Good morning and welcome to the First Financial Bancorp First Quarter 2013 Earnings Call and Webcast. All participants will be a listen-only mode. (Operator instructions) Please note this event is being recorded. And I would now like to turn the conference over to Mr. Ken Lubbock, Senior Vice President, Investor Relations, please go ahead.

Thank you, Emily. Good morning, everyone and thank you for joining us on today's conference call to discuss First Financial Bancorp’s First Quarter 2013 financial results. Discussing our operating and financial results today will be Claude Davis, President and Chief Executive Officer, and Tony Stollings, Executive Vice President and Chief Financial Officer. Before we get started, I would like to mention that both the press release we issued yesterday announcing our financial results for the quarter and the accompanying supplemental presentation are available on our website at www.bankatfirst.com under the “Investor Relations” section. Please refer to the forward-looking statement disclosure contained in the first quarter 2013 earnings release as well as our SEC filings for a full discussion of the company’s risk factors. The information we will provide today is accurate as of March 31, 2013, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I will now turn the call over to Claude Davis.

Thanks, Ken, and thanks to all of you for joining the call today. We were pleased to report first quarter net income of $13.8 million or $0.24 per diluted share. Return on assets was 88 basis points and return on tangible common equity was 9.24% for the quarter. Our results for the quarter were impacted by several items. First we incurred $2.9 million of expenses in connection with the implementation of our efficiency initiative and other organizational changes. We also recognized $1.5 million gains related to sales of investment securities during the quarter. In total, non-operating items reduced pre-tax earnings by $1.7 million or $0.02 per share after tax. Excluding these items, return on assets were 95 basis points and return on tangible common equity was approximately 10%. Briefly with regard to our results, we felt good about our ability to defend against excessive net interest income and net interest margin compression. Excluding the $2.2 million prepayment fee, we recognized in the fourth quarter, net interest income decreased $1.1 million or 1.8% and net interest margin decreased seven basis points to 4.04%, which are modest declines considering the continuing impact of our declining covered loan portfolio and the spread between yields on new loan originations and payoffs in our uncovered portfolio. Tony will provide more details on net interest margin drivers, but I wanted to highlight that our strong loan production was critical to minimizing the compression in these areas. We are very pleased with the progress we made on implementation of the efficiency initiative during the quarter. Non-interest expense adjusted for expenses covered under loss share agreements and the non-operating items I mentioned earlier, declined $2.6 million or 5.1% during the quarter. Based on our accumulative results to date, we’ve realized savings of approximately $12.5 million on annualized basis,…

Thank you, Claude. Our adjusted pre-tax, pre-provision earnings as shown on Slides 3 and 4 of the supplement were $25.3 million for the quarter or 1.60% of average assets on an annualized basis. Adjusted pre-tax, pre-provision earnings, which exclude certain items related to covered loan activity as well as significant nonrecurring items declined approximately 12% quarter-over-quarter. However, excluding the $2.2 million prepayment fee recognized in the fourth quarter of 2012, adjusted pretax, pre-provision earnings declined $1.1 million or approximately 4%. Including the prepayment fee, total interest income declined $1.9 million or 3% compared to the linked quarter, due to lower interest income on loans partially offset by higher interest income earned on the investment securities during the period. The decline in interest income on loan, again net of the prepayment fee, was primarily the result of 8.8% decrease in the average balance of covered loans, partially offset by an increase in yield earned on the portfolio. This impact from covered loan activity was partially offset by a $95 million or 3.1% increase average uncovered loan balances compared to the linked quarter. However, the impact to interest income continues to be muted as the portfolio yield on uncovered loans declined 13 basis points compared to the linked quarter excluding the impact of the previously mentioned fee. The decline in uncovered loan yields during the quarter highlights the interest rate environment we are navigating as the quarter’s loan originations continue to be recorded at yield significantly lower than the average yield on loans that paid off during the period. Higher interest income from investment securities resulted from a $92 million or 5.3% increase in average balances compared to the linked quarter, modesty offset by one basis point decline in the portfolio yield as we reinvestment rates remained low. Later in the first…

Thanks Tony. And before we open the call back up for questions, I want to just take a couple of minutes and provide some closing comments on where we are focusing our strategic efforts really as kind of re-interest the industry, continue navigate through this challenging operating environment. First is that we are focused on maintaining our strong balance sheet and capital position, which we think is instrumental to allowing us to capitalize on growth opportunities. Second, we remain committed to managing capital in a shareholder-friendly manner, a combination of our current dividend policy and share repurchases that resulted in capital returns exceeding 100% and we believe our long term expectation of returning 60% to 80% of earnings will contribute to providing a solid return on your investment in First Financial. Third organic growth in all lines of business continues to be our primary growth strategy is evidenced by our loan production levels and wealth management growth. Fourth, disciplined expense management will be key to achieving our target efficiency levels by both executing on the $17 million of announced expense savings and identifying additional efficiency throughout 2013 and 2014. Fifth, interest rate risk management especially focusing on net interest income and margin remain top of mind given the continued low interest rate environment and our declining covered loan portfolio and finally we continue to believe that First Financial is well positioned to be an attractive alternative to community banks looking to partner with a larger institution and we are continually evaluating acquisition opportunities for strategic fit. This concludes the prepared comments for the call and I’ll now turn the call -- or now open the call up for questions.

(Operator Instructions) And our first question will come from Scott Siefers with Sandler O'Neill. Please go ahead.

Good morning, guys.

Hi Scott.

Good morning.

Let’s see, Tony, I guess the first question is for you. I appreciate the color on some of the drops that you saw in fee income, particularly mortgage and service charges and I guess along those lines, so it sounds like timing had a pretty significant influence on the mortgage side. Would you expect that -- that kind of timing imbalances, sufficient such that you could actually see a list in mortgage revenues in the second quarter or would you expect a continued decline of this level and then I was hoping you could separately provide a little more color on some of the trends you are seeing in volumes that you noted on the service charge side. Have those picked up at all subsequent to quarter end or at the end of the first quarter? Anything you could -- could offer there would be helpful.

Yes sure, Scott. First on the mortgage side, pretty hard to tell what's going to happen in the second quarter, but your comment around timing is certainly on. Our origination levels were pretty consistent with the fourth quarter. However, we just didn’t -- we weren’t able to get some of those sales settled and you can see that in the run up in our held for sale balances on the balance sheet. So a lot of timing there in the first quarter, so we would expect that to roll in the second quarter. So we are -- we feel good about our platform -- origination platform and our volume. So I would have to see how the second quarter plays out.

I would say, this is Claude, I would agree with that. We should see some just related to timing and then on the service charges, similar with seasonal as we mentioned and we did see some -- just lower volumes related to overdrafts and some other kind of large service charge categories. We would not expect -- we don’t see any trend in that necessarily so, we are looking at some strategies and some evaluations to see how we make that back up in the second quarter and on a go forward basis.

Okay. I appreciate that and then separately do you mind may be giving a little more color on -- you know, overall asset quality was pretty stable, I mean, net charge-offs were obviously very good, but NPA is pretty stable, I think the only thing that jumped out to me was the sequential increase in TDRs, I wonder if you could just provide a little more color on what if anything is going is going on there, how you are thinking about use of those instruments, etcetera.

Sure, yes Scott what happened in the TDR increase is, it was a loan, it was already a non-accrual that some adjustments were made in that relationship, which moved into the TDR category was the biggest reason that you see normal non-accruals go down. Most of that was a transition or transfer if you will to the non-accrual TDR bucket. As you would expect at this level where we are at in NPA, NPAs mainly, we have two or three larger credits that make up a large percentage of that total and they are ones that we think we got active and good resolution strategies on. It’s really been a function of timing as to when that occurs and so we can’t predict it will be second quarter, third quarter, but we are actively working with those clients and we think we got good resolution strategies in place.

Okay. Perfect. I appreciate that and then just final question, I want to make sure I am thinking about capital management for the year correctly, you know it sounds like at least the third quarter will be quite on repurchase, I mean is that really just a function of the fact that you guys will have done this more quickly, what's your anticipation or is there any change in the way you are thinking about overall capital management philosophy? I guess from my perspective it just kind of normalizes if you are quiet in the third quarter but I just want to make sure there is nothing else going on there

No, you read it correctly Scott. It was just a fact that we did a larger volume of purchases in the fourth quarter of 2012 and so in order to -- as the Board we wanted to stay around that one million share number for the year which is why we were quiet in the third quarter and it was unlikely, I mean the Board will evaluate it at the -- at its next meeting, but that’s the intent. So yeah, it’s -- no change in philosophy, just a timing issue.

Okay. All right. That’s what I thought, but just want to make sure. All right guys, thank you.

Thank you. Okay.

And our next question is from Emlen Harmon of Jefferies. Please go ahead.

Good morning.

Hi Emlen.

Good morning.

It was good to see kind of the strength in loan growth again in this quarter, could you may be -- a couple of questions within that, could you quantify just how much growth came out of the specialty lines? You did note that those continue to generate good production, but just would be kind of interested within that kind of what the underlying core demand or trends are on the commercial side of the book?

Yes, the bulk of the loan growth wasn’t kind of broadly defined of the C&I categories and that related to both traditional C&I senior debt on our occupied real estate and some in our what we call business credit or asset based lending function. The piece related to specialty lines would have been between 10% and 15% of the total originations for the quarter. Now the lease financing itself on a linked quarter basis was up about 5%.

The specialty line biggest production I think in the quarter was from the business credit group as we call it, but that -- to answer your broader question I think we’ve been pleased -- we had a good pipeline going into the fourth quarter, going into the first quarter and we continue to see really good activity in the pipeline kind of even going into the second quarter. So we've been encouraged -- it’s certainly very competitive, but we've been encouraged at the investments we made going back two to three years in product lines and sales staff and what they've been able to produce and really balance each other where we saw some nice gains in ICRE in the late part of 2012, that was a little bit slower in the first quarter of 2013, but the C&I kind of part of the business really picked it up.

Got it and I am sorry if I missed this before, but did you guys quantify the kind of the change in pipeline quarter-over-quarter?

We had not.

I mean up, down kind of more stable.

Sure, it is down from where we started the fourth quarter. I am sorry from the fourth quarter leading into the first quarter it is down slightly, but we still feel good about our prospects for the second quarter. I can’t, until you see things close because of timing issues, you don’t know whether you are going to have similar originations or not, but yes, the pipeline is down, still strong by historical standards but don’t have a good sense yet as to what we would see in the second quarter origination.

Got it. Okay. Thanks. And then just on -- on the expense savings program, I guess how much of that was in, how much of it was saves in the first quarter -- first quarter number?

Roughly I think on a normalized basis, we were down $2.6 million and that’s pretty much on track with what we were anticipating from the program from Q1.

Got it. So that would be kind of like $10 million on an annual basis that you realize at this point.

Well I think we've identified the $12.5 million is what we have identified right now on an annualized basis and that’s tracking right where we hope it would be.

Got it. Perfect. Thank you.

Thank you.

Our next question is from Chris McGratty of KBW. Please go ahead. Chris McGratty – KBW: Hey good morning, guys.

Hi Chris.

Hi. Chris McGratty – KBW: Tony, I think in your prepared remarks, I think your quote was you wanted to manage the pace of the NIM decline and the pressure of spread income, could you may be elaborate, I know first quarter is not going to dig on issue, but could you may be elaborate, should we be expecting given the decline in the cover book additional pressure on spread income or is the -- or is the growth momentum that’s building at the core bank enough to kind of send it higher from here, thanks.

Yes. I don’t think that -- I don’t think that we are going to build the momentum to entirely make up for what’s happening in the covered loan book, but I would just say relative to the margin, and probably what we saw this quarter wouldn’t be -- would be fairly typical of what would expect the balance of the year. Chris McGratty – KBW: And that’s actually the one time in the last quarter right.

Yes. On the normalized seven basis contract. Chris McGratty – KBW: Okay, and then one for you Claude, the last priority that you mentioned about -- I think you said partnering with a essentially larger institution, did I hear that correctly and is that -- to me this is the first time you’ve ever kind of thrown that out to the market. I wonder if you could may be elaborate on that comment could have allowed you to go to the buyer.

Yes make sure I am clear, what I said was Chris not us partnering with larger institution, but that we were a good alternative to community banks, we were looking to partner with larger institution with us being that larger institution. Chris McGratty – KBW: Okay.

So us being an acquirer of community banks. Chris McGratty – KBW: Okay. Thanks.

Yes.

(Operator instructions) And our next question will be from Jon Arfstrom of RBC. Please go ahead. Jon Arfstrom – RBC: Hey. Thanks. Good morning guys.

Hey Jon.

Hi. Jon Arfstrom – RBC: Just a quick follow-up on that one, what kind of activity are you seeing in this pricing softening and people getting more realistic in terms of willingness to partner and having that makes sense financially?

You know, Jon I think it’s one of those that we feel like the chatter I guess if you would describe it as that is increasing. As we always said, we always are trying to be out actively and talking with other banks tying to get a feel for what their position is, you know, this isn’t based on any individual conversation but more as we all see the operating environment being what it is and the pressure on margin, the focus on expense. You know, we are I guess hopeful that others will see the value in partnering and I guess to that extent, that’s where we are hopeful that the chatter we are now hearing will translate into some more opportunities. Jon Arfstrom – RBC: Okay. Okay, that’s good and then just a couple of questions on the covered portfolio and in this slide you identified the $252 million of covered loans you are likely to exit, just wondering if you could give us an update on your thoughts on timing on that and if you are seeing any improvement in call it the pricing of the value of the underlying assets?

Well, this is Tony. First on the timing, we certainly as we look forward to the expiration of the loss share agreements, particularly the commercial, which is in the third quarter of next year, we are looking at the portfolio very aggressively and in some cases differently so that’s why you see a slightly different presentation there because it is likely that some of the loans that we may have thought we wouldn’t have previously, it’s likely that we will retain those post loss share. But it is going to be a very aggressive level of activity between now and end of third quarter of next year relative to a number that we have there that is known as likely to exit and that’s the one we are really focused on and so we will keep you posted. I think Claude probably can speak to some of the pricing.

Yes the pricing I think Jon as you would expect with that $252 million a lot of which is in a non-pass rated category, so we are aggressively pursuing collection. It is one of those where depending on the asset type or the geography it can be very mixed. I would say in general, especially on the commercial real estate side of things that if there is cash flow associated with the property, the pricing on those has continued to improve just because the market is getting better as well as we are seeing some of the different geographies that those loans are and have progressively gotten better especially some of the Western states that were very stressed are really in the post acquisition phoenix. Those are showing signs of improvement, but when you ultimately get on the property obviously it’s very dependent on that individual property. So it’s very mixed. Jon Arfstrom – RBC: Okay. Okay, and then just on the other piece of the cover that you feel likely to retain, you feel confident that you can retain the bulk of that I guess the number here you say here is $436.

Well, we have to weigh that against what the agreement allows to do and where we might have as an example we might have looked at a loan that was out of market even though it was performing and because it was out of market, we thought that we, it was likely we would exit that. It’s probably the reverse of that now and that appears no reason that we can exit that through the agreement and have loss share coverage if it’s needed. So we are probably going to retain that and if it’s a past rated credit and we can establish that properly, which we believe we can and then we are going to retain it.

And Jon I would add that given the nature of those and the fact that we are basically 3.5 years now into the end of the loss share, most of what I would call the turnover related to a new bank being involved is for the most part happened and now what we are seeing as we see declines in that, it would be related more to just normal amortization and normal payoffs, which are going to happen in any loan portfolio legacy or purchase. So we feel pretty good about from a relationship perspective retention now just its just a matter of what kind of amortization payoffs can you see in that -- in that other bucket. Jon Arfstrom – RBC: Okay. Okay, I guess my point in asking all this is it seems like it’s -- may be its diminishing headwind over the next few quarters may be not immediately but I guess that’s what I am trying to get at is a sense of that.

Well it is in that context that and what we know and really modeled out as we did the acquisitions in ’09 is that we would go through a period of pretty rapid portfolio decline and especially as it related to the overall loan book and that you would get to a place in the covered loan portfolio where it was a small enough percentage that its decline could be managed by the growth in the uncovered or legacy if you will and we feel like because the investments we made in the sales force, we are starting to see that plateau happen in the smaller percentage the covered book becomes and the less of a headwind it is on a go forward. Does that all make sense? Jon Arfstrom – RBC: Yes, got it. It makes sense.

Yes, the other thing Jon is that our ability to -- when we started out in the deals 3.5 years ago our view on our ability to execute bulk sales in the portfolio was different than it is today. It’s going to be very difficult to just stay if that’s approved under the loss share agreement. So we reevaluate what that portfolio could look like and that’s driving some of this as well. Jon Arfstrom – RBC: Okay. Okay, just one more small question may be for you Claude, it’s a very small piece of your book and it kind of bounces around, but just curious more qualitatively what you are seeing in terms of construction activity in your various markets? Are you seeing some of this begin to pick up?

And Jon you are speaking commercial or residential? Jon Arfstrom – RBC: I guess I would be interested more in commercial and the reason I ask that I am just interested in call it early leading edge activity that you are seeing in the market and which ones are stronger and weaker?

Sure, yes the -- we are seeing more I think in just a general statement but I think what we are seeing and where you saw some of our construction loan balances increase, it would be in a couple of categories. One would be multi family, which I think is a national phenomenon that that is occurring. So we are seeing that and that continues to be strong and we are trying to be careful and make sure we do our market research to make sure that we are not seeing over-building occur in that sector, but at least to this point we feel good about the project that we've done. And then the second is and I would say specific healthcare related type projects that are for a specific purpose and use that we've been a part of and then third, which are much more one-off would be just very strong developers who have specific tenant either for office or retail that we can underwrite through the quality of the tenant as well as the quality the developer that we feel good about and that is kind of less wide spread, but it’s still part of what we are financing. We've not certainly ourselves been a part of and we haven’t seen much in a way of any speculative type instruction happening yet at least in our markets. Jon Arfstrom – RBC: Okay. Thanks guys. Nice job.

Yes, thanks.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Davis for any closing remarks.

Thank you and as always thanks to all of you for your interest in First Financial.

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