Good afternoon and welcome to the First Commonwealth First Quarter Earnings Conference Call. All participants will be in listen only mode. [Operator Instructions] Please also note that this event is being recorded. I would now like to turn the conference over to Mr. Ryan Thomas. Please go ahead.

Thank you, Andrea. As a reminder, a copy of today's earnings release can be accessed by logging onto fcbanking.com and selecting the Investor Relations link at the top of the page. We have also included a slide presentation on our Investor Relations page with supplemental financial information that may be referenced throughout today's call. With me in the room today are Mike Price, President and CEO of First Commonwealth Financial Corporation; and Jim Reske, Executive Vice President and Chief Financial Officer. After brief comments from management, we will open the phone call to your questions. For that portion of the call, we will be joined by Brian Karrip, our Chief Credit Officer, and Mark Lopushansky, our Chief Treasury Officer. Before we begin, I would like to caution listeners that these conference calls will contain forward-looking statements about First Commonwealth, its businesses, strategies and prospects. Please refer to our forward-looking statement disclaimer on Page 2 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 now, I would like to turn the call over to Mike Price.

Thanks, Ryan. And welcome and thank you for joining Jim and I today. First quarter net income of 15.9 million or $0.18 earnings per share increased $3.4 million year-over-year, the decrease some $2 million from last quarter due to a few large recoveries last quarter. A few noteworthy items include, our net interest margin expended to 3.5% following the first full quarterly benefit of the deposits associated with the 13 acquired FirstMerit branches in Canton and Massillon, Ohio. After giving -- also giving us a lift with the recent Federal Reserve interest rate increase, which flow through a predominantly variable rate loan portfolio, the core efficiency ratio approved to 60.49% for the quarter as expenses remain relatively well controlled. Operating expenses were essentially flat this quarter despite absorbing a full quarter of the 13 acquired branched in Canton and Massillon. I'm pleased with our ability to maintain expense discipline as these two recent acquisitions are absorbed into our operating base. Also the first quarter provision expense of 3.2 million saw elevated charge offs and was partially offset by the release of reserves and other components of the ALLL model. As a result, the allowance for credit loss was decreased to $48.7 million or 1.01% of total originated loans which excludes the loans acquired from FirstMerit that would have been marked through purchase accounting. Other non-performing assets increased this quarter, credit metrics such as total delinquency and the level of classified assets trended positively. Our loans grew modestly as commercial loan growth of roughly 6% overcame some runoff in the consumer lending portfolio. We're pleased with where are commercial loan pipeline is at today, particularly in C&I lending while the consumer loan pipelines are showing signs of growth. We are also pleased with the pipeline in Ohio. We have been able…

Thanks Mike. As Mike mentioned, core earnings per share which adjust for non-recurring merger expense came in $0.18 for the quarter and core ROA was $0.98. We had 652,000 in securities gains in the first quarter. Beyond the merger expense and the securities gains, there was a very little runway of one-time events this quarter that might otherwise cloud the earnings picture. Nevertheless, I'll spend a few moments providing you some color on the margin, fee income and expenses as you may find helpful. As Mike noted, the net interest margin improved to 3.50% from 3.44% last quarter, as the yield on average earnings assets improved by 6 basis points while the cost of funds was unchanged. However, 3.50% the first quarter NIM was well above the 335 to 345 guidance we provided last quarter due to mostly because the Fed rates raise in March early than we had anticipated. The March rate increase re-priced approximately 45% of our loan portfolio and will overtime the re-price approximately 64% of the portfolio. In addition as we have disclosed in the past, our predicted model call for an immediate deposit beta of approximately 25%, which was reflected in our NIM guidance, but so far has not been we naturally experienced. The success of the branch acquisition has alleviated our near term funding pressures, bringing our loan to deposit ratio below of 100% such that our actual deposit beta was effectively zero in the first quarter. We continue to see positive deposit inflow even beyond the acquired branch deposits or at the same time, our cost to deposit is decreased. In addition, the commercial nature of our balance sheet provides us the strong source of non-interest bearing deposits representing about a quarter of our total funding. I would add to that the first…

Questions, operator?

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Bob Ramsey of FBR. Please go ahead.

I want to talk a little bit about margin. I know you said, one of the reasons that came in better than expected this quarter had to do with the March Fed fund increase. I guess that may held for a couple of few weeks, but I'm guessing you still get most of that lift as you go into the second quarter. Would you expect a little bit of expansion quarter over quarter as we go forward in the second?

Yes, Bob, this is Jim. That’s exactly right, we do expect that. We did see a little bit of the some anticipation in the markets of the rate increase, starting and beginning of the March. The one month LIBOR rate starting to increase and that’s really the reference rate that drives a lot of variable rates in our loan portfolio. So, we got the benefit of rate increase for about a third of the quarter. But you're right, we'll see the full benefit coming out in the second quarter and that’s reflected in our main guidance that we've given.

And then shifting gears to think about efficiency, sort of excluding the merger call such you may have highlighted for the second quarter. Do you think guys are back under 60 in the second quarter, you think it takes a little bit longer to sort of get the merger call saves to get under that target?

I think we're probably right on the bubble and pushing hard. I think revenue will really be the key for us to drive that efficiency lower and we're ever mindful of cost in a normal environment keeping our cost flat to down.

[Operator Instructions] Our next question comes from Daniel Cardenas of Raymond James. Please go ahead.

Maybe a little bit color on your pipelines coming into the quarter on the lending side. Are they compared to the first quarter and then also some color on what pay downs and pay offs look like so far in the month of April?

I think our pipelines are building particularly in C&I and in Ohio and that pertains well for perhaps a little stronger growth in the second quarter than the first, and we are also opening to turn the ship, in consumer lending, we have been leaking oil little bit over the course of the last year and really get back stabilize and beginning to grow. We will also have more ores in the water by the end of the year when things look like SBA lending, and we are expanding our indirect auto business with dealers and good folks will be doing business within Ohio. So, hopefully, retail can help us to grow as well. And mortgage is also -- we have a nice trajectory in the first quarter in mortgage and hopefully I am sure we will be able to exceed our prior years fundings, and right now I think we are -- portfolio in probably 38% to 40% each quarter there and selling it at about 60. So that will help on the consumer loan side as well.

And then on the indirect side maybe a little bit of color as to how that portfolio is performing for you and what delinquency trends are looking like?

That portfolio has performed very well for us over the years. We have played with price elasticity and we have been pretty firmed in keeping our spreads up, and consequently our volume has run off in the last year probably Jim $40 million to $50 million run off in the last year. That portfolio for us has been -- has had low credit experience over the course of the last decade, and we have underwritten pretty conservatively. Jim, I think you might have the average FICO cycle and many our delinquency.

Our average FICO score is 743 and you've asked about delinquency it's about -- last quarter about 23 basis points. So, it’s a good performance portfolio. And I would just add, Mike had mentioned, we really like the business and like the duration of the business because it’s a very -- it’s a medium term duration business for us. The average portfolio duration is anywhere from 2.5 to 3 years and that just fits nicely in our balance sheet.

And it’s a nice cross-sell with the good dealer. You might have a real estate loan or a full plan line of credit to add the indirect auto and do business with people that you trust.

And then how should we think about your tax rate going forward?

Tax rate guidance, we're giving for the effective tax rate right on 30% is a number that supposed to represent the full year, so that’s it. We have taken into account obviously the one-time merger expense we're going to have in the second quarter in that number and that should be good.

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

We just as always appreciate your interest in our company and the opportunity to follow up with your from quarter-to-quarter. And thanks for your input and take care.

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