Good morning, and welcome to Peoples Bancorp conference call. My name is Teresa, I will be your conference facilitator today. Today's call will cover a discussion of the results of operations for the quarter ended March 31, 2014. All participants will be in listen-only mode. [Operator Instructions] After the speakers’ remarks there will be a question-and-answer period. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] This call is also being recorded. If you object to the recording, please disconnect at this time. Please be advised that the commentary in this call will contain projections or other forward-looking statements regarding Peoples' future financial performance or future events. These statements are based on the management's current expectations. The statements in this call which are not historical fact are forward-looking statements and involve a number of risks and uncertainties detailed in Peoples' Securities and Exchange Commission filings. These include, but are not limited to, the success, impact, and timing of strategic initiatives; the successful completion and integration of planned acquisitions; the competitive nature of the financial service industry; the interest rate environment; the effect of federal and/or state banking, insurance, and tax regulations; and changes in economic conditions. Management believes the forward-looking statements made during this call are based on reasonable assumptions within the bounds of their knowledge of Peoples' business and operations. However, it is possible actual results may differ materially from these projections. Peoples disclaims any responsibility to update these forward-looking statements after this call. Peoples' first-quarter 2015 earnings release was issued this morning and is available at peoplesbancorp.com. This call will include about 20 to 30 minutes of prepared commentary, followed by a question-and-answer period which I will facilitate. An archived webcast of this call will be available on peoplesbancorp.com. Participants in today's call will…

Thanks, Chuck. As Chuck mentioned earlier net interest margin was 3.46% for the quarter short of our guidance in the low-350s much of the variance was viewed to be temporary in a result of excess cash build up on NB&T’s balance sheet. Coupled with normal seasonal increases and government deposits. Management implemented a balance sheet strategy during the quarter with the objective of reducing the excess cash while improving net interest income and margin. To approximately $50 million was paid off $52 million in FHLB advances acquired from North Akron Savings Bank and Ohio Heritage Bank. These advances which were mark-to-market in the third and fourth quarter of last year had an average cost of 1.31% and average life of 2.7 years. The early pay off these advances resulted in a prepayment loss of $520,000 due to the yield curve flattening post acquisitions. We also completed a post acquisition restructuring of the NB&T securities portfolio. Management sold $42 million of low yield NB&T securities and reinvested the proceeds at yields more indicative of our securities portfolio. The restructuring resulted in a $593,000 gain on a sale of these securities. In fact the duration of the portfolio was unaffected by the NB&T restructuring and remains at approximately 2.75. We expect the combination of the deleverage strategy and portfolio restructuring to reposition the net interest margin in the low-350s for the remainder of the year. Our recent acquisitions have incrementally improved overall balance sheet mix and net interest margin. With the addition of NB&T we reduced the relative size of the securities portfolio to 26% of assets moving us closer to our year end target of 25%. Two years the portfolio was 35% of assets, reducing the relative size of securities portfolio and funding strong loan with normal run off of securities…

Thanks Ed. Needless to say our associates have had much to do this quarter. However, our team is energized with the growth prospects of our new NB&T market. This new market is primed and ready to make a strong contribution, our market person Ed Reilly is a well-known banker in this region and he is making a difference. Under his leadership he has already installed the sales culture in energy among his team that exemplifies what we refer to as the PEBO way. The PEBO way means many things to our associates. It’s all about taking care of customers, taking care of each other and taking care of ourselves. It what’s drives our strategic roadmap and our four pillars of success; responsible risk management, extraordinary client experience, profitable revenue growth, and a superior workforce. We have no doubt that NB&T will be an extremely successful acquisition for our company based on early indications we are well on our way. This confidence drives our 2015 expectations. We have many positives to look forward to for the remainder of the year. To recap our 2015 guidance, we expect loan growth excluding NB&T to be in 7% to 9% range for the year based on period and balances. Supported by a strong pipeline commercial balances are expected to increase 8% to 10%. Consumer balances are expected to grow 3% to 5% with continued double-digit growth in indirect auto lending. As Ed discussed earlier we expect net interest margin to stabilize in the low-350s for the remainder of the year. Excess liquidity could create some variability to the margin in the second quarter. Additionally, purchase accounting adjustments and related accretion income may cause variations in the margin quarter-to-quarter. The efficacy ratio should show incremental improvement in the second quarter on the way to a third quarter and fourth quarter core efficiency ratio below 65%. The net charge-off rate is expected to range from 20 basis points to 30 basis points for the year. Our effective tax run rate is estimated to range between 30% to 31% for the year. We remain committed to profitable growth of the company in building long-term shareholder value. I am confident we’ll succeed to disciplined execution of our strategies in providing extraordinary service to our customers and communities. Thanks to all associates for successful conversion of the NB&T acquisition through it’s your talent, experience and dedication that Peoples will continue to move closer to becoming the best Community Bank in America. This concludes our commentary and we will open the call for questions. Once again this is Chuck Sulerzyski and joining me for the Q&A session is Ed Sloane, Chief Financial Officer. I will now turn the call back to the hands of our call facilitator. Thank you.

Thank you. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] Our first question is from Scott Siefers from Sandler O'Neill. Please go ahead.

Good morning guys.

Hi, Scott.

Hi, Scott.

Chuck, maybe first question for you, so just on the expected acceleration in overall loan growth through the remaining three quarters of the year. It sounds like there are zero problems with productions that doesn’t seem like it is really a factor either on the consumer or the commercial side. But I was hoping you could speak to the payoffs obviously you had some expected one this quarter, but maybe if you could spend a moment or so talking about how will you think elevated payoffs could or might affect the remainder of the year in other words were these indeed transitory or some of the factors i.e. low interest rates and potentially sort of secondary market opportunities or those going to persists and way and the overall outlook in our mind.

I do not expect them to continue the payoff that we experienced were expected, the timing of one of the payoffs was a little bit accelerated and the timing of some of the production that we have planned or they little bit delayed, but I expect to see some pretty powerful numbers in the second and third quarter. It’s not dissimilar to 2013 where we had a pretty lousy first quarter and still hit the numbers that we actually exceeded the numbers that we said we would do for the year. I won’t be surprise if that happened again this year. So I feel very good about the 7% to 9%, I feel very, very good about the pipeline and the payoffs I don’t think you will see anything extraordinary in the remaining three quarters.

Okay, that’s very helpful. I appreciate that. And then either for you and Chuck or for Ed, Ed in your prepared remarks you talked about some of the kind of the infrastructure build kind of separate from maybe not separate, but kind of a aligned with all the deals that you guys have done. Where are you in kind of the internal investment, how much more would that impact second quarter just in terms of organic expense growth, any thoughts you might have on those issues would be helpful?

I mean I think that the investments that we have made like we just added a loan production team, those expenses really are not in the quarter that we just concluded, but we’ll be going forward, but the rest of the expenses the operations investments, staffing and so forth the vast majority of that is in and the additional expenses should be minimal.

Okay, that’s perfect. Thank you very much.

Thank you.

Our next question is from Michael Perito from KBW. Please go ahead.

Hi, good afternoon.

Hey, Michael.

Hey, Michael.

Ed, on the margin so when I read the release there is 8 basis points from accretion this quarter that was 20 basis points last quarter, just doing the quick math I would imply that the core margin if you will expand 5 basis points or so sequentially. So how does that work with the liquidity comments that you guys to build up a liquidity I mean it seems like the decrease sequentially was more or so driven by a lower accretion number I am just trying to get a better sense of the workings of the margin?

I think it’s the combination of things going on there we had the NB&T portfolio and their balance sheet coming on, it’s North Akron Savings acquisition those added some strength to the margin as well. So I think there some pluses and minuses in there Mike, and the excess liquidity was one of the key factors that we saw. As I mentioned the strategy to reduce the cash I think with the FHLB advances coming off the seasonal liquidity bringing out mostly in the second quarter which is consistent with prior years I think will drive that margin back to the low 350s. I think a base loan accretion number to kind of work of seems to be around at 7 to 8 basis points, maybe the 20 basis points in the fourth quarter was a little bit on the unusual side, but on average I‘d think in the 78 basis points for loan accretion income that obviously could vary based on how the loan portfolios from our acquisitions perform moving forward, but at least kind of gives you a little bit of an idea. So bottom line back into the 350s, and should be fairly consistent in that range moving forward.

Okay. Yes, understood on the volatility on the accretion, but so that the low 350 kind of guidance range that you guys are assuming kind of a seven to eight consistent accretion impact?

Yes, it seems to be there, its still a little bit early with some of these acquisitions and again the variability around those could move off of that, but that seems to be a good loan accretion basis point increment to our [indiscernible].

Okay, that is very helpful, thanks Ed. And then Chuck just on capital. I mean you guys still have decent capital levels today. Maybe can you talk about your priorities, maybe you are comment on the dividend and also at what point it sounds like the pipelines are strong and growth commentary is pretty positive. At what point does it become a more a fishing use of capital to kind of focus on organic growth versus additional acquisitions.

We got couple of thoughts about acquisitions and capital. We continue to have a strong emphasis on fee income right now at the four bank acquisitions that came with less fee income than the core. We have an interest in building the fee income, the insurance business and the investment business. So we’d love to see a few small insurance acquisitions and few small investment acquisitions to help get us back into our targeted 35% to 40% range. We are promising that our efficiency ratio will be below 65 in the second half and you can see the $1.2 billion worth of assets that we acquired basically improved at five or six points. We think the next billion and a half of acquisitions will probably improve that another five points. So to $5 billion, we think that somewhere around $5 billion we would get to a 60% efficiency ratio. Beyond that I think we would slow the acquisition machine. We are fortunate enough to have strong revenue growth last year; we did 8% on the core. I think we’ll have very similar numbers on the core this year. If we can be 60% efficiency and I’m talking out a couple of years now. I’m not talking 2016, but if we could see an efficiency ratio at 60 pay fee income range in the 35% to 40% and if we could see core revenue growth in the high single-digits and obviously positive operating leverage. We think that’s a pretty powerful company and we think we can do that. At that point, we would be looking at bank deals, if they were good strategic fits with our markets and bought at a rational price we’d still have an interest, but we also like the space between $5 billion and $10 billion looking forward a lot more than we like to space between $10 billion or $11 billion or $12 billion with current penalties that are in place for that. So does that help you?

Yes, that was very helpful and I guess just kind of a follow-up. The focus on the fee income acquisitions does that kind of impact your thoughts on your efficiency targets at all. I know like sometimes wealth and trust can carry higher efficiency ratios is there any [indiscernible] incorporated for that or is it still kind of just a general goal regardless what you guys do.

I believe that we will be able to do both. I mean there are some fee income businesses that would be less efficient than the bank and if we did a sizeable one that could tilt that numbers. But I don’t expect that to be the case. So I expect us to be able to get to that efficiency ratio, while doing those acquisitions.

All right. Thanks guys. Thanks for taking my questions.

Thank you.

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

Good morning guys.

Hi Dan.

Good morning, Dan.

Just a quick housekeeping question maybe if you could breakdown that $9 million one-time expense into categories for me that would – I would appreciate that?

Yes, this is Ed. Basically three key areas. One was on the change of control agreements that severance costs some of those types of things accounted for about $3.5 million of the total cost, termination and de-conversion costs, probably another $3 million to $3.5 million and then the remainder would have been investment banker fees and various another professional type fees.

All right, so the first two of that mostly be in the salary line item.

That’s correct.

Okay. And then just for clarification purposes, as you project a 350-ish, all 350 margin for the rest of the year are you baking in yield accretion in that?

Yes, that would just be basically back to the full margin on a core basis I don’t know if you heard some of my other commentary earlier Dan about that 7 to 8 basis point loan accretion number of kind of being a – it seems to be an average or a base to work off to get down to core.

All right. And then quick question on the criticized loans that increased in this quarter. I guess was that any of that energy related and then maybe geographically where was that in your footprint.

It was a large C&I related loan in particular in West Virginia.

Okay, does that kind of comes with the surprise to you guys the weakness that you saw on the loan?

Yes, it come as a surprise, comes as a disappointment. Since this time we’ve gone out and gotten a lot of collateral companies doing well is going to be able to earn its way out of the whole. So bit of a surprise I guess would be correct way of categorizing it.

Okay. And then last question. As I think about your non-interest expenses, should we kind of expect them to peek here in the second quarter and then maybe work the way down a little bit going forward am I thinking about this correctly?

Dan, I believe they’ll incrementally start to decrease a lot of the cost savings where really are being achieved in March, April, May timeframe. And then I think you’ll start to see some incremental improvement in the efficiency ratio in the second quarter. But the bulk of it with full pace in the third and fourth quarter as Chuck commented down below 65% as an efficiency ratio

Because we are still going to have some one-time cost in the second quarter.

Yes.

Can you characterize this approximately how much that is?

Say somewhere between a million and million and a half right in that range.

Okay, great. All right, thanks, guys.

Thank you.

At this time there are no further questions. Sir, do you have any closing remarks?

Yes. I want to thank everyone for participating. Please remember that our earnings release and a webcast of this call will be archived on peoplesbancorp.com, under Investor Relations section. Thank you for your time, and have a good day.

Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.