have considered the adequacy of the terms of the Merger. The
approvals do not constitute an endorsement or a recommendation of the Merger by
the regulatory authorities.

                                       39
<PAGE>   44


                              THE MERGER AGREEMENT


STRUCTURE OF THE MERGER

         If the Merger is approved by Sand Ridge Financial shareholders at the
Special Meeting by at least a two-thirds (2/3rds) majority vote of the
outstanding shares of Sand Ridge Financial Common Stock and if necessary
regulatory approvals are received and the other conditions required for the
consummation of the transactions contemplated by the Merger Agreement are
satisfied or waived, Sand Ridge Financial will merge with and into First
Financial in a transaction in which the following will occur at the Effective
Time:

         (a)      Each of the then outstanding shares of Sand Ridge Financial
                  will be canceled and extinguished in consideration and
                  exchange for a number of shares of First Financial Common
                  Stock equal to the Exchange Ratio (except for fractional
                  shares and shares of shareholders who exercise dissenters'
                  rights, for which cash shall be paid in exchange);

         (b)      Sand Ridge Financial will merge with and into First Financial
                  at the Effective Time and First Financial will be the
                  continuing, surviving and resulting corporation in the Merger;
                  and

         (c)      Sand Ridge Bank will become a wholly owned subsidiary of First
                  Financial.


SURRENDER OF STOCK CERTIFICATES

         The Merger Agreement provides for the surrender of Sand Ridge Financial
Common Stock certificates by the holders thereof before such holders may receive
certificates evidencing First Financial Common Stock. The Registrar and Transfer
Company will act as the exchange agent (the "Exchange Agent").

         As soon as practicable after the Effective Time, First Financial will
cause the Exchange Agent to prepare and mail to each holder of record of an
outstanding certificate or certificates representing shares of Sand Ridge
Financial a letter of transmittal containing instructions for the surrender of
the certificate or certificates. Upon surrender of the Sand Ridge Financial
certificate or certificates in accordance with instructions set forth in the
letter of transmittal, such holder shall be entitled to receive in exchange
therefor certificates representing the number of whole shares of First Financial
into which the shares represented by the certificate or certificates so
surrendered shall have been converted, without interest.


                                       40
<PAGE>   45



         The Exchange Agent shall not be obligated to deliver certificates for
First Financial Common Stock to a former shareholder of Sand Ridge Financial
until such former shareholder surrenders his or her certificate or certificates
representing shares of Sand Ridge Financial or, in lieu thereof, an appropriate
affidavit of loss and an indemnity agreement or bond as may be required by First
Financial. Until so surrendered for exchange, each such stock certificate
formerly representing shares of Sand Ridge Financial Common Stock will be deemed
for all corporate purposes (except for the payment of dividends, which will be
subject to the exchange of stock certificates as above provided) to evidence the
ownership of the number of shares of common stock of the surviving corporation
that the holder thereof would be entitled to receive upon its surrender to First
Financial.


EFFECTIVE TIME OF THE MERGER

         The Effective Time is to be the later of the dates of filing of
articles of merger with the Secretaries of State of Indiana and Ohio and is
expected to be as soon as practicable after the approval of the Merger Agreement
by Sand Ridge Financial shareholders, the satisfaction of all conditions set
forth in the Merger Agreement and the receipt of approvals from regulatory
authorities, or at such later date as may be agreed upon by Sand Ridge Financial
and First Financial. See "THE MERGER--Regulatory Considerations".

         No assurance can be provided that the necessary shareholder and
regulatory approvals will be obtained or that other conditions precedent to the
Merger will be satisfied. In the event the Merger is not consummated on or
before July 31, 1999, either party may terminate the Merger Agreement or the
parties may agree to extend the time for completion of the Merger.


FRACTIONAL INTERESTS

         No fractional shares of First Financial Common Stock will be issued as
a result of the Merger. In lieu thereof, Sand Ridge Financial shareholders
having a fractional interest will be paid in cash by First Financial for the
fractional interest. Such payment shall be equal to the fractional interest
multiplied by the Average Closing Price, as defined in the Merger Agreement.


CONDITIONS TO CONSUMMATION OF THE MERGER

         Consummation of the Merger is subject to a number of conditions, each
of which may be waived by the party entitled thereto to the extent permissible
by applicable law, including the following:

         (a)      The receipt of all required regulatory approvals for the
                  completion of the Merger and the expiration of any applicable
                  waiting periods, with no such approval or authorization
                  containing any provision which would be materially adverse to
                  the merged businesses of Sand Ridge Financial and First
                  Financial;

                                       41
<PAGE>   46

         (b)      The validity or legality of the transactions contemplated by
                  the Merger Agreement shall not have been materially questioned
                  by any suit, action, investigation by any governmental body or
                  other legal or administrative proceedings;

         (c)      The receipt of all consents required for the consummation of
                  the Merger or for the prevention of any default under any
                  contract, agreement or permit of First Financial or Sand Ridge
                  Financial which, if not obtained or made, is reasonably likely
                  to have, individually or in the aggregate, a material adverse
                  effect on the combined business affairs of First Financial and
                  Sand Ridge Financial;

         (d)      Compliance by First Financial and Sand Ridge Financial with
                  their respective covenants and the truth of all
                  representations and warranties as of the Effective Time;

         (e)      The absence of any material adverse change in the financial
                  condition, operations, corporate status or business of First
                  Financial and its subsidiary banks or Sand Ridge Financial or
                  Sand Ridge Bank since December 31, 1997;

         (f)      The receipt of opinions from First Financial's special counsel
                  and from Sand Ridge Financial's special counsel with respect
                  to various corporate matters, due execution and delivery of
                  the Merger Agreement and various other Merger related matters;

         (g)      The receipt of a favorable ruling from the Internal Revenue
                  Service or an opinion of counsel, in form and substance
                  satisfactory to First Financial and Sand Ridge Financial, to
                  the effect that, under the Internal Revenue Code of 1986, as
                  amended (the "Internal Revenue Code"), no taxable gain or loss
                  will be recognized by Sand Ridge Financial, First Financial or
                  their respective shareholders as a result of the Merger,
                  except in respect of fractional share interests or dissenters
                  receiving cash;

         (h)      The receipt of letters from Ernst & Young LLP and Crowe,
                  Chizek and Company LLP regarding the appropriateness of
                  pooling-of-interests accounting for the Merger under
                  Accounting Principles Board Opinion 16 if the Merger is closed
                  and consummated in accordance with the terms of the Merger
                  Agreement;

         (i)      The receipt by First Financial of a letter from Sand Ridge
                  Financial identifying all persons who are, at the date of the
                  Special Meeting, "affiliates" of Sand Ridge Financial for
                  purposes of Rule 145 under the Securities Act of 1933 and for
                  purposes of qualifying the Merger for pooling of interests
                  accounting treatment and the receipt on or prior to the
                  Effective Time from each person so identified of an agreement
                  to restrict the transfer of First Financial Common Stock
                  received; and

         (j)      The approval of the Merger Agreement by Sand Ridge Financial
                  shareholders at the Special Meeting by at least a two-thirds
                  (2/3rds) majority vote of the outstanding Sand Ridge Financial
                  shares.

                                       42
<PAGE>   47

         No assurance can be given that all of the conditions to the Merger will
be satisfied or waived by any party permitted to do so.


TERMINATION OF THE MERGER

         The Merger may be terminated at any time prior to the Effective Time
under any one or more of the following circumstances:

         (a)      By the mutual consent of the Boards of Directors of Sand Ridge
                  Financial and First Financial;

         (b)      By First Financial if the holders of 7.50% or more of the
                  outstanding shares of Sand Ridge Financial Common Stock will
                  be entitled to receive cash in exchange for their Sand Ridge
                  Financial shares pursuant to perfected dissenters' rights
                  under the Indiana Business Corporation Law;

         (c)      By Sand Ridge Financial or First Financial if, prior to the
                  Effective Time, the conditions to such party's obligation to
                  consummate the Merger are not met;

         (d)      By either Sand Ridge Financial or First Financial if the
                  requisite approval of the shareholders of Sand Ridge Financial
                  is not obtained or if the Merger is not consummated on or
                  before July 31, 1999; or

         (e)      By Sand Ridge Financial if the Average Closing Price, as
                  defined in the Merger Agreement, of First Financial Common
                  Stock is less than $23.2671; the SRFC Ratio is less than the
                  Index Ratio, as both terms are defined in the Merger
                  Agreement; AND First Financial decides not to increase the
                  Exchange Ratio according to the method described in the Merger
                  Agreement.


FIRST FINANCIAL AVERAGE CLOSING PRICE AND TERMINATION OF THE MERGER

         The Merger Agreement contains a provision that permits Sand Ridge
Financial to terminate the Merger Agreement if there is a significant and
prolonged decline in the per share market price of First Financial Common Stock
that is not coincidental with a decline in the stock prices of certain other
financial institution holding companies unless First Financial elects to
increase the Exchange Ratio.

         The following discussion uses the terms defined below:

 -    VALUATION DATE - the second trading day after the day that is the latest
     of (i) the day of expiration of the last waiting period with respect to any
     of the required regulatory approvals, (ii) the day on which the last of the
     required regulatory approvals is obtained, and (iii) the day on which the
     required Sand Ridge Financial stockholder approval is obtained.

                                       43
<PAGE>   48

- -     AVERAGE CLOSING PRICE - the average of the daily closing sales price of
     First Financial Common Stock, as reported on the Nasdaq National Market for
     the 20 consecutive trading days, in which at least 1,000 shares were
     traded, ending on the Valuation Date.

- -     SRFC RATIO - the number obtained by dividing First Financial's Average
     Closing Price by $26.5909.

- -     INDEX GROUP - 31 specified financial institution holding companies, 17
     with headquarters in Ohio and 14 with headquarters in Indiana. All
     specified companies are publicly traded and have not announced an
     acquisition transaction at any time during the period beginning on the date
     of the Merger Agreement and ending on the valuation date. If the common
     stock of any of the specified companies ceases to be publicly traded or if
     an acquisition transaction involving any of the specified companies is
     announced, that company will be removed from the Index Group.

- -     INDEX PRICE - the price obtained by dividing the sum of the December 15,
     1998, closing sales price of each of the stocks in the Index Group by the
     number of holding companies composing the Index Group. December 15, 1998 is
     the day before the public announcement of the Merger Agreement.

- -     AVERAGE INDEX PRICE - the price resulting from dividing (i) the sum of the
     average of the daily closing sales price for the common stock of each
     financial institution composing the Index Group during the 20 consecutive
     trading days ending on the Valuation Date by (ii) the number of financial
     institutions composing the Index Group.

- -     INDEX RATIO - the number obtained by dividing the Average Index Price
     by the Index Price and subtracting 0.125 from the quotient.

         Prior to making any decision to terminate, or allow the termination of,
the Merger Agreement, each of the Sand Ridge Financial and the First Financial
Boards would consult with its respective financial and other advisors and would
consider all financial and other information it deemed relevant to its decision.
It is not possible to know whether the Price-Based Termination right will be
triggered until after the Valuation Date. The Sand Ridge Financial Board has
made no decision as to whether it would exercise its right to terminate the
Merger Agreement if the termination right has been triggered. In considering
whether to exercise its termination right in such situation, the Sand Ridge
Financial Board would, consistent with its fiduciary duties, take into account
all relevant facts and circumstances that exist at such time and would consult
with its financial advisors and legal counsel. Approval and adoption of the
Merger Agreement by the stockholders of Sand Ridge Financial at the Special
Meeting will confer on the Sand Ridge Financial Board the power, consistent with
its fiduciary duties, to elect to consummate the Merger in the event the
termination right is triggered, whether or not there is any increase in the
Exchange Ratio and without any further action by, or resolicitation of, the
stockholders of Sand Ridge Financial.

                                       44
<PAGE>   49

         The Merger may be terminated and abandoned upon a majority vote of Sand
Ridge Financial's Board of Directors at any time during the ten-day period
commencing on the Valuation Date if both of the following conditions are
satisfied:

         (a)       the Average Closing Price is less than $23.2671, and

         (b)      the SRFC Ratio is less than the Index Ratio.

         Prompt written notice must be given to First Financial if Sand Ridge
Financial's Board of Directors elects to exercise this termination right. During
the five days commencing with the receipt of the written notice, First Financial
will have the option to avoid the termination of the Merger Agreement by
electing to increase the Exchange Ratio to the lesser of:

         (a)      the quotient obtained by dividing $1,983.52 by the Average
                  Closing Price, or

         (b)      the quotient obtained by multiplying the Index Ratio and the
                  Exchange Ratio, as then in effect, and dividing the resulting
                  product by the SRFC Ratio.

         Prompt written notice of First Financial's decision will be provided
Sand Ridge Financial. If First Financial decides to increase the Exchange Ratio,
the Merger Agreement will remain in effect in accordance with its original
terms, except for the modification of the Exchange Ratio. If First Financial
decides not to increase the Exchange Ratio, Sand Ridge Financial will have five
days after receipt of First Financial's written notice to provide First
Financial with written notice of either its election to withdraw its termination
request or its election to have the termination of the Merger Agreement become
effective at the close of business on the second business day after First
Financial's receipt of the final notice.

                                       45
<PAGE>   50


                        INFORMATION ABOUT FIRST FINANCIAL


         Information about First Financial is included in the First Financial
Form 10-K, incorporated herein by reference, and in First Financial's Quarterly
Report on Form 10-Q for the quarters ended March 31, June 30, and September 30,
1998, incorporated herein by reference.


RECENT DEVELOPMENTS

         PENDING MERGER WITH HEBRON BANCORP, INC. First Financial signed a plan
and agreement of merger with Hebron Bancorp, Inc., Hebron, Kentucky ("Hebron
Bancorp") on December 31, 1998. The consideration to be paid to Hebron Bancorp
shareholders pursuant to the merger agreement is fixed at 1,222,650 shares of
First Financial Common Stock in exchange for all outstanding shares of Hebron
Bancorp common stock. After the merger, Hebron Deposit Bank, Hebron Bancorp's
only subsidiary, will become a wholly owned subsidiary of First Financial.

         As of September 30, 1998, Hebron Bancorp had total assets of
approximately $106 million, loans outstanding of $69 million, total deposits of
$90 million and total shareholders' equity of $12 million. Its equity-to-assets
ratio at September 30, 1998 was 11.0%. Hebron Bancorp had net earnings for the
nine months ended September 30, 1998, of approximately $1,158,000 or $19.79 per
share. See "PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET" and "PRO FORMA
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS."

         The merger with Hebron Bancorp is subject to numerous conditions
including, among others, regulatory and shareholder approvals. First Financial
is unable to predict when or whether such conditions will be satisfied.
Accordingly, there can be no assurance that the proposed merger with Hebron
Bancorp will be consummated. Provided all conditions are met and approvals
obtained, the proposed merger with Hebron Bancorp is anticipated to be completed
during the second quarter of 1999.

         If the Merger had been effective December 31, 1998, former shareholders
of Sand Ridge Financial would have owned approximately 12.4% of the combined
company. But if the merger with Hebron Bancorp had occured on the same date, the
percentage ownership of former shareholders of Sand Ridge Financial would have
been reduced to 12.0% as the result of issuing 1,222,650 shares of First
Financial Common Stock in exchange for shares of Hebron common stock.

         FIRST FINANCIAL'S 1998 EARNINGS. First Financial's net earnings for
1998 were $44,106,000, or $1.21 on a diluted per share basis. This represents a
9.42% increase over 1997 net earnings of $40,308,000. On a diluted per share
basis, 1998 net earnings were 10.0% greater than 1997 diluted earnings per share
of $1.10. The rise in earnings is largely attributable to growth in net interest
income of $15.7 million - up 13.6% over 1997. Loan growth of $290 million, or
14.7%, was primarily responsible for the increase in net interest income.


                                       46
<PAGE>   51

GENERAL

         First Financial is a corporation organized under the laws of the State
of Ohio and is registered as a bank holding company as well as a savings and
loan holding company. Its principal executive offices are located in Hamilton,
Ohio. First Financial owns the following subsidiaries:

     Bank subsidiaries:

         First National Bank of Southwestern Ohio, Hamilton, Ohio 
         Community First Bank & Trust , Celina, Ohio
         Union Trust Bank, Union City, Indiana 
         Indiana Lawrence Bank, North Manchester, Indiana
         Citizens First State Bank, Hartford City, Indiana
         Union Bank & Trust Company, North Vernon, Indiana
         The Clyde Savings Bank Company, Clyde, Ohio
         Peoples Bank and Trust Company, Sunman, Indiana
         Bright National Bank, Flora, Indiana
         Farmers State Bank, Liberty, Indiana
         National Bank of Hastings, Hastings, Michigan
         Vevay Deposit Bank, Vevay, Indiana

     Savings bank subsidiaries:
         Fidelity Federal Savings Bank, Marion, Indiana
         Home Federal Bank, a Federal Savings Bank, Hamilton, Ohio

     Finance company subsidiary:
         First Finance Mortgage Company of Southwestern Ohio, Inc.,
           Hamilton, Ohio

         At September 30, 1998, First Financial had total assets of
approximately $2.8 billion, deposits of approximately $2.2 billion and
shareholders' equity of approximately $302 million. See Form 10-Q for the
quarter ended September 30, 1998 and "Item 1. Business" in the First Financial
Form 10-K, both of which have previously been incorporated herein by reference.


                                       47
<PAGE>   52


             INFORMATION ABOUT THE BUSINESS OF SAND RIDGE FINANCIAL


GENERAL

         Sand Ridge Financial, a bank holding company, was established in 1984
and is headquartered in Highland, Indiana, which is twenty miles southeast of
Chicago. The holding company's wholly owned subsidiary, Sand Ridge Bank, was
chartered by the State of Indiana as a state bank in 1969. Sand Ridge's primary
market area includes the cities of Highland, Schererville and Hammond, Indiana
and the contiguous areas within Lake County, Indiana. The economic base of Sand
Ridge Bank's primary market area is primarily retail, but also includes
industrial companies and Great Lakes commercial and service companies.

         As of September 30, 1998, Sand Ridge Financial had total assets of
approximately $527 million, total deposits of approximately $438 million and
shareholders' equity of approximately $45 million. It had 233 employees at
September 30, 1998.

         Sand Ridge Bank offers a diversified selection of loan and investment
products. At December 31, 1997, approximately 38.6% and 35.4% of its lending
portfolio was comprised of commercial and real estate loans, respectively. The
balance of its loan portfolio is comprised primarily of installment loans.
Lendable funds are obtained primarily from deposits and loan principal payments.
Sand Ridge Bank offers a full line of checking and NOW accounts, savings,
certificates of deposit and individual retirement accounts. In addition to
originating loans, Sand Ridge Bank invests in U.S. treasury and government
agency securities, mortgage-backed securities, corporate notes and municipal
securities.


COMPETITION

         Sand Ridge Bank competes for deposits and loans with other commercial
banks, savings associations, savings banks, and credit unions. Competition from
entities other than financial institutions has become significant. Such deposit
competitors include insurance companies and issuers of commercial paper and
other securities, such as shares in money market and stock mutual funds. Loan
competitors include consumer finance companies, leasing companies, insurance
companies and mortgage brokers. Major retail corporations compete for loans by
offering retail installment contracts.

         Sand Ridge Bank competes for loan originations primarily through
interest rates and loan fee charges and through the efficiency and quality of
services it provides to borrowers. The primary factors in competing for deposits
are interest rates, quality of service and convenience of office location.

         Competition is affected by, among other things, the general
availability of lendable funds, general and local economic conditions, current
interest rate levels and other factors which are not readily predictable.

                                       48
<PAGE>   53


REGULATION

         Sand Ridge Financial, as a bank holding company, is subject to
supervision and/or regular examination by the Federal Reserve Board. Sand Ridge
Bank, as a state bank and a nonmember of the Federal Reserve, is subject to
supervision and regular examination by the Indiana Department of Financial
Institutions and by the Federal Deposit Insurance Corporation.


PROPERTIES

         Sand Ridge Bank conducts its business through its main office, two
stand-alone branch offices, two supermarket branches and a network of 18 ATMs.
The Main Office and a stand-alone branch are located in Highland and another
stand-alone branch is located in Schererville, Indiana. The supermarket branches
are located in Van Til's supermarket in Hammond and Strack and Van Til's
supermarket in Schererville. The ATMs are located within Lake County. An
operations center is located in Schererville.

         The main office, stand-alone branch offices and operations center are
owned by Sand Ridge Bank. The two supermarket branches are leased. In addition,
Sand Ridge Bank owns a parcel of vacant land located in St. John, Indiana, which
is considered a possible future branch location, and two buildings adjacent to
its Highland branch facility. The two Highland buildings are currently leased to
others. Sand Ridge Financial does not directly own any real property.


LEGAL PROCEEDINGS

         Neither Sand Ridge Financial nor Sand Ridge Bank is presently involved
in any legal proceedings of a material nature. From time to time, Sand Ridge
Bank is a party to legal proceedings incidental to its business to enforce its
security interests in collateral pledged to secure loans made by Sand Ridge
Bank.


CERTAIN TRANSACTIONS WITH SAND RIDGE FINANCIAL

         At September 30, 1998, certain directors and executive officers of Sand
Ridge Financial and members of their immediate families were indebted to Sand
Ridge Bank in the aggregate amount of approximately $2,459,000. Such
indebtedness was incurred in the ordinary course of business on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with unrelated persons. All such loans were
current at December 31, 1997 and September 30, 1998 and are not considered to
involve more than the normal risk of collectibility or to present other
unfavorable features.


                                       49
<PAGE>   54


SELECTED FINANCIAL DATA

         The following table sets forth certain information concerning the
financial condition, earnings and other data regarding Sand Ridge Financial at
the dates and for the periods indicated:

<TABLE>
<CAPTION>

                                               At September 30,                                At December 31,
                                           ----------------------        --------------------------------------------------------
Financial condition and other data:          1998           1997          1997        1996        1995        1994        1993
                                             ----           ----          ----        ----        ----        ----        ----
                                                                   (Dollars in thousands, except per share data)
Total amount of:
<S>                                       <C>            <C>            <C>         <C>         <C>         <C>         <C>     
  Assets                                  $527,256       $428,343       $456,094    $416,544    $393,138    $363,566    $318,596
  Investment securities:
    Held-to-maturity                             0              0              0           0           0      17,948           0
    Available-for-sale                     202,824        137,977        154,483     124,205     124,588      85,623           0
    Held-for-sale                                0              0              0           0           0           0      12,611
    Investment                                   0              0              0           0           0           0      84,404
  Loans receivable, net of
   unearned income, deferred               290,153        263,214        268,729     256,115     242,999     233,696     194,355
   loan fees and allowance
   for loan losses
  Deposits                                 437,587        381,283        378,676     361,280     336,022     307,903     273,900
  Long-term FHLB advances                   13,898          4,686          4,686       3,500           0           0           0
  Shareholders' equity                      44,768         38,723         39,681      34,589      31,002      24,279      23,289
</TABLE>

<TABLE>
<CAPTION>

                                              Nine Months Ended
                                                September 30,                       Year Ended December 31,
                                           ----------------------        --------------------------------------------------------
Earnings and other data:                    1998           1997           1997         1996        1995       1994          1993
                                            ----           ----           ----         ----        ----       ----          ----
                                                                           (Dollars in thousands, except per share data)

<S>                                       <C>            <C>            <C>         <C>         <C>         <C>         <C>     
Interest income                           $ 26,264       $ 23,663       $ 32,122    $ 28,932    $ 27,354    $ 23,248    $ 20,760
Interest expense                            13,379         11,962         16,257      14,472      14,058      10,933       8,753
                                          --------       --------       --------    --------    --------    --------    --------
Net interest income                         12,885         11,701         15,865      14,460      13,296      12,315      12,007
Provision for loan losses                    1,750          1,350          1,800       1,440       1.040         840         840
                                          --------       --------       --------    --------    --------    --------    --------
Net interest income after
   provision for loan losses                11,135         10,351         14,065      13,020      12,256      11,475      11,167
Other income                                 3,349          2,800          3,851       3,277       2,999       2,723       2,355
Other expenses                               9,200          8,385         11,229       9,499       9,567       9,276       8,608
                                          --------       --------       --------    --------    --------    --------    --------
Earnings before income taxes                 5,284          4,766          6,687       6,798       5,688       4,922       4,914
Income taxes                                 1,265          1,195          1,694       1,914       1,530       1,283       1,286
                                          --------       --------       --------    --------    --------    --------    --------
Net earnings                              $  4,019       $  3,571       $  4,993    $  4,884    $  4,158    $  3,639    $  3,628
                                          ========       ========       ========    ========    ========    ========    ========

Net earnings per share                    $  66.99       $  59.51       $  83.21    $  81.39    $  69.30    $  60.66    $  60.47
                                          ========       ========       ========    ========    ========    ========    ========
Dividends per share                       $   0.00       $   0.00       $  17.00    $  16.00    $  15.00    $  14.00    $  13.00
                                          ========       ========       ========    ========    ========    ========    ========

Return on equity (net earnings
divided by average equity)                   13.04%(1)      13.47%(1)      13.74%      15.06%      15.24%      15.30%      16.59%

Return on assets (net earnings
  divided by average total assets)            1.09%(1)       1.09%(1)       1.13%       1.20%       1.09%       1.07%       1.21%

Dividend payout ratio (dividends
   declared per share divided by net          0.00%          0.00%         20.43%      19.66%      21.65%      23.08%      21.50%
   earnings per share)

Book value per common share               $ 746.13       $ 645.39       $ 661.34    $ 576.49    $ 516.70    $ 404.64    $ 388.15
Average shareholders' equity to average       8.38%          8.12%          8.23%       7.99%       7.17%       6.97%       7.28%
total assets
</TABLE>

- --------
(1)  Annualized



                                       50

<PAGE>   55


ANALYSIS OF NET INTEREST INCOME

         The following table sets forth for the years ended December 31, 1997,
1996 and 1995 the average balances of major categories of interest-earning
assets and interest-bearing liabilities, interest income earned and interest
expense paid during such periods and the related weighted average rates for Sand
Ridge Financial.
<TABLE>
<CAPTION>
                                                                                             Year ended December 31,
                                             --------------------------------------------------------------------------------

                                                             1997                                     1996                   
                                             -------------------------------------    -------------------------------------  
                                                Average       Interest                  Average       Interest               
                                              Outstanding     Earned/      Yield/     Outstanding      Earned/      Yield/   
                                                Balance         Paid        Rate        Balance         Paid         Rate    
                                                -------         ----        ----        -------         ----         ----    
                                                                                             (Dollars in thousands)

<S>                                                <C>          <C>           <C>          <C>           <C>           <C>   
Interest-earning assets:
  Loans (1)                                        $267,162     $22,642       8.48%        $255,482      $21,149       8.28% 
  Securities available for sale (2)                 136,684       8,498        6.22         124,115        7,448        6.00 
  Federal funds sold                                 17,247         973        5.64           5,925          316        5.33 
  Interest-bearing balances with financial
   institutions                                         100           9        9.00             239           19        7.95 
                                                   --------     -------                    --------      -------             
  Total interest-earning assets                     421,193      32,122        7.63         385,761       28,932        7.50 
Noninterest-earning assets:
  Allowance for loan losses                         (2,940)                                 (3,664)                          
  Cash and due from financial institutions           11,799                                  12,030                          
  SFAS No. 115 adjustment                             2,149                                   1,678                          
  Other assets                                        9,413                                  10,211                            
                                                   --------                                --------                          
Total assets                                       $441,614                                $406,016                          
                                                   ========                                ========                          

Interest-bearing liabilities:
  Savings, NOW and money market                    $174,340       5,703        3.27        $176,346        5,800        3.29 
  Other time deposits                               176,428      10,016        5.68         146,484        8,252        5.63 
  Federal funds purchased                               342          18        5.26           3,233          178        5.51 
  Securities sold under agreements to 
    repurchase                                          899          51        5.67           1,574           93        5.91 
  Federal funds purchased                             7,847         469        5.98           2,642          149        5.64 
                                                   --------     -------                    --------      -------             
  Total interest-bearing liabilities                359,856      16,257        4.52         330,279       14,472        4.38 
                                                                -------                                  -------             
Noninterest-bearing liabilities
  Demand deposits                                    41,427                                  38,977                          
  Other liabilities                                   3,983                                   4,334                            
                                                   --------                                --------                          
Total liabilities                                   405,266                                 373,590                          
Shareholders' equity                                 36,348                                  32,426                          
                                                   --------                                --------                          
 Total liabilities and shareholders' equity        $441,614                                $406,016                          
                                                   ========                                ========                          
Net interest income, interest rate spread                       $15,865       3.11%                      $14,460       3.12% 
                                                                =======       =====                      =======       ===== 
Net interest margin (net interest income
  as a percent of average interest-earning 
  assets)                                                                      3.77%                                    3.75% 
                                                                              =====                                    ===== 
  
Average interest-earning assets to average
  interest-bearing liabilities                                              117.04%                                  116.80% 
                                                                            =======                                  ======= 

<CAPTION>
                                                            Year ended December 31,
                                                     --------------------------------------

                                                                   1995
                                                     ----------------------------------------
                                                         Average       Interest
                                                       Outstanding     Earned/      Yield/
                                                        Balance         Paid        Rate
                                                        -------         ----        ----
                                                             (Dollars in thousands)

<S>                                                       <C>          <C>           <C>  
Interest-earning assets:
  Loans (1)                                               $240,044     $20,072       8.36%
  Securities available for sale (2)                        109,125       6,577        6.03
  Federal funds sold                                        11,235         667        5.94
  Interest-bearing balances with financial
   institutions                                              481            38        7.90
                                                          --------     -------            
  Total interest-earning assets                            360,885      27,354        7.58
Noninterest-earning assets:
  Allowance for loan losses                                (3,040)
  Cash and due from financial institutions                  11,659
  SFAS No. 115 adjustment                                    (703)
  Other assets                                             11,585
                                                          --------                         
Total assets                                              $380,386
                                                          ========

Interest-bearing liabilities:
  Savings, NOW and money market                           $176,780       6,070        3.43
  Other time deposits                                      120,421       6,924        5.75
  Federal funds purchased                                    2,255         151        6.70
  Securities sold under agreements to 
   repurchase                                                3,808         234        6.15
  Federal funds purchased                                   11,101         679        6.12
                                                          --------     -------             
  Total interest-bearing liabilities                       314,365      14,058        4.47
                                                                       -------              
Noninterest-bearing liabilities
  Demand deposits                                           35,034
  Other liabilities                                          3,710
                                                          --------                        
Total liabilities                                          353,109
Shareholders' equity                                        27,277
                                                          --------                              
 Total liabilities and shareholders' equity               $380,386
                                                          ========
Net interest income, interest rate spread                              $13,296       3.11%
                                                                       =======       =====
Net interest margin (net interest income
  as a percent of average interest-earning 
  assets)                                                                            3.68%
                                                                                     =====
  
Average interest-earning assets to average
  interest-bearing liabilities                                                     114.80%
                                                                                   =======
</TABLE>

- --------------------

(1)      For purposes of these computations, nonaccrual loans are included in
         the average loan balances outstanding and loan fees are included in
         interest on loans receivable. The inclusion of nonaccrual loans and
         fees does not have a material effect on either the average balance or
         the average yield.
(2)      Interest income on tax-exempt securities has not been adjusted to a
         taxable equivalent basis.

                                       51
<PAGE>   56


INTEREST INCOME AND EXPENSE RATE/VOLUME ANALYSIS

         The table below describes the extent to which changes in interest rates
and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected Sand Ridge Financial's interest income and expense
during the periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (change in volume multiplied by prior year rate), (ii)
changes in rate (change in rate multiplied by prior year volume) and (iii) total
changes in rate and volume. The combined effects of changes in both volume and
rate, which cannot be separately identified, have been allocated proportionately
to the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
                                                                             Year ended December 31,
                                                     -------------------------------------------------------------------------
                                                                 1997 vs. 1996                1996 vs. 1995
                                                    ---------------------------------   ------------------------ --------
                                                    Increase (decrease) due to          Increase (decrease) due to
                                                    ------------------------             ------------------------
                                                      Volume       Rate        Total       Volume       Rate        Total
                                                      ------       ----        -----       ------       ----        -----
                                                                                 (In thousands)

<S>                                                     <C>          <C>         <C>         <C>         <C>          <C>   
Interest income attributable to:
  Loans                                                 $  977       $  516      $1,493      $1,310      $  (233)      $1,077
  Securities available for sale (1)                        774          276       1,050         900          (29)         871
  Federal funds sold                                       638           19         657        (289)         (62)        (351)
  Interest-bearing balances with financial
    institutions                                           (12)           2         (10)        (19)           0          (19)
                                                        ------       ------      ------      ------       ------       ------
  Total interest income                                  2,377          813       3,190       1,902        (324)        1,578

Interest expense attributable to:
  Savings, NOW and money market                            (66)         (31)        (97)        (15)        (255)        (270)
  Other time deposits                                    1,699           65       1,764       1,471         (143)       1,328
  Federal funds purchased                                 (152)          (8)       (160)         57          (30)          27
  Securities sold under agreements to repurchase           (38)          (4)        (42)       (132)          (9)        (141)
  Advances from FHLB                                       311            9         320        (481)         (49)        (530)
                                                        ------       ------      ------      ------       ------       ------
  Total interest expense                                 1,754           31       1,785         900         (486)         414
                                                        ------       ------      ------      ------       ------       ------

Increase (decrease) in net interest income              $  623       $  782      $1,405      $1,002       $  162      $ 1,164
                                                        ======       ======      ======      ======       ======      =======
</TABLE>

- --------------------
(1) Interest income on tax-exempt securities has not been adjusted to a tax
equivalent basis.



                                       52

<PAGE>   57


INVESTMENT SECURITIES

         The following table sets forth the carrying amount of securities
classified as available for sale at December 31, 1997, 1996 and 1995. Sand Ridge
Financial did not have any securities classified as held to maturity at these
three dates. Investment securities classified as available for sale are recorded
at fair value.

<TABLE>
<CAPTION>
                                                                              Available For Sale
                                                                                  December 31,
                                                               ---------------------------------------------------
                                                                       1997              1996             1995
                                                                       ----              ----             ----
                                                                                 (In thousands)
<S>                                                                   <C>               <C>              <C>     
          U.S. treasury and  government agencies                      $ 19,364          $ 16,709         $ 19,830
          Obligations of states and  political subdivisions             69,431            59,198           48,800
          Other corporate securities                                     2,678               414              427
          Mortgage-backed securities                                    61,629            46,509           54,173
          Marketable equity securities                                   1,381             1,375            1,358
                                                                      --------          --------         --------
          Total                                                       $154,483          $124,205         $124,588
                                                                      ========          ========         ========
</TABLE>

         The following table presents the contractual maturities or terms to
repricing of debt securities available for sale and the weighted average yield
at December 31, 1997.

<TABLE>
<CAPTION>
                                                                       After one but          After five but
                                                                          within                  within
                                               Within One Year           Five Years               Ten Years       
                                               ---------------          -----------              ----------       
                                              Amount     Yield      Amount       Yield       Amount      Yield    
                                              ------     -----      ------       -----       ------      -----    
                                                                                          (Dollars in thousands)
<S>                                             <C>        <C>        <C>           <C>       <C>          <C>    
          U.S. treasury and government          $    0     0.00%      $12,638        5.91%    $ 6,726       6.60%  
           agencies
          Obligations of states and
            political subdivisions               1,666     5.22        11,006        6.25      22,010       5.58  
          Other corporate securities             2,471     6.03           207       10.26           0       0.00  
          Mortgage-backed securities                 0     0.00             0        0.00           0       0.00  
                                                ------     ----       -------       -----     -------      -----   
                                                $4,137     5.70%      $23,851        6.11%    $28,736       5.82%  
                                                ======     =====      =======       =====     =======      =====  


<CAPTION>
                                              
                                             
                                                After Ten Years           Totals
                                               ----------------       -----------------
                                               Amount      Yield      Amount     Yield
                                               ------      -----      ------     -----
                                             
<S>                                             <C>          <C>      <C>          <C>  
          U.S. treasury and government
           agencies                             $     0       0.00%   $ 19,364      6.15%
          Obligations of states and
            political subdivisions               34,749       5.52      69,431      5.65
          Other corporate securities                  0       0.00       2,678      6.35
          Mortgage-backed securities             61,629       6.98      61,629      6.98
                                                -------      -----    --------     ----- 
                                                $96,378       6.45%   $153,102      6.26%
                                                =======      =====    ========     =====
</TABLE>


         --------------------
(1)      Yields on tax-exempt investments have not been computed on a tax
         equivalent basis.

         At December 31, 1997 there were no holdings of securities of any one
issuer, other than the U.S. government and its agencies and corporations, in an
amount greater than 10% of shareholders' equity.

                                       53

<PAGE>   58


LOAN PORTFOLIO

         LOAN PORTFOLIO COMPOSITION. Sand Ridge Financial's primary lending
areas are the cities of Highland, Schererville and Hammond, Indiana and the
contiguous areas in Lake County, Indiana.

         The following table presents certain information regarding the
composition of Sand Ridge Financial's loan portfolio at the dates indicated:

<TABLE>
<CAPTION>
                                                                             At December 31,
                                            ------------------------------------------------------------------------------
                                              1997             1996              1995              1994             1993
                                            --------         --------          --------          --------         --------
                                                                        (In thousands)

<S>                                         <C>              <C>               <C>               <C>              <C>     
Commercial                                  $105,181         $102,464          $ 92,767          $ 78,810         $ 66,028
Real estate-mortgage                          94,362           85,202            86,872            93,843           89,644
Real estate-construction                       2,160            3,600             2,869               589              274
Installment                                   68,159           65,845            63,448            63,922           41,785
Credit card                                    2,686            2,010             1,241                 0                0
                                            --------         --------          --------          --------         --------
  Total loans                                272,548          259,121           247,197           237,164          197,731
Deferred loan fees                              (567)            (639)             (826)             (893)            (990)
Allowance for loan losses                     (3,252)          (2,367)           (3,372)           (2,575)          (2,386)
                                            --------         --------          --------          --------         --------
    Net loans                               $268,729         $256,115          $242,999          $233,696         $194,355
                                           =========         ========          ========          ========         ========
</TABLE>

         At December 31, 1997, Sand Ridge Financial did not have any
concentrations of loans exceeding 10.0% of total loans not otherwise disclosed
in the loan categories in the table above.


         LOAN MATURITY SCHEDULE. The following table sets forth certain
information at December 31, 1997 regarding commercial and real
estate-construction loans maturing or repricing, based on the earlier of
contractual terms to maturity or the next scheduled repricing date for variable
rate loans:

<TABLE>
<CAPTION>
                                                            After one         After five
                                             Within         but within        but within          After
                                            One Year        Five Years        Ten Years         Ten Years           Total
                                            --------        ----------        ---------         ---------           -----
                                                                        (In thousands)
<S>                                         <C>              <C>               <C>               <C>              <C>     
Commercial                                  $ 56,456         $ 30,533          $  8,975          $  9,217         $105,181
Real estate-construction                       2,160                0                 0                 0            2,160
                                            --------         --------          --------          --------         --------
Totals                                      $ 58,616         $ 30,533          $  8,975          $  9,217         $107,341
                                           =========        =========         =========         =========         ========
</TABLE>

                  The following table sets forth the dollar amount of all
commercial and real estate-construction loans due after one year that have
predetermined interest rates and have floating or adjustable interest rates:

<TABLE>
<CAPTION>
                                                    Predetermined                 Floating or
                                                        Rates                   Adjustable Rates
                                                        -----                   ----------------
                                                                  (In thousands)

<S>                                                    <C>                          <C>    
          Commercial                                   $33,152                      $15,573
          Real estate-construction                           0                            0
                                                       -------                      -------
          Totals                                       $33,152                      $15,573
                                                       =======                      =======
</TABLE>

                                       54
<PAGE>   59


         DELINQUENT LOANS AND NONPERFORMING ASSETS. All loans are reviewed on a
regular basis and are placed on non-accrual status when, in the opinion of
management, the collection of interest is doubtful. Loans are classified as
restructured when management, to protect its investment, grants concessions that
would not otherwise be considered to a debtor. Other real estate owned ("OREO")
represents real estate acquired by Sand Ridge Financial as a result of loan
defaults by customers. The following table summarizes Sand Ridge Financial's
nonaccrual loans, restructured loans, OREO and past due loans:

<TABLE>
<CAPTION>
                                                                           At December 31,
                                             ------------------------------------------------------------------------------
                                                  1997            1996           1995            1994            1993
                                                  ----            ----           ----            ----            ----
                                                                              (In thousands)

<S>                                                <C>             <C>            <C>             <C>             <C>    
Nonaccrual loans                                   $ 2,643         $ 5,834        $   873         $   657         $   772
Restructured loans                                       0               0              0               0               0
Other real estate owned                                200               0              0               0             196
                                                   -------         -------        -------         -------         -------
  Total nonperforming assets                       $ 2,843         $ 5,834        $   873         $   657         $   968
                                                   =======         =======        =======         =======         =======

Accruing loans past due
  90 days or more                                  $   188         $   203        $   146         $   170         $   100
                                                   =======         =======        =======         =======         =======

Nonperforming assets as a
  percent of total loans
  plus OREO                                          1.04%           2.25%          0.35%           0.28%           0.49%
                                                    =====           =====          =====           =====           =====
</TABLE>

         Interest income which would have been recorded under the original terms
of nonaccrual loans and the interest income actually recognized are summarized
below:

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                             ------------------------------------------------------------------------------
                                                     1997            1996           1995            1994            1993
                                                     ----            ----           ----            ----            ----
                                                                                 (In thousands)

<S>                                                 <C>             <C>            <C>             <C>             <C>    
Interest income which would
  have been recorded                                $   388         $   510       $    83          $   40         $    53
Interest income recognized                               61             103           120              35              67
                                                    -------         -------       -------           -----         -------   
Interest income foregone                            $   327         $   407       $   (37)         $    5         $   (14)
                                                    =======         =======       =======          ======         =======  
</TABLE>

         At December 31, 1997 Sand Ridge Financial had approximately $3.8
million in loans not currently classified as nonaccrual or 90 days past due and
accruing where known information about possible credit problems of borrowers
caused management to have serious doubts as to the ability of such borrowers to
comply with the present loan repayment terms and which may result in future
disclosure of such loans. These loans are subject to constant monitoring by
management and are considered in determining the adequacy of Sand Ridge
Financial's allowance for loan losses.


                                       55


<PAGE>   60




         ALLOWANCE FOR LOAN LOSSES. Sand Ridge Financial maintains an allowance
to absorb anticipated losses on loans. Additions to the allowance for loan
losses are charged to the provision for loan losses on the statement of income.
Management reviews on a quarterly basis the allowance for loan losses as it
relates to a number of relevant factors, including, but not limited to, trends
in the level of nonperforming assets, current and anticipated economic
conditions in the primary lending area, past loss experience, loan
concentrations, composition of the loan portfolio and possible losses arising
from specific problem loans. While management believes that it uses the best
information available to determine the allowance for loan losses, unforeseen
market conditions could result in adjustments and net earnings could be
significantly affected if circumstances differ substantially from the
assumptions used in evaluating the adequacy of the allowance for loan losses.

         The following table sets forth an analysis of Sand Ridge Financial's
allowance for loan losses for the periods indicated:
<TABLE>
<CAPTION>
                                                                                    Year ended December 31,
                                                 ------------------------------------------------------------------------------
                                                      1997            1996            1995            1994           1993
                                                      ----            ----            ----            ----           ----
                                                                                 (In thousands)

<S>                                                    <C>             <C>             <C>             <C>            <C>     
Balance at beginning of period                         $  2,367        $  3,372        $  2,575        $  2,386       $  1,768
Charge-offs:
  Commercial                                                979           2,299             134             510            186
  Real estate-mortgage                                       10              14               0              97            150
  Real estate-construction                                    0               0               0               0              0
  Installment and credit card                               522             480             411             178             59
                                                       --------        --------        --------        --------       --------
    Total charge-offs                                     1,511           2,793             545             785            395

Recoveries:
  Commercial                                                430             186             168              60             92
  Real estate-mortgage                                       16               4               0              24             48
  Real estate-construction                                    0               0               0               0              0
  Installment and credit card                               150             158             134              50             33
                                                       --------        --------        --------        --------       --------
    Total recoveries                                        596             348             302             134            173
                                                       --------        --------        --------        --------       --------

Net charge-offs (recoveries)                                915           2,445             243             651            222
Provision for loan losses                                 1,800           1,440           1,040             840            840
                                                       --------        --------        --------        --------       --------
Balance at end of period                               $  3,252        $  2,367        $  3,372        $  2,575       $  2,386
                                                       ========        ========        ========        ========       ========

Loans outstanding at end of period                     $272,548        $259,121        $247,196        $237,164       $197,731
                                                       ========        ========        ========        ========       ========
Average loans outstanding
  during period                                        $267,162        $255,482        $240,044        $219,928       $180,131
                                                       ========        ========        ========        ========       ========
Ratio of net charge-offs (recoveries) during the
  period to average loans outstanding during 
  the period                                               0.34%           0.96%           0.10%           0.30%          0.12%
                                                          =====           =====           =====           =====          =====
</TABLE>
  
         The following table provides an allocation of Sand Ridge Financial's
allowance for loan losses by category for the periods indicated. The allowance
can be allocated by category only on an approximate basis. The allocation of
allowance to each category is not necessarily indicative of future losses and
does not restrict the use of the allowance to absorb losses in any other
category.

                                       56
<PAGE>   61

<TABLE>
<CAPTION>
                                                                  Allowance for Loan Losses
                                                                          At December 31,
                                             ------------------------------------------------------------------------------
                                                  1997            1996           1995            1994            1993
                                                  ----            ----           ----            ----            ----
                                 (In thousands)

<S>                                                <C>             <C>            <C>             <C>             <C>     
Commercial                                         $  1,421        $  1,134       $    683        $    825        $    793
Real estate-mortgage                                    131             118            255             522             320
Real estate-construction                                  0               0              0               0               0
Installment and credit card                             499             419            105              95             112
Unallocated                                           1,201             696          2,329           1,133           1,161
                                                   --------        --------       --------        --------        --------
Total                                              $  3,252        $  2,367       $  3,372        $  2,575        $  2,386
                                                   ========        ========       ========        ========        ========
</TABLE>

<TABLE>
<CAPTION>
                                                                      Percentage of Loans to Total Loans
                                                                             At December 31,
                                             ------------------------------------------------------------------------------
                                                      1997            1996           1995            1994            1993
                                                      ----            ----           ----            ----            ----

<S>                                                  <C>             <C>            <C>             <C>             <C>   
Commercial                                           38.59%          39.54%         37.53%          33.23%          33.39%
Real estate-mortgage                                  34.63           32.88          35.14           39.57           45.34
Real estate-construction                               0.79            1.39           1.16            0.25            0.14
Installment and credit card                           25.99           26.19          26.17           26.95           21.13
Unallocated                                           N/A             N/A            N/A             N/A             N/A
                                                   --------        --------       --------        --------        --------
Total                                               100.00%         100.00%        100.00%         100.00%         100.00%
                                                    =======         =======        =======         =======         =======
</TABLE>


DEPOSITS

         Deposits have traditionally been the primary source of Sand Ridge
Financial's funds for use in lending and other investment activities. Deposits
are attracted principally within the area of Lake County, Indiana through the
offering of a broad selection of deposit instruments, including checking and NOW
accounts, money market deposit accounts, regular savings accounts, term
certificate accounts and retirement savings plans. Sand Ridge Financial has not
and does not presently use brokers to attract deposits.

         The average balance of and the average rate paid on various deposit
categories for 1997, 1996 and 1995 is disclosed elsewhere herein in the table
showing "Analysis Of Net Interest Income."

         The following table presents the amount of Sand Ridge Financial's time
deposits of $100,000 or more by the time remaining until maturity as of December
31, 1997:

<TABLE>
<CAPTION>
                              Maturity                   December 31, 1997
                              ---------                  -----------------
                                                           (In thousands)

<S>                                                              <C>     
          Three months or less                                   $ 12,795
          Over three through six months                             3,348
          Over six through twelve months                            6,321
          Over twelve months                                        3,316
                                                                 --------
          Total                                                  $ 25,780
                                                                 ========
</TABLE>


                                       57
<PAGE>   62


RETURN ON EQUITY AND ASSETS

         The following table sets forth certain performance ratios of Sand Ridge
Financial for the periods indicated:
<TABLE>
<CAPTION>
                                                                             Year ended December 31,
                                                                   ----------------------------------------------
                                                                       1997            1996            1995
                                                                       ----            ----            ----
<S>                                                                    <C>             <C>             <C>  
          Return on assets (net income
            divided by average total assets)                           1.13%           1.20%           1.09%

          Return on equity (net income
            divided by average equity)                                13.74%          15.06%          15.24%

          Dividend payout ratio (dividends
            declared per share divided by
            net income per share)                                     20.43%          19.66%          21.65%

          Equity to assets ratio (average
            equity divided by average assets)                          8.23%           7.99%           7.17%
</TABLE>


SHORT-TERM BORROWINGS

         This information is not required as there were no categories of
short-term borrowings for which the average balance outstanding during the
period was 30% or more of shareholders' equity at the end of the period.



                                       58
<PAGE>   63


               PRINCIPAL SHAREHOLDERS AND OWNERSHIP BY MANAGEMENT


         For information regarding the principal shareholders of First Financial
and ownership of First Financial Common Stock by First Financial's directors and
executive officers, see "Item 12. Security Ownership of Certain Beneficial
Owners and Management" in the First Financial Form 10-K, which is incorporated
herein by reference.

         The following table sets forth certain information with respect to the
only persons known to Sand Ridge Financial to own beneficially more than 5% of
the outstanding common stock of Sand Ridge Financial as of the Record Date:

<TABLE>
<CAPTION>
                                                                          Number of          Percent of Shares
                                                                           Shares               Outstanding
                                                                           ------               -----------
          Name And Address
          ----------------

<S>                                                                          <C>                 <C>   
          Bruce E. Leep                                                      7,544               12.57%
          Sand Ridge Financial Corporation
          2611 Highway Avenue
          Highland, Indiana  46322

          E. Kenneth Leep                                                    6,559               10.93%
          Sand Ridge Financial Corporation
          2611 Highway Avenue
          Highland, Indiana  46322

          Van Der Molen Sand Ridge LLC                                       5,786                9.64%
          Richard L. Van Der Molen, Trustee
          1 North 335 Indian Knoll Road
          West Chicago, Illinois  60185
</TABLE>


                                       59
<PAGE>   64


         The following table sets forth certain information regarding the number
of shares of common stock of Sand Ridge Financial beneficially owned by each
director of Sand Ridge Financial and by all directors and executive officers of
Sand Ridge Financial as a group as of the Record Date:

<TABLE>
<CAPTION>
                                             Number of          Percent of Shares
                             Name               Shares              Outstanding
                             ----               ------              -----------

<S>                                               <C>                    <C>   
          Bruce E. Leep                           7,544 (1)               12.57%
          E. Kenneth Leep                         6,559 (2)               10.93%
          Richard E. Olszewski                       50 (3)                0.08%
          Rhett L. Tauber                            50 (4)                0.08%
          Gerald Van Prooyen                      1,571 (5)                2.62%
          Samuel Van Til                            102 (6)                0.17%
          Carl Wolak                                260 (7)                0.43%

          All executive officers and
          directors as a group
          (9 persons)                                16,918               28.20%
</TABLE>

         --------------------

         (1)      Of these, 3,034 shares are owned by Mr. Bruce E. Leep's wife,
                  for which Mr. Leep disclaims beneficial ownership, and 387
                  shares are owned by the Sand Ridge Financial Employee Profit
                  Sharing Trust, of which Mr. Leep is a committee member.
         (2)      Of these, 2,336 shares are owned by Mr. E. Kenneth Leep's wife
                  and 380 shares are owned by their children, for which Mr. Leep
                  disclaims beneficial ownership.
         (3)      All of Mr. Olszewski's shares are owned jointly with his wife.
         (4)      All of Mr. Tauber's shares are owned jointly with his wife.
         (5)      Of these, 24 shares are owned by a revocable trust, of which
                  Mr. Van Prooyen is the trustee, and 624 shares are owned by
                  Mr. Van Prooyen's wife is the trustee. Mr. Van Prooyen
                  disclaims beneficial ownership of the shares owned by the
                  trust and his wife.
         (6)      All of Mr. Van Til's shares are owned jointly with his wife.
         (7)      Of these, 10 shares are owned by Mr. Wolak's wife, for which
                  Mr. Wolak disclaims beneficial ownership, and 150 shares are
                  owned jointly with his wife.

                                       60
<PAGE>   65


                   COMPARATIVE MARKET AND DIVIDEND INFORMATION


NATURE OF TRADING MARKET

         The First Financial Common Stock is quoted on the Nasdaq National
Market System under the symbol "FFBC". On March __, 1999, the last reported sale
price of First Financial Common Stock as reported on the Nasdaq National Market
System was $_____ per share.

         The Sand Ridge Financial Common Stock is not traded on an established
public market. The last known trading price of Sand Ridge Financial Common Stock
was $1,100 per share on December 8, 1998 for two shares. As there is not an
established public trading market for the shares of Sand Ridge Financial Common
Stock, the stock is not liquid and the price indicated above may not reflect the
prices which would be paid for such shares on an active market. This information
should not necessarily be relied upon when determining the value of a
shareholder's investment.

         The following table sets forth, for the periods indicated, the high and
low sales prices per share of First Financial Common Stock as reported on the
Nasdaq National Market System. All prices have been adjusted to give retroactive
effect to stock dividends and stock splits.

<TABLE>
<CAPTION>
                                              FIRST FINANCIAL           FIRST FINANCIAL
                                                 HIGH BID                  LOW BID

<S>                                                <C>                       <C>   
         1995
         ----
         First Quarter                             $13.05                    $12.21
         Second Quarter                             12.96                     12.40
         Third Quarter                              13.33                     12.40
         Fourth Quarter                             13.24                     12.40

         1996
         ----
         First Quarter                              13.34                     12.58
         Second Quarter                             13.15                     11.84
         Third Quarter                              13.15                     12.02
         Fourth Quarter                             13.43                     12.49

         1997
         ----
         First Quarter                              15.19                     12.60
         Second Quarter                             17.15                     13.95
         Third Quarter                              23.07                     16.12
         Fourth Quarter                             22.95                     21.14

         1998
         ----
         First Quarter                              26.70                     21.82
         Second Quarter                             28.98                     23.41
         Third Quarter                              26.70                     22.73
         Fourth Quarter                             31.00                     25.00
</TABLE>


                                       61
<PAGE>   66

         The following information reflects actual trade transactions in Sand
Ridge Financial Common Stock made during 1996 through 1998, for which management
is aware of both the number of shares traded and the selling price. The
information should not necessarily be relied upon when determining the value of
a shareholder's investment.

<TABLE>
<CAPTION>
                                                       Sand Ridge Financial Trades In
                                             ----------------------------------------------------
                                                   1996             1997            1998(1)
                                                   ----             ----            ----
<S>                                          <C>              <C>               <C>
          Number of trades                                 11               12                11
          Number of shares traded                      10,667            1,892               583
          Selling price                       $439.89-$569.67  $569.67-$700.00  $925.00-$1,100.00
</TABLE>

         ----------
         (1)  Through September 30, 1998

         As of March __, 1999, there were approximately _______ holders of
record of First Financial Common Stock. As of March 1, 1999, Sand Ridge
Financial had 337 shareholders of record.


DIVIDENDS

         The following table sets forth the per share cash dividends declared on
First Financial and Sand Ridge Financial Common Stock, respectively, for each
quarter since January 1, 1995. First Financial dividends have been adjusted to
give retroactive effect to all stock dividends and stock splits.

<TABLE>
<CAPTION>
                                                   FIRST                  SAND RIDGE
                                                 FINANCIAL                 FINANCIAL
                                                 ---------                 ---------

<S>                                               <C>                     <C>
         1995
         ----
         First Quarter                            $ .10
         Second Quarter                             .10
         Third Quarter                              .10
         Fourth Quarter                             .11                     $15.00

         1996
         ----
         First Quarter                              .11
         Second Quarter                             .11
         Third Quarter                              .11
         Fourth Quarter                             .12                      16.00

         1997
         ----
         First Quarter                              .12
         Second Quarter                             .12
         Third Quarter                              .14
         Fourth Quarter                             .14                      17.00

         1998
         ----
         First Quarter                              .14
         Second Quarter                             .14
         Third Quarter                              .14
         Fourth Quarter                             .15                      18.00
</TABLE>

                                       62
<PAGE>   67

         In the Merger Agreement, First Financial and Sand Ridge Financial
agreed that if the Effective Time is after First Financial's record date for its
first quarter, 1999 regular dividend, Sand Ridge Financial shareholders will
receive a quarterly dividend of $4.75 per share on April 1, 1999.

         The future dividend policy of First Financial is subject to the
discretion of First Financial's Board of Directors, cash needs, general business
conditions and dividends from subsidiaries.

         For certain restrictions on the payment of dividends by First Financial
and Sand Ridge Financial see "COMPARISON OF COMMON STOCK AND SHAREHOLDERS'
RIGHTS--Dividend Rights."

                                       63
<PAGE>   68


               COMPARISON OF COMMON STOCK AND SHAREHOLDERS' RIGHTS

         The following summary comparison of the terms of the common stock of
Sand Ridge Financial and First Financial, and the rights of holders thereof,
does not purport to be complete and is qualified in its entirety by reference to
First Financial's Articles of Incorporation, Sand Ridge Financial's Articles of
Incorporation, First Financial's Regulations and Sand Ridge Financial's Code of
By-Laws. Various features of the Articles of Incorporation and Regulations of
First Financial differ from Sand Ridge Financial's Articles of Incorporation and
Code of By-Laws. The following discussion summarizes the differences that are
deemed to be material by First Financial.


AUTHORIZED BUT UNISSUED SHARES

         First Financial's Articles of Incorporation authorize the issuance of
60,000,000 shares, without par value, of First Financial Common Stock, of which
36,320,338 shares were issued and outstanding at December 31, 1998. At its
upcoming annual meeting of shareholders, First Financial is proposing to
increase its authorized common shares to 160,000,000 shares. The remaining
authorized but unissued shares of First Financial Common Stock may be issued
upon authorization of the Board of Directors without prior shareholder approval.

         Sand Ridge Financial's Articles of Incorporation authorize the issuance
of 200,000 shares, without par value, of which 60,000 shares were issued and
outstanding at December 31, 1998.


DIVIDEND RIGHTS

         The holders of Sand Ridge Financial and First Financial Common Stock
are entitled to dividends and other distributions when, as and if declared by
their respective Boards of Directors out of funds legally available therefor.
Subject to certain regulatory restrictions, dividends may be paid in cash,
property or shares of common stock, unless the entity is insolvent or the
dividend payment would render it insolvent.

         The amount of dividends, if any, that might be declared by First
Financial following the purchase will necessarily depend upon many factors,
including without limitation, future earnings, capital requirements, business
conditions of subsidiaries (since First Financial will be dependent upon
dividends paid to it by its subsidiaries) and the discretion of First
Financial's Board of Directors. Dividends paid to First Financial by its
subsidiary financial institutions are subject to the regulations of various
regulatory authorities. A Federal Reserve Board Policy Statement provides that
cash dividends paid by a bank holding company should meet the following two
guidelines: (1) the organization's net income available to common shareholders
over the past year should be sufficient to fully fund the dividends and (2) the
prospective rate of earnings retention by the organization appears consistent
with capital needs, asset quality, and overall financial condition. First
Financial has complied with the first guideline since its organization in 1983
and believes it has also complied with the second guideline.

                                       64

<PAGE>   69

DIRECTORS

         After the Merger, Sand Ridge Financial's Board of Directors will cease
to exist and First Financial's Board of Directors will be the Board of Directors
for the Surviving Corporation, except that Bruce E. Leep, a member of Sand Ridge
Bank's Board of Directors, will be appointed to First Financial's Board promptly
after the Effective Time. First Financial does NOT have a similar agreement with
Hebron Bancorp, Inc.

         The number of directors of First Financial can be no less than nine and
no more than 25. First Financial currently has 15 directors, not including the
Sand Ridge Bank director who will be appointed to First Financial's Board
promptly after the Effective Time, divided into three classes of directors.
The size of the Board can be increased or decreased at any time by:

         a.       the affirmative vote of two-thirds (2/3rds) of the whole
                  authorized number of directors, or

         b.       the affirmative vote of the holders of at least two-thirds
                  (2/3rds) of the outstanding voting power of First Financial at
                  a meeting of shareholders, at which a quorum is present,
                  called for the purpose of electing directors.

         First Financial's Board of Directors may not, under provisions of First
Financial's Regulations, increase the authorized number of directors by more
than three positions during any period between annual meetings.

         First Financial directors are elected to three-year terms, with the
term of office of one class expiring each year. Shareholders of First Financial
annually elect only one of the three classes. This method of election could be
considered an impediment for a takeover of control of First Financial by third
parties.

         Sand Ridge Financial's Code of By-Laws provides for a Board of
Directors of seven persons. All directors are elected by the shareholders to
one-year terms at each annual meeting, except that the Board of Directors may
fill vacancies occurring on the Board of Directors, including vacancies
resulting from an increase in the number of directors on the Board.

         Nominations for the election of First Financial directors may be made
by the Board of Directors, a committee appointed by the Board of Directors or by
any shareholder entitled to vote in the election of directors. Shareholders
intending to nominate director candidates for election must deliver written
notice thereof to the Secretary of First Financial no later than (i) 90 days
prior to the date one year from the date of the immediately preceding annual
meeting of shareholders with respect to an election to be held at an annual
meeting of shareholders, or (ii) the close of business on the tenth day
following the date on which a meeting notice is first given to shareholders with
respect to an election to be held at a special meeting of shareholders. The
written notice must set forth certain information, as described in the
Regulations, concerning the shareholder and the person being nominated. Any
person not nominated in compliance with the prescribed procedures will not be
eligible for election as a director. Sand Ridge Financial's Code of By-Laws does
not describe the method for making nominations for the election of directors.

                                       65
<PAGE>   70

         A majority of First Financial's directors in office at any time, though
less than a majority of the whole authorized number of directors, may, by a vote
of a majority of their number, fill any director's office that is created by an
increase in the number of directors or by a vacancy. Any directors so chosen
will hold office for the remaining length of the term; a vote by First Financial
shareholders is not required. A majority of Sand Ridge Financial's directors
then in office is required to fill any vacancies in Sand Ridge Financial's Board
or fill any newly created director positions. Any directors so chosen may hold
office only until the next annual or special meeting of the shareholders.

         Any director of Sand Ridge Financial may be removed, with or without
cause, by the affirmative vote of at least two-thirds (2/3rds) of the
outstanding shares of Sand Ridge Financial Common Stock at a meeting of
shareholders called for that purpose. A First Financial director may be removed
only if a court of law finds such director guilty of a felony or if the director
has breached his or her fiduciary duty under the laws of Ohio.

         First Financial's Regulations have an age limitation preventing
election or re-election of directors who have reached the age of 70 years or
older. Sand Ridge Financial's Articles of Incorporation and Code of By-Laws do
not contain such an age limitation, but as a matter of policy all directors in
fact resign at age 70.


QUORUM FOR SHAREHOLDERS' MEETINGS

         Except as provided by law, the holders of record of a majority of
outstanding shares, in person or by proxy, are required for a quorum at all
First Financial and Sand Ridge Financial shareholders' meetings.


MEETING PARTICIPATION BY USE OF COMMUNICATION EQUIPMENT

         Sand Ridge Financial's Code of By-Laws allows any or all directors to
participate in a Board of Directors meeting or a committee meeting by using a
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can communicate with each other. First
Financial's Articles of Incorporation and Regulations make no provision for
meeting participation using communication equipment, but Ohio statutes allow
directors to participate in a directors' meeting using such equipment.


VOTING RIGHTS

         The holders of Sand Ridge Financial Common Stock and First Financial
Common Stock are entitled to one vote per share on all matters presented for
shareholder vote. Shareholders of First Financial or Sand Ridge Financial do not
have cumulative voting rights in the election of directors.

                                       66
<PAGE>   71

SPECIAL MEETINGS

         Special Meetings of the shareholders of First Financial may be called
for any purpose by the Chairman of the Board of Directors; by the President; by
the Vice President authorized to exercise the authority of the President upon
his absence, death or disability; by resolution of the directors; or by holders
of not less than 50% percent of the outstanding voting power of First Financial.

         Special Meetings of the shareholders of Sand Ridge Financial may be
called by the President, by the Board of Directors, or by shareholders holding
of record not less than one-fourth (1/4th) of all shares of Sand Ridge Financial
Common Stock outstanding and entitled to vote on the business proposed to be
transacted at the meeting. The President shall also call a special meeting upon
the written request of a majority of the members of the Board of Directors or
shareholders holding of record a majority of all shares of common stock
outstanding and entitled to vote on the business for which the meeting is being
called. Any request for a special meeting shall state the purpose or purposes of
the proposed meeting.


NOTICE OF SHAREHOLDER MEETINGS

         First Financial and Sand Ridge Financial have similar notification
requirements. Notice of shareholder meetings shall be mailed, postage prepaid,
to every shareholder of record at the address appearing on the respective
company's books at least ten days prior to the date of the meeting.


PREEMPTIVE RIGHTS

         As permitted by law, neither First Financial's nor Sand Ridge
Financial's Articles of Incorporation provide for preemptive rights.


REDEMPTION AND ASSESSMENT

         Shares of First Financial and Sand Ridge Financial Common Stock are not
subject to further call or assessment. A bank holding company may redeem or
purchase shares of its Common Stock with funds legally available therefor,
provided it gives prior notice to the Federal Reserve Board if the consideration
to be paid for the purchase or redemption, when aggregated with the
consideration paid for all purchases or redemptions for the preceding twelve
months, equals or exceeds 10% of its consolidated net worth. This prior
notification is not required if the bank holding company (a) exceeds the
thresholds established for a "well-capitalized" institution both before and
after the redemption, (b) received a composite "1" or "2" rating at its most
recent regulatory inspection, and (c) is not the subject of any unresolved
supervisory issues. First Financial currently meets these three requirements and
is not required to notify the Federal Reserve Board before purchasing shares of
its common stock. Redemptions may not be made when First Financial is insolvent
or, as a result of the redemption, would be rendered insolvent. Redemptions or
repurchases of Sand Ridge Financial Common Stock are also subject to regulatory
limitations.

                                       67
<PAGE>   72

TWO-THIRDS MAJORITY VOTE REQUIRED

The Articles of Incorporation for Sand Ridge Financial require a two-thirds
(2/3rds) majority vote of the outstanding shares of Sand Ridge Financial Common
Stock for:

         a.       Removal of any or all members of the Board of Directors;

         b.       Approval of any merger or consolidation of Sand Ridge
                  Financial or any of its subsidiaries, except for a merger or
                  consolidation of one or more subsidiaries with each other or
                  with the holding company;

         c.        The liquidation or dissolution of Sand Ridge Financial;

         d.       Any sale, exchange or other disposition of (but not any bona
                  fide security interest in or mortgage, pledge or other
                  encumbrance on) all or substantially all of the assets of Sand
                  Ridge Financial; and

         e.       Any amendment or repeal of the two-thirds (2/3rds) voting
                  requirement for the above four items.

         See "Directors" and "Amendments to Articles and Regulations/Code of
By-Laws" of this section for discussions of those actions requiring a two-thirds
(2/3rds) affirmative vote of outstanding shares of First Financial Common Stock.


AMENDMENTS TO ARTICLES AND REGULATIONS/CODE OF BY-LAWS

         Any provision of First Financial's Articles of Incorporation may be
amended, altered, changed or repealed by following the procedures prescribed by
the then current laws of the State of Ohio.

         Any section of Sand Ridge Financial's Articles of Incorporation may be
amended or repealed by following the procedures prescribed by the then current
laws of the State of Indiana, except for repeal or amendment of the section of
the Articles requiring a two-thirds (2/3rds) majority vote of outstanding shares
of Sand Ridge Financial Common Stock entitled to vote, as described in
"TWO-THIRDS MAJORITY VOTE REQUIRED."

         Sand Ridge Financial's Code of By-Laws may be altered, amended or
repealed by a majority vote of the number of authorized members of the Board of
Directors. Since Sand Ridge Financial's Code of By-Laws currently authorizes a
Board of seven members, the affirmative vote of four members is necessary to
alter, amend, or repeal provisions of the Code of By-Laws.

                                       68
<PAGE>   73



         First Financial's Regulations may be amended, altered, repealed or
replaced by the affirmative vote of at least two-thirds (2/3rds) of shares
outstanding at a meeting of shareholders called for such purpose, unless the
change or changes is recommended by the affirmative vote of two-thirds (2/3rds)
of the whole authorized number of directors. If recommended by the affirmative
vote of two-thirds (2/3rds) of the whole authorized number of directors, the
affirmative vote of a majority of the outstanding shares will be required for
approval.


PROVISIONS AFFECTING BUSINESS COMBINATIONS AND CHANGES IN CONTROL

         Ohio law governs the rights of shareholders of First Financial. Chapter
1704 of the Ohio Revised Code (the "ORC") may be viewed as having an
anti-takeover effect. This statute, in general, prohibits an "issuing public
corporation," the definition of which includes First Financial, from entering
into a "Chapter 1704 Transaction" with the beneficial owner, or affiliates of
such beneficial owner, of 10.0% or more of the outstanding shares of the
corporation (an "interested shareholder") for at least three years following the
date on which the interested shareholder attains such 10.0% ownership, unless
the board of directors of the corporation approves, prior to such person
becoming an interested shareholder, either the transaction or the acquisition of
shares resulting in a 10.0% ownership position. A "Chapter 1704 Transaction" is
broadly defined to include, among other things, a merger or consolidation with;
a sale of substantial assets to; or the receipt of a loan, guaranty or other
financial benefit, which is not proportionately received by all shareholders,
from the interested shareholder. Following the expiration of such three-year
period, a Chapter 1704 Transaction with the interested shareholder is permitted
only if either (i) the transaction is approved by the holders of at least
two-thirds of the voting power of the corporation or such different proportion
as is set forth in the corporation's articles of incorporation, including a
majority of the outstanding shares excluding those owned by the interested
shareholder, or (ii) the business combination results in the shareholders other
than the interested shareholder receiving a prescribed "fair price" for their
shares. One significant effect of Chapter 1704 is to encourage a person to
negotiate with the board of directors of a corporation prior to becoming an
interested shareholder.

         In addition, Section 1707.043 of the ORC requires a person or entity
that makes a proposal to acquire the control of a corporation to repay to that
corporation any profits made from trades in the corporation's stock within
eighteen months after making the control proposal.

         Section 1701.831 of the ORC (the "Control Share Acquisition Statute")
requires shareholder approval of any proposed "control share acquisition" of an
Ohio corporation. A "control share acquisition" is the acquisition, directly or
indirectly, by any person, including any individual, partnership, corporation,
limited liability company, society, association or two or more persons who have
a joint or common interest, of shares of a corporation that, when added to all
other shares of the corporation that may be voted, directly or indirectly, by
the acquiring person, would entitle such person to exercise or direct the
exercise of 20.0% or more, but less than 33-1/3%, of the voting power of the
corporation in the election of directors or 33-1/3% or more, but less than a
majority, of such voting power or a majority or more of such voting power. Under
the Control Share Acquisition Statute, the control share acquisition must be
approved in advance by the holders of a majority of the outstanding voting
shares represented at a meeting at which a quorum is 

                                       69
<PAGE>   74

present and by the holders of a majority of the portion of the outstanding
voting shares represented at such a meeting excluding the voting shares owned by
the acquiring shareholder and certain "interested shares," including shares
owned by officers elected or appointed by the directors of the corporation and
by directors of the corporation who are also employees of the corporation.

         The purpose of the Control Share Acquisition Statute is to give
shareholders of Ohio corporations a reasonable opportunity to express their
views on a proposed shift in control, thereby reducing the coercion inherent in
an unfriendly takeover. The provisions of the Control Share Acquisition Statute
grant to the shareholders of First Financial the assurance that they will have
adequate time to evaluate the proposal of the acquiring person, that they will
be permitted to vote on the issue of authorizing the acquiring person's purchase
program to go forward in the same manner and with the same proxy information
that would be available to them if a proposed merger of First Financial were
before them and, most importantly, that the interests of all shareholders will
be taken into account in connection with such vote and the probability will be
increased that they will be treated equally regarding the price to be offered
for their common shares if the implementation of the proposal is approved.

         The Control Share Acquisition Statute applies not only to traditional
offers but also to open market purchases, privately negotiated transactions and
original issuances by an Ohio corporation, whether friendly or unfriendly. The
procedural requirements of the Control Share Acquisition Statute could render
approval of any control share acquisition difficult in that the transaction must
be authorized at a special meeting of shareholders, at which a quorum is
present, by the affirmative vote of the majority of the voting power represented
and by a majority of the portion of such voting power excluding interested
shares. Any corporate defense against persons seeking to acquire control may
have the effect of discouraging or preventing offers which some shareholders
might find financially attractive. On the other hand, the need on the part of
the acquiring person to convince the shareholders of First Financial of the
value and validity of the offer may cause such offer to be more financially
attractive in order to gain shareholder approval.

         In addition, Section 1701.59 of the ORC provides that, in determining
what such director reasonably believes to be in the best interests of the
corporation, the director may consider, in addition to the interests of the
corporation's shareholders, any of the interests of the corporation's employees,
suppliers, creditors and customers, the economy of the State of Ohio and the
United States, community and societal considerations and the long-term as well
as the short-term interests of the corporation and its shareholders, including
the possibility that these interests may be best served by the continued
independence of the corporation.

         Although First Financial believes that these provisions are in its best
interests, you should be aware that such provisions could be disadvantageous to
you because the overall effect of these statutes may be to render more difficult
or discourage the removal of incumbent management or the assumption of effective
controls by other persons.


                                       70
<PAGE>   75


FIRST FINANCIAL SHAREHOLDER RIGHTS PLAN

         On November 26, 1993, First Financial adopted a shareholder rights plan
(the "Plan") and declared a dividend of one right on each outstanding share of
First Financial Common Stock ("Right") to shareholders of record as of December
6, 1993. Each share of First Financial Common Stock issued after December 6,
1993 will include one Right. Under the Plan, the Rights will actually be
distributed only if one or more of certain designated actions involving First
Financial Common Stock occur. See Note 18 of First Financial's 1997 Financial
Statements for more information on the Plan.


TRANSFER AGENT AND REGISTRAR

         The registrar and transfer agent for First Financial Common Stock is
The Registrar and Transfer Company, Cranford, New Jersey.



                                       71
<PAGE>   76


                       ADJOURNMENT OF THE SPECIAL MEETING


         The shareholders of Sand Ridge Financial are being asked to approve a
proposal to permit the adjournment of the Special Meeting, if necessary, to
solicit additional proxies with respect to the approval of the Merger Agreement.
The Merger Agreement must be approved by the affirmative vote of at least
two-thirds of the outstanding shares of Sand Ridge Financial Common Stock. If
such matter does not receive the requisite number of proxy votes at the Special
Meeting and does not receive a sufficient number of negative proxy votes to
assure the failure of the matter, the Board of Directors may decide to adjourn
the Special Meeting to solicit additional proxies. If the Board of Directors
decides to adjourn the Special Meeting with respect to the Merger Agreement, the
Chairman of the Special Meeting will request a motion that the Special Meeting
be adjourned for up to 30 days. An adjournment of up to 30 days would not
require either the setting of a new meeting date or the giving of notice of the
adjourned meeting.

         Each proxy given in connection with the Special Meeting will be voted
on a motion for adjournment in accordance with the instructions contained
therein. If no contrary instructions are given, each proxy will be voted in
favor of any motion to adjourn the Special Meeting. The holders of the majority
of the shares of Sand Ridge Financial represented in person or by proxy at the
Special Meeting will be required to approve a motion to adjourn the Special
Meeting.

         If a motion to adjourn the Special Meeting is approved, no vote will be
taken on the Merger Agreement at the Special Meeting on April 22, 1999 but the
Merger Agreement will be voted upon at the adjourned meeting. Unless revoked
prior to its use, any proxy solicited for the Special Meeting will continue to
be valid and will be voted in accordance with the instructions contained therein
at the adjourned meeting.

         Since the Board of Directors recommends that the shareholders vote for
the Merger Agreement, the Board of Directors similarly recommends that the
shareholders vote FOR the proposal to adjourn the Special Meeting, which will
facilitate the approval of the Merger Agreement. Such an adjournment would be
disadvantageous to shareholders who oppose the Merger Agreement because the
adjournment will give Sand Ridge Financial additional time to solicit votes in
favor of the Merger Agreement, thereby increasing the chances of passing the
Merger Agreement proposal. Sand Ridge Financial has no reason to believe that an
adjournment of the Special Meeting will be required.

         If a quorum is not present at the Special Meeting, none of the
proposals will be acted upon, and the Board of Directors will adjourn the
Special Meeting to a later date in order to solicit additional proxies to assure
the presence of a quorum. The proposal to approve a motion to adjourn the
Special Meeting does not apply to an adjournment relating to the absence of a
quorum.

                                       72
<PAGE>   77


                                     EXPERTS


         The consolidated financial statements of First Financial incorporated
by reference in First Financial's Annual Report on Form 10-K for the year ended
December 31, 1997, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

         The consolidated financial statements of Sand Ridge Financial at
December 31, 1997 and 1996 and for the years ending December 31, 1997, 1996 and
1995 appearing in this Proxy Statement-Prospectus have been audited by Crowe,
Chizek and Company LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.



                                  LEGAL MATTERS


         The legality of the shares of First Financial Common Stock to be issued
in the Merger described herein and certain additional legal matters will be
passed upon by Frost & Jacobs LLP, 2500 PNC Center, 201 East Fifth Street,
Cincinnati, Ohio 45202.

         Barnes & Thornburg, 600 1st Source Bank Center, 100 North Michigan,
South Bend, Indiana 46601-1632 will pass upon certain legal matters in
connection with the Merger for Sand Ridge Financial and issue the tax opinion.


                                       73
<PAGE>   78


                       WHERE YOU CAN FIND MORE INFORMATION


         First Financial files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.

         The SEC allows us to "incorporate by reference" the information we file
with them which means that we can disclose important information to you by
referring you to other documents. The information incorporated by reference is
considered to be part of this prospectus and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934:

         1.       First Financial's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1997 (the "First Financial Form
                  10-K");

         2.       First Financial's Quarterly Report on Form 10-Q for the
                  quarters ended March 31, June 30, and September 30, 1998;

         3.       The following information set forth in the 1997 Annual Report
                  of First Financial to its shareholders:

                  a.       The information in the table set forth on page 50
                           under the caption " Quarterly Financial And Common
                           Stock Data."

                  b.       The information in the table set forth on page 24
                           under the caption "Table 1 - Financial Summary."

                  c.       The information set forth on pages 23 through 31
                           under the caption "Management's Discussion And
                           Analysis Of Financial Condition And Results of
                           Operations."

         4.       First Financial's report on Form 8-K filed March 26, 1998,
                  discussing issues concerning First Financial's Year 2000
                  preparations.

         5.       First Financial's report on Form 8-K filed August 31, 1998,
                  regarding the announcement of two stock repurchase programs.


                                       74

<PAGE>   79


         You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:

                                    Secretary
                                    First Financial Bancorp.
                                    Third and High Streets
                                    Hamilton, Ohio  45011
                                    (513) 867-4700

         You should rely only on the information incorporated by reference or
provided in this Proxy Statement-Prospectus. First Financial has not authorized
anyone else to provide you with different information. First Financial is not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Proxy
Statement-Prospectus is accurate as of any date other than the date on the front
of this document.



                                       75
<PAGE>   80




                                      
                                      
                       SAND RIDGE FINANCIAL CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
         OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Years ended
                       December 31, 1997, 1996 and 1995

- ------------------------------------------------------------------------------


The following discussion and analysis provides information about the
consolidated financial condition and results of operations of Sand Ridge
Financial Corporation (the "Corporation") and its wholly-owned subsidiary Sand
Ridge Bank (the "Bank"). It identifies trends and material changes that occurred
during the reporting periods and should be read in conjunction with the
consolidated financial statements and accompanying notes.


EARNINGS SUMMARY

Consolidated net income of the Corporation for the year ended December 31, 1997
was $4,993,000 or $83.21 per share. This represented an increase of 2.23% or
$109,000 over 1996 earnings. Net income for 1996 was $4,884,000 ($81.39 per
share) reflecting a 17.46% or $726,000 increase over 1995 earnings of $4,158,000
($69.30 per share). The increase in net income during 1996 was impacted by
growth in interest-earning assets but more significantly from a reduction in
noninterest expense compared to 1995.

Two often cited ratios for analysis of financial institutions are return on
average assets (ROA) and return on average equity (ROE). ROA was 1.13%, 1.20%
and 1.09% for the years ended December 31, 1997, 1996 and 1995 respectively. ROE
for 1997 was 13.74%, 1996 was 15.06% and 1995 was 15.24%.


RESULTS OF OPERATIONS (1997 compared to 1996)

Net interest income, the Corporation's principal source of earnings, is the
excess of interest received from earning assets over interest paid on
interest-bearing liabilities. The Corporation's net interest income for the
years 1995 through 1997 is shown in the table "Analysis of Net Interest Income"
that is incorporated in this document.

The amount of net interest income is determined by the volume and mix of earning
assets, the rates earned on such earning assets and the volume, mix and rates
paid for the deposits and borrowed money that support the earning assets. The
table "Interest Income and Expense Rate/Volume Analysis" that is incorporated in
this document describes the extent to which changes in interest rates and
changes in volume of earning assets and interest-bearing liabilities have
affected the Corporation's net interest income during the years indicated. The
combined effect of changes in both volume and rate has been allocated
proportionately to the change due to volume and the change due to rate.

Total interest income was $32,122,000 in 1997, an increase of $3,190,000 or
11.03% over 1996. This change was a result of an increase in both the average
interest-earning assets and the yield on earning assets. Average outstanding
loan, securities available for sale and federal funds sold increased
$11,680,000, $12,569,000 and $11,322,000 compared to 1996. The yield on loans,
securities available for sale and federal funds sold increased 0.20%, 0.22% and
0.31% compared to 1996.

                                                                             F-1


<PAGE>   81

Total interest expense was $16,257,000 in 1997, an increase of $1,785,000 or
12.33% over 1996. This change was predominately due to an increase of
$29,577,000 in average interest-bearing liabilities, from an average of
$330,279,000 during 1996 to an average of $359,856,000 during 1997. The increase
in average interest-bearing liabilities was primarily due to the $29,944,000
increase in other time deposits from $146,484,000 in 1996 to $176,428,000 in
1997.

Net interest income, the difference between total interest income and total
interest expense, increased $1,405,000 during 1997 due to increases in both
volume and rate as described above. The increased interest income was greater
than the increased interest expense, thereby causing net interest income to
increase.

The interest rate spread and the net interest margin are two ratios frequently
used to measure differences in interest income and interest expense. The
interest rate spread (the average rate on interest-earning assets minus the
average rate on interest-bearing liabilities) was 3.11% for 1997 and 3.12% for
1996, a difference of one basis point. The net interest margin (net interest
income divided by average interest-earning assets) increased two basis points to
3.77% during 1997 from 3.75% during 1996.

The Corporation records a provision for loan losses in the Consolidated
Statement of Income to provide for expected credit losses. Actual losses on
loans are charged against the allowance for loan losses, which is an allowance
accumulated on the Consolidated Balance Sheet. The recorded values of
uncollectable loans are removed from the Consolidated Balance Sheet and referred
to as charge-offs and, after netting out recoveries on previously charged off
assets, become net charge-offs. The Corporation's policy is to charge off loans
when, in management's opinion, collection of principal is in doubt. All loans
charged off are subject to continuous review and concerted efforts are made to
maximize recovery.

Management records the provision for loan losses in amounts sufficient to result
in an allowance that will cover future risks believed to be inherent in the loan
portfolio. Management's evaluation in establishing the provision includes such
factors as historical loss and recovery experience, estimated future loss for
loans, known deterioration in loans and prevailing economic conditions that
might have an impact on the portfolio. The evaluation is inherently subjective
as it requires material estimates, including the amounts and timing of future
cash flows expected to be received on impaired loans, that may be susceptible to
significant change. The evaluation of the factors is completed by an internal
loan review analyst and reviewed by a group of senior officers from the
financial and lending departments.

The provision for loan losses increased $360,000 from $1,440,000 in 1996 to
$1,800,000 in 1997. The increase during 1997 was due to the increase in total
loans, net of deferred fees, of 5.22% and also provided for a 28 basis point
increase in the allowance to total loans ratio. The allowance at December 31,
1997, was $3,252,000 or 1.19% of total loans which compares to $2,367,000 or
0.91% of total loans at December 31, 1996. The increase in both the provision
and the allowance for loan losses during 1997 was primarily due to the growth in
the loan portfolio, a need to replenish the allowance for loan losses for
$915,000 in net charge-offs recorded during 1997 and increasing the allowance
for risks related to a $600,000 increase in total impaired loans, excluding
impaired Bennett Funding loans (see discussion of Bennett Funding loans later
herein), from $1.3 million at December 31, 1996 to $1.9 million at December 31,
1997. The allowance allocated to these impaired loans increased $157,000 from
$282,000 at December 31, 1996 to $439,000 at December 31, 1997.

                                                                             F-2

<PAGE>   82


Impaired loans totaled $2.8 million at December 31, 1997, including $862,000
related to Bennett Funding, compared to $5.8 million at December 31, 1996,
including $4.5 million related to Bennett Funding. The decline in the balance of
impaired Bennett Funding loans from December 31, 1996 to December 31, 1997 was
due to significant payments received during 1997 under a settlement agreement
with the Bennett Funding bankruptcy trustee. No portion of the allowance for
loan losses was allocated for the Bennett Funding loans at December 31, 1997 or
1996 as full payment on the remaining balance, after recording a $1.7 million
charge-off in 1996, was expected based on the agreement with the bankruptcy
trustee.

The level of nonaccrual loans is an important element in assessing asset
quality. Loans are classified as nonaccrual when, in the opinion of management,
collection of interest is doubtful. Nonaccrual loans decreased $3.2 million from
$5.8 million at December 31, 1996 to $2.6 million at December 31, 1997. The
decrease in nonaccrual loans during 1997 occurred primarily as a result of $3.6
million in settlement payments received on the Bennett Funding loans during
1997.

Noninterest income increased $574,000 or 17.52% in 1997 as compared to 1996. Net
realized gain (loss) on sales of securities available for sale increased
$113,000 from a loss of $28,000 during 1996 to a gain of $85,000 during 1997.
During 1997, the Corporation received $17.2 million in proceeds from sales of
securities available for sale. Service charges on deposit accounts increased
$451,000 or 26.63% over 1996 and represented the majority of the increase in
noninterest income. This increase was achieved as the result of implementing a
free checking account product and replacing the lost monthly service charge
income with higher services charges for overdraft and non-sufficient fund
transactions.

Noninterest expense increased $1.7 million or 18.21% in 1997 as compared to
1996. The largest component of noninterest expense is salaries and employee
benefits, which increased $770,000 or 15.93% in 1997 as compared to 1996
primarily due to additional employees needed to service a 9.49% growth in total
assets, normal annual wage and salary increases and related increases in
employee benefits. Furniture and equipment depreciation expense increased
$146,000 or 16.58% in 1997 as compared to 1996. Marketing expense increased
$148,000 or 42.67% primarily due to increased promotional efforts to generate
home equity line of credit loans and deposits. Other expenses also increased
$457,000 or 24.39% in 1997 as compared to 1996 primarily due to increases in ATM
interchange fees, credit card processing fees, telephone expense and postage.

Income tax expense decreased $220,000 in 1997 as compared to 1996. This decrease
was primarily due to an increase of $622,000 in tax exempt interest income that
resulted in a $211,000 reduction of income tax expense in 1997 as compared to
1996.

Net loans increased $12.6 million or 4.93% during 1997. The majority of the
increase was from growth in real estate-mortgage loans which increased $9.2
million or 10.75%. This increase was achieved as the Corporation took advantage
of continued mortgage loan demand for both new and loan refinancing taking place
during 1997 due to the low interest rate environment during 1997 as compared to
historical interest rates.

Securities available for sale increased $30.3 million or 24.38% during 1997. All
securities are classified as available for sale at December 31, 1997 and are
available for liquidity and asset-liability management purposes. The Corporation
follows a conservative investment policy, investing primarily for interest rate
risk management and liquidity management purposes and to also provide additional
interest income. U.S. Treasury securities, generally considered to have the
least credit risk and the highest liquidity, composed 5.23% of the Corporation's
investment portfolio at December 31, 1997.

                                                                             F-3
<PAGE>   83

Another 7.30% of the securities portfolio balance at December 31, 1997 was
composed of securities issued by U.S. government agencies and corporations,
primarily the Federal Home Loan Bank (FHLB), Federal Home Loan Mortgage
Corporation (FHLMC) and Federal National Mortgage Association (FNMA). Due to the
government guarantees, either expressed or implied, U.S. government agency and
corporate obligations are considered to have low credit risk and high liquidity.

Mortgage-backed securities (MBSs), including collateralized mortgage obligations
(CMO's), composed 39.89% of the securities portfolio at December 31, 1997. MBSs
represent participations in pools of mortgage loans, the principal and interest
payments of which are passed to the security investors. MBSs are subject to
prepayment risk, especially during periods of decreasing interest rates.
Prepayments of the underlying mortgage loans may shorten the lives of the
securities, thereby affecting yields to maturity and market values. The
Corporation invests primarily in MBSs issued by U.S. government agencies, such
as FHLMC, FNMA and Government National Mortgage Association (GNMA). Such
securities, because of government agency guarantees, are considered to have low
credit risk and high liquidity.

State, county and municipal securities composed 44.94% of the Corporation's
security portfolio at December 31, 1997. The securities are highly diversified
as to states and issuing authorities within states, thereby decreasing portfolio
risk.

The Corporation solicits deposits by offering a wide variety of savings and
transaction accounts, including checking accounts, regular savings accounts,
money market accounts and other time deposits of various maturities and rates.
Total deposits increased $17.4 million or 4.82% during 1997. The growth in
deposits was used to finance the growth in the loan and securities portfolios.

Federal funds purchased and securities sold under agreements to repurchase
increased $8.2 million and $8.0 million during 1997. These funds were also used
to help finance the growth in the loan and securities portfolios.


RESULTS OF OPERATIONS (1996 compared to 1995)

Total interest income was $28,932,000 in 1996, an increase of $1,578,000 or
5.77% over 1995. This change was a result of an increase of $24,876,000 in
average interest-earning assets offset by an 8 basis point decrease in the yield
for average interest-earning assets. Average outstanding loans and securities
available for sale increased $15,438,000 and $14,990,000 as compared to 1995.

Total interest expense was $14,472,000 in 1996, an increase of $414,000 or 2.94%
over 1995. This change was predominately due to an increase of $15,914,000 in
average interest-bearing liabilities, from an average of $314,365,000 during
1995 to an average of $330,279,000 during 1996. The increase in average
interest-bearing liabilities was primarily due to the $26,063,000 increase in
other time deposits from $120,421,000 in 1995 to $146,484,000 in 1996, offset by
a decrease in advances from FHLB of $8,459,000 from $11,101,000 in 1995 to
$2,642,000 in 1996. The increase of average interest-bearing liabilities were
partially offset by a nine basis point decrease in the cost of average
interest-bearing liabilities compared to 1995.

Net interest income, the difference between total interest income and total
interest expense, increased $1,164,000 during 1996 primarily due to increases in
the volume of net interest-earning assets as described above. The increased
interest income was greater than the increased interest expense, thereby causing
net interest income to increase.

                                                                             F-4
<PAGE>   84

The interest rate spread and the net interest margin are two ratios frequently
used to measure differences in interest income and interest expense. The
interest rate spread (the average rate on interest-earning assets minus the
average rate on interest-bearing liabilities) was 3.12% for 1996 and 3.11% for
1995, a difference of one basis point. The net interest margin (net interest
income divided by average interest-earning assets) increased seven basis points
to 3.75% during 1996 from 3.68% during 1995.

The provision for loan losses increased from $1,040,000 in 1995 to $1,440,000 in
1996. The provision recorded during 1996 was $400,000 greater than 1995's
provision. The increase during 1996 was due to the increase in total loans of
4.82% and to replenish the allowance for loan losses for $2.4 million in net
loan charge-offs during 1996. Of these net charge-offs, $1.7 million resulted
from the Bennett Funding loan relationship. The allowance for loan losses at
December 31, 1996, was $2,367,000 or 0.91% of total loans which compares to
$3,372,000 or 1.36% or total loans at December 31, 1995. The reduction in the
allowance for loan losses during 1996 was a result of the net charge-offs
related to the Bennett Funding loan relationship.

Of the $5.8 million balance of impaired and nonaccrual loans as of December 31,
1996, approximately $4.5 million related to the Bennett Funding loan
relationship and reflected a reduction of $1.7 million which was charged-off
during 1996. The reason for the impairment classification is that Bennett
Funding had filed for Chapter 11 bankruptcy during 1996. The Corporation had
purchased pools of numerous leases secured by small business equipment such as
copy and facsimile machines from Bennett Funding. Bending Funding acts as
servicing agent to collect lease payments for the Corporation. The Corporation
negotiated a settlement with the bankruptcy trustee and anticipates full
recovery of the loan balances remaining after recording the $1.7 million
charge-off and, therefore, no portion of the allowance for loans losses balance
at December 31, 1996 was allocated for the Bennett Funding loan relationship.

Noninterest income increased $278,000 or 9.27% in 1996. Net realized gain (loss)
on sales of securities available for sale decreased $183,000 from a gain of
$155,000 during 1995 to a loss of $28,000 during 1996. The Corporation received
$29.0 million in proceeds on sales of securities available for sale during 1996.
Service charges on deposit accounts increased $107,000 or 6.72% over 1995
primarily due to an increase in average deposits during 1996. Other income
increased $266,000 or 48.45% from $549,000 in 1995 to $815,000 in 1996. This
increase was primarily due to a $45,000 increase in credit life commission
income, a $41,000 increased credit card merchant discount fees, and $142,000 in
gains on sales of fixed assets during 1996.

Noninterest expense decreased $68,000 or .71% in 1996. The largest component of
noninterest expense is salaries and employee benefits, which increased $125,000
or 2.66% over 1995 primarily due to normal annual wage and salary increases.
FDIC insurance decreased from $355,000 in 1995 to $12,000 in 1996 and was the
primary factor for the decrease in total noninterest expense. The decrease in
FDIC insurance was a result of the FDIC restructuring the bank and thrift
insurance programs resulting in lower premiums for well capitalized banks.

Income tax expense increased $385,000 for 1996 compared to 1995. This increase
was primarily due to an increase of $1,110,000 in income before income taxes
from 1995 to 1996.


                                                                             F-5

<PAGE>   85

LIQUIDITY

The Corporation manages its liquidity position through the Bank. The purpose of
liquidity management is to fund loan demand, meet the withdrawal needs of
customers and provide for operating expenses. Sources of liquidity are cash and
funds due from financial institutions, interest-bearing balances with financial
institutions, federal funds sold, sale and/or maturity of securities classified
as available for sale and principal repayments on loans. The Corporation also
has a borrowing relationship with the Federal Home Loan Bank of Indianapolis.
This relationship allows the Corporation to borrow funds using the Bank's real
estate mortgage loans, held in portfolio, as collateral. This ability to borrow
funds allows for another source of liquidity.
Management believes its current liquidity level is sufficient to meet
anticipated growth.

The consolidated statements of cash flows indicates the concerted level of
emphasis management has placed upon maximizing interest income from earning
assets. While cash and due from financial institutions have fluctuated from a
low of $13,326,000 at the beginning of 1995 to a high of $26,076,000 at year end
1996, to $23,010,000 at December 31, 1997, management has structured its balance
sheet to increase the overall net interest margin on average interest-earning
assets by using funds obtained from deposits and borrowings to invest in the
origination of loans and the purchase of securities. Cash and due from financial
institutions at reporting periods may fluctuate due to various operational
activities; however, the average balance of cash and due from financial
institutions has been $11,659,000 during 1995, $12,030,000 during 1996 and
$11,799,000 during 1997, demonstrating that management of liquidity and
noninterest-earning funds has been consistent.

Liquid assets include cash and due from financial institutions, securities
available for sale, federal funds sold and interest-bearing balances with
financial institutions. Core deposits are defined as customer account balances
that are loyal to a particular financial institution. Core deposits exclude
public funds and brokered deposits or "hot money."

<TABLE>
<CAPTION>
                                                                     December 31,
                                                               1997              1996
                                                               ----              ----
<S>                                                       <C>               <C>       
         Liquid Assets (in millions)                      $    177.6        $    150.4

         Core Deposits (in millions)                      $    216.5        $    210.4
</TABLE>


INTEREST RATE SENSITIVITY

The following schedule details the maturities and yields of interest-bearing
financial instruments at December 31, 1997, for the next five years and
thereafter. The values represent the contractual maturity of each instrument.
For loan instruments without contractual maturities, such as credit card loans,
management has allocated principal payments based upon historical trends of
payment activity. Where there is no set maturity, as in the case of some
interest-bearing liabilities, management has allocated the amounts based upon
its expectation of cash flows, incorporating internal core deposit studies and
current expectations of customer behavior. For loans, securities, and
liabilities with contractual maturities, the table presents principal cash flows
and related weighted-average interest rates by contractual maturities. The data
in the table was aggregated by type of financial instrument - fixed and variable
rate loans, fixed and variable rate securities available for sale, fixed and
variable rate deposits, and fixed rate borrowings. The Corporation has no
interest rate swaps, interest rate caps, or interest rate floors. Therefore,
data concerning these instruments is not included in the table.

                                                                             F-6
<PAGE>   86

The primary source of market risk for the financial instruments presented is
interest rate risk. That is, the risk that an adverse change in market rates
will adversely affect the market value of the instruments. Generally, the longer
the maturity, the higher the interest rate risk exposure. While maturity
information does not necessarily present all aspects of exposure, it may provide
an indication of where risks are prevalent.

All financial institutions assume interest rate risk as an integral part of
normal operations. Managing and measuring interest rate risk is a dynamic,
multi-faceted process that ranges from reducing the exposure of the
Corporation's net interest margin to swings in interest rates, to assuring
sufficient capital and liquidity to support future balance sheet growth. The
Corporation manages interest rate risk through the Asset/Liability Committee.
The Asset/Liability Committee is comprised of bank officers from various
disciplines. The Committee establishes policies and rates which lead to the
prudent investment of resources, the effective management of risks associated
with changing interest rates, the maintenance of adequate liquidity, and the
earning of an adequate return on shareholders' equity.


       MARKET RISK DISCLOSURE OF SCHEDULED MATURITIES AT DECEMBER 31, 1997
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                   1998      1999         2000        2001          2002     Thereafter    Total
RATE-SENSITIVE ASSETS
<S>                                            <C>         <C>         <C>          <C>         <C>         <C>         <C>       

   Variable interest rate loans                $   52,169 $   14,924   $   18,389 $    5,203   $    5,972  $   18,802   $  115,459
      Average interest rate                          8.85%      8.28%        7.71%      7.80%        7.71%       7.52%        8.27%
   Fixed interest rate loans                       75,829     31,531       19,607      8,909        5,231      15,982      157,089
      Average interest rate                          9.40%      8.77%        8.81%      8.31%        7.91%       8.33%        8.98%
   Variable interest rate securities
     available for sale                            51,347       --           --         --           --          --         51,347
      Average interest rate                          6.84%      --           --         --           --          --           6.84%
   Fixed interest rate securities
     available for sale                             3,945      9,132        9,954      3,702        3,882      72,521      103,136
      Average interest rate                          5.81%      6.31%        6.36%      6.00%        5.70%       5.94%        6.00%

RATE-SENSITIVE LIABILITIES
   Noninterest-bearing demand deposits             32,957       --         14,125       --           --          --         47,082
      Average interest rate                          --         --           --         --           --          --           --
   Savings, NOW and money market deposits          69,943     34,971       34,971     29,570         --          --        169,455
      Average interest rate                          3.23%      3.23%        3.23%      3.16%        --          --           3.22%
   Variable interest rate other time deposits       7,151       --           --         --           --          --          7,151
      Average interest rate                          5.36%      --           --         --           --          --           5.36%
   Fixed interest rate other time deposits        118,759     22,295        6,597      2,514        3,148       1,675      154,988
      Average interest rate                          5.65%      5.92%        5.85%      5.85%        5.85%       7.45%        5.72%
   Fixed interest rate securities sold under
     agreements to repurchase                       8,000       --           --         --           --          --          8,000
      Average interest rate                          5.63%      --           --         --           --          --           5.63%
   Fixed interest rate borrowings                  21,232        543          530      2,445          736        --         25,486
      Average interest rate                          5.69%      6.05%        6.12%      5.87%        6.71%       --           5.75%
</TABLE>


                                                                             F-7
<PAGE>   87
\

CAPITAL MANAGEMENT

Total shareholders' equity was $39,681,000 as of December 31, 1997. This
represents an increase over the prior year of December 31, 1996 of 14.72%. This
was accomplished while increasing the cash dividend from $16.00 per share during
1996 to $17.00 per share during 1997. The primary component of the change in
shareholders' equity is the net income for the year. Secondarily, the year of
1997 benefited from a positive net unrealized gain on securities classified as
available for sale of $1,119,000.

Restrictions exist due to regulatory guidelines imposed upon all financial
institutions regarding the Bank's ability to transfer funds to the Corporation
in the form of cash dividends, loans or advances. These restrictions have had no
significant impact on the Corporation's dividend policy or operations.

The Corporation's subsidiary Bank remains above the minimum capital levels
required by regulatory agencies to meet the definition of a well capitalized
Bank. The banking regulators may alter minimum capital requirements as a result
of revising their internal policies and their rating of the Corporation's
subsidiary Bank. As of December 31, 1997, management is not aware of any current
recommendations by banking authorities which, if they were to be implemented,
would have, or are reasonably likely to have, a material adverse effect on the
Corporation's liquidity, capital resources or operations.

Under risk-based capital guidelines issued by the Federal Reserve Board, the
Corporation and its subsidiary Bank are required to maintain a minimum
risk-based total capital ratio of 8% and a minimum Tier 1 capital ratio of 4% as
of December 31, 1997. While risk-based total capital and risk-based Tier 1
capital guidelines consider on-balance-sheet and off-balance-sheet risk, the
minimum Tier 1 capital ratio measures capital in relation to total
on-balance-sheet assets. The components of risk-based total capital are Tier 1
capital and Tier 2 capital. The definition of capital, used in the Tier 1
capital ratio, is identical to Tier 1 capital under risk-based capital
guidelines. Tier 1 capital is total shareholders' equity less intangible assets.
Tier 2 capital includes total allowance for loan losses up to a maximum of 1.25%
of risk-weighted assets. The net unrealized gain (loss) on securities available
for sale, net of tax, is not considered for meeting regulatory capital
requirements. The following table provides the minimum regulatory capital
requirements and the Corporation's and the Bank's actual capital ratios at
December 31, 1997.

<TABLE>
<CAPTION>
                                      Minimum Regulatory           Corporation's                  Bank's
                                     Capital Requirements      Actual Capital Ratio      Actual Capital Ratio
      Type Of Capital Ratio          At December 31, 1997      At December 31, 1997     At December 31, 1997
      ---------------------          --------------------      ---------------------    --------------------
<S>                                           <C>                       <C>                      <C>  
      Ratio of total capital to
        risk-weighted assets                  8%                        14.8%                    14.7%

      Ratio of Tier 1 capital to
        risk-weighted assets                  4%                        13.6%                    13.5%

      Tier 1 capital ratio                    4%                         8.0%                     8.0%
</TABLE>


                                                                             F-8
<PAGE>   88


IMPACT OF THE YEAR 2000

The Corporation is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The issue is whether
computer systems will properly recognize the date sensitive information as the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail. The Corporation is
heavily dependent on computer processing in its business activities and the year
2000 issue creates risk for the Corporation from unforeseen problems in the
Corporation's computer system and from third parties whom the Corporation uses
to process information. Such failures of the Corporation's computer system
and/or third parties computer systems could have a material impact on the
Corporation's ability to conduct its business.

A major third party vendor provides the Corporation's primary data processing.
This provider has advised the Corporation that it has completed the renovation
and testing of its system to be Year 2000 ready. Users of the system have been
given the opportunity to participate in proxy testing of the system and the
Corporation has taken advantage of this opportunity.

The Corporation has performed an assessment of its computer hardware and
software, and has determined those systems that require upgrade to be Year 2000
ready. Such upgrades have been substantially completed. In addition, the
Corporation has reviewed other external third party vendors that provide
services to the Corporation (i.e. utility companies, electronic fund transfer
providers, and alarm companies), and has requested or already received
certification letters from these vendors that their systems will be Year 2000
ready on a timely basis. Testing will be performed with these service providers,
where possible, to determine their Year 2000 readiness.

The Corporation could incur losses if loan payments are delayed due to Year 2000
problems affecting significant borrowers. The Corporation is communicating with
such parties to assess their progress in evaluating and implementing any
corrective measures required by them to be Year 2000 ready. To date, the
Corporation has not been advised by such parties that they do not have plans in
place to address and correct the issues associated with the Year 2000 problem;
however, no assurance can be given as to the adequacy of such plans or to the
timeliness of their implementation.

Based on the Corporation's review of its computer systems, management believes
the cost of the remediation effort to make its systems Year 2000 ready will be
approximately $49,000. In addition, it is estimated that 1,881 man-hours will be
incurred by Corporation personnel related to Year 2000 issues at an approximate
cost of $56,000. Such costs will be charged to expense as incurred. Computer
equipment totaling about $200,000 is to be replaced in many areas of the
Corporation during 1998 and 1999. Much of this equipment was replaced sooner
than it otherwise would have been for Year 2000 compliance purposes; however, it
was not replaced purely for this reason.

The Corporation has developed a Year 2000 contingency plan that addresses, among
other issues, critical operations and potential failures thereof, and strategies
for business continuation.

Although management believes the Corporation's computer systems and service
providers will be Year 2000 ready, there can be no assurance that these systems,
or those systems of other companies on which the Corporation's systems rely,
will be fully functional in the Year 2000. Such failure could have a significant
adverse impact on the financial condition and results of operations of the
Corporation.

                                                                             F-9

<PAGE>   89

THE IMPACT OF INFLATION AND CHANGING PRICES

For a financial institution, the effects of price changes and inflation can vary
substantially. Inflation affects the growth of total assets, but it is difficult
to assess its impact since neither the timing nor the magnitude of the changes
in the consumer price index (CPI) coincides with changes in interest rates. The
price of one or more of the important components of the CPI may fluctuate
considerably and thereby influence the overall CPI without having a
corresponding affect on interest rates or upon the cost of those goods and
services normally purchased by the Corporation. In years of high inflation and
high interest rates, intermediate and long-term fixed interest rates tend to
increase, thereby adversely impacting the market values of investment
securities, mortgage loans and other long-term fixed rate loans. In addition,
higher short-term interest rates caused by inflation tend to increase the cost
of funds. In years of low inflation and low interest rates, the reverse
situation may occur.


FORWARD-LOOKING STATEMENTS

When used in this filing and in future filings involving the Corporation with
the Securities and Exchange Commission, in the Corporation's press releases or
other public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phases, "anticipate,"
"would be," "will allow," "intends to," "will likely result," "are expected to,"
"will continue," "is anticipated," "estimated," "project," or similar
expressions are intended to identify, "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are subject to risks and uncertainties, including but not limited to changes in
economic conditions in the Corporation's market area, and competition, all or
some of which could cause actual results to differ materially from historical
earnings and those presently anticipated or projected.

The Corporation wishes to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made, and
advise readers that various factors, including regional and national economic
conditions, substantial changes in levels of market interest rates, credit and
other risks of lending and investing activities, and competitive and regulatory
factors, could affect the Corporation's financial performance and could cause
the Corporation's actual results for future periods to differ materially from
those anticipated or projected.

The Corporation does not undertake, and specifically disclaims any obligation,
to update any forward looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.


                                                                            F-10
<PAGE>   90








                        SAND RIDGE FINANCIAL CORPORATION

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995









                                                                        F-11
<PAGE>   91


                        SAND RIDGE FINANCIAL CORPORATION
                                Highland, Indiana

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995









                                    CONTENTS









REPORT OF INDEPENDENT AUDITORS ............................................ F-13


CONSOLIDATED FINANCIAL STATEMENTS

     CONSOLIDATED BALANCE SHEETS .......................................... F-14

     CONSOLIDATED STATEMENTS OF INCOME .................................... F-15

     CONSOLIDATED STATEMENTS OF CHANGES IN
       SHAREHOLDERS' EQUITY ............................................... F-16

     CONSOLIDATED STATEMENTS OF CASH FLOWS ................................ F-17

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ........................... F-19





                                                                           F-12
<PAGE>   92



 





                         REPORT OF INDEPENDENT AUDITORS



Shareholders and Board of Directors
Sand Ridge Financial Corporation
Highland, Indiana


We have audited the accompanying consolidated balance sheets of Sand Ridge
Financial Corporation as of December 31, 1997 and 1996 and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the years ended December 31, 1997, 1996 and 1995. These consolidated
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sand Ridge Financial
Corporation as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years ended December 31, 1997, 1996 and 1995 in
conformity with generally accepted accounting principles.






                                                   Crowe, Chizek and Company LLP

South Bend, Indiana
January 15, 1998



                                                                           F-13

<PAGE>   93


                        SAND RIDGE FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1997 and 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                     1997             1996
                                                                     ----             ----
<S>                                                              <C>              <C>         
ASSETS
     Cash and due from financial institutions                    $ 23,009,706     $ 26,075,959
     Interest-bearing balances with financial
       institutions                                                   100,000          100,000
     Securities available for sale                                154,483,307      124,204,554
     Loans receivable, net of allowance for loan
       losses of $3,252,361 in 1997 and $2,367,288 in 1996        268,729,148      256,115,131
     Premises and equipment - net                                   5,958,084        6,107,718
     Interest receivable and other assets                           3,813,879        3,941,052
                                                                 ------------     ------------
         Total assets                                            $456,094,124     $416,544,414
                                                                 ============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Noninterest-bearing demand deposits                         $ 47,081,633     $ 41,690,247
     Savings, NOW and money market                                169,455,230      168,726,981
     Other time deposits                                          162,139,170      150,863,222
                                                                 ------------     ------------
         Total deposits                                           378,676,033      361,280,450
     Federal funds purchased                                       13,800,000        5,600,000
     Securities sold under agreements to repurchase                 8,000,000                -
     Advances from Federal Home Loan Bank (FHLB)                   11,686,285       11,000,000
     Interest payable and other liabilities                         4,251,128        4,074,715
                                                                 ------------     ------------
         Total liabilities                                        416,413,446      381,955,165

Shareholders' equity
     Preferred stock, 100,000 shares authorized and
       -0- shares outstanding                                               -                -
     Common stock, $10 stated value:  200,000 shares
       authorized and 60,000 shares issued and outstanding            600,000          600,000
     Additional paid-in capital                                     4,600,000        4,600,000
     Retained earnings                                             32,042,978       28,070,262
     Net unrealized gain on securities available for sale,
       net of tax of $1,598,894 in 1997 and $865,130 in 1996        2,437,700        1,318,987
                                                                 ------------     ------------
         Total shareholders' equity                                39,680,678       34,589,249
                                                                 ------------     ------------

              Total liabilities and shareholders' equity         $456,094,124     $416,544,414
                                                                 ============     ============
</TABLE>

- --------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.


                                                                            F-14
<PAGE>   94

                        SAND RIDGE FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              1997             1996              1995
                                                              ----             ----              ----
<S>                                                      <C>              <C>               <C>         
Interest income
      Loans, including fees                              $ 22,642,057     $ 21,148,663      $ 20,071,674
      Deposits with financial institutions                      9,133           19,071            37,721
      Federal funds sold                                      973,281          316,246           667,410
      Securities:
         Taxable                                            5,106,986        4,689,273         3,986,487
         Non-taxable                                        3,390,166        2,758,563         2,590,637
                                                         ------------     ------------      ------------
                                                           32,121,623       28,931,816        27,353,929
Interest expense
      Deposits                                             15,718,890       14,052,419        12,993,928
      Federal funds purchased                                  18,216          178,043           151,458
      Securities sold under agreements to repurchase           50,548           92,767           233,705
      Advances from FHLB                                      469,187          149,157           679,381
                                                         ------------     ------------      ------------
                                                           16,256,841       14,472,386        14,058,472
                                                         ------------     ------------      ------------

NET INTEREST INCOME                                        15,864,782       14,459,430        13,295,457

      Provision for loan losses                             1,800,000        1,440,000         1,040,000
                                                         ------------     ------------      ------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES        14,064,782       13,019,430        12,255,457

Noninterest income
      Net securities gains (losses)                            85,417          (27,729)          155,329
      Service charges on deposit accounts                   2,145,418        1,694,261         1,587,587
      ATM fees                                                412,697          323,778           295,746
      Investment commissions                                  353,112          366,235           293,689
      Trust revenues                                          144,960          105,730           117,128
      Other income                                            709,519          814,751           549,475
                                                         ------------     ------------      ------------
                                                            3,851,123        3,277,026         2,998,954
Noninterest expenses
      Salaries and employee benefits                        5,601,839        4,832,160         4,706,833
      Occupancy                                               700,494          614,385           646,637
      Furniture and equipment                               1,028,016          881,848           900,324
      FDIC insurance                                           46,958           12,457           355,279
      Data processing                                         582,320          552,378           466,126
      Marketing                                               496,356          347,896           291,208
      Supplies                                                441,032          383,009           431,688
      Other expenses                                        2,331,952        1,874,650         1,768,660
                                                         ------------     ------------      ------------
                                                           11,228,967        9,498,783         9,566,755
                                                         ------------     ------------      ------------

Income before income taxes                                  6,686,938        6,797,673         5,687,656

      Income tax expense                                    1,694,222        1,914,131         1,529,407
                                                         ------------     ------------      ------------

NET INCOME                                               $  4,992,716     $  4,883,542      $  4,158,249
                                                         ============     ============      ============

Basic earnings per common share                          $      83.21     $      81.39      $      69.30
                                                         ============     ============      ============
</TABLE>

- --------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.



                                                                            F-15
<PAGE>   95

                        SAND RIDGE FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  Years ended December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                  Net Unrealized
                                                                                    Gain (Loss)
                                                                                   on Securities
                                                 Additional                          Available           Total
                                   Common          Paid-In          Retained         For Sale,       Shareholders'
                                    Stock          Capital          Earnings        Net of Tax          Equity
                                    -----          -------          --------        ----------          ------
<S>                            <C>              <C>              <C>               <C>             <C>             
Balance-January 1, 1995        $     600,000    $    4,600,000   $    20,888,471   $  (1,809,825)  $     24,278,646

     Net income                            -                 -         4,158,249               -          4,158,249
     Cash dividends ($15.00
       per share)                          -                 -          (900,000)              -           (900,000)
     Net change in unrealized
       gain (loss) on securities
       available for sale, net
       of tax of $2,272,636                -                 -                 -       3,464,895          3,464,895
                               -------------    --------------   ---------------   -------------   ----------------

Balance-December 31, 1995            600,000         4,600,000        24,146,720       1,655,070         31,001,790

     Net income                            -                 -         4,883,542               -          4,883,542
     Cash dividends ($16.00
       per share)                          -                 -          (960,000)              -           (960,000)
     Net change in unrealized
       gain (loss) on securities
       available for sale, net
       of tax of ($220,436)                -                 -                 -        (336,083)          (336,083)
                               -------------    --------------   ---------------   -------------   ----------------

Balance-December 31, 1996            600,000         4,600,000        28,070,262       1,318,987         34,589,249

     Net income                            -                 -         4,992,716               -          4,992,716
     Cash dividends ($17.00
       per share)                          -                 -        (1,020,000)              -         (1,020,000)
     Net change in unrealized
       gain (loss) on securities
       available for sale, net
       of tax of $733,764                  -                 -                 -       1,118,713          1,118,713
                               -------------    --------------   ---------------   -------------   ----------------

Balance-December 31, 1997      $     600,000    $    4,600,000   $    32,042,978   $   2,437,700   $     39,680,678
                               =============    ==============   ===============   =============   ================
</TABLE>

- --------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.



                                                                            F-16
<PAGE>   96



                        SAND RIDGE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1997, 1996 and 1995

- -------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                         1997             1996            1995
                                                                         ----             ----            ----
<S>                                                                  <C>               <C>             <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                     $   4,992,716     $  4,883,542    $  4,158,249
      Adjustments to reconcile net income
        to net cash from operating activities
         Depreciation                                                      901,591         855,747          785,442
         Provision for loan losses                                       1,800,000       1,440,000        1,040,000
         Net amortization and accretion of securities                     (125,810)        122,891          300,805
         Net securities (gains) losses                                     (85,417)         27,729         (155,329)
         Net (gain) loss on sales of premises
           and equipment                                                    (6,325)       (142,191)             581
         Net change in:
             Other assets                                                 (606,591)       (604,671)         154,780
             Other liabilities                                             116,413        (329,627)         782,996
                                                                     -------------     ------------    ------------
                Total adjustments                                        1,993,861       1,369,878        2,909,275
                                                                     -------------     ------------    ------------
                    Net cash from operating activities                   6,986,577       6,253,420        7,067,524

CASH FLOWS FROM INVESTING ACTIVITIES
      Net change in interest-bearing balances with
        financial institutions                                                   -         289,583           98,963
      Net change in loans receivable                                   (15,010,345)    (14,904,487)     (10,644,679)
      Purchase of:
         Securities available for sale                                 (96,824,613)    (45,358,515)     (36,984,597)
         Securities held to maturity                                             -               -         (373,920)
         Premises and equipment                                           (760,516)       (544,255)        (575,300)
      Proceeds from:
         Sales of securities available for sale                         17,228,831      28,998,352        2,802,775
         Maturities and calls of securities
           available for sale                                           41,740,880       5,030,031        9,080,629
         Maturities and calls of securities
           held to maturity                                                      -               -        1,346,403
         Principal payments on securities
           available for sale                                            9,639,853      11,006,152        8,704,842
         Recoveries on loans charged-off                                   596,328         348,279          301,733
         Sales of premises and equipment                                    14,884         819,049           16,229
                                                                     -------------     ------------    ------------
             Net cash from investing activities                        (43,374,698)    (14,315,811)     (26,226,922)
</TABLE>

- -------------------------------------------------------------------------------

                                  (Continued)


                                                                            F-17
<PAGE>   97


                        SAND RIDGE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                              1997             1996               1995
                                                              ----             ----               ----
<S>                                                       <C>               <C>               <C>         
CASH FLOWS FROM FINANCING ACTIVITIES
      Net change in deposits                              $ 17,395,583      $ 25,258,420      $ 28,119,067
      Net change in federal funds purchased                  8,200,000        (2,400,000)          200,000
      Proceeds from securities sold under
         agreements to repurchase                            8,000,000         1,818,860         3,723,970
      Repayment of securities sold under agreements
        to repurchase                                                -        (5,588,580)       (3,420,161)
      Proceeds from advances from FHLB                       8,250,000        11,000,000        10,000,000
      Repayment of advances from FHLB                       (7,563,715)      (10,000,000)      (17,000,000)
      Cash dividends paid                                     (960,000)         (900,000)         (840,000)
                                                          ------------      ------------      ------------
         Net cash from financing activities                 33,321,868        19,188,700        20,782,876
                                                          ------------      ------------      ------------

Net change in cash and cash equivalents                     (3,066,253)       11,126,309         1,623,478

Cash and cash equivalents at beginning of year              26,075,959        14,949,650        13,326,172
                                                          ------------      ------------      ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                  $ 23,009,706      $ 26,075,959      $ 14,949,650
                                                          ============      ============      ============


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
      Cash paid during the year for
         Interest                                         $ 15,992,313      $ 14,429,340      $ 13,217,221
         Income taxes                                        1,667,000         2,899,754         1,010,862

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
      Transfer from
         Securities held to maturity to securities
           available for sale                             $          -      $          -      $ 16,989,356
</TABLE>

- --------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.




                                                                            F-18
<PAGE>   98


                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of Sand Ridge Financial Corporation and its wholly-owned
subsidiary, Sand Ridge Bank ("the Bank") (together referred to as "the
Corporation"). Sand Ridge Financial Corporation is a bank holding company,
organized under Indiana law, that owns all of the outstanding stock of Sand
Ridge Bank. All significant inter-company balances and transactions have been
eliminated in consolidation.

NATURE OF BUSINESS AND CONCENTRATION OF CREDIT RISK: The Corporation accepts
deposits and grants commercial, real estate, installment and personal loans to
customers mainly in the northwestern Indiana region. Substantially all loans are
collateralized by specific items including business assets, consumer assets, and
residences. Commercial loans make up approximately 38% of the loan portfolio and
include loans secured by business assets. Commercial loans are expected to be
repaid from cash flow from operations of businesses. Real estate loans make up
approximately 35% of the loan portfolio and are collateralized by both
commercial and residential real estate.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS: The preparation of
consolidated financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period, as well as the
disclosures provided. Areas involving the use of estimates and assumptions in
the accompanying consolidated financial statements include the allowance for
loan losses, fair values of securities and other financial instruments,
determination and carrying value of impaired loans, the realization of deferred
tax assets, and the determination of depreciation of premises and equipment.
Actual results could differ from those estimates. The collectibility of loans
and estimates associated with the allowance for loan losses and the fair values
of securities and other financial instruments are particularly susceptible to
significant change in the near term.

CASH FLOW REPORTING: For purposes of the statement of cash flows, cash and cash
equivalents is defined to include the Corporation's cash on hand, demand
deposits in other financial institutions and its federal funds sold with a
maturity of 90 days or less. The Corporation reports net cash flows for customer
loan and deposit transactions, interest-bearing balances with financial
institutions, and short-term borrowings with maturities of 90 days or less.


- -------------------------------------------------------------------------------

                                  (Continued)


                                                                            F-19
<PAGE>   99

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

SECURITIES: The Corporation has the ability to classify investment securities
and mortgage-backed and related securities into held to maturity and available
for sale categories at the time of purchase. Held to maturity securities are
those which the Corporation has the positive intent and ability to hold to
maturity, and are reported at amortized cost. Available for sale securities are
those the Corporation may decide to sell if needed for liquidity,
asset-liability management or other reasons. Available for sale securities are
reported at fair value, with unrealized gains and losses included as a separate
component of shareholders' equity, net of tax. Currently, the Corporation has
classified all securities as available for sale.

Realized gains and losses resulting from the sale of securities are computed by
the specific identification method. Interest and dividend income, adjusted by
amortization of purchase premium or discount, is included in earnings. Premiums
and discounts on securities are recognized using the level yield method over the
estimated life of the security.

INTEREST INCOME ON LOANS: Interest on loans is accrued over the term of the
loans based on the principal balance outstanding. When serious doubt exists as
to collectibility of a loan, the accrual of interest is discontinued. Under
Statement of Financial Accounting Standards ("SFAS") No. 114, as amended by SFAS
No. 118, the carrying values of impaired loans are periodically adjusted to
reflect cash payments, revised estimates of future cash flows, and increases in
the present value of expected cash flows due to passage of time. Cash payments
representing interest income are reported as such. Other cash payments are
reported as reductions in carrying value, while increases or decreases due to
changes in estimates of future payments and due to the passage of time are
reported as a component of the provision for loan losses.

LOAN FEES AND COSTS: Loan fees, net of direct loan origination costs, are
deferred. The net amount deferred is reported in the consolidated balance sheets
as part of loans and is recognized into interest income over the term of the
loan using the level yield method.

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is established because
some loans may not be paid in full. Increases to the allowance are recorded by a
provision for loan losses charged to expense. Estimating the risk of loss and
the amount of loss on any loan is necessarily subjective. Accordingly, the
allowance is maintained by management at a level considered adequate to cover
losses that are currently anticipated. This is based on past loss experience,
general economic conditions, information about specific borrowers' situations,
including their financial position and collateral values, and other factors and
estimates which are subject to change over time. While management may
periodically allocate portions of the allowance for specific problem loan
situations, the whole allowance is available for any loan charge-offs that
occur. A loan is charged-off by management as a loss when deemed uncollectible,
although collection efforts continue and future recoveries may occur.

- -------------------------------------------------------------------------------

                                  (Continued)


                                                                            F-20
<PAGE>   100

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans are considered impaired if full principal or interest payments are not
anticipated in accordance with the contractual loan terms. Impaired loans are
carried at the present value of expected future cash flows discounted at the
loan's effective interest rate or at the fair value of the collateral if the
loan is collateral dependent. A portion of the allowance for loan losses is
allocated to impaired loans if the value of such loans is deemed to be less than
the unpaid balance. If these allocations cause the allowance for loan losses to
require an increase, such increase is reported as a component of the provision
for loan losses.

Smaller-balance homogeneous loans are evaluated for impairment in total. Such
loans include residential first mortgage loans secured by one-to-four family
residences, residential construction loans, and automobile, manufactured homes,
home equity and second mortgage loans. Commercial loans and mortgage loans
secured by other properties are evaluated individually for impairment. When
analysis of borrower operating results and financial condition indicates that
underlying cash flows of the borrower's business are not adequate to meet its
debt service requirements, the loan is evaluated for impairment. Often this is
associated with a delay or shortfall in payments of 90 days or more. Nonaccrual
loans are often also considered impaired. Impaired loans, or portions thereof,
are charged off when deemed uncollectible.

FORECLOSED REAL ESTATE: Real estate properties acquired through, or in lieu of,
loan foreclosure are initially recorded at fair value at the date of
acquisition, establishing a new cost basis. Any reduction to fair value from the
carrying value of the related loan at the time of acquisition is accounted for
as a loan loss and charged against the allowance for loan losses. After
acquisition, a valuation allowance is recorded through a charge to income for
the amount of estimated selling costs. Valuations are periodically performed by
management, and valuation allowances are adjusted through a charge to income for
changes in fair value or estimated costs to sell. The dollar amount of
properties held as other real estate owned at December 31, 1997 and 1996 was
$200,000 and $-0-.

INCOME TAXES: Income tax expense is the sum of the current year income tax due
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences between the carrying amounts and tax basis of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.

PREMISES AND EQUIPMENT: Premises and equipment are stated at cost less
accumulated depreciation. All depreciation is computed on a straight-line basis
with useful lives as follows:

          Buildings and improvements                        15 - 40 years
          Furniture, equipment and land improvements         3 - 15 years

- -------------------------------------------------------------------------------

                                  (Continued)



                                                                            F-21
<PAGE>   101

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE: Substantially all securities
sold under agreements to repurchase represent amounts advanced by various
customers that are not covered by federal deposit insurance and are secured by
securities owned.

DIVIDEND RESTRICTION: The Corporation and the Bank are subject to banking
regulations which require the maintenance of certain capital levels which limit
the amount of dividends which may be paid. For regulatory capital requirements,
see Note 14.

PROFIT SHARING PLAN: The Corporation maintains a 401(k) profit sharing plan
covering substantially all employees. The plan provides for discretionary
contributions by the Corporation as determined by the Board of Directors and
voluntary employee contributions. The Corporation's contribution to the plan is
charged to expense annually. The Corporation's expense for 1997, 1996 and 1995
was approximately $305,000, $347,000 and $280,000, respectively.

EARNINGS PER COMMON SHARE: Basic earnings per common share is based on the
weighted average common shares outstanding. The weighted average number of
common shares outstanding was 60,000 for 1997, 1996 and 1995. Diluted earnings
per common share further assumes issue of any dilutive potential common shares.
The Corporation has no dilutive potential common shares, therefore no diluted
earnings per common share is reported for 1997, 1996 or 1995. The adoption of
SFAS No. 128, "Earnings Per Share", on December 31, 1997, did not impact the
computation of earnings per common share for 1997 and did not result in the
restatement of any prior period earnings per share data.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Corporation, in the
normal course of business, makes commitments to extend credit which are not
reflected in the consolidated financial statements. A summary of these
commitments is disclosed in Note 10.

FAIR VALUES OF FINANCIAL INSTRUMENTS: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately. Fair value estimates involve uncertainties and matters of
significant judgment regarding interest rates, credit risk, prepayments, and
other factors, especially in the absence of broad markets for particular items.
Changes in assumptions or in market conditions could significantly affect the
estimates. The fair value estimates of existing on- and off-balance-sheet
financial instruments does not include the value of anticipated future business
or the values of assets and liabilities not considered financial instruments.

RECLASSIFICATIONS: Certain amounts in the 1996 and 1995 consolidated financial
statements have been reclassified to conform with the 1997 presentation.


- -------------------------------------------------------------------------------

                                  (Continued)




                                                                            F-22
<PAGE>   102

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------


NOTE 2 - CASH AND DUE FROM FINANCIAL INSTITUTIONS

The Corporation is required by the Federal Reserve to maintain cash reserves
consisting of cash on hand and noninterest-bearing balances on deposit with the
Federal Reserve Bank. The required cash reserve and clearing balances at
December 31, 1997 and 1996 was approximately $6,815,000 and $5,666,000,
respectively.


NOTE 3 - SECURITIES AVAILABLE FOR SALE

Year end securities available for sale were as follows:

<TABLE>
<CAPTION>
                                                         Gross                 Gross
                                Amortized              Unrealized            Unrealized              Fair
                                   Cost                  Gains                  Losses               Value
                                   ----                  -----                  ------               -----
1997
- ----
<S>                           <C>                  <C>                   <C>                   <C>          
U.S. Treasury                 $   8,055,141        $      34,709         $      (2,352)        $   8,087,498
U.S. Government and
  federal agencies               11,222,621               54,297                   (92)           11,276,826
States and political
  subdivisions                   66,532,154            2,990,588               (91,960)           69,430,782
Mortgage-backed pass-
  through securities             18,583,374              704,089                  (105)           19,287,358
Collateralized
  mortgage obligations           42,000,894              496,917              (156,305)           42,341,506
Corporate and other
  debt securities                 2,671,229                8,880                (2,072)            2,678,037
Marketable equity
  securities                      1,381,300                  -                     -               1,381,300
                              -------------        -------------         -------------         -------------
                              $ 150,446,713        $   4,289,480         $    (252,886)        $ 154,483,307
                              =============        =============         =============         =============
1996
- ----
U.S. Treasury                 $   7,018,173        $       1,639         $     (22,001)        $   6,997,811
U.S. Government and
  federal agencies                9,752,289               26,227               (67,713)            9,710,803
States and political
  subdivisions                   57,698,461            1,653,306              (154,112)           59,197,655
Mortgage-backed pass-
  through securities             29,420,090              741,461               (45,870)           30,115,681
Collateralized
  mortgage obligations           16,358,440               94,804               (59,940)           16,393,304
Corporate and other
  debt securities                   397,684               16,316                   -                 414,000
Marketable equity
  securities                      1,375,300                  -                     -               1,375,300
                              -------------        -------------         -------------         -------------
                              $ 122,020,437        $   2,533,753         $    (349,636)        $ 124,204,554
                              =============        =============         =============         =============
</TABLE>

- -------------------------------------------------------------------------------

                                  (Continued)



                                                                            F-23
<PAGE>   103

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

NOTE 3 - SECURITIES AVAILABLE FOR SALE (Continued)

The amortized cost and fair value of securities available for sale, by
contractual maturity, are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties. Securities not due at
a single maturity date or with no maturity date are shown separately.

<TABLE>
<CAPTION>
                                                                               Securities Available for Sale
                                                                                        December 31, 1997
                                                                                        -----------------
                                                                                  Amortized        Fair
                                                                                    Cost           Value
                                                                                    ----           -----
<S>                                                                          <C>              <C>          
     Due in one year or less                                                 $   4,120,658    $   4,137,445
     Due after one year through five years                                      23,369,562       23,851,348
     Due after five years through ten years                                     27,612,348       28,735,718
     Due after ten years                                                        33,378,577       34,748,632
     Mortgage-backed pass-through securities
       and collateralized mortgage obligations                                  60,584,268       61,628,864
     Marketable equity securities                                                1,381,300        1,381,300
                                                                             -------------    -------------
                                                                             $ 150,446,713    $ 154,483,307
                                                                             =============    =============
</TABLE>

Proceeds, gross gains and gross losses realized from sales of securities
available for sale for the years ended December 31, 1997, 1996 and 1995 are as
follows:

<TABLE>
<CAPTION>
                                                              1997              1996              1995
                                                              ----              ----              ----
<S>                                                          <C>             <C>              <C>          
Proceeds from sales of securities
  available for sale                                         $ 17,228,831    $  28,998,352    $   2,802,775
                                                             ============    =============    =============

Gross gains from sales of securities
  available for sale                                         $    191,283    $     108,910    $      45,321
Gross losses from sales of securities
  available for sale                                             (105,866)        (136,639)               -
Net gains from calls of securities available
  for sale and securities held to maturity                              -                -          110,008

                                                             ------------    -------------    -------------
Net securities gains (losses)                                $     85,417    $     (27,729)   $     155,329
                                                             ============    =============    =============
</TABLE>

Securities with a carrying value of approximately $1,102,000, $1,102,000 and
$5,163,000 were pledged to secure public deposits and short-term borrowings for
the years ended December 31, 1997, 1996 and 1995. See Note 7 for discussion of
securities pledged for securities sold under agreements to repurchase.

The applicable income tax effects of net securities gains (losses) were as
follows: 1997 - tax expense of $34,000; 1996 - tax benefit of $11,000; and 1995
- - tax expense of $62,000.

- -------------------------------------------------------------------------------

                                  (Continued)


                                                                            F-24
<PAGE>   104
                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------


NOTE 4 - LOANS RECEIVABLE - NET

Loans receivable, net at December 31, are summarized as follows:

<TABLE>
<CAPTION>
                                                                        1997                1996
                                                                        ----                ----

<S>                                                                  <C>              <C>          
     Commercial                                                      $ 105,181,077    $ 102,463,938
     Real estate - mortgage                                             94,362,314       85,202,395
     Real estate - construction                                          2,160,338        3,599,845
     Installment                                                        68,158,869       65,845,095
     Credit card                                                         2,685,823        2,009,705
                                                                     -------------    -------------
                                                                       272,548,421      259,120,978
     Deferred loan fees                                                   (566,912)        (638,559)
     Allowance for loan losses                                          (3,252,361)      (2,367,288)
                                                                     -------------    -------------

                                                                     $ 268,729,148    $ 256,115,131
                                                                     =============    =============
</TABLE>

Activity in the allowance for loan losses is 
summarized as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                        1997            1996              1995
                                                        ----            ----              ----

<S>                                                   <C>            <C>              <C>          
     Balance at beginning of year                     $ 2,367,288    $   3,372,317    $   2,575,265
     Provision for loan losses                          1,800,000        1,440,000        1,040,000
     Charge-offs                                       (1,511,255)      (2,793,308)        (544,681)
     Recoveries                                           596,328          348,279          301,733
                                                      -----------    -------------    -------------

         Balance at end of year                       $ 3,252,361    $   2,367,288    $   3,372,317
                                                      ===========    =============    =============
</TABLE>

Information regarding impaired loans is as follows for the years ending December
31:

<TABLE>
<CAPTION>
                                                          1997           1996            1995
                                                          ----           ----            ----
<S>                                                   <C>            <C>            <C>        
     Year end loans with no allowance for loan
       losses allocated                               $   881,110    $ 5,029,291    $   196,697
     Year end loans with allowance for loan
       losses allocated                                 1,900,537        734,502      1,208,483
     Amount of allowance allocated                        439,000        282,000        330,000

     Average of impaired loans during the year          4,817,197      6,034,919        971,985
     Interest income recognized during
       impairment                                          60,853        102,524        119,662
     Cash-basis interest income recognized                      -        102,524         92,277
</TABLE>

- -------------------------------------------------------------------------------

                                  (Continued)


                                                                            F-25
<PAGE>   105

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

NOTE 5 - PREMISES AND EQUIPMENT - NET

Premises and equipment at December 31 are summarized as follows:

<TABLE>
<CAPTION>
                                        1997                1996
                                        ----                ----

<S>                               <C>                  <C>         
Land                              $    954,191         $    844,101
Buildings and improvements           4,975,611            4,877,021
Furniture and equipment              5,797,089            5,278,698
Land improvements                      746,039              740,114
                                  ------------         ------------
                                    12,472,930           11,739,934
Accumulated depreciation            (6,514,846)          (5,632,216)
                                  ------------         ------------

                                  $  5,958,084         $  6,107,718
                                  ============         ============
</TABLE>


NOTE 6 - TIME DEPOSITS

At December 31, 1997, the scheduled maturities of other time deposits are as
follows for the years ended December 31:

<TABLE>
<S>                                                    <C>          
              1998                                     $ 122,116,849
              1999                                        23,863,142
              2000                                         7,258,348
              2001                                         3,076,283
              2002                                         3,678,606
              Thereafter                                   2,145,942
                                                       -------------

                                                       $ 162,139,170
                                                       =============
</TABLE>

The Corporation had approximately $25,780,000 and $26,219,000 in time
certificates of deposit in denominations of $100,000 or more as of December 31,
1997 and 1996, respectively. Interest expense on certificates of deposit in
denominations of $100,000 or more was approximately $2,171,000, $1,719,000 and
$1,083,000 in 1997, 1996 and 1995, respectively.



- -------------------------------------------------------------------------------

                                  (Continued)


                                                                            F-26
<PAGE>   106


                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

NOTE 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase consist of obligations of the
Corporation to other parties. These arrangements are for terms of one year or
less and are secured by investment securities. Such collateral is held by
safekeeping agents of the Corporation. Information concerning securities sold
under agreements to repurchase as of December 31, 1997, 1996 and 1995 is
summarized as follows:

<TABLE>
<CAPTION>
                                                                 1997                1996                1995
                                                                 ----                ----                ----

<S>                                                         <C>                 <C>                <C>             
         Balance at end of year                             $     8,000,000     $            -     $     3,769,720
         Average daily balance during the year              $       898,630     $    1,574,003     $     3,808,016
         Average interest rate during the year                        5.625%             5.894%              6.137%
         Maximum month end balance during
           the year                                         $     8,000,000     $    3,665,470     $     4,830,120
</TABLE>

Securities underlying these agreements at year end were as follows:
<TABLE>
<CAPTION>

                                                                 1997                1996                1995
                                                                 ----                ----                ----

<S>                                                         <C>                 <C>                <C>             
         Carrying value of securities                       $     8,039,000     $        -         $      4,135,000
         Fair value                                         $     8,039,000     $        -         $      4,135,000
</TABLE>


NOTE 8 - ADVANCES FROM FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank at year end were:

<TABLE>
<CAPTION>
                                                                                     1997                1996
                                                                                     ----                ----
<S>                                                                             <C>                <C>             
     5.68% FHLB advance, due June 1997                                          $        -         $      7,500,000
     6.15% FHLB advance, due January 1998                                             7,000,000                -
     5.43% FHLB advance, due February 2001                                            1,936,285           2,000,000
     6.36% FHLB advance, due January 2002                                             1,500,000           1,500,000
     6.71% FHLB advance, due May 2002                                                 1,250,000                -
                                                                                ---------------    ----------------
                                                                                $    11,686,285    $     11,000,000
                                                                                ===============    ================
</TABLE>

At December 31, 1997 and 1996, the Corporation had book value of approximately
$15,522,000 and $15,682,000, respectively, of mortgage loans which were pledged
to the Federal Home Loan Bank to secure advances outstanding in addition to
$1,381,000 in 1997 and $1,375,000 in 1996 of FHLB stock.

- --------------------------------------------------------------------------------
                                  (Continued)
                                                                            F-27

<PAGE>   107

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------

NOTE 9 - INCOME TAXES

Income tax expense consists of:
<TABLE>
<CAPTION>
                                                                   1997              1996               1995
                                                                   ----              ----               ----
<S>                                                          <C>                <C>               <C>           
     Current federal                                         $    2,041,504     $      836,424    $    2,573,125
     Deferred federal                                              (950,564)           471,956        (1,556,919)
     Current state                                                  853,263            510,116         1,104,872
     Deferred state                                                (249,981)            95,635          (591,671)
                                                             --------------     --------------    --------------
                                                             $    1,694,222     $    1,914,131    $    1,529,407
                                                             ==============     ==============    ==============
</TABLE>

The difference between the income tax expense shown in the statements of income
and amounts computed by applying the statutory federal income tax rate to income
before income taxes, is as follows:

<TABLE>
<CAPTION>
                                                                   1997              1996               1995
                                                                   ----              ----               ----
<S>                                                          <C>                <C>               <C>           
     Income tax calculated at statutory rate of 34%          $    2,273,559     $    2,311,209    $    1,933,803
     Increase (decrease) due to tax effect of
         Tax-exempt interest income                              (1,135,799)          (924,348)         (862,789)
         Non-deductible interest expense                            147,304            120,822           114,502
         State income tax, net of federal income
           tax benefit                                              398,166            399,796           338,713
         Other items, net                                            10,992              6,652             5,178
                                                             --------------     --------------    --------------
                                                             $    1,694,222     $    1,914,131    $    1,529,407
                                                             ==============     ==============    ==============
</TABLE>

The components of the net deferred tax asset recorded in the consolidated
balance sheets as of December 31 are as follows:

<TABLE>
<CAPTION>
                                              1997              1996
                                              ----              ----
         Deferred tax assets
<S>                                        <C>           <C>
     Provision for loan losses             $1,040,310    $   682,499
     Mark to market adjustment              1,651,502        755,934
     Deferred loan fees                       121,347        185,267
     Other                                    193,202        100,038
                                          -----------    -----------
                                          $ 3,006,361    $ 1,723,738
Deferred tax liabilities
     State tax                            $  (217,248)   $  (128,316)
     Accretion                               (153,472)      (160,326)
     Net unrealized gain
       on securities available for sale    (1,598,894)      (865,130)
                                          -----------    -----------
                                           (1,969,614)    (1,153,772)
          Valuation allowance                    --             --
                                          -----------    -----------
                                          $ 1,036,747    $   569,966
                                          ===========    ===========
</TABLE>


- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-28
<PAGE>   108

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------



NOTE 10 - COMMITMENTS AND CONTINGENCIES AND FINANCIAL INSTRUMENTS
  WITH OFF-BALANCE-SHEET RISK

As of December 31, 1997, the Corporation leased branch offices as well as
various equipment. Rent expense was approximately $29,000, $23,000 and $36,000
in 1997, 1996 and 1995, respectively. In accordance with the terms of the
leases, the Corporation pays insurance and maintenance costs.

Rental commitments under noncancelable operating leases are as follows for the
year ended December 31:

<TABLE>
<S>           <C>                                     <C>         
              1998                                    $     16,000
              1999                                          11,000
              2000                                          11,000
              2001                                             925
                                                      ------------
                                                      $     38,925
                                                      ============
</TABLE>

There are various contingent liabilities that are not reflected in the financial
statements, including claims and legal actions arising in the ordinary course of
business. In the opinion of management, after consultation with legal counsel,
the ultimate disposition of these matters is not expected to have a material
effect on the Corporation's consolidated financial condition or results of
operations.

Some financial instruments are used in the normal course of business to meet the
financing needs of customers and to reduce exposure to interest rate changes.
These financial instruments include commitments to extend credit, unused credit
on credit card arrangements and standby letters of credit. These involve, to
varying degrees, credit and interest-rate risk in excess of the amount reported
in the financial statements.

Exposure to credit loss if the other party does not perform is represented by
the contractual amount for commitments to extend credit, standby letters of
credit, and financial guarantees written. The same credit policies are used for
commitments and conditional obligations as are used for loans.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being used, the total commitments do not necessarily represent
future cash requirements. Standby letters of credit and financial guarantees
written are conditional commitments to guarantee a customer's performance to a
third party.



- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-29
<PAGE>   109

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------


NOTE 10 - COMMITMENTS AND CONTINGENCIES AND FINANCIAL INSTRUMENTS
  WITH OFF-BALANCE-SHEET RISK (Continued)

A summary of the notional or contractual amounts of financial instruments with
off-balance-sheet risk at year end follows:

<TABLE>
<CAPTION>
                                                        1997              1996
                                                        ----              ----

<S>                                                  <C>              <C>       
Commitments to extend credit
   (primarily variable rate)                         $21,290,000      41,396,000
Unused credit on credit card arrangements
   (primarily fixed rate)                              9,314,000       8,490,000
Standby letters of credit
   (primarily variable rate)                           1,167,000       1,677,000
                                                     -----------     -----------
                                                     $31,771,000     $51,563,000
                                                     ===========     ===========
</TABLE>


NOTE 11 - RELATED PARTY TRANSACTIONS

Certain directors and executive officers of the Corporation, including
associates of such persons, are loan customers. A summary of the related party
loan activity, for loans aggregating $60,000 or more to any one related party,
follows for the years December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                   1997                1996
                                                   ----                ----

<S>                                            <C>                  <C>        
Balance, January 1                             $ 2,725,056          $ 2,516,722

    New loans                                      678,331            1,736,529
    Repayments                                    (303,368)          (1,528,195)
                                               -----------          -----------
Balance, December 31                           $ 3,100,019          $ 2,725,056
                                               ===========          ===========
</TABLE>



- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-30
<PAGE>   110

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------


NOTE 12 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of Sand Ridge Financial Corporation at December
31:

                            CONDENSED BALANCE SHEETS
                           December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                                                    1997                1996
                                                                                    ----                ----
<S>                                                                             <C>                <C>             
ASSETS
     Cash and due from financial institutions                                   $       283,557    $        180,610
     Securities available for sale                                                       74,766              36,188
     Investment in subsidiary bank                                                   39,454,070          34,377,649
     Dividends receivable                                                               840,000             960,000
     Interest receivable and other assets                                                83,974              44,541
                                                                                ---------------    ----------------
         Total assets                                                           $    40,736,367    $     35,598,988
                                                                                ===============    ================

LIABILITIES
     Dividends payable                                                          $     1,020,000    $        960,000
     Interest payable and other liabilities                                              35,689              49,739
                                                                                ---------------    ----------------
         Total liabilities                                                            1,055,689           1,009,739

SHAREHOLDERS' EQUITY                                                                 39,680,678          34,589,249
                                                                                ---------------    ----------------
     Total liabilities and shareholders' equity                                 $    40,736,367    $     35,598,988
                                                                                ===============    ================
</TABLE>

                         CONDENSED STATEMENTS OF INCOME
                  Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                 1997               1996                 1995
                                                                 ----               ----                 ----

<S>                                                         <C>                 <C>                <C>             
Dividends from bank - cash                                  $     1,035,000     $       960,000    $        900,000
Interest income  on deposits
  with financial institutions                                             -               1,250                   -
Interest income on securities                                           183                 169              15,944
Other income                                                              -                   -               2,764
Other expenses                                                            -                 (60)                (15)
                                                            ---------------     ---------------    ----------------
 INCOME BEFORE INCOME TAX EXPENSE AND EQUITY
  IN UNDISTRIBUTED EARNINGS OF SUBSIDIARY BANK                    1,035,183             961,359             918,693

Income tax expense                                                      174                 677               6,412
                                                            ---------------     ---------------    ----------------
 INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS
  OF SUBSIDIARY BANK                                              1,035,009             960,682             912,281

Equity in undistributed earnings of subsidiary
  bank                                                            3,957,707           3,922,860           3,245,968
                                                            ---------------     ---------------    ----------------
 Net income                                                  $    4,992,716     $     4,883,542    $      4,158,249
                                                            ===============     ===============    ================
</TABLE>



- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-31
<PAGE>   111

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------




NOTE 12 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)

                       CONDENSED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
                                                                 1997               1996                 1995
                                                                 ----               ----                 ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                         <C>                 <C>                <C>             
     Net income                                             $     4,992,716     $     4,883,542    $      4,158,249
     Adjustment to reconcile net income to
       net cash from operating activities
         Equity in undistributed earnings
           of subsidiary bank                                    (3,957,707)         (3,922,860)         (3,245,968)
         Net accretion of securities                                   (183)               (169)                  -
         Change in dividends receivable                             120,000             (60,000)            (60,000)
         Change in interest receivable and
           other assets                                             (39,433)            (12,123)            123,120
         Change in interest payable and
           other liabilities                                        (14,051)             48,673               1,066
                                                            ---------------     ---------------    ----------------
              Net cash from operating activities                  1,101,342             937,063             976,467

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of securities available for sale                      (38,395)                 -                 (176)
                                                            ---------------     ---------------    ----------------
         Net cash from investing activities                         (38,395)                 -                 (176)

CASH FLOWS FROM FINANCING ACTIVITIES
     Cash dividends paid                                           (960,000)           (900,000)           (840,000)
                                                            ---------------     ---------------    ----------------
         Net cash from financing activities                        (960,000)           (900,000)           (840,000)

Net change in cash and cash equivalents                             102,947              37,063             136,291

Cash and cash equivalents at beginning of year                      180,610             143,547               7,256
                                                            ---------------     ---------------    ----------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                    $       283,557     $       180,610    $        143,547
                                                            ===============     ===============    ================
</TABLE>




- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-32
<PAGE>   112

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------


NOTE 13 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated year end fair values of financial instruments were:

<TABLE>
<CAPTION>

                                                               1997                               1996
                                                               ----                               ----
                                                   Carrying            Fair           Carrying            Fair
                                                    Amount             Value           Amount             Value
                                                    ------             -----           ------             -----
<S>                                             <C>              <C>               <C>              <C>            
Financial assets
    Cash and due from financial
      institutions                              $   23,009,706   $    23,010,000   $   26,075,959   $    26,076,000
     Interest-bearing balances with
      financial institutions                           100,000           100,000          100,000           100,000
    Securities available for sale                  154,483,307       154,483,000      124,204,554       124,205,000
    Loans receivable, net of allowance for
      loan losses                                  268,729,148       271,021,000      256,115,131       257,236,000

Financial liabilities
    Non-interest bearing demand deposits           (47,081,633)      (47,082,000)     (41,690,247)      (41,690,000)
    Savings, NOW and money market                 (169,455,230)     (169,455,000)    (168,726,981)     (168,727,000)
    Other time deposits                           (162,139,170)     (162,386,000)    (150,863,222)     (151,147,000)
    Short-term borrowings                          (21,800,000)      (21,800,000)      (5,600,000)       (5,600,000)
    Advances from FHLB                             (11,686,285)      (11,697,000)     (11,000,000)      (10,918,000)
</TABLE>

For purposes of the above disclosures of estimated fair values, the following
assumptions were used as of December 31, 1997 and 1996. The estimated fair value
for cash and due from financial institutions is considered to approximate cost.
The estimated fair value for interest-bearing balances with financial
institutions and securities available for sale is based on quoted market values
for the individual deposits or securities or for equivalent deposits or
securities. The estimated fair value for commercial loans is based on estimates
of the difference in interest rates the Corporation would charge the borrowers
for similar such loans with similar maturities made at December 31, 1997 and
1996, applied for an estimated time period until the loan is assumed to reprice
or be paid. The estimated fair value for other loans is based on estimates of
the rate the Corporation would charge for similar such loans at December 31,
1997 and 1996, applied for the time period until estimated repayment. The
estimated fair value for demand, savings, NOW and money market deposits is based
on their carrying value. The estimated fair values for other time deposits,
short-term borrowings and advances from FHLB are based on estimates of the rate
the Corporation would pay on such deposits or borrowings at December 31, 1997
and 1996, applied for the time period until maturity. The estimated fair values
for other financial instruments and off-balance-sheet loan commitments are
considered to approximate cost at December 31, 1997 and 1996, and are not
considered significant to this presentation.



- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-33
<PAGE>   113

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------



NOTE 14 - REGULATORY MATTERS

The Corporation and Bank are subject to regulatory capital requirements
administered by federal banking agencies. Capital adequacy guidelines and prompt
corrective action regulations involve quantitative measures of assets,
liabilities, and certain off-balance-sheet items calculated under regulatory
accounting practices. Capital amounts and classifications are also subject to
qualitative judgments by regulators about components, risk weightings, and other
factors, and the regulators can lower classifications in certain cases. Failure
to meet various capital requirements can initiate regulatory action that could
have a direct material effect on the consolidated financial statements.

The prompt corrective action regulations provide five classifications, including
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition. If only adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required.

At year end, consolidated and bank only actual capital levels and minimum
required levels were:

<TABLE>
<CAPTION>
                                                                                             Minimum Required
                                                                                                To Be Well
                                                                  Minimum Required           Capitalized Under
                                                                     For Capital             Prompt Corrective
                                               Actual             Adequacy Purposes         Action Regulations
                                               ------             -----------------         ------------------
                                       Amount         Ratio      Amount        Ratio       Amount       Ratio
                                       ------         -----      ------        -----       ------       -----
                                                                  (Dollars in thousands)
1997
- ----
Total capital (to risk weighted assets)
<S>                                    <C>           <C>         <C>             <C>        <C>           <C>  
   Consolidated                        $ 40,495      14.8%       $ 21,893        8.0%       $27,367       10.0%
   Bank                                $ 40,269      14.7%       $ 21,870        8.0%       $27,337       10.0%
Tier 1 capital (to risk weighted assets)
   Consolidated                        $ 37,243      13.6%       $ 10,947        4.0%       $16,420        6.0%
   Bank                                $ 37,016      13.5%       $ 10,935        4.0%       $16,402        6.0%
Tier 1 capital (to average assets)
   Consolidated                        $ 37,243       8.0%       $ 18,580        4.0%       $23,225        5.0%
   Bank                                $ 37,016       8.0%       $ 18,563        4.0%       $23,204        5.0%
</TABLE>




- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-34
<PAGE>   114

                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995

- --------------------------------------------------------------------------------


NOTE 14 - REGULATORY MATTERS (Continued)
<TABLE>
<CAPTION>
                                                                                                Minimum Required
                                                                                                   To Be Well
                                                                     Minimum Required           Capitalized Under
                                                                        For Capital             Prompt Corrective
                                                Actual               Adequacy Purposes         Action Regulations
                                                ------               -----------------         ------------------
                                          Amount      Ratio          Amount      Ratio         Amount     Ratio
                                          ------      -----          ------      -----         ------     -----
                                                                  (Dollars in thousands)
<S>                                       <C>        <C>             <C>         <C>           <C>        <C>  
1996
- ----
Total capital (to risk weighted assets)
   Consolidated                           $35,637    13.9%           $20,485     8.0%          $25,607    10.0%
   Bank                                   $35,426    13.8%           $20,468     8.0%          $25,585    10.0%
Tier 1 capital (to risk weighted assets)
   Consolidated                           $33,270    13.0%           $10,243     4.0%          $15,364     6.0%
   Bank                                   $33,059    12.9%           $10,234     4.0%          $15,351     6.0%
Tier 1 capital (to average assets)
   Consolidated                           $33,270     8.2%           $16,258     4.0%          $20,323     5.0%
   Bank                                   $33,059     8.1%           $16,249     4.0%          $20,312     5.0%
</TABLE>

The Corporation and Bank at year end 1997 and 1996 were categorized as well
capitalized.




- --------------------------------------------------------------------------------
                                  (Continued)

                                                                            F-35
<PAGE>   115






                        SAND RIDGE FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

- ----------------------------------------------------------------------------


The following discussion and analysis provides information about material
changes in the consolidated financial condition and results of operations of
Sand Ridge Financial Corporation (the "Corporation") and its wholly-owned
subsidiary, Sand Ridge Bank (the "Bank"). It identifies trends and material
changes that occurred during the reporting periods and should be read in
conjunction with the consolidated financial statements and accompanying notes
appearing elsewhere herein.


MATERIAL CHANGES IN FINANCIAL CONDITION

Total assets increased by $71,162,000, or 15.60%, from $456,094,000 at December
31, 1997, to $527,256,000 at September 30, 1998. This represents a 20.80%
annualized rate of growth. This increase can primarily be attributed to the
growth in securities available for sale and loans receivable. Securities
available for sale increased $48,341,000 or 31.29%, from $154,483,000 at
December 31, 1997, to $202,824,000 at September 30, 1998. This was an annualized
rate of growth of 41.72% and was primarily due to the purchase of more fixed
rate government agencies and state and political subdivision securities than
were sold, called or matured during the period. The growth in net loans
represents an increase of $21,424,000, or 7.97%, from $268,729,000 at December
31, 1997, to $290,153,000 at September 30, 1998. This is an annualized growth
rate of 10.63%. The loan growth primarily occurred in the Bank's real estate
loan portfolio.

The growth in securities and loans were funded primarily from increases in total
deposits and Federal Home Loan Bank (FHLB) borrowings. Total deposits increased
by $58,911,000, or 15.56%, from $378,676,000 at December 31, 1997, to
$437,587,000 at September 30, 1998. This represents a 20.74% annualized rate of
growth. Interest-bearing deposit accounts increased $46,180,000 and
noninterest-bearing accounts increased $12,731,000. FHLB borrowings increased
$12,704,000, or 108.71%, from $11,686,000 at December 31, 1997, to $24,390,000
at September 30, 1998.

                                                                            F-36

<PAGE>   116


MATERIAL CHANGES IN RESULTS OF OPERATIONS

For the nine months ended September 30, 1998, the Bank recorded net income of
$4,019,000 compared to net income of $3,571,000 for the same period in 1997,
resulting in an increase of $448,000 or 12.55%. Interest income increased
$2,601,000, or 10.99%, primarily due to the increase in the average balance of
interest-earning assets. To offset the increase to interest income, interest
expense increased $1,416,000 or 11.84%. This increase was primarily due to the
increase in the average balance of interest-bearing liabilities. The combined
effect of the increase in interest income and interest expense resulted in a
$1,185,000 or 10.12% increase in net interest income for the nine months ended
September 30, 1998 as compared to the same period in 1997.

The provision for loan losses increased $400,000 or 29.63% from $1,350,000 for
the nine months ended September 30, 1997 to $1,750,000 for the same period for
1998. This increase in this provision was used to replenish the allowance for
loan losses from $1,179,000 in net loan charge-offs during the nine months ended
September 30, 1998, and to provide an increase of 17.57% in the allowance for
loan losses related to the loan growth during those nine months.

The increase in net interest income after provision for loan losses of $785,000
for the nine months ended September 30, 1998, compared to the same period for
1997, was the primary reason for the $448,000 increase in net income.
Noninterest income, noninterest expense and income tax expense all increased
incrementally as a result of the general growth that occurred during the nine
months ended September 30, 1998 as compared to the same period for 1997.

LIQUIDITY

The Corporation manages its liquidity position through the Bank. The purpose of
liquidity management is to fund loan demand, meet the withdrawal needs of
customers and provide for operating expenses. Sources of liquidity are cash and
funds due from financial institutions, interest-bearing balances with financial
institutions, federal funds sold, sale and/or maturity of securities classified
as available for sale and principal repayments on loans. The Corporation also
has a borrowing relationship with the Federal Home Loan Bank of Indianapolis.
This relationship allows the Corporation to borrow funds using the Bank's real
estate mortgage loans, under a general blanket agreement, as collateral. This
ability to borrow funds allows for another source of liquidity. Management
believes its current liquidity level is sufficient to meet anticipated growth.


INTEREST RATE SENSITIVITY AND QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK

The primary source of market risk for the financial instruments held by the
Corporation is interest rate risk. That is, the risk that an adverse change in
market rates will adversely affect the market value of the instruments.
Generally, the longer the maturity, the higher the interest rate risk exposure.
While maturity information does not necessarily present all aspects of exposure,
it may provide an indication of where risks are prevalent.


                                                                            F-37
<PAGE>   117

All financial institutions assume interest rate risk as an integral part of
normal operations. Managing and measuring interest rate risk is a dynamic,
multi-faceted process that ranges from reducing the exposure of the
Corporation's net interest margin to swings in interest rates, to assuring
sufficient capital and liquidity to support future balance sheet growth. The
Corporation manages interest rate risk through its Asset/Liability Committee.
The Asset/Liability Committee is comprised of bank officers from various
disciplines. The Committee establishes policies and rates which lead to the
prudent investment of resources, the effective management of risks associated
with changing interest rates, the maintenance of adequate liquidity, and the
earning of an adequate return on shareholders' equity.

Management believes that there has been no significant change to the interest
rate sensitivity since the presentation in the December 31, 1997 Management
Discussion and Analysis appearing elsewhere herein.


CAPITAL MANAGEMENT

Total shareholders' equity was $44,768,000 as of September 30, 1998. This
represents an increase of $5,087,000, or 12.82%, over the prior year end of
December 31, 1997. The primary component of the change in shareholders' equity
is the $4,019,000 in net income for the nine months ended September 30, 1998.
Secondarily, the period ended September 30, 1998 benefited from a positive
change in net unrealized gains on securities available for sale, net of tax, of
$1,068,000.

Restrictions exist due to regulatory guidelines imposed upon all financial
institutions regarding the Bank's ability to transfer funds to the Corporation
in the form of cash dividends, loans or advances. These restrictions have had no
significant impact on the Corporation's dividend policy or operations.

The Corporation's subsidiary Bank remains above the minimum capital levels
required by regulatory agencies to meet the definition of a well capitalized
Bank. The banking regulators may alter minimum capital requirements as a result
of revising their internal policies and their rating of the Corporation's
subsidiary bank. As of September 30, 1998, management is not aware of any
current recommendations by banking authorities which, if they were to be
implemented, would have, or are reasonably likely to have a material adverse
effect on the Corporation's liquidity, capital resources or operations.

Under risk-based capital guidelines issued by the Federal Reserve Board, the
Corporation and its subsidiary Bank are required to maintain a minimum
risk-based total capital ratio of 8% and a minimum Tier 1 capital ratio of 4% as
of September 30, 1998. While risk-based total capital and risk-based Tier 1
capital guidelines consider on-balance-sheet and off-balance-sheet risk, the
minimum Tier 1 capital ratio measures capital in relation to total
on-balance-sheet assets. The components of risk-based total capital are Tier 1
capital and Tier 2 capital. Tier 1 capital is total shareholders' equity less
intangible assets. Tier 2 capital includes total allowance for loan losses up to
a maximum of 1.25% of risk-weighted assets. The net unrealized gain (loss) on
securities available for sale, net of tax, is not considered for meeting
regulatory capital requirements. The following table provides the minimum
regulatory capital requirements and the Corporation's and Bank's actual capital
ratios at September 30, 1998.

                                                                            F-38
<PAGE>   118

<TABLE>
<CAPTION>
                                      Minimum Regulatory           Corporation's                 Bank's
                                     Capital Requirements      Actual Capital Ratio       Actual Capital Ratio
      Type of Capital Ratio          at September 30, 1998     at September 30, 1998      at September 30, 1998
      ---------------------          ---------------------     ---------------------      ---------------------
<S>                                           <C>                     <C>                        <C>  
      Ratio of total capital to
       risk-weighted assets                   8%                      15.0%                      14.9%

      Ratio of Tier 1 capital to
       risk-weighted assets                   4%                      13.7%                      13.7%


      Tier 1 capital ratio                    4%                       8.0%                       8.0%
</TABLE>


IMPACT OF THE YEAR 2000

The Corporation is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The issue is whether
computer systems will properly recognize the date sensitive information as the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail. The Corporation is
heavily dependent on computer processing in its business activities and the year
2000 issue creates risk for the Corporation from unforeseen problems in the
Corporation's computer system and from third parties whom the Corporation uses
to process information. Such failures of the Corporation's computer system
and/or third parties' computer systems could have a material impact on the
Corporation's ability to conduct its business.

A major third party vendor provides the Corporation's primary data processing.
This provider has advised the Corporation that it has completed the renovation
and testing of its system to be Year 2000 ready. Users of the system have been
given the opportunity to participate in proxy testing of the system and the
Corporation has taken advantage of this opportunity.

The Corporation has performed an assessment of its computer hardware and
software, and has determined those systems that require upgrade to be Year 2000
ready. Such upgrades have been substantially completed. In addition, the
Corporation has reviewed other external third party vendors that provide
services to the Corporation (i.e. utility companies, electronic fund transfer
providers, and alarm companies), and has requested or already received
certification letters from these vendors that their systems will be Year 2000
ready on a timely basis. Testing will be performed with these service providers,
where possible, to determine their Year 2000 readiness.

The Corporation could incur losses if loan payments are delayed due to Year 2000
problems affecting significant borrowers. The Corporation is communicating with
such parties to assess their progress in evaluating and implementing any
corrective measures required by them to be Year 2000 ready. To date, the
Corporation has not been advised by such parties that they do not have plans in
place to address and correct the issues associated with the Year 2000 problem;
however, no assurance can be given as to the adequacy of such plans or to the
timeliness of their implementation.

                                                                            F-39
<PAGE>   119

Based on the Corporation's review of its computer systems, management believes
the cost of the remediation effort to make its systems Year 2000 ready will be
approximately $49,000. In addition, it is estimated that 1,881 man-hours will be
incurred by Corporation personnel related to Year 2000 issues at an approximate
cost of $56,000. Such costs will be charged to expense as incurred. Computer
equipment with an aggregate total of about $200,000 has been replaced in 1998
and is to be replaced in many areas of the Corporation in 1999. Much of this
equipment was replaced sooner than it otherwise would have been for Year 2000
compliance purposes; however, it was not replaced purely for this reason.

The Corporation has developed a Year 2000 contingency plan that addresses, among
other issues, critical operations and potential failures thereof, and strategies
for business continuation.

Although management believes the Corporation's computer systems and service
providers will be Year 2000 ready, there can be no assurance that these systems,
or those systems of other companies on which the Corporation's systems rely,
will be fully functional in the Year 2000. Such failure could have a significant
adverse impact on the financial condition and results of operations of the
Corporation.



                                                                            F-40
<PAGE>   120












                        SAND RIDGE FINANCIAL CORPORATION

                   UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
             As of September 30, 1998 and for the Nine Months Ended
                           September 30, 1998 and 1997



                                                                          F-41
<PAGE>   121


                        SAND RIDGE FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
              September 30, 1998 (Unaudited) and December 31, 1997

- ------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                     1998           1997
                                                                     ----           ----
<S>                                                              <C>            <C>         
ASSETS
     Cash and due from financial institutions                    $ 22,726,983   $ 23,009,706
     Interest-bearing balances with financial
       institutions                                                   100,000        100,000
     Securities available for sale                                202,824,166    154,483,307
     Loans receivable, net of allowance for loan
       losses of $3,823,640 in 1998 and $3,252,361 in 1997        290,152,964    268,729,148
     Premises and equipment - net                                   5,750,350      5,958,084
     Interest receivable and other assets                           5,702,011      3,813,879
                                                                 ------------   ------------
           Total assets                                          $527,256,474   $456,094,124
                                                                 ============   ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Noninterest-bearing demand deposits                         $ 59,812,896   $ 47,081,633
     Savings, NOW and money market                                181,338,022    169,455,230
     Other time deposits                                          196,436,200    162,139,170
                                                                 ------------   ------------
           Total deposits                                         437,587,118    378,676,033
     Federal funds purchased                                        9,300,000     13,800,000
     Securities sold under agreements to repurchase                 5,219,000      8,000,000
     U.S Treasury demand note                                         970,186           --
     Advances from Federal Home Loan Bank (FHLB)                   24,389,845     11,686,285
     Interest payable and other liabilities                         5,022,433      4,251,128
                                                                 ------------   ------------
         Total liabilities                                        482,488,582    416,413,446

Shareholders' equity
     Preferred stock, 100,000 shares authorized and
       -0- shares outstanding                                            --             --
     Common stock, $10 stated value:  200,000 shares
       authorized and 60,000 shares issued and outstanding            600,000        600,000
     Additional paid-in capital                                     4,600,000      4,600,000
     Retained earnings                                             36,062,367     32,042,978
     Net unrealized gains on securities available for sale,
       net of tax of $2,299,285 in 1998 and $1,598,894 in 1997      3,505,525      2,437,700
                                                                 ------------   ------------
         Total shareholders' equity                                44,767,892     39,680,678
                                                                 ------------   ------------
              Total liabilities and shareholders' equity         $527,256,474   $456,094,124
                                                                 ============   ============

</TABLE>


See accompanying notes to unaudited consolidated financial statements.


                                                                            F-42
<PAGE>   122


                        SAND RIDGE FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                  Nine months ended September 30, 1998 and 1997
                                   (Unaudited)

- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                            1998               1997
                                                            ----               ----
<S>                                                    <C>                <C>             
Interest income
     Loans, including fees                             $    18,028,800    $     16,808,607
     Deposits with financial institutions                        6,831               6,832
     Federal funds sold                                         76,560             713,954
     Securities:
          Taxable                                            5,169,882           3,644,444
          Non-taxable                                        2,982,051           2,489,510
                                                       ---------------    ----------------
                                                            26,264,124          23,663,347
Interest expense
     Deposits                                               12,244,943          11,553,197
     Federal funds purchased                                   191,496              12,930
     Securities sold under agreements to repurchase            272,578                   -
     Advances from FHLB                                        636,373             396,461
     Other                                                      33,386             -
                                                       ---------------    ----------------
                                                            13,378,776          11,962,588
                                                       ---------------    ----------------

NET INTEREST INCOME                                         12,885,348          11,700,759

     Provision for loan losses                               1,750,000           1,350,000
                                                       ---------------    ----------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         11,135,348          10,350,759

Noninterest income
     Net securities gains                                       91,035              31,937
     Service charges on deposit accounts                     1,745,997           1,585,554
     ATM fees                                                  363,838             344,454
     Investment commissions                                    413,612             256,296
     Trust revenues                                            125,912             111,087
     Other income                                              608,960             471,047
                                                       ---------------    ----------------
                                                             3,349,354           2,800,375

Noninterest expenses
     Salaries and employee benefits                          4,779,387           4,127,671
     Occupancy                                                 497,968             550,088
     Furniture and equipment                                   888,780             795,971
     FDIC insurance                                             35,876              35,224
     Data processing                                           458,894             436,563
     Marketing                                                 346,821             375,660
     Supplies                                                  316,030             324,884
     Other expenses                                          1,876,691           1,739,439
                                                       ---------------    ----------------
                                                             9,200,447           8,385,500
                                                       ---------------    ----------------

INCOME BEFORE INCOME TAXES                                   5,284,255           4,765,634

     Income tax expense                                      1,264,866           1,194,866
                                                       ---------------    ----------------

NET INCOME                                             $     4,019,389    $      3,570,768
                                                       ===============    ================

Basic earnings per common share                        $         66.99    $          59.51
                                                       ===============    ================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.

                                                                            F-43
<PAGE>   123


                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 Nine months ended September 30, 1998 and 1997
                                   (Unaudited)

- ------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                                     1998               1997
                                                                                     ----               ----

<S>                                                                             <C>                <C>             
NET INCOME                                                                      $     4,019,389    $      3,570,768

Other comprehensive income
     Net change in unrealized gains on securities available for sale
          Unrealized gains arising during the period                                  1,859,251             964,888
          Reclassification adjustments for
            gains included in net income                                                (91,035)            (31,937)
                                                                                ---------------    ----------------
          Net change in unrealized gains on securities
            available for sale                                                        1,768,216             932,951
     Tax effects                                                                       (700,391)           (369,542)
                                                                                ---------------    ----------------
          Total other comprehensive income                                            1,067,825             563,409
                                                                                ---------------    ----------------
COMPREHENSIVE INCOME                                                            $     5,087,214    $      4,134,177
                                                                                ===============    ================
</TABLE>




See accompanying notes to unaudited consolidated financial statements.

                                                                            F-44
<PAGE>   124



                        SAND RIDGE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Nine months ended September 30, 1998 and 1997
                                   (Unaudited)

- ------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                                   1998                    1997
                                                                                   ----                    ----
<S>                                                                             <C>               <C>             
CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                                                $  4,019,389           $ 3,570,768
      Adjustments to reconcile net income
        to net cash from operating activities
         Depreciation                                                                801,748                732,907
         Provision for loan losses                                                 1,750,000              1,350,000
         Net amortization and accretion of securities                                 89,635                 19,735
         Net securities gains                                                        (91,035)               (31,937)
         Net change in:
             Other assets                                                         (2,588,522)               669,249
             Other liabilities                                                     1,791,305                166,255
                                                                                ------------           -----------
                Total adjustments                                                  1,753,131              2,906,209
                                                                                ------------           -----------
                    Net cash from operating activities                             5,772,520              6,476,977

CASH FLOWS FROM INVESTING ACTIVITIES
      Net change in loans receivable                                             (23,400,935)            (8,628,528)
      Purchase of:
         Securities available for sale                                          (121,072,034)           (46,166,572)
         Premises and equipment                                                     (594,014)              (476,964)
      Proceeds from:
         Sales of securities available for sale                                   12,239,325             14,740,066
         Maturities and calls of securities available for sale                    48,741,879              9,559,731
         Principal payments on securities available for sale                      13,519,586              7,039,187
         Recoveries on loans charged-off                                             227,119                179,762
                                                                                ------------           -----------
             Net cash from investing activities                                  (70,339,074)           (23,753,318)
</TABLE>



(Continued)

                                                                            F-45
<PAGE>   125




                        SAND RIDGE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Nine months ended September 30, 1998 and 1997
                                   (Unaudited)

- ------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                          1998           1997
                                                          ----           ----
<S>                                                  <C>            <C>             
CASH FLOWS FROM FINANCING ACTIVITIES
     Net change in deposits                          $ 58,911,085    $ 20,002,564
     Net change in federal funds purchased             (4,500,000)     (5,600,000)
     Proceeds from securities sold under
        agreements to repurchase                        2,414,450            --
     Repayment of securities sold under agreements
       to repurchase                                   (5,195,450)           --
     Net change in U.S. Treasury demand note              970,186            --
     Proceeds from advances from FHLB                  30,000,000       1,250,000
     Repayment of advances from FHLB                  (17,296,440)     (7,563,715)
     Cash dividends paid                               (1,020,000)       (960,000)
                                                     ------------    ------------
         Net cash from financing activities            64,283,831       7,128,849
                                                     ------------    ------------

Net change in cash and cash equivalents                  (282,723)    (10,147,492)

Cash and cash equivalents at beginning of year         23,009,706      26,075,959
                                                     ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR             $ 22,726,983    $ 15,928,467
                                                     ============    ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     Cash paid during the year for
         Interest                                    $ 13,173,342    $ 12,004,574
         Income taxes                                   3,084,215         640,000
</TABLE>


- --------------------------------------------------------------------------------

See accompanying notes to unaudited consolidated financial statements.

                                                                            F-46
<PAGE>   126






                        SAND RIDGE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           September 30, 1998 and 1997
                                   (Unaudited)

- -----------------------------------------------------------------------------

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and Article 10-01 of Regulation S-X. Accordingly, footnote
disclosures, which would substantially duplicate the disclosures contained in
the most recent audited financial statements, have been omitted. In the opinion
of management of the Corporation, all adjustments necessary for a fair
presentation of such financial information have been included. All such
adjustments are of a normal recurring nature. The results of operations and cash
flows for the nine months ended September 30, 1998 may not be indicative of the
results for the entire year. The accompanying unaudited consolidated financial
statements should be read in conjunction with the notes to consolidated
financial statements contained in the December 31, 1997 consolidated financial
statements.


NOTE 1 - EARNINGS PER COMMON SHARE

Earnings per common share are calculated on the basis of the weighted average
number of shares outstanding. The Corporation has no dilutive potential common
shares. Earnings per common share are based on 60,000 shares for the nine months
ended September 30, 1998 and 1997, respectively.


NOTE 2 - ACCOUNTING STANDARDS IMPLEMENTED IN 1998

Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," requires comprehensive income to be reported for all periods.
Comprehensive income includes both net income and other comprehensive income.
Other comprehensive income includes the change in net unrealized gains and
losses on securities available for sale, net of tax.


NOTE 3 - MERGER AGREEMENT

In December of 1998, the Corporation announced that it had signed a definitive
agreement to be acquired by First Financial Bancorp., parent company of First
National Bank of Southwestern Ohio. The transaction will be structured as a
tax-free exchange and will be accounted for under the pooling-of-interests
method. Transaction related expenses are anticipated to total approximately
$2,400,000, if the transaction is consummated. The expenses are primarily for
investment banker fees which are variable based upon the value of the
consideration to be paid by First Financial Bancorp. These expenses have not
been included in the September 30, 1998 Statement of Income.


                                                                          F-47
<PAGE>   127



                                                                      APPENDIX A




                          PLAN AND AGREEMENT OF MERGER
                                     BETWEEN
                            FIRST FINANCIAL BANCORP.
                                       AND
                        SAND RIDGE FINANCIAL CORPORATION


<PAGE>   128





                                TABLE OF CONTENTS
<TABLE>
                                                                                                               PAGE
                                                                                                               ----

<S>                                                                                                            <C>
1.   Recitals.....................................................................................................1


2.   The Merger...................................................................................................1


3.   Closing......................................................................................................2


4.   Effective Time...............................................................................................2


5.   Governing Law; Articles of Incorporation.....................................................................2


6.   Regulations..................................................................................................2


7.   Directors and Officers.......................................................................................2


8.   Conversion of Shares in the Merger...........................................................................3
         8.1.     FFB's Common Shares.............................................................................3
         8.2.     SRFC's Common Shares............................................................................3
         8.3.     Consideration; Exchange Ratio...................................................................3
         8.4.     Surrender of SRFC Certificates..................................................................3
         8.5.     Fractional Interests............................................................................4


9.   Effect of the Merger.........................................................................................4


10.  Approval of Shareholders.....................................................................................5


11.  SRFC's Representations and Warranties........................................................................5
         11.1.    Organization....................................................................................5
         11.2.    Corporate Authority.............................................................................5
         11.3.    Capitalization..................................................................................5
         11.4.    List of Information.............................................................................5
         11.5.    Subsidiaries....................................................................................5
         11.6.    Financial Statements............................................................................6
         11.7.    Intellectual Property...........................................................................6
         11.8.    Good and Marketable Title.......................................................................7
</TABLE>
<PAGE>   129
<TABLE>
<S>                                                                                                            <C>
         11.9.    Taxes...........................................................................................7
         11.10.   Absence of Certain Changes or Events............................................................7
         11.11.   Contracts and Agreements........................................................................8
         11.12.   Insurance.......................................................................................8
         11.13.   Litigation and Proceedings......................................................................8
         11.14.   Material Contracts; No Conflict with Other Instruments..........................................8
         11.15.   Governmental Authorizations and Filings.........................................................9
         11.16.   Consents and Approvals..........................................................................9
         11.17.   Brokers.........................................................................................9
         11.18.   Environmental Matters...........................................................................9
         11.19.   Validity of Contemplated Transactions..........................................................10
         11.20.   Year 2000 Compliance...........................................................................10


12.  FFB's Representations and Warranties........................................................................12
         12.1.    Organization...................................................................................12
         12.2.    Corporate Authority............................................................................12
         12.3.    Subsidiaries...................................................................................12
         12.4.    Capitalization.................................................................................12
         12.5.    Shares to be Issued............................................................................12
         12.6.    Financial Statements...........................................................................13
         12.7     Environmental Matters..........................................................................13
         12.8     Absence of Certain Changes or Events...........................................................14
         12.9.    Litigation and Proceedings.....................................................................14
         12.10.   Consents and Approvals.........................................................................14
         12.11.   Brokers........................................................................................15
         12.12.   Validity of Contemplated Transactions..........................................................15
         12.13    Year 2000 Compliance...........................................................................15
         12.14    Intellectual Property..........................................................................15
         12.15    Good and Marketable Title......................................................................16
         12.16    Taxes..........................................................................................16
         12.17    Material Contracts; No Conflict with Other Instruments.........................................16


13.  Conduct of Business Pending the Merger......................................................................17
         13.1.    Negative Covenants of SRFC.....................................................................17
         13.2.    Dividends......................................................................................17
         13.3.    SRFC Efforts...................................................................................17
         13.4.    PURCHASE OF "TAIL COVERAGE"....................................................................17


14.  Additional Agreements.......................................................................................17
         14.1.    Access and Information.........................................................................17
         14.2.    Confidentiality................................................................................18
         14.3.    Registration Statement.........................................................................18
         14.4.    Employee Benefits..............................................................................18
         14.5.    Expenses.......................................................................................19
</TABLE>


                                       ii
<PAGE>   130
<TABLE>
<S>                                                                                                            <C>
         14.6.    Further Assurances.............................................................................19
         14.7.    Pooling........................................................................................20
         14.8.    Audited Financial Statements...................................................................20
         14.9.    Press Releases.................................................................................20
         14.10.   Seller Affiliates..............................................................................20
         14.11.   Board Representation...........................................................................21


15.  Conditions Precedent; Terminations..........................................................................21
         15.1.    Conditions Precedent to Obligations of the Parties.............................................21
         15.2.    Conditions Precedent to FFB's Obligations......................................................21
         15.3.    Conditions Precedent to SRFC's Obligation......................................................23
         15.4.    Termination and Abandonment....................................................................24
         15.5.    Effect of Termination..........................................................................27
         15.6.    Expenses.......................................................................................27
         15.7.    Survival of Representations....................................................................27


16.  General Provisions..........................................................................................27
         16.1.    Definitions....................................................................................27
         16.2.    Amendments.....................................................................................27
         16.3.    Notices........................................................................................28
         16.4.    Binding Nature of Agreement....................................................................28
         16.5.    Assignment.....................................................................................29
         16.6.    Governing Law..................................................................................29
         16.7.    Counterparts...................................................................................29
</TABLE>

                                      iii

<PAGE>   131




                          PLAN AND AGREEMENT OF MERGER

                                     BETWEEN

                            FIRST FINANCIAL BANCORP.

                                       AND

                        SAND RIDGE FINANCIAL CORPORATION



         THIS PLAN AND AGREEMENT OF MERGER (the "Agreement") is made and entered
into this 16th day of December, 1998 by and between FIRST FINANCIAL BANCORP.
("FFB"), an Ohio corporation and registered as a bank holding company under the
Bank Holding Company Act of 1956 and a savings and loan holding company under
the Savings and Loan Holding Company Act, and SAND RIDGE FINANCIAL CORPORATION
("SRFC"), an Indiana corporation and registered as a bank holding company under
Bank Holding Company Act of 1956.

1.       RECITALS.

         1.1 FFB is a corporation duly organized and existing under the laws of
the State of Ohio, having been incorporated on August 8, 1982. SRFC is a
corporation duly organized and existing under the laws of the State of Indiana,
having been incorporated on May 24, 1984.

         1.2 The Boards of Directors of FFB and SRFC deem it advisable for the
general welfare and advantage of FFB and SRFC and their respective shareholders
that SRFC merge with and into FFB pursuant to this Agreement and pursuant to the
applicable provisions of the laws of the States of Ohio and Indiana and the
United States of America, subject to the approval of various federal and state
regulatory authorities.

         1.3 As of November 6, 1998 the authorized capital stock of FFB
consisted of 60,000,000 common shares, without par value ("FFB Common Shares"),
of which 32,921,329 shares were outstanding.

         1.4 As of November 1, 1998, the authorized capital stock of SRFC
consisted of 200,000 shares of common stock, without par value ("SRFC Common
Shares"), of which 60,000 shares were issued and outstanding, and 100,000 shares
of preferred stock, $100 par value, of which no shares were issued and
outstanding.

         NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual agreements herein contained, the parties hereby agree as follows:

2. THE MERGER. Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 4), in accordance with
the applicable statutory provisions of the States of Ohio and Indiana, the
United States of America, and any regulatory approvals, SRFC will be merged with
and into FFB and the separate corporate existence of 


<PAGE>   132

SRFC shall thereupon cease (the "Merger"). FFB will be the surviving corporation
in the Merger (said corporation hereafter being sometimes called the "Surviving
Corporation"), and the separate corporate existence of FFB with all of its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger. Sand Ridge Bank (the "Bank"), a wholly owned subsidiary of SRFC,
will continue as a wholly owned subsidiary of the Surviving Corporation.

3. CLOSING. The closing of the Merger (the "Closing") shall take place on the
earlier of the following date (the "Closing Date"): July 31, 1999; or (ii) if
all conditions precedent to the consummation of this Agreement as set forth in
Section 15 hereof have been satisfied on or before the fifteenth day of any
given month, the parties will consummate this Agreement as of the end of the
same month; provided, however, that if the conditions precedent to the
consummation of this Agreement are satisfied on or after the sixteenth day of
any month through the last day of such month, as of the end of the month
immediately following such month; or (iii) on such other date as the parties
mutually agree.

4. EFFECTIVE TIME. As soon as practicable following the Closing, FFB will cause
(i) the Articles of Merger in the form attached hereto as Exhibit A (the "Ohio
Articles of Merger") to be filed with the office of the Secretary of State of
the State of Ohio (the "Ohio Secretary of State") and (ii) Articles of Merger in
the form attached hereto as Exhibit B (the "Indiana Articles of Merger") to be
filed with the office of the Secretary of State of the State of Indiana (the
"Indiana Secretary of State"). The Merger will become effective (the "Effective
Time") on the date on which the latest of the following actions will have been
completed: (i) at the time when the Ohio Articles of Merger are accepted for
filing by the Ohio Secretary of State, (ii) at the time when the Indiana
Articles of Merger are accepted for filing by the Indiana Secretary of State or
(iii) such later time agreed to by FFB and SRFC and established under the Ohio
and Indiana Articles of Merger but not later than 30 days after the Closing
Date.

5. GOVERNING LAW; ARTICLES OF INCORPORATION. The laws which are to govern the
Surviving Corporation are the laws of the State of Ohio. The Articles of
Incorporation of FFB, at the Effective Time, will be the Articles of
Incorporation of the Surviving Corporation until the same will be further
amended or altered in accordance with the provisions thereof.

6. REGULATIONS. The Regulations of FFB at the Effective Time will be the
Regulations of the Surviving Corporation until the same will be altered or
amended in accordance with the provisions thereof.

7. DIRECTORS AND OFFICERS. The directors of FFB at the Effective Time will be
the directors of the Surviving Corporation until their respective successors are
duly elected and qualified. Subject to the authority of the Board of Directors
as provided by law and the Regulations of the Surviving Corporation, the
officers of FFB at the Effective Time will be the officers of the Surviving
Corporation. The directors of Bank at the Effective Time will be the directors
of Bank until their respective successors are duly elected and qualified.
Subject to the authority of the board of directors of Bank as provided by law
and the By-Laws of Bank, the officers of Bank at the Effective Time will
continue to serve as officers of Bank after the Effective Time.

                                       2
<PAGE>   133

8. CONVERSION OF SHARES IN THE MERGER. The mode of carrying into effect
the Merger provided in this Agreement and the manner and basis of converting the
shares of the constituent corporation into shares of the Surviving Corporation
are as follows: 

         8.1 FFB'S COMMON SHARES. None of the FFB Common Shares issued at the
Effective Time will be converted as a result of the Merger, but all such shares
(including shares held in the treasury) will remain issued shares of FFB.

         8.2 SRFC'S COMMON SHARES. At the Effective Time, each SRFC Common Share
outstanding immediately prior to the Effective Time (except as otherwise
provided in Section 8.5) will by virtue of the Merger be converted into FFB
Common Shares as determined pursuant to Section 8.3 below, and each SRFC Common
Share held in treasury immediately prior to the Effective Time will be
cancelled.

8.3 CONSIDERATION; EXCHANGE RATIO. 

         8.3.1 Each SRFC Common Share issued and outstanding immediately prior
to the Effective Time shall, subject to Section 15.4.7, be converted into, and
become exchangeable for, a number (the "Exchange Ratio") of FFB Common Shares
(the "Merger Consideration"), the numerator of which shall be 5,115,000 (which
number is adjusted for the 10% stock dividend declared by FFB on November 24,
1998) and the denominator of which shall be the number of SRFC Common Shares
outstanding, on a fully diluted basis, immediately prior to the Effective Time;
provided, however that dissenting shareholders of SRFC who perfect their rights
under the laws of the State of Indiana will instead receive cash in such amount
per SRFC Common Share which they own as determined in accordance with Indiana
Business Corporation Law I.C. ss. 23-1-44. In the event that prior to the
Effective Time the outstanding FFB Common Shares shall have been increased,
decreased or changed into or exchanged for a different number or kind of shares
or securities by reorganization, recapitalization, reclassification, stock
dividend, stock split or other like changes in FFB's capitalization, all without
FFB receiving consideration therefor, then an appropriate and proportionate
adjustment shall be made in the Exchange Ratio. As of the date of this
Agreement, the Exchange Ratio is 85.25.

8.3.2 At the Effective Time, each of the then issued and outstanding SRFC Common
Shares will be cancelled and extinguished and, in consideration and in exchange
therefor, the holders thereof will be entitled, upon compliance with Section
8.4, to receive from FFB the number of FFB Common Shares as determined pursuant
to Section 8.3.1. 

8.3.3 After determining the Exchange Ratio, each holder of
outstanding SRFC Common Shares after the Effective Time, upon surrender to FFB,
will be entitled to receive one or more stock certificates of FFB into which the
SRFC Common Shares so surrendered will have been converted as aforesaid. No
dividends that may have been declared by FFB after the Effective Time and prior
to the surrender of SRFC Common Shares will be paid until such shares have been
presented for exchange to FFB. 

         8.4 SURRENDER OF SRFC CERTIFICATES. As soon as practicable after the
Effective Time, the stock certificates representing SRFC Common Shares issued
and outstanding at the Effective Time will be surrendered for exchange to FFB.
As promptly as practicable after the Effective



                                       3
<PAGE>   134

Time, FFB will cause the Registrar and Transfer Company (the "Exchange Agent")
to prepare and mail to each holder of record of an outstanding certificate or
certificates prior thereto representing SRFC Common Shares a letter of
transmittal containing instructions for the surrender of the certificate or
certificates of SRFC held by such holder. Upon surrender of the certificate or
certificates that prior thereto represented SRFC Common Shares in accordance
with instructions set forth in the letter of transmittal, such holder will be
entitled to receive in exchange therefor, certificates representing the number
of whole shares of FFB into which the shares represented by the certificate or
certificates so surrendered will have been converted, without interest. The
Exchange Agent will not be obligated to deliver certificates for FFB Common
Shares to a former stockholder of SRFC until such former stockholder surrenders
his or her certificate or certificates representing shares of SRFC or, in
default thereof, an appropriate affidavit of loss and indemnity agreement or
bond as may be required by FFB. Until so surrendered for exchange, each such
stock certificate formerly representing SRFC Common Shares will be deemed for
all corporate purposes (except for the payment of dividends, which will be
subject to the exchange of stock certificates as above provided) to evidence the
ownership of the number of common shares of the Surviving Corporation that the
holder thereof would be entitled to receive upon its surrender to FFB.

         8.5 FRACTIONAL INTERESTS. No fractional FFB Common Shares or
certificate or scrip representing the same will be issued. In lieu thereof, each
holder of SRFC's Common Shares having a fractional interest arising upon such
conversion will be paid in cash by FFB for the additional fractional interest.
Such payment will be equal to the fractional interest times the Average Closing
Price as defined in Section 15.4.7. This amount will not be paid to any holder
of SRFC's Common Shares who will not have surrendered his or her certificates
for exchange pursuant to Section 8.4 hereof, and FFB will retain such amount
until such time as such certificates have been surrendered.

         9. EFFECT OF THE MERGER. At the Effective Time, the Surviving
Corporation will succeed to, without other transfer, and will possess and enjoy,
all the rights, privileges, immunities, powers and franchises both of a public
and a private nature, and be subject to all the restrictions, disabilities and
duties of each of FFB and SRFC, and all the rights, privileges, immunities,
powers and franchises of each of FFB and SRFC and all property, real, personal
and mixed, and all debts due to either of said constituent corporations on
whatever account, for stock subscriptions as well as for all other things in
action or belonging to each of said corporations, will be vested in the
Surviving Corporation; and all property, rights, privileges, immunities, powers
and franchises, and all and every other interest will be thereafter as
effectually the property of the Surviving Corporation as they were of FFB and
SRFC, respectively, and the title to any real estate vested by deed or otherwise
in either of FFB and SRFC will not revert or be in any way impaired by reason of
the Merger; provided, however, that all rights of creditors and all liens upon
any property of either of FFB or SRFC will be preserved unimpaired, limited in
lien to the property affected by such liens at the Effective Time, and all
debts, liabilities and duties of said constituent corporations, respectively,
will thenceforth attach to the Surviving Corporation and may be enforced against
it to the same extent as if said debts, liabilities and duties had been incurred
or contracted by the Surviving Corporation.



                                       4
<PAGE>   135

10. APPROVAL OF SHAREHOLDERS. This Agreement will be submitted to the
shareholders of SRFC for adoption and approval on or before June 30, 1999 or
such later date as the Boards of Directors of FFB and SRFC mutually approve.

11. SRFC'S REPRESENTATIONS AND WARRANTIES. SRFC represents and warrants to FFB
as of the date hereof and as of the Closing Date as follows:

         11.1 ORGANIZATION. SRFC is a corporation duly organized and validly
existing under the laws of the State of Indiana and is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended. SRFC has
the corporate power to carry on its businesses as they are now being conducted
and is qualified to do business in each jurisdiction in which the character and
location of the assets owned by it, or the nature of the business transacted by
it, requires qualification.

         11.2 CORPORATE AUTHORITY. SRFC has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate,
subject only to the approval of the Merger by the holders of at least two-thirds
of the outstanding SRFC Common Shares entitled to vote on the matter, the
Merger. This Agreement is a valid and binding agreement of SRFC enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").

         The Board of Directors of SRFC (i) has unanimously adopted the plan of
merger set forth herein and approved this Agreement and the other transactions
contemplated hereby, (ii) has declared that the Merger and this Agreement and
the other transactions contemplated hereby are advisable and (iii) has received
the opinion of its financial advisor, Hovde Financial, Inc., to the effect that
as of the date hereof, the Exchange Ratio to be received by the holders of the
SRFC Common Shares in the Merger is fair to such holders from a financial point
of view.

         11.3 CAPITALIZATION. SRFC's capitalization consists of 200,000
authorized SRFC Common Shares, of which, as of the date hereof, 60,000 shares
were issued and outstanding, and 100,000 preferred shares, $100 par value, of
which no shares are issued and outstanding. Each SRFC Common Share was validly
issued, fully paid and non-assessable, and each outstanding SFRC Common Share is
entitled to one vote. There are no outstanding subscriptions, options, warrants,
calls or rights of any kind relating to or providing for the issuance, sale,
delivery or transfer of any class of securities of SRFC.

         11.4 LIST OF INFORMATION. For the due diligence examination in
November, 1998, SRFC delivered to FFB certain information. Such information and
the copies of documents furnished to FFB are accurate in all material respects
as of the date furnished.

         11.5 SUBSIDIARIES. SRFC has one wholly owned Subsidiary, the Bank. SRFC
has no other Subsidiaries. Bank is a state bank duly organized and validly
existing under the laws of the State of Indiana. Bank has the corporate power to
carry on its businesses as they are now being conducted and is qualified to do
business in each jurisdiction in which the character and location 



                                       5
<PAGE>   136

of the assets owned by it, or the nature of the business transacted by it,
requires qualification. All of the outstanding shares of the stock of Bank are
validly issued, fully paid and non-assessable, except as provided under federal
banking law, and all such shares are owned by SRFC free and clear of all liens,
claims, charges or encumbrances. There are no outstanding subscriptions,
options, warrants, calls or rights of any kind relating to or providing for the
issuance, sale, delivery or transfer of any class of securities of Bank.

         11.6 FINANCIAL STATEMENTS. SRFC has delivered to FFB copies of its
consolidated balance sheets as of December 31, 1997, 1996, and 1995 and the
related consolidated statements of earnings, changes in shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1997 in
each case including the notes thereto, all certified by Crowe, Chizek and
Company LLP, independent public accountants, or one of said accountant's
predecessor firms.

         All of such financial statements present fairly the financial positions
as of and at the dates shown and the results of operations for the periods
covered thereby. They have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods indicated,
except as otherwise indicated in the notes thereto. Each of the balance sheets
presents a true and complete statement in all material respects as of its date
of SRFC's financial condition. All material liabilities of SRFC (including any
contingent liabilities), as of the date of each balance sheet, were properly
accrued in such balance sheet or disclosed in the related footnotes, in
accordance with generally accepted accounting principles.

         11.7 INTELLECTUAL PROPERTY. Except as disclosed in the Disclosure
Schedule, SRFC and Bank do not have knowledge of any valid grounds for any bona
fide claims (i) to the effect that their licensing or use of any product as now
used, sold or licensed or proposed for use, sale or license by SRFC or Bank
infringes on any copyright, patent, trademark, trade name, service mark or trade
secret; (ii) against the use by SFRC and Bank of any copyrights, patents,
trademarks, trade names, service marks, trade secrets, technology, know-how or
computer software programs and applications used in the business of SRFC and
Bank as currently conducted or as proposed to be conducted; (iii) challenging
the ownership, validity or effectiveness of any of SRFC's and Bank's
Intellectual Property Rights or other trade secret material of SRFC and Bank; or
(iv) challenging the license or legally enforceable right to use Third-Party
Intellectual Rights by SRFC and Bank.

         As used in this Agreement, the term (x) "Intellectual Property" means
all patents, trademarks, trade names, service marks, copyrights and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or materials;
(y) "Third-Party Intellectual Property Rights" means any third-party patents,
trademarks, trade names, service marks and copyrights; and (z) "SRFC's and
Bank's Intellectual Property Rights" means the patents, registered and material
unregistered trademarks, trade names and service marks, registered copyrights
and any applications therefor owned by SRFC or Bank.


                                       6
<PAGE>   137



         11.8 GOOD AND MARKETABLE TITLE. SRFC and Bank have and on the Closing
Date will have good and marketable title in fee simple to all lands and
buildings shown as assets in their records and books of account, free and clear
of all liens, encumbrances and charges except as reflected in the aforesaid
financial statements and except for current taxes and assessments not delinquent
or being contested in good faith and liens, encumbrances and charges shown in
their records and books of account which are not substantial in character or
amount and do not materially detract from the value or interfere with the use of
the properties subject thereto or affected thereby. SRFC and Bank have and on
the Closing Date will have valid leases under which they are entitled to occupy
and use in their business all real property of which they are lessees, and SRFC
and Bank have no knowledge of any material default under any such lease. As of
the date hereof, neither SRFC nor Bank has title to any real property or
buildings as a result of foreclosure or by otherwise realizing on collateral
held by either of them. Neither SRFC nor Bank will take action to foreclose or
otherwise realize on any real property collateral held by either of them prior
to the Closing Date without the prior consent of FFB, which consent will not be
unreasonably withheld.

         SRFC and Bank have and on the Closing Date will have good and
marketable title to the machinery, equipment, merchandise, materials, supplies
and other property of every kind, tangible or intangible, contained in their
offices and other facilities or shown as assets in their records and books of
account, except for properties held in trust or other fiduciary capacity or
personal property of SFRC employees or Bank employees contained in their
offices, free and clear of all liens, encumbrances and charges except as
reflected in the aforesaid financial statements and except for liens,
encumbrances and charges, if any, which do not materially detract from the value
of or interfere with the use of the properties subject thereto or affected
thereby. SRFC and Bank have and will have immediately prior to the Closing Date
valid leases under which they are entitled to use in their business all personal
property of which they are lessees, and neither SRFC nor Bank has any knowledge
of any material default under any such leases.

         11.9 TAXES. SRFC and Bank have paid all taxes imposed by the United
States or by any state, municipality, subdivision or instrumentality of the
United States or by any other taxing authority, which are due or payable by
either SRFC or Bank, that the failure to pay would have a material and adverse
effect on SRFC and/or Bank, and all claims asserted against each of them have
been paid in full or are adequately accrued in the records and books of accounts
of each of SRFC and Bank and will be so paid or provided for on the Closing
Date. All income tax returns for each of SRFC and Bank have been filed with the
taxing authorities having jurisdiction thereof through December 31, 1997, and no
extension of time for the assessment of deficiencies for any such years is in
effect. Neither SRFC nor Bank has knowledge of any unassessed tax deficiency
proposed or threatened against it.

         11.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
disclosure schedule attached hereto (the "Disclosure Schedule), from December
31, 1997 to the date hereof, there has not been: 

         11.10.1 any material change in the corporate status, business,
operations or financial condition of SRFC and Bank, other than changes in the
ordinary course of business;



                                       7
<PAGE>   138

               11.10.2 any declaration, setting aside or payment of any dividend
or other distribution, with respect to SRFC's Common Shares except for the
payment in January 1998 to the SRFC shareholders of a regular annual dividend in
the amount of $17.00 per share in respect of the fiscal year ended 1997; and

               11.10.3 any other event or condition of any character which has
materially and adversely affected the corporate status, business, operations or
financial condition of SRFC and Bank taken as a whole.

         11.11 CONTRACTS AND AGREEMENTS. Except for agreements described in the
Disclosure Schedule, neither SRFC nor Bank is a party to: (a) any sales agency
agreement not subject to termination without liability on notice of 60 days or
less; (b) any contract for the purchase or sale of any materials, products or
supplies which contains any escalator, renegotiation or redetermination clause
or which commits it for a fixed term greater than 36 months or which provides
for annual payments greater than $50,000; (c) any contract of employment with
any officer or employee not terminable at will without liability; (d) any
pension, retirement or profit sharing plan or agreement not cancelable within 60
days without liability; (e) any management or consultation agreement not
terminable at will without liability; (f) any lease, license, royalty, union
agreement or loan agreement except those entered into in the ordinary course of
business and which are terminable without liability on notice of 60 days or less
or which has an annual contract price less than $50,000; (g) any contract,
accepted order or commitment for the purchase or sale of materials, products or
supplies having a total annual contract price in excess of $50,000; or (h) any
other agreement which materially affects the business, properties, assets or
condition (financial or otherwise) of SRFC, or which was entered into other than
in the ordinary and usual course of business.

         11.12 INSURANCE. SRFC is adequately insured with respect to risks
normally insured against by companies similarly situated. SRFC has previously
delivered copies, of all existing insurance policies of SRFC and Bank, including
but not limited to group insurance and pension plans. All such policies are in
full force and effect. The Disclosure Schedule also contains a list of all
claims for insured losses in excess of $10,000 filed by SRFC and Bank during the
three-year period immediately preceding the date of this Agreement, including
but not limited to worker's compensation, automobile and general liability.

         11.13 LITIGATION AND PROCEEDINGS. Except as set forth in the Disclosure
Schedule, there is no suit, action or legal or administrative proceeding pending
or, to the knowledge of SRFC, threatened, against it or Bank, which, if
adversely determined, might materially and adversely affect the financial
condition, on a consolidated basis, of SRFC and Bank or the conduct of their
businesses, nor is there any decree, injunction or order of any court,
governmental department or agency outstanding against SRFC or Bank having any
such effect.

         11.14 MATERIAL CONTRACTS; NO CONFLICT WITH OTHER INSTRUMENTS. Neither
SRFC nor Bank is in default under the terms of any outstanding contract,
agreement, lease or other commitment which default would have a material and
adverse effect, on a consolidated basis, on SRFC and Bank, and on the Closing
Date, the consummation of the transactions contemplated by this Agreement will
not result in the breach of any term or provision of or constitute a default
under any indenture, mortgage, deed of trust or other agreement or instrument to
which SRFC or 



                                       8
<PAGE>   139

Bank is a party, which default or breach would have a material and adverse
effect, on a consolidated basis, on SRFC and Bank.

         11.15 GOVERNMENTAL AUTHORIZATIONS AND FILINGS. Each of SRFC and Bank
has all valid and sufficient licenses, franchises, permits and other
governmental authorizations for all businesses presently carried on by SRFC and
Bank, respectively, and has filed with the Federal Reserve Board all reports
necessary to the conduct of its business as a bank holding company and is
current in all respect as to such filings. SRFC has previously delivered to FFB
its Annual Reports on Forms FRY-6 and FRY-9 for 1993, 1994, 1995, 1996 and 1997,
proxy materials for its Annual Meetings in such years and will provide proxy
materials for its Annual Meeting in 1999. Bank has previously delivered to FFB
its Year-End Call Reports for 1994, 1995, 1996 and 1997 and will deliver 1998,
when available, as filed with the Federal Deposit Insurance Corporation.

         11.16 CONSENTS AND APPROVALS. The only consent and approval required to
be obtained by or on behalf of SRFC or Bank on or prior to the Closing Date is
the approval of the SRFC shareholders in the form required by the Financial
Institutions Law of the State of Indiana. Other consents and approvals required
to be obtained prior to the Effective Time are set forth in Section 12.12 below.

         11.17 BROKERS. Neither SRFC, Bank nor any of their officers, directors
or employees have employed any broker or finder or incurred any liability for
any financial advisory fees, brokerage fees, commissions or finders' fees in
connection with this Agreement or with the transactions contemplated hereby
except that SRFC has retained Hovde Financial, Inc. ("Hovde") to perform various
brokerage services in connection with this transaction. SFRC is liable for and
will pay all amounts due Hovde.

         11.18 ENVIRONMENTAL MATTERS. For purposes hereof, "environmental laws"
means all applicable federal, state or local statutes, laws, ordinances, codes,
rules, regulations and guidelines (including consent decrees and administrative
orders) relating to public health and safety and protection of the environment
and natural resources.

               11.18.1 Except as set forth in the Disclosure Schedule, to the
best knowledge of SRFC and Bank, to the extent required, SRFC and Bank have
filed all notices, permit applications and other required governmental
submissions and have obtained all permits, licenses and other authorizations
which are required and which are material in connection with the conduct of
their respective businesses under all applicable environmental laws, including
approvals relating to emissions, discharges, releases or threatened releases,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals, new or used petroleum products, industrial, toxic or
hazardous substances or solid wastes into the environment (including, without
limitation, ambient air, surface water, groundwater, land or sewers).

               11.18.2 Except as set forth in the Disclosure Schedule, to the
extent required, each of SRFC and Bank is in compliance, in all material
respects, in the conduct of its business with all terms and conditions of the
necessary permits, licenses and authorizations, and to the best of their
knowledge is also in compliance in all material respects with all other
applicable 



                                       9
<PAGE>   140

limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such environmental laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved under such
environmental laws.

               11.18.3 Except as set forth in the Disclosure Schedule, neither
SRFC nor Bank is aware of, nor has either of SRFC or Bank received notice of,
any past or present events, conditions, circumstances, activities, practices,
incidents, actions or plans which may materially interfere with or prevent
compliance or continued compliance in the conduct of its business with such
environmental laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
under such environmental laws, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment (including, without limitation, ambient air,
surface water, groundwater, land or sewers), of any pollutant, contaminant,
chemical, or industrial, toxic or hazardous substance or waste or new or used
petroleum products.

               11.18.4 Except as set forth in the Disclosure Schedule, neither
SRFC nor Bank is aware of, nor has either of SRFC or Bank received notice of,
any material civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation, investigation, or
proceeding pending or threatened against either SRFC or Bank relating in any way
to the environmental laws or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved under such environmental laws.

               11.18.5 Except as set forth in the Disclosure Schedule, to the
best knowledge of each of SRFC and Bank, there is no asbestos containing
material on the properties of SRFC or Bank that violates any environmental law
or is in need of removal or repair.

         11.19 VALIDITY OF CONTEMPLATED TRANSACTIONS. Except as set forth in the
Disclosure Schedule, the execution, delivery and performance of this Agreement
will not: (i) violate, or conflict with, or require any consent under, or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any lien upon any of the assets of either of SRFC or
Bank, under any of the terms, conditions or provisions of the Articles of
Incorporation or By-Laws of SRFC and the Articles of Association or By-Laws of
Bank, or of any note, bond, mortgage, indenture, deed of trust, material
license, lease, agreement or other instrument or obligation to which either of
SRFC or Bank is a party or by which either of SRFC or Bank or any of their
assets may be bound or affected or (ii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to SRFC, Bank or any of their
assets.

         11.20 YEAR 2000 COMPLIANCE. Except as set forth in the Disclosure
Schedule and a preliminary Millennium Management Report dated December 1998 on
SRFC Year 2000 Preparedness, the software and hardware operated by SRFC and Bank
are capable of providing or are being adapted or replaced to provide
uninterrupted millennium functionality to record, 



                                       10
<PAGE>   141

store, process and present calendar dates falling on or after January 1, 2000
and date-dependent data in substantially the same manner and with the same
functionality as such software records, stores, processes and presents such
calendar dates and date-dependent data as of the date hereof, except for the
failure to have such capability which would not, individually or in the
aggregate, be reasonably likely to cause a material adverse effect upon the
business, financial condition and operations of SRFC and Bank. SRFC and Bank
have complied in all material respects with any and all programs, guidelines and
statements relating to Year 2000 issued by the Federal Financial Institutions
Examination Council. 

         11.21 EMPLOYEE BENEFIT PLANS. For purposes hereof, "ERISA" means the
Employee Retirement Income Security Act as amended.

               11.21.1 The Disclosure Schedule lists each employee benefit plan,
arrangement, practice, contract or agreement, whether formal or informal,
written or unwritten, and whether applicable to one or more persons, now or ever
maintained or contributed to by SRFC or Bank, including but not limited to
employee welfare benefit plans and employee pension benefit plans as defined in
Sections 3(1) and 3(2) of the Employee Retirement Income Security Act ("ERISA"),
nonqualified deferred compensation plans, medical plans, disability plans, life
insurance plans, severance pay plans, educational assistance plans, cafeteria
plans, flexible spending accounts, stock option plans or stock purchase plans
("Benefit Plans"). Except as disclosed in the Disclosure Schedule, neither SRFC
nor Bank ever maintained or contributed to any defined benefit plan (as defined
in Section 3(35) of ERISA), multiemployer plan (as defined in Section 3(37) of
ERISA), medical plan providing benefits after termination of employment (except
for continuation coverage required by the federal law known as COBRA), or
severance pay plan or arrangement. Except for SRFC and Bank, there is no trade
or business, whether or not incorporated, which, together with SRFC and/or Bank,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code.

               11.21.2 For each Benefit Plan, SRFC and Bank have made available
to FFB a copy of the plan and any relevant trust agreements, the summary plan
description, the latest determination letters issued by the Internal Revenue
Service, the latest annual report, the latest report of any trustee or insurance
company providing benefits under the Benefit Plan, and the latest actuarial
valuation or statement of individual accounts.

               11.21.3 Except as disclosed in the Disclosure Schedule, each
Benefit Plan at all times has been maintained and operated in substantial
compliance with all applicable laws and regulations, including but not limited
to laws and regulations concerning eligibility for favorable tax treatment and
those requiring the filing of reports. Except as disclosed on the Disclosure
Schedule, there are no claims, no audits or investigations by any federal or
state agency and no litigation pending or threatened with respect to any Benefit
Plan. Except for routine payments due on insurance contracts and routine
deposits to any 401(k) plan of SRFC or Bank, neither SRFC nor Bank has any
unsatisfied liability to any person (including but not limited to governmental
agencies) with respect to any Benefit Plan, and except to the extent disclosed
on the Disclosure Schedule there are no facts known to SRFC or Bank which could
give rise to such liability. Each Benefit Plan may be terminated on notice of 60
days or less by SRFC or Bank, as applicable, without liability to SRFC or Bank
except for liability for benefits accrued in the normal operation of the plan
prior to the date of termination. 



                                       11
<PAGE>   142
12. FFB'S REPRESENTATIONS AND WARRANTIES. FFB represents and warrants to SRFC as
of the date hereof and as of the Closing Date as follows:

         12.1 ORGANIZATION. FFB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio and is
registered as a bank holding company under Bank Holding Company Act of 1956, as
amended, and a savings and loan holding company under the Savings and Loan
Holding Company Act. FFB has the corporate power to carry on its businesses as
they are now being conducted and is qualified to do business in each
jurisdiction in which the character and location of the assets owned by it, or
the nature of the business transacted by it, requires qualification. FFB has
authority to enter into this Agreement and this Agreement is legally binding.

         12.2 CORPORATE AUTHORITY. FFB has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate the
Merger. This Agreement is a valid and binding agreement of FFB enforceable
against FFB in accordance with its terms, subject to the Bankruptcy and Equity
Exception.

         The FFB Board of Directors has (i) unanimously adopted the plan of
merger set forth herein and approved this Agreement and the other transactions
contemplated hereby, (ii) has declared that the Merger and this Agreement and
the other transactions contemplated hereby are advisable.

         12.3 SUBSIDIARIES. Each indirect and direct subsidiary of FFB which, as
of the effective time of the Merger would be deemed to be a "significant
subsidiary," as such term is defined in Rule 405 of the rules and regulations
promulgated in the Securities Act of 1933, as amended (the "1933 Act"), is
either a national bank or federal savings association duly organized, validly
existing, and in good standing under a charter granted by the Office of the
Comptroller of the Currency or the Office of Thrift Supervision, or is a
corporation or state bank duly organized, validly existing and in good standing
under the laws of the state of its incorporation, and in either case, is duly
qualified to do business and is in good standing in all jurisdictions where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified and where failure to so qualify would have a material and
adverse effect on the consolidated business, financial condition or results of
operations of FFB.

         12.4 CAPITALIZATION. FFB's capitalization consists of 60,000,000
authorized Common Shares, of which, as of November 6, 1998, 32,921,329 shares
were issued and outstanding. Adjusted for a 10% stock dividend declared on
November 24, 1998 and payable on January 4, 1999, FFB's equivalent shares
outstanding as of November 6, 1998 would be 36,213,462. Each issued share is
validly issued, fully paid and non-assessable, and each outstanding share is
entitled to one vote.

         12.5 SHARES TO BE ISSUED. All FFB Common Shares into which the SRFC
Common Shares will be converted will be, immediately after the Effective Time
and when issued upon such conversion, duly and validly authorized and issued,
fully paid and non-assessable, and no shareholder of FFB will have any
pre-emptive right of subscription or purchase in respect 



                                       12
<PAGE>   143

thereof. FFB will take such steps as may be necessary for such shares to be
listed on NASDAQ immediately after the Effective Time.

         12.6 FINANCIAL STATEMENTS. FFB has delivered to SRFC copies of its
consolidated balance sheets as of December 31, 1997, 1996 and 1995, and the
related consolidated statements of earnings, changes in shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1997, in each case including the notes thereto, all certified by Ernst & Young
LLP, independent public accountants, or one of said accountants' predecessor
firms.

         All of such financial statements present fairly the financial positions
as of and at the dates shown and the results of operations for the periods
covered thereby. They have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods indicated,
except as otherwise indicated in the notes thereto. Each of such balance sheets
presents a true and complete statement in all material respects as of its date
of FFB's financial condition. All material liabilities of FFB (including any
contingent liabilities), as of the date of each balance sheet, were properly
accrued in such balance sheet or disclosed in the related footnotes, in
accordance with generally accepted accounting principles.

         12.7 ENVIRONMENTAL MATTERS. For purposes hereof, "environmental laws"
means all applicable federal, state or local statutes, laws, ordinances, codes,
rules, regulations and guidelines (including consent decrees and administrative
orders) relating to public health and safety and protection of the environment
and natural resources.

               12.7.1 Except as set forth in a writing delivered to SRFC, to the
best knowledge of FFB, to the extent required, FFB has filed all notices, permit
applications and other required governmental submissions and has obtained all
permits, licenses and other authorizations which are required and which are
material in connection with the conduct of their respective businesses under all
applicable environmental laws, including approvals relating to emissions,
discharges, releases or threatened releases, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals, new or used
petroleum products, industrial, toxic or hazardous substances or solid wastes
into the environment (including, without limitation, ambient air, surface water,
groundwater, land or sewers).

               12.7.2 Except as set forth in a writing delivered to SRFC, to the
extent required, FFB is in compliance, in all material respects, in the conduct
of its business with all terms and conditions of the necessary permits, licenses
and authorizations, and to the best of its knowledge is also in compliance in
all material respects with all other applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in such environmental laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved under such environmental laws.

               12.7.3 Except as set forth in a writing delivered to SRFC, FFB is
not aware of, nor has FFB received notice of, any past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may materially interfere with or prevent compliance or continued
compliance in the conduct of its business with such environmental laws or any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued,



                                       13
<PAGE>   144

entered, promulgated or approved under such environmental laws, or which may
give rise to any common law or legal liability, or otherwise form the basis of
any claim, action, demand, suit, proceeding, hearing, study or investigation,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment (including,
without limitation, ambient air, surface water, groundwater, land or sewers), of
any pollutant, contaminant, chemical, or industrial, toxic or hazardous
substance or waste or new or used petroleum products.

               12.7.4 Except as set forth in a writing delivered to SRFC, FFB is
not aware of, nor has FFB received notice of, any material civil, criminal or
administrative action, suit, demand, claim, hearing, notice or demand letter,
notice of violation, investigation, or proceeding pending or threatened against
FFB relating in any way to the environmental laws or any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved under such environmental laws.

               12.7.5 Except as set forth in a writing delivered to SRFC, to the
best knowledge of FFB, there is no asbestos containing material on the
properties of FFB that violates any environmental law or is in need of removal
or repair.

         12.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. From September 30, 1998 to
the date hereof, there has not been:

               12.8.1 any change in the corporate status, business, operations
or financial condition of FFB and its consolidated Subsidiaries, other than
changes in the ordinary course of business, and those changes described in any
FFB filings with the Securities and Exchange Commission, none of which are, in
the aggregate, materially adverse to FFB; or

               12.8.2 any other event or condition of any character which has
materially and adversely affected the corporate status, business, operations or
financial condition of FFB and its consolidated Subsidiaries taken as a whole.

         12.9 LITIGATION AND PROCEEDINGS. There is no suit, action or legal or
administrative proceeding pending, or to the knowledge of FFB threatened,
against it or any of FFB's consolidated Subsidiaries, which, if adversely
determined, might materially and adversely affect the financial condition, on a
consolidated basis, of FFB and FFB's consolidated Subsidiaries or the conduct of
their businesses, nor is there any decree, injunction or order of any court,
governmental department or agency outstanding against FFB or any of FFB's
consolidated Subsidiaries having any such effect.

         12.10 CONSENTS AND APPROVALS. The consents and approvals required to be
obtained by FFB on or prior to the Closing Date are set forth below:

               12.10.1 approval and effectiveness of the Registration Statement
referred to in Section 14.3 or of any post effective amendment thereto;


                                       14
<PAGE>   145


               12.10.2 approval of FRB under Bank Holding Company Act;

               12.10.3 approval of the Department of Financial Institutions of
the State of Indiana; and

               12.10.4 any other required consents for the completion of the
Merger.

         12.11 BROKERS. Neither FFB nor any of its officers, directors or
employees have employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finders' fees in
connection with this Agreement or with the transactions contemplated thereby.

         12.12 VALIDITY OF CONTEMPLATED TRANSACTIONS. The execution, delivery
and performance of this Agreement will not: (i) violate, or conflict with, or
require any consent under, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien
upon any of the assets of FFB, under any of the terms, conditions or provisions
of the Articles of Incorporation or Regulations of FFB, or of any note, bond,
mortgage, indenture, deed of trust, material license, lease, agreement or other
instrument or obligation to which FFB is a party or by which FFB or any of its
assets may be bound or affected or (ii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to FFB or any of its assets.

         12.13 YEAR 2000 COMPLIANCE. Except as set forth in the Disclosure
Schedule, the software and hardware operated by FFB and its Subsidiaries are
capable of providing or are being adapted or replaced to provide uninterrupted
millennium functionality to record, store, process and present calendar dates
falling on or after January 1, 2000 and date-dependent data in substantially the
same manner and with the same functionality as such software records, stores,
processes and presents such calendar dates and date-dependent data as of the
date hereof, except for the failure to have such capability which would not,
individually or in the aggregate, be reasonably likely to cause a material
adverse effect upon the business, financial condition and operations of FFB and
its Subsidiaries. FFB and its Subsidiaries have complied in all material
respects with any and all programs, guidelines and statements relating to Year
2000 issued by the Federal Financial Institutions Examination Council.

         12.14 INTELLECTUAL PROPERTY. Except as disclosed in a writing delivered
to SRFC, FFB does not have knowledge of any valid grounds for any bona fide
claims (i) to the effect that its licensing or use of any product as now used,
sold or licensed or proposed for use, sale or license by FFB infringes on any
copyright, patent, trademark, trade name, service mark or trade secret; (ii)
against the use by FFB of any copyrights, patents, trademarks, trade names,
service marks, trade secrets, technology, know-how or computer software programs
and applications used in the business of FFB as currently conducted or as
proposed to be conducted; (iii) challenging the ownership, validity or
effectiveness of any of FFB's Intellectual Property Rights or other trade secret
material of FFB; or (iv) challenging the license or legally enforceable right to
use Third-Party Intellectual Rights by FFB.

                                       15
<PAGE>   146

         As used in this Agreement, the term (x) "Intellectual Property" means
all patents, trademarks, trade names, service marks, copyrights and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or materials;
(y) "Third-Party Intellectual Property Rights" means any third-party patents,
trademarks, trade names, service marks and copyrights; and (z) "FFB's
Intellectual Property Rights" means the patents, registered and material
unregistered trademarks, trade names and service marks, registered copyrights
and any applications therefor owned by FFB.

         12.15 GOOD AND MARKETABLE TITLE. FFB has and on the Closing Date will
have good and marketable title in fee simple to all lands and buildings shown
as assets in its records and books of account, except for properties held in
trust or other fiduciary capacity, free and clear of all liens, encumbrances
and charges except as reflected in the aforesaid financial statements and
except for current taxes and assessments not delinquent or being contested in
good faith and liens, encumbrances and charges shown in their records and books
of account which are not substantial in character or amount and do not
materially detract from the value or interfere with the use of the properties
subject thereto or affected thereby. FFB has and on the Closing Date will have
valid leases under which it is entitled to occupy and use in its business all   
real property of which it is lessee, and FFB has no knowledge of any material
default under any such lease.

         FFB has and on the Closing Date will have good and marketable title to
the machinery, equipment, merchandise, materials, supplies and other property of
every kind, tangible or intangible, contained in its offices and other
facilities or shown as assets in its records and books of account, except for
properties held in trust or other fiduciary capacity or personal property of FFB
employees contained in their offices, free and clear of all liens, encumbrances
and charges except as reflected in the aforesaid financial statements and except
for liens, encumbrances and charges, if any, which do not materially detract
from the value of or interfere with the use of the properties subject thereto or
affected thereby. FFB has and will have immediately prior to the Closing Date
valid leases under which it is entitled to use in its business all personal
property of which it is lessee, and FFB has no knowledge of any material default
under any such lease.

         12.16 TAXES. All taxes imposed by the United States or by any state,
municipality, subdivision or instrumentality of the United States or by any
other taxing authority, which are due or payable by FFB, and all claims asserted
against it have been paid in full or are adequately accrued in the records and
books of accounts of FFB and will be so paid or provided for on the Closing
Date. All income tax returns for FFB have been filed with the taxing authorities
having jurisdiction thereof through 1994, and no extension of time for the
assessment of deficiencies for any such years is in effect. FFB has no knowledge
of any unassessed tax deficiency proposed or threatened against it.

         12.17 MATERIAL CONTRACTS; NO CONFLICT WITH OTHER INSTRUMENTS. Neither
FFB nor any of its consolidated Subsidiaries is in default under the terms of
any material outstanding contract, agreement, lease or other commitment which
default would have a material and adverse effect, on a consolidated basis, on
FFB and FFB's consolidated Subsidiaries, and on the Closing Date, the
consummation of the transactions contemplated by this Agreement will not result
in the breach of any term or provision of or constitute a default under any
material indenture, mortgage, deed or trust or other material agreement or
instrument to which FFB or any of its consolidated



                                       16
<PAGE>   147

Subsidiaries is a party, which default or breach would have a material and
adverse effect, on a consolidated basis, on FFB and FFB's consolidated
Subsidiaries.

13. CONDUCT OF BUSINESS PENDING THE MERGER.

         13.1 NEGATIVE COVENANTS OF SRFC. From and after the date of this
Agreement and prior to the Effective Time, without the prior written consent of
FFB, neither SRFC nor Bank will:

               13.1.1 amend its respective Articles of Incorporation, Articles
of Association, Regulations or By-Laws;

               13.1.2 engage in any material activity or transaction or incur
any material obligation (by contract or otherwise) except in the ordinary course
of business;

               13.1.3 issue rights or options to purchase or subscribe to any
shares of its capital stock or subdivide or otherwise change any such shares; or

               13.1.4 issue or sell any shares of its capital stock.

         13.2 DIVIDENDS. The parties agree that in January 1999 the shareholders
of SRFC shall receive a regular annual dividend, anticipated to be in the amount
of eighteen dollars ($18.00) per share. In addition, in the event that the
Effective Time is after FFB's first quarter 1999 record date, on April 1, 1999,
SRFC's shareholders shall receive a quarterly dividend in the amount of $4.75
per share.

         13.3 SRFC EFFORTS. From and after the date of this Agreement and prior
to the Effective Time, SRFC and Bank will use their respective best efforts to
preserve their business organizations intact; to keep available the services of
their present officers and employees and to preserve the goodwill of their
suppliers, customers and others having business relations with it. During the
same period, SRFC and Bank will not put into effect any material increase in the
compensation or other benefits applicable to officers or other key personnel in
excess of compensation increases paid by SRFC or Bank to similarly situated
employees in accordance with past practices.

         13.4 PURCHASE OF "TAIL COVERAGE". SFRC may purchase "tail coverage" on
its Directors' and Officers' insurance for a period of six years and for a sum
not exceeding $115,000 in the aggregate. From and after the Effective Time,
every director, officer, employee and agent of SRFC and Bank shall be entitled
to indemnification from FFB on the same basis and to the same extent as the
other directors, officers, employees and agents of FFB.

14. ADDITIONAL AGREEMENTS.

         14.1 ACCESS AND INFORMATION. FFB and SRFC hereby agree that each will
give to the other and to the other's accountants, counsel and other
representatives full access during normal business hours throughout the period
prior to the Merger to all of its properties, books, contracts, commitments and
records, and that each will furnish the other during such period with all such
information concerning its affairs as such other party may reasonably request.
In the event of the 



                                       17
<PAGE>   148

termination of this Agreement, each party will, upon the request of the other,
destroy or deliver to the other all documents, work papers and other material
obtained from the other relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, and will use its best
efforts to have any information so obtained and not heretofore made public kept
confidential.

         14.2 CONFIDENTIALITY. From and after the date of this Agreement, the
parties and their respective Subsidiaries will, and they will cause their
respective directors, officers, employees and advisors ("Affiliates") to, treat
all information received from or on behalf of another party hereto or its
Affiliates concerning the business, assets, operations and financial condition
of such other party or its Subsidiaries as confidential, unless and to the
extent that the party receiving such information can demonstrate that such
information was in the public domain, and the party receiving such information
and its Subsidiaries will, and will cause their respective Affiliates to, not
use any such confidential information for any purpose except in furtherance of
the transactions contemplated by this Agreement. In the event this Agreement is
terminated pursuant to Section 15.4 hereof, each party and its Subsidiaries,
upon the request of the other, will promptly return to the other party or
destroy all documents and work papers and all copies thereof, containing any
such confidential information received from or on behalf of another party hereto
in connection with the transactions contemplated by this Agreement. The
covenants contained in this Section are of the essence and will survive any
termination of this Agreement and the closing of the transactions contemplated
by this Agreement.

         14.3 REGISTRATION STATEMENT. FFB will prepare and file a Registration
Statement on Form S-4 under the 1933 Act (the "Registration Statement") to
register a sufficient number of FFB Common Shares which the shareholders of SRFC
will receive pursuant to Section 8 at the Effective Time. FFB will use its best
efforts to cause such Registration Statement to become effective. SRFC and Bank
agree that none of the information supplied or to be supplied by each of them
for inclusion or incorporation by reference in (i) the Registration Statement,
including the joint proxy statement and prospectus (the "Joint Proxy
Statement-Prospectus") constituting a part thereof, will, at the time the
Registration Statement becomes effective under the Securities Act or (ii) the
Joint Proxy Statement-Prospectus and any amendment or supplement thereto will,
at the date of mailing to shareholders and at the times of the meeting of
shareholders of SRFC to be held in connection with the Merger, in either case
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

         Other than information supplied by SRFC and Bank for inclusion or
incorporation by reference in the Registration Statement and the Joint Proxy
Statement-Prospectus, FFB agrees that neither the Registration Statement at the
time the Registration Statement becomes effective under the Securities Act nor
the Joint Proxy Statement-Prospectus at the date of mailing to shareholders and
at the time of the meeting of shareholders of SRFC in either case, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.

14.4     EMPLOYEE BENEFITS.



                                       18
<PAGE>   149

               14.4.1 As soon as practicable after the Effective Time, FFB shall
make available to eligible employees of Bank employee benefit plans comparable
to the employee benefit plans then made available to similarly situated
employees of other FFB subsidiaries. Employee benefit plans, fringe benefits and
other employee practices and policies in effect at Bank immediately prior to the
effective date of the Merger shall continue in effect until modified or
terminated by FFB.

                  The SRFC 401(k) Plan ("SRFC 401(k) Plan") shall continue in
effect until the first January 1 or July 1 coinciding with or next following the
Effective Time (the "Initial Entry Date"). No contributions shall be made to the
SRFC 401(k) Plan with respect to compensation paid after the Initial Entry Date.
On or after the Initial Entry Date, the SRFC 401(k) Plan may be maintained as a
frozen plan for an indefinite period or merged into the FFB Thrift Plan.
Participants in the SRFC 401(k) Plan shall become fully vested in their accounts
under that plan as of the Initial Entry Date to the extent required by law. As
of the Initial Entry Date, the FFB Thrift Plan shall be extended to eligible
employees of Bank. All years of service as of the Effective Time credited to
SRFC and Bank employees will be recognized for purposes of computing eligibility
and vesting for the FFB Thrift Plan.

               14.4.2 If any person who is an SRFC employee as of the Effective
Time is terminated without cause within one year after the Effective Time, Bank,
as a subsidiary of FFB, shall pay such employee a termination payment equal to
one week's salary for each full year of completed service with Bank, upon
receipt from the employee of a release of all claims in form satisfactory to
Bank and FFB; provided, however, that any such terminated employee with less
than four full years of completed services with Bank shall receive a termination
payment equal to four weeks' salary in the aggregate.

               14.4.3 Nothing contained in this Section shall be deemed to
constitute an agreement to employ or continue to employ any employee of Bank or
restrict the right of FFB to modify or terminate any employee benefit plan,
policy or practice applicable to employees of Bank. 

         14.5 EXPENSES. Upon a termination of this Agreement as provided in
Section 15.4, each party will pay all costs and expenses of its performance of
and compliance with all agreements and conditions contained herein on its part
to be performed or complied with, including fees, expenses and disbursements of
its accountants and counsel.

         14.6 FURTHER ASSURANCES. If at any time the Surviving Corporation will
consider or be advised that any further assignment or assurance in law or other
action is necessary or desirable to vest, perfect, or confirm, of record or
otherwise, in the Surviving Corporation, the title to any property or rights of
SRFC acquired or to be acquired by or as a result of the Merger, the proper
officers and directors of SRFC and the Surviving Corporation, respectively, will
be and they hereby are severally and fully authorized to execute and deliver
such proper deeds, assignments and assurances in law and take such other action
as may be necessary or proper in the name of SRFC or the Surviving Corporation
to vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise carry out the purposes of this Agreement.


                                       19
<PAGE>   150

         14.7 POOLING. Neither SRFC, Bank, FFB nor any of its consolidated
Subsidiaries has taken or agreed to take any action that would prevent SRFC and
FFB from accounting for the business combination to be effected by the Merger as
a "pooling of interests." SRFC has received from its independent accountants,
Crowe, Chizek and Company LLP, a letter stating that, based upon Crowe, Chizek
and Company LLP's review of such relevant documents and information which Crowe,
Chizek and Company LLP deemed relevant, such firm is currently unaware of any
reason why the business combination to be effected by the Merger cannot be
accounted for as a "pooling of interests" in regard to SRFC and Bank. FFB has
received from its independent accountants, Ernst & Young LLP, a letter stating
that, based upon Ernst & Young's review of such relevant documents and
information which Ernst & Young LLP deemed relevant, such firm is currently
unaware of any reason why the business combination to be effected by the Merger
cannot be accounted for as a "pooling of interests" in regard to FFB and its
consolidated Subsidiaries.

         14.8 AUDITED FINANCIAL STATEMENTS. As soon as reasonably practicable,
SRFC will deliver to FFB the information required by Item 17 of the instructions
to Registration Statement Form S-4, including but not limited to a copy of its
consolidated balance sheet as of December 31, 1998 (if available), 1997 and 1996
and related consolidated statements of income, changes in shareholders' equity
and cash flows for the fiscal years ended December 31, 1998 (if available),
1997, 1996 and 1995, and such financial statements for the most recently ended
fiscal year will be in the format required by the Securities and Exchange
Commission and will include a Management's Discussion and Analysis of Financial
Condition and Results of Operations section. Upon request by FFB, SRFC will
deliver to FFB a copy of its balance sheet (unaudited) and related statements of
income and cash flows (unaudited) for the nine months period ending September
30, 1998, including the notes thereto. All of such financial statements will
present fairly the financial positions as of and at the dates shown and the
results of operations for the periods covered thereby. They will have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated, except as otherwise
indicated in the notes thereto. All liabilities of SRFC (including any
contingent liabilities), as of the date of each balance sheet, will be properly
accrued in such balance sheet or disclosed in the related footnotes in
accordance with generally accepted accounting principles. Each of such
consolidated statements of earnings of SRFC will be fairly presented in
accordance with generally accepted accounting principles for the periods
indicated.

         14.9 PRESS RELEASES. The parties will consult with each other as to the
form and substance of any press release, written communication with their
shareholders, or other public disclosure of matters related to this Agreement,
and a party will not issue any such press release, written communication, or
public disclosure without the prior consent of the other party, which consent
will not be unreasonably withheld or delayed; provided, however, that nothing
contained herein will prohibit any party, following notification to the other
party, from making any disclosures which its counsel deems necessary to conform
with requirements of law or the rules of NASDAQ.

         14.10 SRFC AFFILIATES. SRFC shall deliver to FFB a letter ("Affiliate
Letter") identifying all persons who are, at the date of the SRFC shareholders
meeting to approve the Merger contemplated by this Agreement, "affiliates" of
SRFC for purposes of Rule 145 under



                                       20
<PAGE>   151

the Securities Act of 1933 ("Seller's Rule 145 Affiliates") and for
purposes of qualifying the Merger for pooling of interests accounting treatment.
SRFC shall use its best efforts to cause each person who is identified as a
"Seller's Rule 145 Affiliate" in such letter to deliver to FFB on or prior to
the Closing Date a written agreement substantially in a form agreed to by the
parties. FFB shall be entitled to place legends on any certificates of FFB
Common Shares issued to such Seller's Rule 145 Affiliates to restrict transfer
of such shares as set forth above; provided, however, such legends shall be
removed at the request of a Seller's Rule 145 Affiliate not earlier than one
year after the Closing Date. 

         14.11 BOARD REPRESENTATION. FFB agrees that, promptly after the
Effective Time, FFB will appoint a member of the Board of Directors of Bank as a
director of FFB (such selected candidate to be mutually agreeable to FFB and the
Board of Directors of Bank).

         14.12 DISCLOSURE SCHEDULE. SRFC shall have delivered a Disclosure
Schedule in final form to FFB by December 21, 1998, and FFB shall have
determined whether such Disclosure Schedule is satisfactory by December 24,
1998.

15. CONDITIONS PRECEDENT; TERMINATIONS.

         15.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES. The
obligations of each of the parties hereto to effect the Merger is subject to the
fulfillment on or prior to the Effective Time of the following conditions
precedent:

               15.1.1 The Merger will have been approved by the FRB or the
delegate, and by any other governmental authority having jurisdiction and any
applicable waiting period will have expired, with no such approval or
authorization containing any provision which would be materially adverse to the
merged businesses of SRFC and FFB as contemplated by this Agreement.

               15.1.2 No suit, action, investigation by any governmental body,
or other legal or administrative proceedings will have been brought or
threatened which materially questions the validity or legality of the
transactions contemplated herein. For the purposes hereof, inquiries which could
give rise to any such suit, investigation or proceeding given by any
governmental agency may, at the option of either party, be deemed such a threat.

               15.1.3 The parties hereto will have obtained any and all consents
required for the consummation of the Merger or for the preventing of any default
under any contract, agreement or permit of the parties hereto, which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a material adverse effect on the combined business affairs of SRFC
and FFB.

         15.2 CONDITIONS PRECEDENT TO FFB'S OBLIGATIONS. The obligation of FFB
to effect the Merger will be subject to the fulfillment on or prior to the
Effective Date of the following conditions precedent (which may be waived in
writing by FFB):

               15.2.1 The representations and warranties of SRFC herein
contained will be true as of and at the Closing Date with the same effect as
though made at such time; SRFC will have



                                       21
<PAGE>   152

performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with by it prior to the Closing Date; and
SRFC will have delivered to FFB a certificate, dated the Closing Date and signed
by its president or one of its vice presidents and its secretary or one of its
assistant secretaries, to both such effects.

         15.2.2 No material change in the corporate status, businesses,
operations or condition (financial or otherwise) of either of SRFC or Bank will
have occurred since December 31, 1997, (whether or not covered by insurance),
which has been materially adverse in relation to SRFC, taken as a whole, and no
other event or condition of any character will have occurred or arisen since
that date which will have materially and adversely affected the corporate
status, businesses, operations or financial condition of SRFC.

         15.2.3 FFB will have received from Barnes & Thornburg, counsel for
SRFC, a favorable opinion, dated as of the Closing Date, in form and substance
satisfactory to FFB's counsel. In rendering this opinion, such counsel may rely
on certificates of public officials and of corporate officers, opinions of
recognized local counsel in jurisdictions where such counsel is not qualified to
practice, and such other evidence as he may deem appropriate. The provisions of
the preceding sentence are applicable to all other opinions of counsel to be
delivered hereunder.

         15.2.4 The Registration Statement will have become effective relating
to the shares of FFB which the shareholders of SRFC will receive at the
Effective Time.

         15.2.5 FFB will have received a favorable ruling from the Internal
Revenue Service, or opinion of counsel, in form and substance satisfactory to
FFB and its counsel, to the effect that, under the IRC, and particularly Section
368(a)(1)(A), no gain or loss will be recognized to FFB or its shareholders or
to SRFC or its shareholders as a result of the Merger except for gain (but not
loss) on cash received by the shareholders of SRFC.

         15.2.6 FFB will have received such written consents and confirmations
(or opinions of counsel to the effect that such consents or confirmations are
not required), as they may reasonably request to the effect that the Surviving
Corporation will succeed upon consummation of the Merger to all of SRFC's right,
title and interest in and to its material contracts, agreements, leases and
other commitments and that the Surviving Corporation will possess and enjoy all
material licenses, permits and other governmental authorizations possessed by
SRFC at the date hereof. FFB will have received those approvals and consents
described in Section 12.10 hereof.

         15.2.7 At the date of signing this Agreement and immediately prior to
the Closing Date, FFB will have received from FFB's independent accountants
letters to the effect that they are not aware of any reason that FFB is not in
compliance with the pooling of interests criteria as specified under APB No. 16,
and that, accordingly, the Merger can be accounted for as a pooling of interests
from FFB's perspective.

         15.2.8 SRFC will have performed, at FFB's expense, a Phase I
Environmental Survey by December 31, 1998 and FFB will have reviewed the results
of such Phase I Environmental Survey on its owned banking facilities by January
15, 1999 and determined whether it is satisfied with the results thereof and
that no further testing is required and no 



                                       22
<PAGE>   153

remedial action is necessary, or if such Phase I is not satisfactory in form and
substance to it, FFB and SRFC will have reached agreement by January 31, 1999 as
to the remedial actions necessary to correct any unsatisfactory conditions and
the payment for such remedial actions.

               15.2.9 FFB will have received the Affiliate Letter and the
written agreements signed by each Seller's Rule 145 Affiliate described in
Section 14.10 hereof.

         15.3 CONDITIONS PRECEDENT TO SRFC'S OBLIGATION. The obligation of SRFC
to effect the Merger will be subject to the fulfillment on or prior to the
Effective Time of the following conditions precedent (which may be waived in
writing by SRFC):

               15.3.1 The representations and warranties of FFB herein contained
will be true as of and at the Closing Date with the same effect as though made
at such time; FFB will have performed all obligations and complied with all
covenants required by this Agreement to be performed or complied with by it
prior to the Closing Date; and FFB will have delivered to SRFC a certificate,
dated the Closing Date and signed by its president or one of its vice presidents
and its secretary or one of its assistant secretaries, to both such effects.

               15.3.2 No material change in the corporate status, businesses,
operations or condition (financial or otherwise) of FFB and its consolidated
Subsidiaries will have occurred since December 31, 1997 (whether or not covered
by insurance), which has been materially adverse in relation to FFB and its
consolidated Subsidiaries, taken as a whole, and no other event or condition of
any character will have occurred or arisen since that date which will have
materially and adversely affected the corporate status, businesses, operations
or financial condition of FFB and its consolidated Subsidiaries, taken as a
whole.

               15.3.3 SRFC will have received from Frost & Jacobs LLP, counsel
for FFB, a favorable opinion, dated immediately prior to the Closing Date, in
form and substance satisfactory to SRFC's counsel. In rendering this opinion,
such counsel may rely on certificates of public officials and of corporate
officers, opinions of recognized local counsel in jurisdictions where such
counsel is not qualified to practice, and such other evidence as it may deem
appropriate. The provisions of the preceding sentence are applicable to all
other opinions of counsel to be delivered hereunder.

               15.3.4 The Registration Statement will have become effective
relating to the shares of FFB common stock which the shareholders of SRFC will
receive at the Effective Time.

               15.3.5 SRFC will have received a favorable ruling from the
Internal Revenue Service, or opinion of counsel, in form and substance
satisfactory to SRFC, to the effect that, under the Internal Revenue Code of
1986, as amended (i) no gain or loss will be recognized to SRFC as a result of
the Merger, and (ii) no gain or loss (except in respect of fractional share
interests sold or dissenter's receiving cash) will be recognized to SRFC's
shareholders as a result of their exchange of common stock of SRFC for common
shares of FFB, and covering such other matters as are typically covered by such
opinion.

               15.3.6 At the date of signing this Agreement and immediately
prior to the Closing Date, SRFC will have received from SRFC's independent
accountants letters to the



                                       23
<PAGE>   154

effect that they are not aware of any reason that SRFC is not in compliance with
the pooling of interests criteria as specified under APB No. 16, and that,
accordingly, the Merger can be accounted for as a pooling of interests from
SRFC's perspective.

               15.3.7 The SRFC Board of Directors shall have received an opinion
from Hovde, dated as of the date of the Joint Proxy Statement-Prospectus, to the
effect that the consideration to be received by SRFC shareholders in the merger
is fair from a financial point of view, and such opinion shall not have been
withdrawn at the time of Closing.

         15.4 TERMINATION AND ABANDONMENT. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned at any
time before the Effective Time, whether before or after adoption or approval of
this Agreement by the shareholders of SRFC, under any one or more of the
following circumstances:

               15.4.1 By the mutual consent of the Boards of Directors of FFB
and SRFC;

               15.4.2 By FFB if the holders of 7.5% or more of the outstanding
shares of common stock of SRFC will be entitled to receive cash in exchange for
their SRFC shares pursuant to perfected dissenters' rights under the Indiana
Business Corporation Act;

               15.4.3 By FFB if, prior to the Effective Time, the conditions set
forth in Sections 15.2.1 through 15.2.9, inclusive, will not have been met;

               15.4.4 By SRFC if, prior to the Effective Time, the conditions
set forth in Sections 15.3.1 through 15.3.7, inclusive, will not have been met;

               15.4.5 By either FFB or SRFC if prior to the Effective Time, the
conditions set forth in Sections 15.1.1 through 15.1.3, inclusive, will not have
been met, or any action or proceeding before any court or other governmental
body or agency will have been instituted or threatened to restrain or prohibit
the Merger and such constituent corporation deems it unadvisable to proceed with
the Merger;

               15.4.6 By either FFB or SRFC if the requisite approval of the
shareholders of SRFC will not have been obtained or if the Effective Time, will
not have occurred on or before July 31, 1999;

               15.4.7 By SRFC, in accordance with the procedures set forth in
this Section 15.4.7, if the SRFC Board so determines by a vote of a majority of
its members, at any time during the ten-day period commencing on the second
trading day (the "Valuation Date") after the day that is the latest of (i) the
day of expiration of the last waiting period with respect to any of the required
regulatory approvals, (ii) the day on which the last of the required regulatory
approvals is obtained, and (iii) the day on which the required SRFC stockholder
approval is obtained, if both of the following conditions are satisfied (a
"Termination Event"):

         (a) the Average Closing Price is less than $23.2671, AND

         (b) the SRFC Ratio is less than the Index Ratio.

                                       24
<PAGE>   155

If SRFC elects to exercise this termination right, it will give prompt written
notice to FFB (which notice may be withdrawn at any time). During the five days
commencing with its receipt of such notice, FFB will have the option to avoid
the termination of this Agreement by electing to increase the Exchange Ratio to
equal the lesser of (i) the result of dividing $1,983.52 by the Average Closing
Price, and (ii) the quotient obtained by dividing the product of the Index Ratio
and the Exchange Ratio (as then in effect) by the SRFC Ratio. If FFB makes an
election contemplated by the preceding sentence (the "Election") within such
five-day period, it will give prompt written notice to SRFC of the Election and
the revised Exchange Ratio, whereupon (x) no termination will have occurred as a
result of the Termination Event and SRFC's exercise of its right of termination,
(y) this Agreement will remain in effect in accordance with its terms (except as
the Exchange Ratio will have been so modified), and (z) any references in the
Agreement to "Exchange Ratio" will thereafter be deemed to refer to the Exchange
Ratio as so adjusted). If FFB fails to make the Election, FFB will give prompt
written notice to SRFC of its decision not to make the Election and, within five
days of its receipt of such notice, SRFC must give written notice (the "Final
Notice") to FFB of either: (A) its election to withdraw the exercise of its
termination right, in which case (i) no termination will have occurred as a
result of the Termination Event and SRFC's exercise of its right of termination,
(ii) this Agreement will remain in effect in accordance with its terms, and
(iii) any references in the Agreement to "Exchange Ratio" will continue as
defined herein and without any modification or adjustment; or (B) its election
to have the termination of this Agreement become effective, in which case such
termination will occur at the close of business on the second business day after
FFB's receipt of the Final Notice.

         For purposes of this Section 15.4.7, the following terms have the
definitions set forth below:

     * Average Closing Price means the average of the daily closing sales price
of a FFB common share, as reported on the Nasdaq National Market for the 20
consecutive Nasdaq trading days (in which at least 1,000 shares were traded)
ending on the Valuation Date.

     * Index Group" means the 31 financial institution holding companies (17
with headquarters in Ohio and 14 with headquarters in Indiana) listed below, the
common stock of all of which shall be publicly traded and as to which there
shall not have been an Acquisition Transaction (as defined in the Merger
Agreement) involving such company publicly announced at any time during the
period beginning on the date of the Merger Agreement and ending on the Valuation
Date. In the event that the common stock of any such company ceases to be
publicly traded or a proposal regarding a change in control involving, or a
material acquisition by, any such company is announced at any time during the
period beginning on the date of the Merger Agreement and ending on the Valuation
Date, such company will be removed from the Index Group. The 31 financial
institution holding companies are as follow:

                                    Ohio Banks
                                    ----------

                             BFOH   BancFirst Ohio Corp
                             BLMT   Belmont Bancorp.
                             FITB   Fifth Third Bancorp
                             FMER   FirstMerit Corporation


                                       25
<PAGE>   156

HMAN   Huntington Bancshares Incorporated
KEY    KeyCorp
                             MGNB   Mahoning National Bancorp, Incorporated
                             NCC    National City Corporation
                             OAKF   Oak Hill Financial, Inc.
                             OVBC   Ohio Valley Banc Corp.
                             PRK    Park National Corporation
                             PEBO   Peoples Bancorp Inc.
                             PFGI   Provident Financial Group Inc.
                             SECD   Second Bancorp, Incorporated
                             SKYF   Sky Financial Group Inc.
                             UBCP   United Bancorp, Inc.
                             WNNB   Wayne Bancorp, Inc.

                                    Indiana Banks
                                    -------------

                             SRCE   1st Source Corporation
                             ANBC   ANB Corporation
                             BNK    CNB Bancshares, Inc.
                             CBIN   Community Bank Shares of Indiana, Inc.
                             THFF   First Financial Corporation
                             FRME   First Merchants Corporation
                             GABC   German American Bancorp
                             IUBC   Indiana United Bancorp
                             IRWN   Irwin Financial Corporation
                             LKFN   Lakeland Financial Corporation
                             METB   MetroBanCorp
                             NCBE   National City Bancshares, Inc.
                             OLDB   Old National Bancorp
                             PPLS   Peoples Bank Corporation of Indianapolis

         If FFB or any company belonging to the Index Group declares or effects
a stock dividend, reclassification, recapitalization, split-up, combination,
exchange or shares or similar transaction between the date of the Merger
Agreement and the Valuation Date, the prices for the common stock of such
company will be appropriately adjusted for purposes of determining whether a
Termination Event has occurred.

     * Index Price means, with respect to the Index Group, the price resulting
from dividing (i) the sum of the closing sales price on the Starting Date of a
share of common stock of each member of the Index Group by (ii) the number of
financial institutions that comprise the Index Group.

     * Average Index Price, with respect to the Index Group, means the price
resulting from dividing (i) the sum of the average of the daily closing sales
price of a share of common stock of each financial institution comprising the
Index Group, as reported on the consolidated transaction reporting system for
the market or exchange on which such common stock is principally traded, 



                                       26
<PAGE>   157

during the period of 20 consecutive trading days ending on the Valuation Date by
(ii) the number of financial institutions that comprise the Index Group.

     * SFRC Ratio means the number obtained by dividing the Average Closing
Price by $26.5909.

     * Index Ratio means the number obtained by dividing the Average Index Price
by the Index Price and subtracting 0.125 from the quotient.

     * Starting Date means the day immediately prior to the parties' public
announcement of the signing of this Agreement.

         An example of the determination regarding whether a Termination Event
has occurred and the resulting number of FFB common shares that could possibly
be issued is attached as Schedule 15.4.7; or

               15.4.8 By FFB if it determines that the disclosure Schedule
delivered pursuant to Section 14.12 is not satisfactory.

         15.5 EFFECT OF TERMINATION. Upon any such termination and abandonment,
neither party will have any liability or obligation hereunder to the other,
except for the return of all documents exchanged and the preservation of the
confidentiality by each party of the information exchanged, and except for a
termination pursuant to Section 15.4.3 (resulting from a failure to satisfy
Section 15.2.1) or pursuant to Section 15.4.4 (resulting from a failure to
satisfy Section 15.3.1), in which case, a termination shall not relieve the
breaching party from liability for a breach of a representation or covenant
giving rise to the termination.

         15.6 EXPENSES. Upon a termination of this Agreement as provided in
Section 15.4, each party will pay all costs and expenses of its performance of
and compliance with all agreements and conditions contained herein on its part
to be performed or complied with, including fees, expenses and disbursements of
its accountants and counsel.

         15.7 SURVIVAL OF REPRESENTATIONS. The representations and warranties of
the parties contained in this Agreement survive until the Effective Time and do
not survive after such Effective Time.

16. GENERAL PROVISIONS.

         16.1 DEFINITIONS. "Subsidiaries" as used herein means any corporation
50% or more of whose outstanding voting securities are owned directly or
indirectly by FFB or SRFC, as the context may require, whether consolidated or
unconsolidated. The headings in this Agreement will not affect in any way its
meaning or interpretation.

         16.2 AMENDMENTS. Any of the terms or conditions of this Agreement may
be modified or waived at any time before the Effective Time by the party which
is, or the shareholders of which are, entitled to the benefit thereof upon the
authority of the Board of Directors of such party, provided that any such
modification or waiver will in the judgment of the party making it 



                                       27
<PAGE>   158

not affect substantially or materially and adversely the benefits to such party
or its shareholders intended under this Agreement.

         16.3 NOTICES. All notices, demands, requests, consents or approvals
required hereunder will be in writing and will be given (and will be deemed to
have been duly given upon receipt) by delivery in person or by certified or
registered mail, return receipt requested, postage prepaid, addressed to such
party at the address set forth below or to such other address as any party may
give to the other by like notice:

                  IF TO FFB:          First Financial Bancorp.
                                      300 High Street
                                      P.O. Box 476
                                      Hamilton, Ohio  45012-0476
                                      ATTENTION:  Stanley N. Pontius, President
                                       and Chief Executive Officer

                  With copies to:     Frost & Jacobs
                                      2500 PNC Center
                                      201 East Fifth Street
                                      P.O. Box 5715
                                      Cincinnati, Ohio  45201-5715
                                      ATTENTION: Neil Ganulin

                  If to SRFC:         Sand Ridge Financial Corporation
                                      2611 Highway Avenue
                                      P. O. Box 1929
                                      Highland, Indiana  46322
                                      ATTENTION:  Bruce E. Leep, President

                  With copies to:     Barnes & Thornburg
                                      600 1st Source Bank Center
                                      100 North Michigan
                                      South Bend, Indiana  46601-1632
                                      ATTENTION:  John A. Burgess, Esq.

                                      Hovde Financial, Inc.
                                      1629 Colonial Parkway
                                      Inverness, Illinois  60067
                                      ATTENTION:  Steve Nelson


         16.4 BINDING NATURE OF AGREEMENT. This Agreement will be binding upon
and inure to the benefit of FFB and SRFC and their respective successors and
permitted assigns.



                                       28
<PAGE>   159

         16.5 ASSIGNMENT. Neither this Agreement nor any obligation or right
hereunder may be assigned by any party hereto, whether directly or indirectly,
without the prior written consent of the other party.

         16.6 GOVERNING LAW. This Agreement will in all respects be governed and
construed in accordance with the laws of the State of Ohio, except to the extent
superseded by the federal banking laws of the United States.

         16.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.

         IN WITNESS WHEREOF, pursuant to authority duly given by its Board of
Directors, each of FFB, and SRFC has caused this Agreement to be executed and
attested by its authorized officers as of the date and year first above written.

                          FIRST FINANCIAL BANCORP.



                          By:
                             -------------------------------------
                             Stanley N. Pontius
                             President and CEO


                          SAND RIDGE FINANCIAL CORPORATION


                          By:
                             -------------------------------------
                             Bruce E. Leep
                             Chairman and President






                                       29
<PAGE>   160


                                 SCHEDULE 15.4.7

         The following example illustrates whether a Termination Event could
occur and the resulting number of FFB shares that could possibly be issued:
<TABLE>
<S>                                             <C>                  <C>
Average Closing Price                                $22.75              $22.75
Average Index Price/Index Price                         .97                1.01
SRFC Ratio                                            .8556               .8556
Index Ratio                                           .8450               .8850
Does Termination Event Occur?                            No                 Yes
New Exchange Ratio (lower of I or ii):
         (i)                                                            87.1877
         (ii)                                                           88.1793
FFBC Shares Issued                                5,115,000           5,231,262
</TABLE>



                                      30
<PAGE>   161


                                                                      APPENDIX B

                               TO BE UPDATED AS OF THE DATE OF THE PROXY MAILING
                               -------------------------------------------------


December 16, 1998



Board of Directors
Sand Ridge Financial Corporation
2611 Highway Avenue
Highland, IN 46322

Members of the Board:

         Sand Ridge Financial Corporation ("Sand Ridge"), an Indiana
corporation, and First Financial Bancorp ("First Financial"), an Ohio
corporation, have entered into a Plan and Agreement of Merger ("Plan of Merger")
dated December 16, 1998, pursuant to which Sand Ridge will be merged with and
into First Financial (the "Merger"). As is set forth in Section 8.3 of the Plan
of Merger, at the effective time of the Merger each of the outstanding shares of
Sand Ridge common stock ("Sand Ridge Common Stock") will be converted into and
have the right to receive 85.25 shares (the "Exchange Ratio") of First Financial
common stock ("First Financial Common Stock"), subject to certain adjustments as
set forth in Section 15.4 of the Plan of Merger. In connection therewith, you
have requested our opinion as to the fairness, from a financial point of view,
of the Exchange Ratio to the shareholders of Sand Ridge.

         Hovde Financial, Inc. ("Hovde") specializes in providing investment
banking and financial advisory services to commercial bank and thrift
institutions. Our principals are experienced in the independent valuation of
securities in connection with negotiated underwritings, subscription and
community offerings, private placements, merger and acquisition transactions and
recapitalizations. We are familiar with Sand Ridge, having acted as its
financial advisor in connection with, and having participated in the
negotiations leading to, the Plan of Merger.

         We were retained by Sand Ridge to act as its exclusive financial
advisor with respect to a review of Sand Ridge's strategic alternatives and the
possible sale, merger, consolidation, or other business combination, in one or a
series of transactions, involving all or a substantial amount of the business,
securities or assets of Sand Ridge. We will receive compensation from Sand Ridge
in connection with our services, a significant portion of which is contingent
upon the consummation of the Merger. At your direction, we solicited the
interest of third parties regarding a possible business combination with Sand
Ridge. The Plan of Merger is the result of this solicitation.

                                      B-1
<PAGE>   162


Board of Directors
Sand Ridge Financial Corporation
December 16, 1998
Page Two




         During the course of our engagement, we reviewed and analyzed material
bearing upon the financial and operating conditions of Sand Ridge and First
Financial and material prepared in connection with the proposed transaction,
including the following: the Plan of Merger; certain historical publicly
available information concerning Sand Ridge and First Financial; the terms of
recent merger and acquisition transactions involving thrifts and thrift holding
companies that we considered relevant; historical market prices and trading
volumes for First Financial Common Stock; and financial and other information
provided to us by the managements of Sand Ridge and First Financial.

         In addition, we have conducted meetings with members of the senior
management of Sand Ridge and First Financial for the purpose of reviewing the
future prospects of Sand Ridge and First Financial. We also evaluated the pro
forma ownership of First Financial Common Stock by Sand Ridge's shareholders
relative to the pro forma contribution of Sand Ridge's assets, liabilities,
equity and earnings to the pro forma company, and conducted such other studies,
analyses and examinations as we deemed appropriate. We also took into account
our assessment of general economic, market and financial conditions and our
experience in other transactions, as well as our knowledge of the banking
industry and our general experience in securities valuations.

         In rendering this opinion, we have assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to us by
Sand Ridge and First Financial and in the discussions with Sand Ridge and First
Financial management. We did not independently verify and have relied on and
assumed that the aggregate allowances for loan losses set forth in the balance
sheets of each of Sand Ridge and First Financial at September 30, 1998 were
adequate to cover such losses and complied fully with applicable law, regulatory
policy and sound banking practices as of the date of such financial statements.
We were not retained to and did not conduct a physical inspection of any of the
properties or facilities of Sand Ridge or First Financial, nor did we make any
independent evaluation or appraisal of the assets, liabilities or prospects of
Sand Ridge or First Financial, nor were we furnished with any such evaluation or
appraisal, and we were not retained to and did not review any individual credit
files.

                                      B-2

<PAGE>   163


Board of Directors
Sand Ridge Financial Corporation
December 16, 1998
Page Three




         We have assumed that the Merger is, and will be, in compliance with all
laws and regulations that are applicable to Sand Ridge and First Financial. In
rendering this opinion, we have been advised by Sand Ridge and First Financial
and we have assumed that there are no factors that would impede any necessary
regulatory or governmental approval for the Merger and we have further assumed
that in the course of obtaining the necessary regulatory and governmental
approvals, no restriction will be imposed on First Financial or the surviving
corporation that would have a material adverse effect on First Financial or the
contemplated benefits of the Merger. We have also assumed that there would not
occur any change in the applicable law or regulation that would cause a material
adverse change in the prospects or operations of First Financial or the
surviving corporation after the Merger.

         Our opinion is based solely upon the information available to us and
the economic, market and other circumstances as they exist as of the date
hereof. Events occurring and information that becomes available after the date
hereof could materially affect the assumptions and analyses used in preparing
this opinion. We have not undertaken to reaffirm or revise this opinion or
otherwise comment upon any events occurring or information that becomes
available after the date hereof.

         We are not expressing any opinion herein as to the prices at which
shares of First Financial Common Stock issued in the Merger may trade if and
when they are issued or at any future time, nor does our opinion constitute a
recommendation to any holder of Sand Ridge Common Stock as to how such holder
should vote with respect to the Plan of Merger at any meeting of holders of Sand
Ridge Common Stock.

         This letter is solely for the information of the Board of Directors of
Sand Ridge and is not to be used, circulated, quoted or otherwise referred to
for any other purpose, nor is it to be filed with, included in or referred to in
whole or in part in any registration statement, proxy statement or any other
document, except in each case in accordance with our prior written consent which
shall not be unreasonably withheld; provided, however, that we hereby consent to
the inclusion and reference to this letter in any registration statement, proxy
statement, information statement or tender offer document to be delivered to the
holders of Sand Ridge Common Stock in connection with the Merger if and only if
this letter is quoted in full or attached as an exhibit to such document and
this letter has not been withdrawn prior to the date of such document.

                                      B-3

<PAGE>   164


Board of Directors
Sand Ridge Financial Corporation
December 16, 1998
Page Four




         Subject to the foregoing and based on our experience as investment
bankers, our activities and assumptions as described above, and other factors we
have deemed relevant, we are of the opinion as of the date hereof that the
Exchange Ratio is fair, from a financial point of view, to the shareholders of
Sand Ridge.

                                                     Sincerely,



                                                     HOVDE FINANCIAL, INC.



                                      B-4


<PAGE>   165


                                                                      APPENDIX C

                                  INDIANA CODE
                                   CHAPTER 44
                               DISSENTERS' RIGHTS

Section.
23-1-44-1.        "Corporation" defined.
23-1-44-2.        "Dissenter" defined.
23-1-44-3.        "Fair value" defined.
23-1-44-4.        "Interest" defined.
23-1-44-5.        "Record shareholder" defined.
23-1-44-6.        "Beneficial shareholder" defined.
23-1-44-7.        "Shareholder" defined.
23-1-44-8.        Shareholder dissent.
23-1-44-9.        Beneficial shareholder dissent.
23-1-44-10.       Notice of dissenters' rights preceding shareholder vote.
23-1-44-11.       Notice of intent to dissent.
23-1-44-12.       Notice of dissenter's rights following action creating rights.
23-1-44-13.       Demand for payment by dissenter.
23-1-44-14.       Transfer of shares restricted after demand for payment.
23-1-44-15.       Payment to dissenter.
23-1-44-16.       Return of shares and release of restrictions.
23-1-44-17.       Offer of fair value for shares obtained after first 
                  announcement.
23-1-44-18.       Dissenter demand for fair value under certain conditions.
23-1-44-19.       Effect of failure to pay demand - Commencement of judicial
                  appraisal proceeding.
23-1-44-20.       Judicial determination and assessment of costs.


23-1-44-1. "CORPORATION" DEFINED. - As used in this chapter, "corporation" means
the issuer of the shares held by a dissenter before the corporate action, or the
surviving or acquiring corporation by merger or share exchange of that
issuer.[P.L.149-1986, ss. 28.]

23-1-44-2. "DISSENTER" DEFINED. - As used in this chapter, "dissenter" means a
shareholder who is entitled to dissent from corporate action under section 8 [IC
23-1-44-8] of this chapter and who exercises that right when and in the manner
required by sections 10 through 18 [IC 23-1-44-10 through IC 23-1-44-18] of this
chapter. [P.L.149-1986, ss. 28.]

23-1-44-3. "FAIR VALUE" DEFINED.- As used in this chapter, "fair value," with
respect to a dissenter's shares, means the value of the shares immediately
before the effectuation of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable. [P.L. 149-1986, ss. 28.]

23-1-44-4. "INTEREST" DEFINED. - As used in this chapter, "interest" means
interest from the effective date of the corporate action until the date of
payment, at the average rate currently paid by the corporation on its principal
bank loans or, if none, at a rate that is fair and equitable under all the
circumstances. [P.L. 149-1986, ss. 28.]

                                      C-1
<PAGE>   166

23-1-44-5. "RECORD SHAREHOLDER" DEFINED. - As used in this chapter, "record
shareholder" means the person in whose name shares are registered in the records
of a corporation or the beneficial owner of shares to the extent that treatment
as a record shareholder is provided under a recognition procedure or a
disclosure procedure established under IC 23-1-30-4. [P.L.149-1986, ss. 28.]

23-1-44-6. "BENEFICIAL SHAREHOLDER" DEFINED. - As used in this chapter,
"beneficial shareholder" means the person who is a beneficial owner of shares
held by a nominee as the record shareholder. [P.L. 149-1986, ss. 28.]

23-1-44-7. "SHAREHOLDER" DEFINED. - As used in this chapter, "shareholder" means
the record shareholder or the beneficial shareholder. [P.L.149-1986,ss.28.]

23-1-44-8. SHAREHOLDER DISSENT. - (a) A shareholder is entitled to dissent from,
and obtain payment of the fair value of the shareholder's shares in the event
of, any of the following corporate actions:

                  (1)      Consummation of a plan of merger to which the
                           corporation is a party if:

                           (A) Shareholder approval is required for the merger
                               by IC 23-1-40-3 or the articles of incorporation;
                               and

                           (B) The shareholder is entitled to vote on the
                               merger.

                  (2)      Consummation of a plan of share exchange to which the
                           corporation is a party as the corporation whose 
                           shares will be acquired, if the shareholder is 
                           entitled to vote on the plan.

                  (3)      Consummation of a sale or exchange of all, or
                           substantially all, of the property of the corporation
                           other than in the usual and regular course of
                           business, if the shareholder is entitled to vote on
                           the sale or exchange, including a sale in
                           dissolution, but not including a sale pursuant to
                           court order or a sale for cash pursuant to a plan by
                           which all or substantially all of the net proceeds of
                           the sale will be distributed to the shareholders
                           within one (1) year after the date of sale.

                  (4)      The approval of a control share acquisition under IC
                           23-1-42.

                                      C-2
<PAGE>   167


                  (5)      Any corporate action taken pursuant to a shareholder
                           vote to the extent the articles of incorporation,
                           bylaws, or a resolution of the board of directors
                           provides that voting or nonvoting shareholders are
                           entitled to dissent and obtain payment for their
                           shares.

         (b) This section does not apply to the holders of shares of any class
or series if, on the date fixed to determine the shareholders entitled to
receive notice of and vote at the meeting of shareholders at which the merger,
plan of share exchange, or sale or exchange of property is to be acted on, the
shares of that class or series were:

                  (1)      Registered on a United States securities exchange 
                           registered under the Exchange Act (as defined in IC 
                           23-1-43-9); or

                  (2)      Traded on the National Association of Securities 
                           Dealers, Inc. Automated Quotations System 
                           Over-the-Counter Markets - National Market Issues or
                           a similar market.

         (c) A shareholder:

                  (1)      Who is entitled to dissent and obtain payment for the
                           shareholder's shares under this chapter; or

                  (2)      Who would be so entitled to dissent and obtain
                           payment but for the provisions of subsection (b); may
                           not challenge the corporate action creating (or that,
                           but for the provisions of subsection (b), would have
                           created) the shareholder's entitlement.
                           [P.L.149-1986, ss. 28; P.L.107-1987, ss. 19.]

23-1-44-9. BENEFICIAL SHAREHOLDER DISSENT. - (a) A record shareholder may assert
dissenters' rights as to fewer than all the shares registered in the
shareholder's name only if the shareholder dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf the shareholder asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which the shareholder dissents and the
shareholder's other shares were registered in the names of different
shareholders.

         (b) A beneficial shareholder may assert dissenters' rights as to shares
held on the shareholder's behalf only if:

                                      C-3
<PAGE>   168



                  1)       The beneficial shareholder submits to the corporation
                           the record shareholder's written consent to the
                           dissent not later than the time the beneficial
                           shareholder asserts dissenters' rights; and

                  (2)      The beneficial shareholder does so with respect to
                           all the beneficial shareholder's shares or those
                           shares over which the beneficial shareholder has
                           power to direct the vote. [P.L.149-1986, ss. 28.]

23-1-44-10. NOTICE OF DISSENTERS' RIGHTS PRECEDING SHAREHOLDER VOTE. - (a) If
proposed corporate action creating dissenters' rights under section 8 [IC
23-1-44-8] of this chapter is submitted to a vote at a shareholders' meeting,
the meeting notice must state that shareholders are or may be entitled to assert
dissenters' rights under this chapter.

         (b) If corporate action creating dissenters' rights under section 8 of
this chapter is taken without a vote of shareholders, the corporation shall
notify in writing all shareholders entitled to assert dissenters' rights that
the action was taken and send them the Notice to Dissenters described in section
12 [IC 23-1-44-12] of this chapter. [P.L.149-1986, ss. 28; P.L.107-1987, ss.
20.]

23-1-44-11. NOTICE OF INTENT TO DISSENT. - (a) If proposed corporate action
creating dissenters' rights under section 8 [IC 23-1-44-8] of this chapter is
submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights:

                  (1)      Must deliver to the corporation before the vote is
                           taken written notice of the shareholder's intent to
                           demand payment for the shareholder's shares if the
                           proposed action is effectuated; and

                  (2)      Must not vote the shareholder's shares in favor of 
                           the proposed action.

         (b) A shareholder who does not satisfy the requirements of subsection 
(a) is not entitled to payment for the shareholder's shares under this chapter.
[P.L.149-1986, ss. 28.]

23-1-44-12. NOTICE OF DISSENTERS' RIGHTS FOLLOWING ACTION CREATING RIGHTS. - (a)
If proposed corporate action creating dissenters' rights under section 8 [IC
23-1-44-8] of this chapter is authorized at a shareholders' meeting, the
corporation shall deliver a written Notice to Dissenters to all shareholders who
satisfied the requirements of section 11 [IC 23-1-44-11] of this chapter.

                                      C-4
<PAGE>   169

         (b) The Notice to Dissenters must be sent no later than ten (10) days
after approval by the shareholders, or if corporate action is taken without
approval by the shareholders, then ten (10) days after the corporate action was
taken. The Notice to Dissenters must:

                  (1)      State where the payment demand must be sent and where
                           and when certificates for certificated shares must be
                           deposited;

                  (2)      Inform holders of uncertificated shares to what 
                           extent transfer of the shares will be restricted 
                           after the payment demand is received;

                  (3)      Supply a form for demanding payment that includes the
                           date of the first announcement to news media or to
                           shareholders of the terms of the proposed corporate
                           action and requires that the person asserting
                           dissenters' rights certify whether or not the person
                           acquired beneficial ownership of the shares before
                           that date;

                  (4)      Set a date by which the corporation must receive the
                           payment demand, which date may not be fewer than 
                           thirty (30) nor more than sixty (60) days after the
                           date the subsection (a) notice  is delivered; and

                  (5)      Be accompanied by a copy of this chapter. 
                           [P.L.149-1986, ss. 28.]

23-1-44-13. DEMAND FOR PAYMENT BY DISSENTER. - (a) A shareholder sent a Notice
to Dissenters described in IC 23-1-42-11 or in section 12 [IC 23-1-44-12] of
this chapter must demand payment, certify whether the shareholder acquired
beneficial ownership of the shares before the date required to be set forth in
the dissenter's notice under section 12(b)(3) [IC 23-1-44-12(b)(3)] of this
chapter, and deposit the shareholder's certificates in accordance with the terms
of the notice.

         (b) The shareholder who demands payment and deposits the shareholder's
shares under subsection (a) retains all other rights of a shareholder until
these rights are canceled or modified by the taking of the proposed corporate
action.

         (c) A shareholder who does not demand payment or deposit the
shareholder's share certificates where required, each by the date set in the
Notice to Dissenters, is not entitled to payment for the shareholder's shares
under this chapter and is considered, for purposes of this article, to have
voted the shareholder's shares in favor of the proposed corporate action.
[P.L.149-1986, ss. 28.]

                                      C-5
<PAGE>   170

23-1-44-14. TRANSFER OF SHARES RESTRICTED AFTER DEMAND FOR PAYMENT. - (a) The
corporation may restrict the transfer of uncertificated shares from the date the
demand for their payment is received until the proposed corporate action is
taken or the restrictions released under section 16 [IC 23-1-44-16] of this
chapter.

         (b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
[P.L.149-1986, ss. 28.]

23-1-44-15. PAYMENT TO DISSENTER. - (a) Except as provided in section 17 [IC
23-1-44-17] of this chapter, as soon as the proposed corporate action is taken,
or, if the transaction did not need shareholder approval and has been completed,
upon receipt of a payment demand, the corporation shall pay each dissenter who
complied with section 13 [IC 23-1-44-13] of this chapter the amount the
corporation estimates to be the fair value of the dissenter's shares.

         (b)      The payment must be accompanied by:

                  (1)      The corporation's balance sheet as of the end of a
                           fiscal year ending not more than sixteen (16) months
                           before the date of payment, an income statement for
                           that year, a statement of changes in shareholders'
                           equity for that year, and the latest available
                           interim financial statements, if any;

                  (2)      A statement of the corporation's estimate of the 
                           fair value of the shares; and

                  (3)      A statement of the dissenter's right to demand 
                           payment under section 18 [IC 23-1-44-18] of this 
                           chapter.  [P.L.149-1986,ss. 28; P.L. 107-1987,ss.21.]

23-1-44-16. RETURN OF SHARES AND RELEASE OF RESTRICTIONS. - (a) If the
corporation does not take the proposed action within sixty (60) days after the
date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.

         (b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
Notice to Dissenters under section 12 [IC 23-1-44-12] of this chapter and repeat
the payment demand procedure. [P.L.149-1986, ss. 28.]


                                      C-6
<PAGE>   171


23-1-44-17. OFFER OF FAIR VALUE FOR SHARES OBTAINED AFTER FIRST ANNOUNCEMENT. -
(a) A corporation may elect to withhold payment required by section 15 [IC
23-1-44-15] of this chapter from a dissenter unless the dissenter was the
beneficial owner of the shares before the date set forth in the Notice to
Dissenters as the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action.

         (b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares and shall pay this amount to each dissenter who
agrees to accept it in full satisfaction of the dissenter's demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares and a statement of the dissenter's right to demand payment
under section 18 [IC 23-1-44-18] of this chapter. [P.L.149-1986, ss. 28.]

23-1-44-18. DISSENTER DEMAND FOR FAIR VALUE UNDER CERTAIN CONDITIONS. - (a) A
dissenter may notify the corporation in writing of the dissenter's own estimate
of the fair value of the dissenter's shares and demand payment of the
dissenter's estimate (less any payment under section 15 [IC 23-1-44-15] of this
chapter), or reject the corporation's offer under section 17 [IC 23-1-44-17] of
this chapter and demand payment of the fair value of the dissenter's shares, if:

                  (1)      The dissenter believes that the amount paid under
                           section 15 of this chapter or offered under section 
                           17 of this chapter is less than the fair value of the
                           dissenter's shares;

                  (2)      The corporation fails to make payment under section
                           15 of this chapter within sixty (60) days after the 
                           date set for demanding payment; or

                  (3)      The corporation, having failed to take the proposed
                           action, does not return the deposited certificates or
                           release the transfer restrictions imposed on
                           uncertificated shares within sixty (60) days after
                           the date set for demanding payment.

         (b) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (a) within thirty (30) days after the corporation made
or offered payment for the dissenter's shares. [P.L.149-1986, ss. 28.]



                                      C-7
<PAGE>   172



23-1-44-19. EFFECT OF FAILURE TO PAY DEMAND - COMMENCEMENT OF JUDICIAL APPRAISAL
PROCEEDING. - (a) If a demand for payment under IC 23-1-42-11 or under section
18 [IC 23-1-44-18] of this chapter remains unsettled, the corporation shall
commence a proceeding within sixty (60) days after receiving the payment demand
and petition the court to determine the fair value of the shares. If the
corporation does not commence the proceeding within the sixty (60) day period,
it shall pay each dissenter whose demand remains unsettled the amount demanded.

         (b) The corporation shall commence the proceeding in the circuit or
superior court of the county where a corporation's principal office (or, if none
in Indiana, its registered office) is located. If the corporation is a foreign
corporation without a registered office in Indiana, it shall commence the
proceeding in the county in Indiana where the registered office of the domestic
corporation merged with or whose shares were acquired by the foreign corporation
was located.

         (c) The corporation shall make all dissenters (whether or not residents
of this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.

         (d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one (1) or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.

         (e) Each dissenter made a party to the proceeding is entitled to
judgment.

                  (1)      For the amount, if any, by which the court finds the
                           fair value of the dissenter's shares, plus interest,
                           exceeds the amount paid by the corporation; or

                  (2)      For the fair value, plus accrued interest, of the
                           dissenter's after-acquired shares for which the
                           corporation elected to withhold payment under section
                           17 [IC 23-1-44-17] of this chapter. [P.L.149-1986,
                           ss. 28.]



                                      C-8
<PAGE>   173



23-1-44-20. JUDICIAL DETERMINATION AND ASSESSMENT OF COSTS. - (a) The court in
an appraisal proceeding commenced under section 19 [IC 23-1-44-19] of this
chapter shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against such parties and in such amounts as the court finds
equitable.

         (b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:

                  (1)      Against the corporation and in favor of any or all
                           dissenters if the court finds the corporation did not
                           substantially comply with the requirements of
                           sections 10 through 18 [IC 23-1-44-10 through IC
                           23-1-44-18] of this chapter; or

                  (2)      Against either the corporation or a dissenter, in
                           favor of any other party, if the court finds that the
                           party against whom the fees and expenses are assessed
                           acted arbitrarily, vexatiously, or not in good faith
                           with respect to the rights provided by this chapter.

         (c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited. [P.L.149-1986, ss. 28.]


                                      C-9
<PAGE>   174




           INFORMATION NOT REQUIRED IN THE PROXY-STATEMENT PROSPECTUS


ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ---------------------------------------------------



         The Ohio General Corporation Law allows a corporation under certain
circumstances to indemnify its directors, officers, and employees. Generally,
whether by its articles of incorporation or its code of regulations or by
statute, the indemnification permits the Corporation to pay expenses actually
and necessarily incurred in the defense of any pending or threatened suit. The
determination of the right of indemnification is determined by a quorum of
disinterested directors not involved in such a pending matter and if they are
unable to make such determination, then such determination shall be made by
independent legal counsel, First Financial's shareholders or by the Butler
County, Ohio, Court of Common Pleas. The statute does not allow indemnification
of an officer or director wherein such person has been adjudicated negligent or
guilty of misconduct and, additionally, such officer or director must have acted
in good faith or had no reason to believe such officer's or director's conduct
was unlawful to be indemnified. First Financial has an indemnification provision
in its Regulations, set forth below, that requires First Financial to follow the
General Corporation Law of Ohio regarding indemnification.

         Article IV of the Regulations of First Financial provides:

         SECTION 4.1. INDEMNIFICATION. The Corporation shall, to the full extent
         permitted by the General Corporation Law of Ohio, indemnify all persons
         whom it may indemnify pursuant hereto.


Item 21.  Exhibits and Financial Statement Schedules
- ----------------------------------------------------

(a)   See Index to Exhibits.

(b)   See "SAND RIDGE FINANCIAL CORPORATION CONSOLIDATED FINANCIAL
         STATEMENTS."

(c)      Fairness Opinion furnished as Appendix B to Proxy Statement-Prospectus.


Item 22.  Undertakings
- ----------------------

The undersigned registrant hereby undertakes:

(1)      To file, during any period in which offers or sales are being made, a 
         post-effective amendment to this Registration Statement:


                                      II-1
<PAGE>   175

         (i)               To include any prospectus required by section 
                           10(a)(3) of the Securities Act of 1933;

         (ii)              To reflect in the prospectus any facts or events
                           arising after the effective date of the Registration
                           Statement (or the most recent post-effective
                           amendment thereof) which, individually or in the
                           aggregate, represent a fundamental change in the
                           information set forth in the Registration Statement;
                           and

         (iii)             To include any material information with respect to
                           the plan of distribution not previously disclosed in
                           the Registration Statement or any material change to
                           such information in the Registration Statement.

(2)      That, for the purpose of determining any liability under the Securities
         Act of 1933, each such post-effective amendment shall be deemed to be a
         new Registration Statement relating to the securities offered therein,
         and the offering of such securities at that time shall be deemed to be
         the initial bona fide offering thereof.

(3)      To remove from registration by means of a post-effective amendment any 
         of the securities being registered which remain unsold at the 
         termination of the offering.

(4)      To deliver or cause to be delivered with the prospectus, to each person
         to whom the prospectus is sent or given, the latest annual report to
         security holders that is incorporated by reference in the prospectus
         and furnished pursuant to and meeting the requirements of Rule 14a-3 or
         Rule 14c-3 under the Securities Exchange Act of 1934; and, where
         interim financial information required to be presented by Article 3 of
         Regulation S-X are not set forth in the prospectus, to deliver, or
         cause to be delivered to each person to whom the prospectus is sent or
         given, the latest quarterly report that is specifically incorporated by
         reference in the prospectus to provide such interim financial
         information.

(5)      That prior to any public reoffering of the securities registered
         hereunder through use of a prospectus which is a part of this
         registration statement, by any person or party who is deemed to be an
         underwriter within the meaning of Rule 145(c), the issuer undertakes
         that such reoffering prospectus will contain the information called for
         by the applicable registration form with respect to reofferings by
         persons who may be deemed underwriters, in addition to the information
         called for by the other Items of the applicable form.


                                      II-2
<PAGE>   176

(6)      That every prospectus (i) that is filed pursuant to the paragraph
         immediately preceding, or (ii) that purports to meet the requirements
         of section 10(a)(3) of the Securities Act of 1933, as amended (the
         "Securities Act") and is used in connection with an offering of
         securities subject to Rule 415 will be filed as a part of an amendment
         to the registration statement and will not be used until such amendment
         is effective, and that, for purposes of determining any liability under
         the Securities Act of 1933, each such post-effective amendment shall be
         deemed to be a new registration statement relating to the securities
         offered therein, and the offering of such securities at that time shall
         be deemed to be the initial bona fide offering thereof.

(7)      That, insofar as indemnification for liabilities arising under the
         Securities Act may be permitted to directors, officers and controlling
         persons of the registrant pursuant to the foregoing provisions, or
         otherwise, the registrant has been advised that in the opinion of the
         Securities and Exchange Commission such indemnification is against
         public policy as expressed in the Act and is, therefore, unenforceable.
         In the event that a claim for indemnification against such liabilities
         (other than the payment by the registrant of expenses incurred or paid
         by a director, officer or controlling person of the registrant in the
         successful defense of any action, suit or proceeding) is asserted by
         such director, officer or controlling person in connection with the
         securities being registered, the registrant will, unless in the opinion
         of its counsel the matter has been settled by controlling precedent,
         submit to a court of appropriate jurisdiction the question whether such
         indemnification by it is against public policy as expressed in the
         Securities Act and will be governed by the final adjudication of such
         issue.

(8)      To respond to requests for information that is incorporated by
         reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of
         this Form, within one business day of receipt of such request and to
         send the incorporated documents by first class mail or other equally
         prompt means. This includes information contained in documents filed
         subsequent to the effective date of the registration statement through
         the date of responding to the request.

(9)      To supply by means of a post-effective amendment all information
         concerning a transaction, and the company being acquired involved
         therein, that was not the subject of and included in the registration
         statement when it became effective.

                                      II-3
<PAGE>   177


                                   SIGNATURES


Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Hamilton, State of Ohio,
on March 3, 1999.

FIRST FINANCIAL BANCORP.

By: /s/ Stanley N. Pontius
- -------------------------------------
Stanley N. Pontius
President and Chief Executive Officer

Date:  March 3, 1999
- -------------------------------------


Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated:

                                           /s/ Stanley N. Pontius
- -------------------------------------     --------------------------------------
Barry J. Levey, Chairman of the Board      Stanley N. Pontius, Director,
                                           President and Chief Executive
                                           Officer

Date:                                     Date:  March 3, 1999
     --------------------------------          ---------------------------------


 /s/ Michael R. O'Dell                     /s/ C. Douglas Lefferson
- -------------------------------------     ------------------------------------
Michael R. O'Dell, Senior vice President,  C. Douglas Lefferson, First Vice
Chief Financial Officer and Secretary      President, Comptroller

Date:  March 3, 1999                      Date:  March 3, 1999
     --------------------------------          ---------------------------------

 /s/ Richard L. Alderson
- -------------------------------------     ------------------------------------
Richard L. Alderson, Director              Arthur W. Bidwell, Director

Date:  March 3, 1999                      Date:
     --------------------------------          ---------------------------------


 /s/ Donald M. Cisle                       /s/ Carl R. Fiora
- -------------------------------------     ------------------------------------
Donald M. Cisle, Director                  Carl R. Fiora, Director

Date:  March 3, 1999                      Date:  March 3, 1999
     --------------------------------          ---------------------------------


 /s/ Corinne R. Finnerty                   /s/ Vaden Fitton
- -------------------------------------     ------------------------------------
Corinne R. Finnerty, Director              Vaden Fitton, Director

Date:  March 3, 1999                      Date:  March 3, 1999
     --------------------------------          ---------------------------------


 /s/ James C. Garland
- -------------------------------------     ------------------------------------
James C. Garland, Director                 F. Elden Houts, Director

Date:  March 3, 1999                      Date:
- -------------------------------------     ------------------------------------


 /s/ Murph Knapke                          /s/ Stephen S. Marcum
- -------------------------------------     ------------------------------------
Murph Knapke, Director                     Stephen S. Marcum, Director

Date:  March 3, 1999                      Date:  March 3, 1999
     --------------------------------          ---------------------------------

                                      II-4
<PAGE>   178

                             SIGNATURES, Continued



 /s/ Barry S. Porter                       /s/ Steven C. Posey
- -------------------------------------     --------------------------------------
Barry S. Porter, Director                  Steven C. Posey, Director

Date:  March 3, 1999                      Date:  March 3, 1999
     --------------------------------          ---------------------------------


 /s/ Perry D. Thatcher
- -------------------------------------
Perry D. Thatcher, Director

Date:  March 3, 1999
     ---------------------------------



<PAGE>   179


                                INDEX TO EXHIBITS



         Exhibit
         Number            Description
         ------            --------------

         2.1               Plan and Agreement of Merger between First
                           Financial Bancorp. and Sand Ridge Financial
                           Corporation
                           (Included as Appendix A in the Proxy Statement-
                           Prospectus)

         5.                Opinion of Counsel

         8.                Form of Tax Opinion of Barnes & Thornburg
                           to be Issued on Consummation of Merger

         23.1              Consent of Ernst & Young LLP, Independent Auditors
                           for First Financial Bancorp.

         23.2              Consent of Crowe, Chizek and Company LLP,
                           Independent Auditors for Sand Ridge Financial
                           Corporation.

         23.4              Consent of Frost & Jacobs LLP, Counsel for Registrant
                           (Incorporated in Exhibit 5)

         23.5              Consent of Barnes & Thornburg

         23.6              Consent of Hovde Financial, Inc.
                           (Incorporated in Exhibit 99.1)

         99.1              Fairness Opinion of Hovde Financial, Inc.
                           (Included as Appendix B in the Proxy
                           Statement-Prospectus.)

         99.2              Sand Ridge Financial's Form of Proxy

                                      II-6





<PAGE>   1
EXHIBIT 5.--OPINION OF COUNSEL


                               FROST & JACOBS LLP
                                 2500 PNC Center
                              201 East Fifth Street
                              Post Office Box 5715
                           Cincinnati, Ohio 45201-5715
                                 (513) 651-6800


                                                March 3, 1999


First Financial Bancorp.
300 High Street
Hamilton, Ohio  45012-0476

         Re:      First Financial Bancorp.
                  Form S-4 Registration Statement
                  -------------------------------

Gentlemen:

         We are counsel for First Financial Bancorp., an Ohio corporation (the
"Company"), which is named as the registrant in the Registration Statement on
Form S-4 which is being filed on or about March 3, 1999 with the Securities and
Exchange Commission for the purpose of registering under the Securities Act of
1933, as amended (the "Act"), certain common shares, without par value (the
"Common Shares"), of the Company.

         With respect to the Common Shares being registered pursuant to such
Registration Statement as filed and as it may be amended, it is our opinion that
the Common Shares, when issued and paid for pursuant to the Plan and Agreement
of Merger dated as of December 16, 1998 between First Financial Bancorp. and
Sand Ridge Financial Corporation, will be validly issued, fully paid and
non-assessable.

         We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement.

                                             Very Truly Yours,
                                             Frost & Jacobs LLP

NG/gam



<PAGE>   1


EXHIBIT 8.--FORM OF TAX OPINION OF BARNES & THORNBURG TO BE ISSUED ON 
CONSUMMATION OF MERGER

BARNES & THORNBURG                         600 1st Source Bank Center
                                           100 North Michigan
                                           South Bend, Indiana 46601-1632 U.S.A.
                                           (219) 233-1171
                                           Fax (219) 237-1125

                                           http://www.btlaw.com

                                           __________________, 1999

Board of Directors
First Financial Bancorp.
300 High Street
P.O. Box 476
Hamilton, Ohio 45012-0476

Board of Directors
Sand Ridge Financial Corporation
2611 Highway Avenue
Highland, Indiana 46322

         RE: Merger of Sand Ridge Financial Corporation into First Financial 
             ---------------------------------------------------------------
             Bancorp.
             --------

Ladies and Gentlemen:

         You have requested our opinion as to the federal income tax
consequences of the proposed merger ("Merger") of Sand Ridge Financial
Corporation ("Company") into First Financial Bancorp. ("FFB") pursuant to the
Plan and Agreement of Merger, dated December 16, 1998 (the "Agreement"), between
the Company and FFB.

         In issuing the opinion set forth in this letter, we have relied upon
(1) the factual representations made by FFB in written statements dated
_____________, 1999 and the factual representations made by the Company in
written statements dated ___________, 1999 (the "Representations"); (2) the
Agreement; and (3) the facts, information and documentation set forth in the
Registration Statement on Form S-4 of FFB filed with the Securities and Exchange
Commission in connection with the Merger ("Registration Statement"). We have not
attempted to verify independently the accuracy of any of the information in any
such document. We have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such copies.



<PAGE>   2

Board of Directors of First Financial Bancorp.
Board of Directors of Sand Ridge Financial Corporation
__________________________, 1999
Page 2


         The opinions set forth in this letter are predicated upon our
understanding of the facts set forth in the Agreement, the Representations, and
the Registration Statement. Any change in such facts may adversely affect our
opinions. Furthermore, as explained below, our opinions are based upon our
understanding of the existing provisions of the Internal Revenue Code of 1986,
as amended ("Code"), currently applicable Treasury Regulations promulgated under
the Code, current published administrative positions of the Internal Revenue
Service ("IRS") such as revenue rulings and revenue procedures, and existing
judicial decisions, all of which are subject to change either prospectively or
retroactively. Any change in such authorities may adversely affect our opinions.
We assume no obligation to update our opinions for any deletions or additions to
or modifications of any law applicable to the Merger.

         The following opinions reflect our legal judgment solely on the issues
presented and discussed herein. The issues in this matter are complex. There are
no published cases, rulings, regulations or administrative positions with the
same facts as the facts in the present transaction and therefore there are no
published cases, rulings, regulations or administrative positions directly on
point to support the opinions set forth herein. Accordingly, we cannot assure
you that the Internal Revenue Service will agree with the opinions expressed
herein, nor can we assure you that a court of competent jurisdiction will agree
with such opinions. Our opinions are, therefore, qualified by, and should be
understood to reflect the fact that, the resolution of such issues is not free
from doubt.

         Our opinions are based upon and subject to the foregoing and on our
review of the Merger Agreement, the Representations and the Registration
Statement and assuming that the transactions described therein are completed as
described, provided that the merger of the Company with and into FFB qualifies
as a statutory merger under applicable state law and assuming that:

         (a) The fair market value of the FFB common stock received by each
Company shareholder will be approximately equal, in each instance, to the fair
market value of the Company common stock surrendered in the exchange;

         (b) In the merger transaction, shares of Company common stock
representing control of the Company, as defined in Section 368(c) of the Code,
will be exchanged solely for common stock of FFB;

         (c) There is no plan, intention or other arrangement on the part of the
holders of Company common stock, to sell, exchange or otherwise dispose of their
shares of FFB common stock received in the transaction to any "related person"
of FFB in connection with the merger under Treas. Reg. ss. 1.368(e);

<PAGE>   3

Board of Directors of First Financial Bancorp.
Board of Directors of Sand Ridge Financial Corporation
__________________________, 1999
Page 3


         (d) After the merger transaction, FFB, as successor of the Company,
will hold substantially all of the Company's assets;

         (e) Neither FFB or any related person to FFB or the Company has any
plans or intentions to redeem or reacquire any of FFB's common stock issued in
the transaction immediately after the consummation of the merger;

         (f) FFB has no plan or intention to liquidate the Company, merge the
Company with or into another corporation, sell or otherwise dispose of any
outstanding common stock of Company, or cause the Company to sell or otherwise
dispose of any of its assets, except for dispositions made in the ordinary
course of business; and

         (g) Following the transaction, FFB will continue the Company's business
or use a significant portion of its business assets in a business.

         Based upon the above it is our opinion that the Agreement will have the
following federal income tax consequences:

                  1. The Merger will constitute a reorganization within the
meaning of Section 368(a)(1)(A) of the Code and the Company and FFB will each be
a party to the reorganization within the meaning of Section 368(b) of the Code.

                  2. Pursuant to Section 354(a)(1) of the Code, no gain or loss
will be recognized by the Company shareholders who exchange all of their Company
common stock for FFB common stock pursuant to the Merger except to the extent of
gain or loss attributable to any cash received in lieu of receipt of a
fractional share of FFB common stock.

                  3. Pursuant to Section 358(a)(1) of the Code, the tax basis of
the FFB common stock (including deemed fractional share interests) received by
Company shareholders who exchange all of their Company common stock for FFB
common stock will be the same as the basis of the Company common stock
surrendered in exchange therefor.

                  4. Pursuant to Section 1223(1) of the Code, the holding period
of FFB common stock received by the Company shareholders (including deemed
fractional share interests) who exchange all of their Company common stock for
FFB common stock will include the period during which the company common stock
was held, provided that the Company common stock was held as a capital asset in
the hands of such shareholders on the date of the exchange.


<PAGE>   4

Board of Directors of First Financial Bancorp.
Board of Directors of Sand Ridge Financial Corporation
__________________________, 1999
Page 4


                  5. Where a cash payment is received by a Company shareholder
in lieu of fractional shares of FFB common stock, the cash payment will be
treated as received by the shareholder as a distribution in exchange for the
fractional share redeemed.

                  6. Where a holder of Company common stock dissents to the
Merger and receives solely cash for the shareholders' Company common stock, such
cash will be treated as received by the shareholder as a distribution in
redemption of the shareholder's Company common stock, subject to the provisions
and limitations of Section 302 of the Code.

                  7. Pursuant to Sections 361 and 1032 of the Code, no gain or 
loss will be recognized by the Company or FFB in connection with the Merger.

         We express no opinion with regard to the federal income tax
consequences of the Merger no addressed expressly by the above opinions. In
addition, we express no opinion as to any foreign, state or local tax
consequences with respect to the Merger or with respect to any transactions
related to the Merger or contemplated by the Agreement. This opinion is being
furnished only to you in connection with the Merger and solely for your benefit
in connection therewith and may not be used or relied upon for any purpose and
may not be circulated, quoted or otherwise referred to for any other purpose
without our express written consent.

         The foregoing includes a general summary of all of the material federal
income tax consequences of the Merger to shareholders of the Company without
regard to the particular facts and circumstances of each shareholder's tax
situation and status. Each shareholder of the Company should consult his or her
own tax advisor regarding the specific tax consequences of the Merger to him or
her, including the application and effect of federal, state, local and foreign
laws and the possible effect of changes in federal and other tax laws.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

                                        Very truly yours,


                                        BARNES & THORNBURG

slr



<PAGE>   1


EXHIBIT 23.1--CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


                         CONSENT OF INDEPENDENT AUDITORS
                         -------------------------------

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Prospectus of First Financial
Bancorp. for the registration of 5,115,000 shares of its common stock and to the
incorporation by reference therein of our report dated January 15, 1998, with
respect to the consolidated financial statements of First Financial Bancorp.
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1997, as filed with the Securities and Exchange Commission.




                                                     ERNST & YOUNG LLP

Cincinnati, Ohio
March 3, 1999


<PAGE>   1
EXHIBIT 23.2--CONSENT OF CROWE, CHIZEK AND COMPANY LLP, INDEPENDENT AUDITORS


CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form S-4 and
Prospectus of First Financial Bancorp. of our report, dated January 15, 1998, on
the consolidated financial statements of Sand Ridge Financial Corporation as of
December 31, 1997 and 1996 and for the years ended December 31, 1997, 1996 and
1995. We also consent to the use of our name and the statements with respect to
us appearing under the heading of "Experts" in the Prospectus.



                                                   CROWE, CHIZEK AND COMPANY LLP

South Bend, Indiana
March 3, 1999



<PAGE>   1

EXHIBIT 23.5--CONSENT OF BARNES & THORNBURG

BARNES & THORNBURG                         600 1st Source Bank Center
                                           100 North Michigan
                                           South Bend, Indiana 46601-1632 U.S.A.
                                           (219) 233-1171
                                           Fax (219) 237-1125

                                           March 3, 1999


Board of Directors
First Financial Bancorp
Third and High Street
Hamilton, Ohio  45011

                  Re:  Form S-4 Registration Statement to be filed by First 
                       Financial Bancorp concerning merger of Sand Ridge 
                       Financial Corporation into First Financial Bancorp (the 
                       "Registration Statement")

Gentlemen:

         We consent to the use of our name under the caption "Legal M atters" in
the Proxy Statement-Prospectus included in the Registration Statement and to the
filing of this letter as an Exhibit to the Registration Statement.

                                                     Very truly yours,

                                                     BARNES & THORNBURG



<PAGE>   1


EXHIBIT 99.2--SAND RIDGE FINANCIAL'S FORM OF PROXY

                                 REVOCABLE PROXY
                        SAND RIDGE FINANCIAL CORPORATION

                    THIS PROXY IS SOLICITED ON BEHALF OF THE
             BOARD OF DIRECTORS OF SAND RIDGE FINANCIAL CORPORATION

         The undersigned shareholder of Sand Ridge Financial Corporation, an
Indiana corporation ("Sand Ridge Financial"), hereby nominates, constitutes and
appoints ________________ and _____________, or any one of them, as proxy or
proxies for the undersigned, each with full power of substitution and
resubstitution, to vote all of the shares of Sand Ridge Financial which the
undersigned is entitled to cast at the Special Meeting of the Shareholders of
Sand Ridge Financial to be held at 9:00 a.m., local time, on April 22, 1999, at
the Main Office of Sand Ridge Bank, 2611 Highway Avenue, Highland, Indiana
46322, and at any adjournments thereof (the "Special Meeting"), on the following
proposals, all of which are described in the accompanying Proxy
Statement-Prospectus:

         1. Approval of the Plan and Agreement of Merger.


          [ ] FOR [ ] AGAINST [ ] ABSTAIN


         2. Adjournment of the Special Meeting in the event that a sufficient
         number of votes necessary to approve the Plan and Agreement of Merger
         at the Special Meeting is not received.

          [ ] FOR [ ] AGAINST [ ] ABSTAIN

         3. In their discretion, upon such other matters as may properly come
         before the Special Meeting.

         This Revocable Proxy will be voted as directed by the undersigned
shareholder. If no direction is given, this Revocable Proxy will be voted FOR
proposals 1 and 2.

         All proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Special Meeting of Sand Ridge Financial Corporation
and of the accompanying Proxy Statement is hereby acknowledged.

         This Revocable Proxy may be revoked by the undersigned at any time
before it is exercised by (i) executing and delivering to Sand Ridge Financial a
later dated proxy, (ii) attending the Special Meeting and voting in person, or
(iii) giving written notice of revocation to the Secretary of Sand Ridge
Financial.

NOTE: Please sign your name exactly as it appears on your stock certificate(s).
Joint accounts require only one signature. If you are signing this Proxy as an
attorney, administrator, agent, corporation, officer, executor, trustee, or
guardian, etc., please add your full title to your signature.


                                   ---------------------------------------------
                                              Signature
 
                                   ---------------------------------------------
                                              Print Name

                                   ---------------------------------------------
                                              Address

                                   ---------------------------------------------

                                         Dated:___________________, 1999

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE DATE, SIGN
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING
IN THE U.S.A.



© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission