Good afternoon, and welcome to the First Commonwealth Financial Corporation Second Quarter 2013 Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please also note this event is being recorded. I would now like to turn the presentation over to Mr. Rich Stimel, Vice President, Corporate Communications. Please go ahead, Rich.

Thank you. As a reminder, a copy of today’s earnings release can be accessed by logging on to fcbanking.com and selecting the Investor Relations link at the top of the page and then selecting News on the left side of the page under News and Market Data. We’ve also included a slide presentation on our Investor Relations page with supplemental financial information that we’ll reference throughout today’s call. With me in the room today are Mike Price, President and CEO of First Commonwealth Financial Corporation; Bob Rout, Executive Vice President and Chief Financial Officer; and Bob Emmerich, Executive Vice President and Chief Credit Officer. After brief comments from management, we’ll open the call to your questions. Before we begin, I would like to caution listeners that, this conference call will contain forward-looking statements about First Commonwealth, its business, strategies and prospects. Please refer to our forward-looking statements disclaimer on page two of the slide presentation for a description of risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements and also if you would experience any sound issues with the call during the course of the call, please let the operator know. And with that, I’d like to turn the call over to Mike Price.

Hey. Thank you, Rich. Good afternoon, everyone, and thanks for joining us on the call today. We genuinely appreciate your diligence and investment of time to understand First Commonwealth. With me today are Bob Rout, our Chief Financial Officer; and Bob Emmerich, our Chief Credit Officer, who will both speak to you in a few minutes. Our second quarter performance is disappointing, particularly in light of some of the transformative initiatives underway and some progress at First Commonwealth over the last year or so. Earnings of $0.06 per share for the quarter and $0.17 for the first half of the year, compared to earnings of $0.22 for the first half of last year are simply behind plan. The culprit is the last of some legacy development credits that were originated in the 2004 to 2007 timeframe. The past two quarters we have written down or disposed of our two largest non-performing loans. In the second quarter, a loan to a real-estate developer that has been with us since 2004 and had a balance of 18.6 million, this loan represented 10.1 million of our $10.8 million provision expense or about 94%. Bob Emmerich will provide more details in a few minutes. In the first quarter if you recall, we sustained a 3.1 million charge with the sale of an Eastern PA development credit that was our second largest non-performer at the time. Disappointingly, these two loans cost us approximately $0.09 per share in the first half of this year. I would share that the level and composition of our non-performing loans and classified assets continue to fall and in fact they are at four to five year lows. Also just 18 months ago, we had nine credits over 5 million that were non-performing. Now that number is only three. A common…

Thank you, Mike. And welcome everyone. As Mike just mentioned, the big issue in our performance this quarter is the cleanup of our lingering credit issue. Bob Emmerich will be discussing net credit in his presentation. So I will focus my discussion on the remaining pieces of the income statement. The net interest margin continues to be pressured declining $0.10 basis points on a linked quarter basis. Net interest income actually increased in the same linked quarter comparison about 300,000 due to more days in the quarter and the growth in earning assets. About 5 basis points of that net interest margin change is related to less fees, primarily from our corporate syndication function. We also had a 10 basis point decline in our investment yields. During the quarter, we added approximately $100 million of mortgage related securities growth. The purpose of this strategy was to increase net interest income and to use excess liquidity in interest rate risk flexibility until loan growth becomes more meaningful. The loan growth that we did get this quarter was in the home equity and indirect auto portfolios where competition is starting to pressure those yields. Commercial loan growth this quarter was affected by the aforementioned charge off by not renewing a couple of large commercial real estate loans that were outside of our market as part of the portfolio de-risking that Mike was mentioning earlier and the resolution of some smaller problem credits that Bob Emmerich will discuss in his upcoming presentation. On the positive side with respect to the margin, we pulled down our core deposit rates another couple of basis points and the early redemption of the 33 million of 9.5% fixed rate TruP borrowings should benefit our margin 4 to 5 basis points going forward. Traction in our small and…

Thank you, Bob. In the second quarter 13.1 million of our 15.6 million total charge offs and as Mike said 10.1 million of our 10.8 million of total provision expense were from one loan. I'm sure you'll have keen interest in that and that will be the focus of my remarks. The bank's largest non performing asset at 3/31 was the $18.6 million remaining balance on an original $46 million unsecured loan to a Pittsburg bill state developer. You may recall in December of 2010, the bank entered into a forbearance agreement with this borrower and with other banks that had loans made under similar terms to the same developer. At that time the borrower refinanced his properties and was able to take cash out and pay the banks down. Our share of that pay down at the time was $8 million, the banks agreed to accept interest only for 42 months after which time the assets would be sold or refinancing the bank would receive further proceeds. In the fourth quarter 2010 First Commonwealth charged the loan down by 15.4 million. So what the expected net proceeds would be from the sale or refinance of the borrower's assets. The bank also assessed a reserve on part of that remaining balance and we have adjusted the reserve balance each quarter subsequently. Analysis to support the reserve assessment has usually been based on the net operating income of the properties and current cap rates. We're now getting close to the end of our forbearance period and have been meeting with the borrower to develop a liquidation plan that will be acceptable to the bank group. There are seven principal assets that would be the source of our proceeds, five of the assets have held up in value to what the bank's…

Yes, operator, we’d now like to open the line for questions.

(Operator Instructions) The first question comes from Bob Ramsey of FBR. Please go ahead.

First question, I was hoping you could talk a little bit more about net interest margin. The compression was a little more than the 5 to 7 basis points, I think you sort of expected coming into the quarter. I am curious, you know what changed and how you are thinking about margin, the margin outlook from here?

Bob, it’s Bob Rout. Two issues, we added more to our security’s portfolio because the loan growth was not quite what we had expected. We also talked a little about our fee revenues from our syndication desk was not as high as it has been running typically. And we are not giving you a forward-looking information on the margin but we think it’s moderating at this time. Certainly with the most recent rise and interest rates on the long term anyway, that’s starting to have a very beneficial effect to the reinvestments of our maturing securities. Bob Ramsey – FBR: Okay, that’s good to know. Where are you actually purchasing securities and where are you reinvesting the securities book?

Primarily mortgage-backed securities, CMOs with the duration probably slightly under 4 years. And this helps offset some of the runoff that we’ve been experiencing in our first mortgage portfolio which is typically running $50 million to $60 million a year. And quite obviously, the runoff that we’re getting in mortgage loans replace them with mortgage securities is yield certainly [at a stretch] [ph].

And I guess I was curious, what you’ve actually been reinvesting at in terms of yield on the securities book?

We have our treasurer here, Mark (inaudible). Mark can you give them just the…

Sure. With the back up in interest rates mortgage backed securities right now 15 year you’re probably close to over 2.5%. We’re also looking a 10 year [AM] [ph] paper which right now is about 2% even. CMOs are probably in that 2.25 to 2.35 range. Bob Ramsey – FBR: Okay, that’s helpful, and then maybe if you could just talk a little bit about the plans on the resi mortgage origination business and I’ll hop back out of the queue but I’m just curious, you know, how quickly you’re thinking about getting this business up and running if you’ve got any sort of goals or what origination volumes could look like in 2014 and how much of the resi runoff you think this business will be able to offset?

It’s just a couple comments, you know when you began the journey and got out of the mortgage business 7 years ago, we had about a $650 million to $700 million portfolio. So we’ve had that headwind running against us. You know, as a side note I think that also is why our margin has had more downward compression because we haven’t had a good slug of three quarters of the billion dollars sitting there at a longer rate to make our mortgage more buoyant or I mean our NIM more buoyant. As far as the entrée to the mortgage, we’ve looked at a couple of acquisitions. Quite frankly everybody wanted to sell it five times high earnings when we wanted to average three or four years of earnings, so we didn’t want to overpay. We are kind of at a place now particularly with Jane Grebenc joining us, she knows mortgage very well that we can get a seasoned executive and really go into it on a de novo basis, we hope to have an executive in house here in the second half of the year. And ideally, in the first half of next year, begin to be making mortgages. I would also share that the figuring up the volume is not that hard. I am not going to give you a number but it’s basically just taking the number of branches, our branches do a pretty good job of selling consumer loans, our customer base is very loyal and we have high market share in these communities outside of Pittsburgh in particular and we are a natural fit there and you just do the math that one and half to two and half mortgages and times x mortgage amount and it’s a good business.

(Operator instructions). The next question comes from Collyn Gilbert of KBW. Please go ahead.

Bob, just a follow up on the securities discussion, so what is your plan in terms of outstanding if you want to keep that flat? Do you want to grow it? I mean I know you commented obviously on the yield change going on there, but what about just the overall size of the portfolio?

We plan to stay where we are at Collyn. We think internally generated funds will take care of any mortgage growth or any loan growth that we have coming up. However if we would start to experience greater growth than we have so far this year then we have the capacity to redirect those funds into the lending business rather than the portfolio.

Okay, and if you have said and I missed that I apologize but the yield that you are seeing on your new loan originations and I am sure obviously it varies over the buckets, but what is that on average?

On the commercial side, we are still on average for the portfolio in the high 2s to the low 3s. The compression has been more on consumer and the indirect side with the margin.

And when you say high 2s low 3s, is that over LIBOR?

Yes, that spread.

Okay.

[Subtract] [ph] that with the recent month and then at 12 month average and look at that every month.

Okay, I guess, Bob just trying to reconcile the NIM stabilizing here and is it the fact because it still seems like the new origination both on the security side and the loan side is still coming on lower than the portfolio yields of your earning asset buckets. So is it, I am just trying to understand why the NIM would stabilize versus compress a little bit here further?

Well, Mike was talking to you about spread which is LIBOR based and we have probably most of our loan portfolio is LIBOR based and the fact that we could get with the longer rates moving up that’s going to provide a better yield on those new loans coming in that are not LIBOR based. Our interest rate forecast is not indicating any rise in the short term rates for at least another year. So that’s something that we are going to have to live with. So, yes, we will be seeing some price rise, yield increases within our loans and we have already seen increased yields on reinvestment rates for securities and as you know the securities market reacts quicker than what does the loan pricing environment.

Okay, that’s helpful and then Bob, just tying in all of your comments that you have made on credit and watch list, everything you have got going on, do you have a general sense of what do you think the net charge off ratio will be for the second half of the year?

That’s not a projection we are willing to give, Collyn.

(Operator instructions). We have a question from Matthew Breese of Sterne Agee. Please go ahead.

I just wanted to be clear on the mortgage origination business. That’s a for balance sheet business not a gain on sale business, correct?

It will be both.

It will be both. So I am assuming you guys would be selling the conventional paper and keeping some of the shorter duration stuff?

You got it.

And as far as the timing goes, when do you guys expect that?

Probably latter part of the first half, second and third quarter of next year.

Okay and then maybe you guys can talk about the provisioning expense, going forward from here extra large one time charge off this quarter. Is there a way we should be thinking about it as to how to model it?

This is Bob Rout here. It's probably the same response I gave Collins not something we're looking to project. But I would look to the improvements within our classified and criticized assets, for indicators that we're feeling very good about. We're also feeling very good about the size of the non-performing loans and the collateral valuations that we currently have in that portfolio. It's certainly a refreshing change over what we've experienced the last four years. So we're positive but also very cautious at this point.

Matt this is Mike. It was only two or three years ago, when we looked at our infamous ten non-performers. They were out there. Now we have three over 5 million which I think is more in line with what you would expect from a bank of our size. So that will take some pressure off.

Okay.

The other thing Matt that I wanted to mention is the benefit that we're getting from OREO and inflection cost and non-interest expense has been significant. And especially with this last piece of property in Florida that we sold, that was just a tremendous expense drain for a number of years and we’re glad to see it gone.

Maybe tying that into the overall IT conversion, without giving too much guidance on the expense front, what kind of efficiency ratio are you guys eying over the next year or so? I know you have mentioned in the past you wanted to be in the top performing kind of quartile banks. So maybe you could give some color around that again?

It's just; I would share this we're not barking on this IT conversion for a couple of million bucks. So I will leave it at that. And we'll have perhaps more color commentary there shortly, once we get beyond the negotiation phase. And we're looking to get sub 60 into the 50s in the next couple of years.

And as far as the system conversion goes I mean, the negotiation process and there is the actual conversion, when is that expected to happen?

Great question, typically nine to 12 months after you set up a conversion with the vendor.

So it's really more of a back half 2014 event?

Yes.

That's all I had Thank you guys.

(Operator Instructions) This concludes our question and answer session. I would like to turn the conference back over to Mike Price for any closing remarks.

Thank you again for your attention and your interest in First Commonwealth, I know we'll be on the road with a number of you over the course of the next quarter. So sincerely look forward to that. The keys for us are very simple. Lower long term credit costs, growing revenue. We will add more legs to the revenue stool so to speak. Improved efficiency and we feel like we have built a couple of good engines in our core retail and corporate banking franchise, and really look forward. The businesses are a lot of fun, to really willing those in the market place and winning and extending our franchise. So thank you and look forward to being with you shortly.

The conference is now concluded. Thank you for attending today's presentation, you may now disconnect your lines.