Good day. And welcome to the F.N.B. Corporation Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for question. As a remainder, today’s conference is being recorded. And now I’d like to turn the conference over to Cynthia Christopher, Manager of Investor Relations for F.N.B. Corporation. You may begin.

Thank you. Good morning and welcome to our earnings call. This conference call of F.N.B. Corporation and the reports it files with the Securities and Exchange Commission often contain forward-looking statements. Please refer to the forward-looking statement disclosure contained in our earnings release, related presentation materials, in our reports and registration statements filed with the Securities and Exchange Commission and available on our corporate website. A replay of this call will be available until January 29th, and a transcript and the webcast link will be posted to the shareholder and Investor Relation section of our website. I will now turn the call over to Vince Delie, President and Chief Executive Officer.

Thank you. Good morning and welcome to our earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer; and Gary Guerrieri, our Chief Credit Officer. I will be highlighting our operating performance and providing a strategic overview. Gary will review asset quality and Vince will provide further detail on our financial results along with expectations for 2014. Vince will then open the call for any questions. Let's begin by looking at the quarter, which was positive from both an operating and strategic perspective. Operating net income was $32.5 million or $0.21 per diluted share. This translates into 107 basis point return on average tangible assets and a 16.5% return on average tangible common equity. Organic loan growth continued at an annualized rate of 6%, with commercial loans growing over 4% and consumer 14%. These are great results for the quarter. More importantly, the consistency of our growth is a key differentiator and proof point of the success of our strategy. We have grown loan portfolio on an organic basis for 18 consecutive quarters at an average annual rate of 5%, that’s nearly five years. This is an exceptional accomplishment achieved during a difficult operating environment and through the assimilation of four acquisitions. Over this time, our loan growth more than offset the planned run-off of $360 million in two non-strategic portfolios, continuing to position us for better growth in the future. Low cost transaction deposit growth continued at a rate of 7% annualized, primarily through non-interest barring deposits and customer repos. The majority of the growth remains the direct result of obtaining new commercial clients. In addition to the solid operating results, several positive corporate developments took place that further position F.N.B. favorably going forward. In early October, F.N.B. secured an investment grade rating from Moody’s which was…

Thank you Vince and good morning everyone. The fourth quarter reflected continued positive performance across our credit portfolio as we closed out another successful year with our portfolio favorably positioned. Both our quarterly and full year results demonstrate the continued stability and positive movement across all asset quality metrics, specifically NPLs and OREO, delinquency and net charge-offs, all of which improved during the year over already good levels. I will focus on the trends within our originated book as this best represents our core loan portfolio, followed by commentary on our acquired book at which time, I will provide a brief update on the credit impact of the Park View acquisition that was completed in October. During the quarter, our originated NPL and OREO level improved by 5 basis points to end December at 1.44%. It is important to note that this metric includes $5 million in OREO brought along from the Park View acquisition, which impacted the overall level by 6 basis points. This positive NPL activity also supported the lower delinquency level which improved by 16 basis points to end December at a very good 1.28%. Net charge-offs for the fourth quarter met our expectations at $6.1 million or 30 basis points annualized. The originated provision for loan losses of $5.7 million brought the reserve position to 1.29%, reflecting favorable credit quality migration in the portfolio, paydowns on numerous rated credits and reduced NPL levels of $5 million or 6% from the prior quarter. The benefits from these activities supported our provision for loan growth during the quarter. On a full-year basis, our net charge-off performance was solid at 28 basis points, ending the year better than our targeted levels. Shifting now to our acquired portfolio, we ended the year with $1.4 billion of loans carried at fair…

Thanks Gary. Good morning everyone. Today, I will review highlights of our fourth quarter’s operating performance to provide our guidance for the upcoming year. Since the quarter’s results are included in last evening’s earnings release, I want to spend most of my time to discuss on our outlook for 2014 and beyond. As Vince discussed, the fourth quarter was a very solid quarter. Let’s begin with balance sheet highlight. Organic results reflect a continuation of the positive trend seen for some time now. Average loans grew organically, $129 million or 5.9% annualized and we continue to see a good mix of growth coming from both the commercial and consumer banking groups. As a diversification of our product set, full deployment of our sales management program is apparent. On the funding side, organic growth with total deposits and customer repos was $71 million or 2.7% annualized. Growth in transaction deposits and customer repos remain solid. With these average balances increasing organically $138 million or 6.8% annualized due to strong results in non-interest bearing accounts and customer repos. Meanwhile time deposits declined 11% annualized given our strong funding mix and overall liquidity position. The fourth quarter net interest margin expanded 3 basis points to 3.67%, reflecting a 6 basis point benefit from a $1.7 million in accretable yield adjustments due to better than expected cash flows on acquired portfolios. This benefit was partially offset by 3 basis points of compression due to temporary liquidity related to the capital raise. Net of these items, the margin was stable with the prior quarter. Upon the purchase accounting rules, sometimes result in the benefit to the net interest margin and conversely necessary expense through the provision for loan losses. This occurred during the fourth quarter. So all the margin received $1.7 million benefit provisioned on…

Thank you. (Operator Instructions) Our first question comes from Bob Ramsey with FBR.

Hey. Good morning, guys.

Hey, Bob.

Quick question, I know you guys give guidance around net interest margin for the year. I’m just curios, was the accretable yield benefit this quarter sort of a one-time event where you lose those basis points next quarter, or was it sort of a change in your assumptions about cash flows that will sort of persists in the future periods as well?

I would say -- if I could comment on margin, obviously we are very pleased with the performance for the quarter. There are several things working through that and then I will comment on accretable yield. The key affluences working through there was strong loan growth, strong DDA growth. We are now reinvesting security slightly higher than the loan upgrade, that’s obviously a positive. Premium amortization is lower than it's been running in the prior quarters. The accretable yield benefit of a $7 million that we had did reflect some resolution of some loans that were individually marked. So as I have said in the past, accretable yield is going to be choppy. Bob, I kind of look at kind of a core run rate of accretable yield being $500,000 to $750,000 a quarter. So the $7 million is obviously a little bit elevated. Last quarter, we didn’t have any. So it’s really going to be choppy depending on positive or negative changes in the cash flows.

Okay. That helps me to sort of think about why you have ups and downs, the run rate is probably a million lower than this quarter for net interest income. And then if I sort of think about fee income, I was expecting a little bit more of an uptick this quarter in fee income, particularly because of the acquisition. Now, I know a lot of the fee income at the acquired company was mortgaged. Is sort of the mortgage market the reason the fee income was not stronger this quarter than it otherwise might have been, or was that that we are estimating the benefit of a PVC -- PVFC?

Well, the mortgage banking is definitely a key part of this decline if you look at our change in the mortgage banking revenue third to fourth quarter, you can see that came down to really a very low levels of $370,000. That number kind of more of a normal run rate, should be somewhere between $1 million to towards $2 million. So the mortgage banking level this quarter was in the first quarter, we are taking out Park View. But also if you just look at what’s happened as everyone knows with the mortgage refi market during the year, the level of gains that Part View was generating last year and earlier in the year is significantly lower, kind of coming up on board with F.N.B.’s and where it was. So, I would expect that number to move back up. We did have nice growth in the wealth management businesses. Insurance was pretty stable. Service charges were up a little bit. They key delta there is the mortgage banking, but I would expect that to start to move back up from there.

Okay. That's helpful. And then last question and I will hop back out. I think I was expecting a little bit of a self preferred stock dividend this quarter that wasn’t there. Next quarter, do have a full quarters of preferred stock dividend or is there a little bit of catch-up from the end of ’13, or how should I think about the preferred dividend expense next quarter?

Yeah, there will be a little bit of catch-up because you not book it until you declare it. So it is similar to an equity dividend. So you will see this dividend, it will appear and the first quarter will have some extra days and then going forward you will be at just kind of a normal 90 days, one quarter’s worth.

Okay. Perfect. Thank you, guys.

Thanks, Bob.

Thanks.

(Operator Instructions) We’ll take our next question from Collyn Gilbert with KBW.

Thanks. Good morning, gentlemen.

Hey, Collyn. Good morning.

Yeah. Just a follow-up on the NIM discussion. So you mentioned that securities are now coming on with a higher rate than what's rolling off. What is the loan yield differential that you're seeing in terms of what’s rolling off versus what’s been originated?

The new loans that are coming on -- I mean, wonder if you guys want to comment on spreads maybe?

Yeah. First of all, I don’t think that we went out long relative to others to begin with. So from a repricing perspective, it's kind of stabilizing. So we don’t see massive reductions in yield versus what’s going off and what’s coming on. If you look at the make-up of portfolio as we’ve mentioned before, we have a higher portion of variable rate adjustable rate loans in the commercial book so and on the retail side as well. So that margin compression won’t be as dramatic. So, I would say we are not seeing significant declines in yield. We are not seeing any spread compression from a credit spread standpoint in certain portfolios. In others, it is more competitive so, but that’s usually measured in eight to quarter of a point on the overall yield, not a significant number.

Okay. So then if we exclude accretable yield unrecognized and obviously that’s somewhat unpredictable and somewhat volatile, do you think that NIM has bottomed or when or we getting close to a bottom or do you have a sense of that sort of inflection point?

Yeah. I would think we are very close to that. I mean my guidance talked about just several basis points to compression in ’14. The low rate obviously is still very particularly on the short end of the curve. To Vince’s point, we still have 60% of our loans that are variable adjustable rate. Half of that’s in the 12-months or less. So that still has an impact on the overall margin. But I mean very modest, I mean as I said my guidance was for several basis points than some gradual decline. But I would say, we are pretty close to the bottom. The prepayments speed as you would expect gets slow dramatically. Most of the refinance activity has occurred.

Yeah. Okay.

So we are seeing a stretching of the light for the portfolios, so that should help as well. That’s a nice drop.

Okay. Okay. Thanks. And then, Vince, your comment on the mortgage, $370,000, this quarter you expect it to get up to $1 million, in fact normalize over $1 million to $2 million. What will take it back up? Is it just kind of a refocusing and getting people back on track to start to generate more volume or I’m just curios as to how they capped it?

This is Vince Delie. I think part of it is, we went a through transition, we converted a bank that use the slightly different model, they originated in the branch, we don’t originate the branch, we originate through originators. So part of that is transition in personnel, the hiring of personnel, sustaining, that in the phase of a shift and focus from refinance to purchase money. So, all of that will take time to transition. Unfortunately, the timing of when that deal went down versus all of these changes isn't the best. But I think that we have got the right strategy in place and we have got the right people that we are putting in place there from origination standpoint. So the emphasis we ship more quickly the purchase money and we expect that business to build back overtime.

Okay. That’s helpful. Thanks. And then just one last question, as you guys are preparing for the stress test in March? Can you just give us a little more color as to exactly what's going on in the organization that is setting you up to prepare for that?

Oh! Sure. I mean, we have been working on this for quite a long time. I guess that putting in perspective I mean we have done -- already done three years of stress testing. This will be our first year as part of this new group where we are submitting a formal stress testing plan. But, I mean, there is a lot of activity. We have a scanning committee that’s made up of Gary, myself, other executive officers in the company. We are building out modeling to be able to create kind of loss estimates for the loan portfolios in the various distress and the adverse stress scenarios. We are doing some programming to create infrastructure so that we can more easily do these types of forecast on a go-forward basis. For now, its annual, but eventually they are going to probably make us go to twice a year and some day quarterly. So, we are investing some in the infrastructure itself, so that we can have tool that we can use for more than just the regulatory stress testing when we do acquisitions, we want to have a tool that we can use that kind of plug those acquisitions and see what it do to the impacts there. So, I mean, there is just a lot of effort throughout the company to be ready for that. We are right on track for the March 31 deadline and feel good about where it will be. And as you know we run a very low risk model that clearly helps when you stress our portfolios, the fact that we are starting from a very strong credit quality standpoint. So more to come but there is as you expect there is a lot of activity there.

Okay. Okay. Sounds great. Thanks guys.

Thanks you.

Thanks you.

Our next question comes from Frank Schiraldi with Sandler O'Neill.

Good morning.

Hi Frank.

Just -- a few questions, just like as a follow up on the stress testing. Vincent, you talked about investment in infrastructure, think about maybe some other one time expenses, I don’t know perhaps some consulting fees associated with it? Is there -- what are the sort of short-term expenses and where do they fall in terms of the calendar?

Well, there is probably, there is probably $0.5 million in the fourth quarter, there is probably somewhere between $250 and $0.5 million in the first quarter and then its really just the depreciation and the stuff and we are using our existing systems. So we won't buy new systems, we have very strong systems here that we could leverage to be able to do that. So, it's not a significant amount and kind of as you go forward, we will end up having four people that are part of this team that will be working on this, as well as modeling for acquisitions and those types of things. So it's not significant but the consulting fees, Frank, which is the piece that kind of jumps up, we will really follow up after the first quarter.

The longer term piece of it is basically adds to staff to accommodate this activity. I mean we have added significantly in the finance and compliance, we shifted positions, people internally who are in other positions in the company shifted into the stress testing category, so we have to backfill their positions. So it is in expenses endeavor and the long-term impact is reflected in the run rate here now because we have added the team. So, hopefully, that’s behind us from a run rate standpoint.

That seems in place today?

Yeah. They are here today.

Left on the run rate.

Got you. Okay. And then you have talked a little bit about branch rationalization efforts and I am sorry if I missed it, but I am wondering what there could be down the road earliest as we look through the rest of 2014 and potential costs saves there?

Yeah. We've done a pretty good job of managing expenses in the retail delivery channel. First of all, we installed software to help us manage headcount in the branches which has had a meaningful impact on reducing number of FTEs in that world. We've also, I think we've done a very good job of consolidating location that had had a minimal impact on our ability to drive growth and you see that in the escalation of our production since 2010, I mentioned some statistics that are fairly, I mean they are remarkable. And when you really look at the delivery channel, we are at optimal stay, probably not, there is probably handful of branches here and there that we evaluate annually, quarterly, monthly to check on performance. So there is probably more to do there. I wouldn't say it’s taking out 15% of your branches excluding the M&A consolidation is pretty healthy, chunk of your delivery channel. So I wouldn't say there is a lot left out there. But one good take away would be consider how many branches were consolidated and then look at the escalation and production that ultimately leads to increase deficiency. And I think benefits of some of that have helped to offset the impact of all these regulatory requirements and lost revenue that we've mentioned. So very well done by the team and strategically based in to help offset that I think we've done very good job there.

I would add too, Frank, that our team is always looking for opportunity throughout the footprint where, if there is prime location that comes up, is there an opportunity or maybe consolidate two offices into one or into new market. So we'll continue to look for those opportunities and there is always a hit list of places we're looking for.

Yes. It won't be 20 branches again.

Right.

We did that, I mean that, I don't want to mislead here, there is not a big chunk of branches that you would take out simultaneously, so…

Fine tuning, yeah.

It will be more of fine tuning and refining.

Got you. Okay. And then finally on the BCSB deal that I believe it's going to close in 1Q. Can you guys remind me -- I think it's basically neutral to tangible book value and don’t know what it does to TCE ratio, but how does that impact those too?

Yeah. You're right. It's very neutral impact to those measures. We're bringing over about $600 million or so in assets, it's neutral to their IRRs in the high-teens and then the accretion pretty much neutral for ’14 but then start building in ’15. So, you have to correct that.

Okay. Great. Thanks guys.

And I think it started effected.

Yeah. Thank you.

(Operator Instructions) Our next question comes from Matthew Breese with Sterne, Agee.

Good morning, everybody.

Hi Matt.

Good morning, Matt.

Going back to your expanse guidance, you guys gave good commentary there. But I was hoping you could tie that into how we should be thinking that the overall efficiency ratio. In the past you've mentioned kind of having that 55% mark?

Yeah. And I think in the past when we've talked about that, Matt, the 55% is kind of an overtime type goal, given the regulatory burden is there, that's not something we're projecting or targeting to try to get to in ’14. So, I would say, but that’s still a longer term goal that we will achieve for and the guidance that we have as far as the operating leverage that we're continuing to expect in 2014, obviously, we'll provide some benefits the efficiency ratio. So, I think, overtime, we will continue with the revenue growth that we have we'll continue to move towards a mid-50s, 55% type figure, but that's over a few years, that’s really in the short-term. So, but generating positive operating leverage every year, obviously continues to take ship away that.

Okay. So it's more for 2014 slight improvements for the overall efficiency ratio?

Yeah. That's what our guidance would encompass.

Okay. And then as far as loan growth in 2014, I was hoping you could talk about the different areas to focus, Ohio, could be Baltimore, and where you would expect to see particular pocket of strength or weakness, any color that will be great?

Well, you just hit the three that would be the biggest providers of production in our plan. And I can tell you just -- and looking at Maryland for example, the Annapolis deal, we're much further long than we expected to be from a portfolio perspective. So, the pipeline there is pretty strong and we've had growth beyond our expectation. So, I would expect BCSB combination with Annapolis to create large enough platform or move into downtown Baltimore, the hiring of all the bankers that we've hired, should lead pretty decent production levels coming out of that market. And we're very optimistic about it. We've got a fairly robust pipeline that continues to build. In Cleveland, same story. We’ve moved into Cleveland. We hired regional President. We went down town. That franchise has been re-branded. We’ve been canvassing the market and the team we put on the field there is the best you can find. So I’m very optimistic about what’s happening there. The pipeline is fairly robust and growing and we’re excited about that. Pittsburgh has been delivering fairly solid growth for last six years. We’ve grown the portfolio in Pittsburgh over $1 billion organically since 2005, 2006 timeframe. Thousands of accounts, hundreds of middle market clients, so we’ve done a great job of growing our share but our share still fits in the team. So there’s a lot of upside in terms of market share graph. And as the company continues to grow, we continue to focus on larger opportunities that we otherwise wouldn’t have been able to manage where we can provide treasury management, wealth solutions and penetrate from across sale prospective more effectively. So we’re seeing -- we will see good growth in those three markets and then in some of the smaller markets that we’re in, Scranton, for example, the team in Scranton, they’ve done an exceptional job this year. We’re beyond where we had initially modeled that portfolio going back to the CBT acquisition so they’ve growth fairly nicely. And I would expect to see growth in some of the smaller markets as well. So overall we’re pretty optimistic about our prospects.

Now that’s great color. And then, as the balance sheet grows, could you give us some update on M&A prospects, it’s kind of sweet spot deal you look for and kind of saw that into in terms of size but would be good map preferably?

Well, we -- every -- as you know we’ve said this before I think doing a small deal and doing a larger deal requires the same amount of work. So you’ve got to mobilize the teams the same way and you go through the conversion. It maybe less own risk with fewer transactions but still similar process. So $0.5 billion is pretty much what we look at, $0.5 billion and up. We look at opportunities that might be slightly smaller that did end strategically where we can take cost out but we feel the markets are good add-on markets. Obviously our goal is to continue to grow market share in the new markets that we’ve entered. So if there are opportunities in those markets, we’re very interested, provided that they provide us with EPS accretion in the first full year. And there’s limited diminution of capital. So that’s the criteria that we use and I would say we’ve got a plenty of opportunities across Pennsylvania and Ohio and Maryland to keep us busy.

Now if you start too, that I think that the half a billion if you look at our track record, we’ve actually done very well with, buying some of smaller banks in market that were, we think there is a lot of upside to grow and take it and then grow organically. So that’s a key criteria for us is that we need the ability to grow it organically. So we’ve loved to do multi billion dollar transactions that are available but the smaller ones, kind of right now, warehousing, our guys have done a good job integrating it and then creating new organic growth and that process going to be good example of that.

That’s great. Thank you.

Thanks.

Our next question comes from John Moran with Macquarie Capital.

Hi. Good morning guys. Macquarie Capital: Hi. Good morning guys.

Hi John.

Hi. Good morning John.

At this point, I’ve just got a couple of quick kind of ticky-tack questions probably for Vince. On the preferred, just re-visiting that you mentioned and I think we were expecting kind of a little stub period during the fourth quarter too. Am I correct in thinking that will be about an extra million bucks versus what a good run rate at in the first quarter?

I mean it’s an extra 14 days of dividend. So I’m sure if you have 14 days, I can’t do that math in my head. It should be handled right.

We’re all bankers. So we can do math.

(Inaudible) extra 14 days. So just to kind a get it forward. So we looked at it and the accounting is very clear that you don’t book it till you declare it. So we’ll have basically 104 days this quarter and then you 90 a quarter as you go forward.

Got it. Okay. That’s helpful. And than Vince, tax rate, I know in the past you guys have got it at 28 to 29. Is that still good -- a good thing to use going forward?

Yes. That’s still a good rate to use for ‘14.

Okay. And then the last sort of ticky-tack one that I had was just timing on BCSB. It sounded like you guys said in prepared remarks kind of a couple of weeks away, is it still fair to say that kind of comes in half way through this first quarter? Macquarie Capital: Okay. And then the last sort of ticky-tack one that I had was just timing on BCSB. It sounded like you guys said in prepared remarks kind of a couple of weeks away, is it still fair to say that kind of comes in half way through this first quarter?

Yes. That’s a -- we're very -- we're in a very good place. So we would expect the conversion to occur over the next week. I mean it’s coming after.

That’s lock down.

So that’s lock down. Everything is in place and we should be up and running by the middle of February, till the end of February.

The team that we’ve hired for Annapolis is already in place. We have the management…

We already hired. We pre-hired the management team. We built out the team. Once we did the Annapolis deal, we kept going. So we have everybody -- just about everybody is in place there. So we’re ready to roll day one of the headquarters. And we moved into down top ultimately that should be available by the end of February as well. So we’ll all be in place and moving.

Got it. Got it. That’s helpful. So in terms of some incremental OpEx, most of it’s already been observed and we can layer in some additional once this, when closes but you guys are ready to pen it and rock and roll down?

That’s right.

Terrific. I appreciate you taking the question. Thanks.

Thank you.

Our next question comes from Brian Martin with FIG Partners.

Hi guys. FIG Partners: Hi guys.

Hey Brian.

Good morning Brian.

Say couple of my rounds, I guess, two kind, I guess, I’ll call it ticky-tack as well. On the expense guidance, you guys gave. I guess my assumption is that excludes the kind of one time item and -- as well as the OREO. When you look year-over-year, kind of a single digit growth? FIG Partners: Say couple of my rounds, I guess, two kind, I guess, I’ll call it ticky-tack as well. On the expense guidance, you guys gave. I guess my assumption is that excludes the kind of one time item and -- as well as the OREO. When you look year-over-year, kind of a single digit growth?

Well it would the one time cost and the OREO, our normal range is more like $752 million. So it was little bit higher this quarter. I don’t expect that fourth quarter level to recur at that same level in ‘14 sol. But OREO is part of that guidance that kind of the normal run rate but I definitely would exclude one-time cost for Baltimore County.

Okay. And the same thing on the sales and guidance on the mid-single digit. That includes the impact of Durbin as well as the impact of Baltimore, correct? FIG Partners: Okay. And the same thing on the sales and guidance on the mid-single digit. That includes the impact of Durbin as well as the impact of Baltimore, correct?

Yes.

Okay. And then just the last thing, just -- you touched on the M&A. Can you talk about just the level of opportunities, maybe you’re seeing now versus what you were a quarter ago, some of this -- some activity has seem to pick up in the market place recently. Vince, is that consistent with what you guys are seeing -- increased number of opportunities with people you are having discussions with? FIG Partners: Okay. And then just the last thing, just -- you touched on the M&A. Can you talk about just the level of opportunities, maybe you’re seeing now versus what you were a quarter ago, some of this -- some activity has seem to pick up in the market place recently. Vince, is that consistent with what you guys are seeing -- increased number of opportunities with people you are having discussions with?

I would say it’s been fairly consistent for us. I think that many viewers is the optimal buyer given our valuation and our dividend yield. So I would say we’ve had -- we’ve had a fair number of looks through out the last few years and the momentum hasn’t change much for us. But I will say that we’re getting your point now where I think that people are starting to rationalize their existence and they are looking at some of the things that are facing the industry that are daunting investment and technology, the regulatory environment, all of that and I think there are more serious talks going on.

Okay. As far as how you judge your capability, if you look at some of the smaller deals that may after more cost sales. In how many of those could you guys handle at one point versus just doing one larger transaction? FIG Partners: Okay. As far as how you judge your capability, if you look at some of the smaller deals that may after more cost sales. In how many of those could you guys handle at one point versus just doing one larger transaction?

We had three going on simultaneously. So I mean we don’t prefer to do that. I mean I like to do one larger one. But we look at every opportunity. We really look at it through the lens of a shareholder. And if it doesn’t work, it doesn’t work. If it works and we feel strategically, it provide either short or long term, hopefully both value to the share holders than we pursue it. And there are some instances where a smaller transactions makes a lot of sense because it gets you into a market than other wise would be extremely costly. So particularly in the Maryland market, if we go into [Noble], there’s some pretty happy price tag on, moving into the key locations from an expense standpoint. So buying an existing company makes sense, especially when you’re trying to build out your delivery channels to gain market share. And I think what we’ve done better than most banks in the country is moving into a major metro market, buying smaller organizations, putting it together under our business model and driving organic growth and market share gains. Asking the team and extracting the talent. I don’t know if anybody has done as better than us. So, I know I’m patting our team on the back. But I mean if you look at Pittsburgh as a case study, it’s remarkable, the market share gains. And the (inaudible) and anybody else that surveys the market place will tell you its remarkable story. And we have a tremendous opportunity to replicate that in the markets we’ve entered.

Okay. I appreciate you taking the questions. Thanks very much. FIG Partners: Okay. I appreciate you taking the questions. Thanks very much.

Thanks.

Thank you.

Our next question comes from Collyn Gilbert with KBW.

Hey guys, just a quick follow-up. One, the -- can you talk what the dollar amount of NII contributions going to be from Baltimore County?

We are not -- our guidance is progressive, right Collyn. I mean, you can kind of look at where they are coming in. If you look at their third quarter financials let’s say, so they are nice financials. Their margin was 318. I don’t have their net interest. It’s not for us to now. I mean that’s kind of --

No, I know, I know. I just was kind of trying to think about how you’re thinking about it, a drop from September quarters. I would think and just, yeah, okay. Because all the growth rates and everything you gave, Vince, was inclusive of Baltimore County, right?

Yeah.

Okay.

Margin guidance includes it as well.

Includes. Sure.

And I would say that we talked about our strategy. I mean, we’ll go in and we declare our model. So that has been the primary provider, providing management services, providing capital, going after 100% of business, that’s why we’ve had great DDA growth in the markets that we’ve entered. And we would expect the same thing to happen in Maryland overtime. So the margins over time migrate. The net interest margin migrates to more like the rest of the company over time.

Okay.

Developing more robust deposits.

Okay. And then just one kind of last big picture question. Are you guys, as you kind of look at the institution going forward and as you look after the next like two to three years and all of the investments that you guys have made today and moving into the new market, do you think that structurally F.N.B., we could see that single expenses growth, the single digit expense growth rate drop to say 1% to 2%, or do you think the real operating leverage is just going to be more on the revenue side longer-term? Did that expense -- the ongoing investment that’s going to need to be made to your point, Vince, by technology and changing the branch structures and those sort of things will always keep that expense probably growing in that mid-single digit range?

Well, I think it’s difficult to say because we’ve gone through such a period of turmoil. I mean, there were so many external forces outside of all of our control that forces us to take -- if we wouldn’t have invested as heavily in our risk management systems I mentioned before, $10 million increase in run rate expense which is already in our core expenses related to building out our risk management team. Some of that still accommodate growth, some of that to comply with the never ending number of regulation coming down, so that we maintain our relationship with the regulators and we can continue to do acquisitions. So it’s hard to say, I think that as we move forward, I see the opportunity for us to grow revenue has being greater. Now, think about where this company was positioned before and where it’s positioned today. The potential for us to grow revenue is much, much greater, 10 times greater. So, I would expect us to continue to focus on expense control as we normalize relative to the current regulatory in climate, which we feel we’ve taken a big bite out of that apple. And we start to gain our foothold in the new markets we are in and drive revenue growth the operating leverage should improve over time. I can’t really say which -- I know we’ll have revenue growth because of the markets we’ve moved into or at least the potential to grow, but the expense side is really difficult to pick.

Okay.

Yeah, I would add to that, Collyn that one of the things we are in a natural point of lifecycle where we are taking a look at processes and looking at process re-engineering and a lot of banks are doing that. So, I do think there is room to Vince’s point to extend the operating leverage as we continue to grow where you could be little bit slower on the expense growth side. But that would all be depending on the process re-engineering as well as we’ve talked about in the past vendor management, we’ve been much more comprehensive in really negotiating with vendors and trying to optimize those. So this will increase the operating leverage giving us the revenue growth profile that Vince is commenting on.

Okay. Okay. Thanks guys.

Thank you.

Our next question comes from Peter Winter with BMO Capital Markets.

Hi. Thanks for taking my question. Good. One area of focus for you guys when returning value to shareholders is the dividend yield. That dividend has not increased for a couple of years now, but you’ve got stronger capital and you’ve got some momentum on the revenue side. I’m just wondering what’s your thoughts are on the dividend going forward?

We constantly evaluate how we’re deploying our capital. And as you know, we’ve gone through a period here where we have stress testing facing us, Basel III was being rolled out, we had to address the capital stack. And make changes to the types of trenches of capital that we have relative to the rules. So there has been a lot of noise. I think throughout that period, we’ve been in the top-10 out of the top-100 banks in terms of dividend yield. So we have demonstrated a commitment to the dividend and that should say a lot about the organization and what our intentions are going forward. So any event that we get comfortable with where we are from a regulatory standpoint, we get through all the noise around stress testing. Our goal would be to either deploy the capital for above market potential growth or return it to the shareholders. So, I wouldn’t roll anything out but our philosophy relative to the dividend period hasn’t changed. I know it’s been a long time but it hasn’t changed.

Okay. And just from a figure you are in with the capital raise you’re in a better position.

Yeah. We are in a much, much better position today. You’re absolutely right. And given the risk profile of the portfolio and the performance of the portfolio from a credit perspective, we’re in a much better position to evaluate whether we should return capital. And I think that’s where we are.

And I would add, Peter, you go back to years so, the Basel III rolls runs starting. So we’ve talked about in the conference calls that we wanted to get more certainty around what the landscape was going to be the. So now Basel III is known and we’ve addressed that. Stress testing is something we talked about and we’re very comfortable with where we are. We start to finish going through that process. And then our dividend payout ratio will be at the low-end of our range. So there is opportunity to do there in expense as we evaluated every quarter, so there is clearly an opportunity there but just kind of had to keep working through. The last step is really working through the stress testing and then evaluate the opportunities to deploy the capital.

All right. And do you have a Basel III estimate as of today that you can share?

If you look at the Basel I, it’s about 20 to 30 basis points below that. We are still putting the systems in place for the full blown Basel III, but it’s about -- the tier 1 common is about 20 to 30 basis points below the Basel I level that we have in the slide deck.

Got it. Great. Thanks, guys.

Thank you, Peter.

I would like to turn the conference back to Vince Delie for any additional or closing remarks.

Well, I’d like to thank everybody for participating in the call. We had quite a bit participation. I appreciate everybody getting on the call despite the fact it was being buried by snow and the temperature is below zero. So stay warm and look forward to speaking with each of you down the road. So take care. Thank you.

This concludes today's conference. Thank you for your participation.