Ken Lovik - VP, IR and Corporate Development Claude Davis - President and CEO Tony Stollings - EVP and CFO

Jon Arfstrom - RBC Capital Markets Scott Siefers - Sandler O'Neill Chris McGratty - KBW David Long - Raymond James Emlen Harmon - Jefferies John Artstrom - RBC

Good morning. And welcome to the First Financial Bancorp First Quarter 2014 Earnings Conference Call and Webcast. All participants will be in listen-only mode. (Operator Instructions). After today’s presentation there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Ken Lovik, Senior Vice President, Investor Relations and Corporate Development. Please go ahead.

Thank you, Nicky. Good morning, everyone. And thank you for joining us on today's conference call to discuss First Financial Bancorp’s first quarter 2014 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 2014 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, 2014, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I will now turn it over to Claude Davis.

Thanks, Ken, and thanks everyone for joining the call today. For the quarter we reported net income of $15.1 million or $0.26 per share. Our results for the quarter were impacted by non-operating items related to the execution of our efficiency initiatives, acquisition related expenses and legal settlement expenses which reduced reported earnings per share by $0.02. On an adjusted basis return on assets was 1.02% and return on tangible common equity was 11.13%. Additionally as Tony will touch on his comments, our results were impacted by seasonal and weather related events, effecting certain non-interest income and expense items. As many of you have probably seen, we announced our third transaction in the Columbus, Ohio market last night with the signing of the definitive agreement to acquire Guernsey Bancorp the parent company of the Guernsey Bank. Guernsey is a $123 million asset institution with 74.5 million in loans and 100.5 million in deposits. It has three locations in the market including its headquarters in Worthington and banking centers in Upper Arlington and Westerville, all extremely attractive communities in the metropolitan Columbus areas. Bob Patrella the CEO and sole shareholder and his team have built a successful franchise based on providing an exceptional level of client service, which we hope to enhance with our expanded product set and resources. With its strong consumer banking business, Guernsey is a perfect strategic complement to the commercial lending and asset generation capabilities of The First Bexley Bank and Insight Bank. Taken together these acquisitions positions First Financial as one of the larger community banks serving the dynamic Columbus and Central Ohio area and provides a strong platform to capitalize in the potential of one of the mid-west higher growth markets. We are also very pleased with our recent expansion in the Fort Wayne, our…

Thank you, Claude. Our first quarter adjusted pre-tax, pre-provision earnings of $23.6 million which excludes certain items related to covered loan activity, as well as other significant items, increased $3.8 million or 14% from the fourth quarter, primarily due to the impact from typical first quarter seasonality, lower mortgage gain and the unusually harsh weather conditions experienced during the first quarter. As shown on Slides 3 and 4 of the supplement, pre-tax, pre-provision earnings declined to 1.50% of average assets on an annualized basis from 1.75% in the fourth quarter. Excluding the seasonal and the weather related items, our operating performance remains strong and most consistent with the prior quarter. Total interest income increased $900,000, or 1.4% compared to the linked quarter as lower interest income on loans was partially offset by higher interest income from investment securities and the lower amortization of the FDIC indemnification assets related to covered loans. The first quarter decline in interest income on loans is primarily the result of $56 million or 11% decline in the average balance of covered loans as well as the decline in loan prepayment fees. The impact of these declines was partially offset by another strong quarter of loan production, as we saw an 85 million or 2.5% increase in the average balance of uncovered loans during the period. Despite strong loan growth in recent periods, interest income continues to be impacted by the prolonged low interest rate environment as the yield earned on the uncovered loan portfolio declined 11 basis points during the first quarter excluding the fourth quarter 2013 impact related to loans that return to accrual status. Further evidenced in this challenging environment, the average yield earned on new loan origination was approximately a 100 basis points lower, than the average yield on loans that paid…

Great, thanks Tony. Nicky I think we’re ready to open the call up for questions.

Thank you very much. We will now begin the question and answer session. (Operator Instructions). Our first question comes from Jon Arfstrom with RBC. Please go ahead.

Couple of questions here, just Claude bigger picture on the business confidence and also on the commercial growth it seems like its strong and getting stronger. Anything driving that or anything of note?

I don’t know that if there is anything of note in terms of one or two things Jon, it just seems like -- I think a couple of things, one is the activity is a bit better than we’ve seen just broader -- in broader market perspective. I think clients are more confident to make investments where take it back a year or so ago where that was one of our concerns is just the level of conservatism. So I think that’s one issue. I think the second is some of the investments we’ve made over the last two to three years in lending resources, credit product, expansion of product, whether that be in ABL equipment finance, the franchise finance. All those are beginning to pay off for us. So I think it’s a combination of market, client confidence and our investments.

How about the construction activity? Anything of note there?

We are seeing some renewed construction, not so much; we’re not doing too much in the residential construction area other than in our first mortgage group, where we have a nice construction product for our individual clients if they are going to build a new home. And we’re seeing a bit of a pickup there. I would say it’s early and small, we’re seeing some nice construction in the multi-family space which is I think pretty consistent across the country. We have several big clients across our footprint in that area. And I would say that then you got some -- we have also some medical, there is some medical facility construction going on mainly in smaller clinic type facilities that we’ve also been able to participate in. And then the final one that I think has really help drive some growth are some I would say some specific retailer built to suit models that we’ve been financing which have been a nice add as well. So there is some construction pick up but it’s in specific categories.

And then maybe Tony, either you or Claude but you talked a little bit about the margin erosion in the pricing pressure and I think we all understand that. But we’re getting to the point where you have some good organic loan growth and the covered assets in the runoff portfolio just keep getting smaller and smaller. You’re getting closer on net interest income growth but just curious how you think about your ability to grow net interest income potentially later in the year.

Yes, Jon I’ll start, this is Claude, and then I’ll let Tony pick up on that. We do feel like with the organic growth that we’re seeing and as I mentioned, the pipeline is up 17% from year-end with (back fully) [ph] Insight and now Guernsey coming on Board this year and they continue to experience very solid loan growth and in their market we feel good about that ability to grow the balance sheet, grow the earning asset base, even though at different rates than what’s running of. I think if you looked at this quarter and you factored in day count compared to fourth quarter, we might have actually seen some net interest income grow at their marginal growth in that category. So we feel good about the trends there obviously interest rate environment is going to play a big impact.

Yes, there is a couple of things as Claude said the interest rate environment even though we have very solid loan volume in the prolonged interest rate environment, there is just no way you can overcome that in terms of replacing, paying, eroding assets with new assets. As far as the covered loans, you are right it is becoming a much smaller piece of our story, and it is very much a volume driven issue there. I mean the overall when you take the indemnification asset into consideration, the overall return on those assets doesn’t change that much, it’s the volume piece that really drives it. So when we look at the quarter, overall net interest income only down about 900,000 still solid loan growth, covered loan portfolio performing well, we like the position we’re in and are much more focused on net interest income as we are -- than we’re the actual net interest margin percentage.

The next question comes from Scott Siefers with Sandler O'Neill. Please go ahead.

Tony I guess I want to ask I think Jon’s question a little different way. So you mentioned the slightly widening gap between loans coming on versus those they are rolling off. What makes you guys a little unique is of course the covered loan portfolio running off. So do you have a sense for where new loan yields are or where in the first quarter versus say that the fourth quarter, just trying to get a perspective for how intense the pricing pressure is and how much is simply due to the run-off of the covered portfolio? I think my sense is if that is more of the later but would be curious to hear your thoughts there?

: Yes, it’s a little bit of both. We have talked in recent quarters about that spread, I’d say some quarters were a little better at managing it than we are others. This particular quarter we saw a little bit of a widening there, a little on the origination side but mostly on the pay-off side.

: What comes into play there Scott, this is Claude, is in any one quarter if you certain loans that pay off, you could be getting a fixed rate loan paying off one quarter, a variable rate loan paying off the next quarter and those rate differentials can be significant. Same is true on the origination side. John asked a question about construction, we’re seeing some construction pick up, those are typically variable rates. So it also depends on the mix of short term versus long term. I would tell you I think in just in general in terms of what’s being originated in terms of the rate, I am not sure we’ve seen a substantial tightening of spread which is what we think about it. So I mean it is really on any one quarter it’s a mix determined spread.

Okay, that’s helpful color and I appreciate it. And then either Claude or Tony, just so you could chat about the -- just what you’re seeing on the mortgage side for a second, (I guess you guys) [ph] a little unique that you’ve got sort of that newer team out of Fort Wayne, but just curious there have been some pretty mixed messages on the strength of the spring selling season. I know it in your guys geography in particular, you’ve got that the increment weather issue which was relatively more of a factor. But just would be curious what you’re seeing on actual activity inventory levels et cetera?

Sure. The first 2.5 months were pretty brutal to put it kindly, because what we’ve been doing Scott, your point is not just the Fort Wayne team, we’ve really been growing in the last year and half, two years, our MLO base in multiple markets, we’ve got a very nice team coming on board in Columbus Ohio both with Insight and First Bexley as well, so that’s really a growing business for us from a sales staff perspective. We did see the pipelines increase a fair amount late in March and into April and so we feel good about that in terms of the increase but it was off of a very low base in January and February. So my own opinion is that it’s still a little bit early to say whether we’re going to see a substantial pickup in 2Q although it will be a pick up just because of how bad the first 2.5 months were. Now Tony if you could anything there.

Yes I mean our overall volume Scott was not -- didn’t decline too much maybe 10%, we put a little more on the balance sheet this quarter than we did originate for sale, so that impacted some of the gain numbers, but it’s been a little bit of -- it's been a steady decline since the second and third quarter of last year but our drop off from the fourth quarter through the first quarter was really not that significant.

Okay, all right that’s great. I appreciate it and then just the final question is on the M&A side. So obviously the last few months have been a little more active but in the aggregate even though you’ve got three sort of open items now still very small, so Claude just would be curious to hear your thoughts on if -- is there any governor for sort of number of things going on at the same time even if the size is small or I guess just judging by what you guys have done in the past few years, you certainly seem to have a capacity that handle a few things at a time without a lot of problem. So would be just curious to hear your thoughts about a lot of little things and then maybe a bigger picture question sort of how much extra capital do you guys feel like you have at this point given the regulatory items what you might see on the horizon et cetera and sort of how big would you be willing to look if the right opportunity came along?

Sure, yes, a few questions there Scott and I'll -- if I don’t get them all, remind me. First one I think on our capacity, you’re right, I think in total when all three deals close and with their current growth, I would guess would be around 700 million in the Columbus market and so taken together, that’s a very manageable size and deal for us both from a resource and capital perspective it’s five locations. So we feel very good about our ability to integrate all three of the Columbus Ohio deals. Yet I would tell you and I think what our operations staff would tell you is that it is still more difficult to integrate three deals than one deal because there is a lot of the work that has to get done that it doesn’t matter whether the banks are 100 million or 1 billion, it’s the same amount of work. So we’re very sensitive to our resource constrain issue. One of the reasons why we feel good and I commented in my script about our ability to look at additional deals now, is that a lot of the heavy lifting on the Insight and First Bexley deals is substantially complete, not complete, obviously it’s not closed, not integrated yet, but a lot of the planning, product mapping, data mapping has been done and it’s ready to go. So with those two we feel like we’re substantially further along and with Guernsey being on the smaller into the three, we feel good about our capability there as well. So to the extent, another opportunity comes along tomorrow, just because the way the calendar and the timing would work, our ability to execute that deal and then plan the integration in the context of the other three, I…

I think you got all half dozen of them. So that was good. No, I appreciate all the color, so that does it for me. So thanks again.

Thank you. And the next question comes from Chris McGratty with KBW. Please go ahead.

Claude or Tony, I want to ask the margin one more way. Given the color about near term, I look back in your margin (pre-Irwin) was call it 370, 375, obviously a lot has changed since then, but is that kind of where you guys feel you may be going until we ultimately drop? Is that reasonably?

You know it’s really difficult to say, I think as we try and look out over the next 9, 12, 15 months, I guess I can say that kind of feels right but it’s really difficult to say it depends on really, where rates go and how long we are kind of caught in this funk. But, I think that we probably see the biggest [indiscernible] that we’re going to see.

On the new markets maybe an update on Fort Wayne, any new wins there in terms of market share and maybe any incremental investments you guys may need to make?

Certainly, yes, we're really excited about Fort Wayne as a market which we have been for some time and now with the teams we have there, we’re even more excited and I would say the initial investment we’re going to be making there, Chris in addition to what we've already done is we're in the process of searching for a new hub for the Fort Wayne market, a permanent downtown home, we will certainly look at additional retail locations in that market over the next, probably couple of years. And there will be staff that go along with that. And then we’d like to certainly build out some of the asset or wealth management. Our product lines in the market as we get the opportunity to do so. So we'll continue to invest in Fort Wayne. And in terms of wins in market share I would just reiterate what I mentioned in the script and that is that thus far -- and it's very early but the growth thus far, especially on the commercial side has been in excess of our original forecast. Now we don’t disclose the forecast and we don’t disclose by market growth but I would just tell you that in terms of how we’ve thought about that market and our expectations thus far they are exceeding them.

That’s fair. Great. Thank you. Just last one, Tony, maybe I missed it on the small transaction. Did you disclose the intangibles in the CDI and (emerging) [ph] charges, if so could pull on it?

Yes, we didn’t get that kind of granularity on this, we did provide the potential book value dilution in about $0.12 in the earn back period, the rest is, we really don’t get into the model assumptions and pricing decisions and those things.

Thank you. (Operator Instructions) The next question comes from David Long with Raymond James. Please go ahead.

Thanks for giving the update on the pipeline. It sounds like the commercial pipeline is going pretty nicely, but if you look back over the last year or so, looking at that pipeline, have you noticed any changes in the closure rate those loans that were in the pipeline that have been closed say within three months?

: Honestly, I don’t believe so David and our commercial team did not mention anything to me related to kind of fallout rates, kind of increasing or declining, I don’t know Tony or Kenneth either one of you…

: No, I’ve not heard that as being any kind of an impediment to our growth.

: And certainly we’ve seen a correlation between the build of the pipeline in our growth rates which lead me to believe, no, but to be honest I have not looked specifically at fallout rates to that question.

Okay. And then second question I had. You mentioned it a couple of times the Columbus market being particularly strong in the Midwest and just wanted to see if you can maybe provide a little bit more color, why do you think the Columbus market is particularly strong. And are there any specific metrics that you’re directly thinking about?

: Well want to just size the growth rates that are projected for the market compared to other Midwest growth markets and I don’t have the deck in front of me that we talk about it at first quarter call where we had some of the comparative growth statistics, David. But that was one and Tony and Ken look and see if they can find that really quickly. The second though is just the quality of the market in terms of our target client base and that target client base obviously both being consumers which its nearly a kind of 2 million person MFA, the diverse economy in terms of not only the large number of Fortune 1000 Companies of which there are about 15 in that market. But a substantial number what we call our small and middle market business target client base. We think it’s particularly strong in the Columbus market. And then third is the stability of that market with the existence of the state capital, Ohio State University, the regional health center that’s in Columbus, all of those just give us a strong confidence in that the quality of that economy and the growth rate for us. And what we've been trying to position ourselves to be David, both, we’ve done it in Cincinnati, we believe, we’re trying to do this in Indianapolis, Portland, Columbus just to be the largest community bank alternative to the superregional banks that we can offer a very similar product set especially to that commercial client base where we can offer everything from capital markets alternatives to ABL equipment finance, traditional senior debt, treasury management capability. And if we can get enough scale on those markets to be that community bank alternative, we think it provides us a better than market growth rate in a good economy such as Columbus.

: I’ll just add to that that while we were certainly we were initially attracted to the market, something that we didn’t fully appreciate until we got up there was the opportunity to build that scalable platform with some of the smaller banks that were there that we’re feeling constrained that really we’re looking to accomplish a rollup type of strategy if you will, that was something that as we spent more time in that market we begin to realize and see as an opportunity. So for all the points to coordinate on, on the economic strengths of the area once we were there and saw the opportunity to achieve the scale that we like and made it even more attractive.

Thank you. The next question comes from Emlen Harmon with Jefferies. Please go ahead

On Columbus and the acquisitions, I’ll say the geography had a personally even added through three different deals, do you add anything unique in terms of kind of businesses or expertise from those three organizations and kind of how do they complement one another in that regard?

: Sure, they are all three slightly different and we feel very good about take as an example, the commercial teams that First Bexley and Insight kind of bring to us once those deals are closed, is they bring a group of commercial talent to us that is not typical of the -- I call it a smaller community bank. Many of these individuals have worked in larger banks in their career. They can do both small business as well as small and middle market clients which is why we’ve always talked about that ability to have a platform for growth, that to Tony’s going to point just a second ago we were pleased with our ability to create that platform for growth with two or three smaller institutions. The Bexley Bank also had very strong kind of private banking type model, we have a lot of very good solid individual clients that we think will be wonderful for us not only as clients but as influence makers for us in the Columbus market, and then the addition of Guernsey Bank which is I’d say a bit more of a retail oriented institution, been around much longer, a much more core deposit base, each of them bring a complement to the other that we think we can meld together and make a very strong First Financial brand.

Got it, okay thanks, and there is one other quick one on Guernsey, [indiscernible] like you won’t get the kind of full accretion until 2016 which is a little bit on the longer side, maybe we are just getting later in the year but I mean is there anything unique there that’s going to take you kind of longer to get the full effect from the deal or is that really just timing?

: No, it’s just a transaction that we’re projecting will happen later in the year and between the field costs and our ability to achieve all the cost saves just going to stretch over into ’15, so ’16 will be the first really full clean year.

Thank you, the next question is a follow-up from John Artstrom with RBC, please go ahead.

Hey thanks, Tony, I don’t know if you’ve -- I’m assuming you’ve done the math on weather, but any estimate for the cost maybe revenue and expense, together.

: On weather did you say?

Yes.

: Yes, I mean we’ve done some -- what we think is some conservative math around that and you know on the income side its maybe $0.5 million to $750,000 on the expense side, probably closer to $1 million, so we look at our performance for the quarter that’s kind of the way we talked about internally.

Okay, so it’s meaningful. Okay, and then I guess the other question. You mentioned the seasonal bounce that you expect in fees that March seems to be back on track, anything else going on there or we should just expect the typical Q2?

: No, I mean I think that, as I said we did see some bounce back not just in number of transactions but size of the transactions and that's a good sign. I think we’re continuing to monitor customer behavior around service charges and fees and those type of, you know the volumes there, the consumers are much more cautious around how many handle their checking accounts and the overdrafts and things like that, so that’s something that we’re watching but nothing we’re alarmed about.

Okay and then just the last one, anything that we need to as analysts or investors think about on the expiration of the commercial piece of a [indiscernible].

: No I don’t think there’s anything you need to think about beyond what we -- we’ve been talking about for a number of quarters now, and been very transparent about, we’re aggressively managing those assets under that last year agreement out. We’re very, very happy with where we’re headed, we had another strong quarter of resolution in the first quarter feel good about what we see thus far in the second quarter, so we think we’re going to be probably as good as [indiscernible] as we can be in mid third quarter when those things expire.

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