Good morning and welcome to the First Financial Bancorp Q2 2012 Earnings Conference Call. (Operator instructions.) Please note this event is being recorded. I would now like to turn the conference over to Ken Lubbock, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Valerie. Good morning everyone and thank you for joining us on today’s conference call to discuss First Financial Bancorp’s Q2 2012 financial results. Discussing our operating and financial results today will be Claude Davis, President and Chief Executive Officer; and Frank Hall, Executive Vice President, Chief Financial Officer and Chief Operating 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 Q2 2012 earnings release as well as our SEC filings for a full discussion of the company’s risk factors. The information we provide today is accurate as of June 30, 2012, 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.

Great, thanks Ken, and thanks to all of you who have joined the call today. We are pleased to announce another quarter of solid performance, reporting net income of $17.8 million or $0.30 per diluted common share. Return on average assets was 1.13% and return on average equity was 9.98% for the quarter. The results were impacted by two one-time items during the quarter. First, we recognized $2.2 million of nonrecurring expenses on a pre-tax basis or $0.02 per share, primarily related to expenses associated with our branch consolidation plan. We also recognized a pre-tax gain of $5 million associated with the settlement of litigation related to a subsidiary which impacted earnings per share by $0.05. Earnings were also affected by the provision for loan losses related to our uncovered loan portfolio which increased $5.1 million compared to the linked quarter. We paid our third variable dividend during the quarter, representing a 100% dividend payout ratio based on our Q4 2011 reported earnings per share of $0.31, and while not reflected in Q2’s reported results, we paid our fourth variable dividend earlier this month based on Q1’s reported earnings per share of $0.29. Our next quarterly dividend will consist of a regular dividend of $0.15 per share and a variable dividend of $0.15 per share based on Q2’s earnings of $0.30, the announced dividend results and a current yield of 7.4% based on yesterday’s closing price of $16.21. As we mentioned last quarter we intend to continue paying the variable dividend through 2013 unless our capital position changes materially or capital deployment opportunities arise that cause our capital ratios to move to our stated thresholds sooner than expected. As of June 30, our tangible counter ratio was 9.91%, Tier 1 leverage was 10.21%, and total risk-based capital was 18.42%. Our…

Thank you, Claude. We have provided supplemental financial information that is crucial to establishing and maintaining a clear understanding of our reported results as well as the concepts that have a material effect on our current and future performance. Unique accounting and reporting requirements and the strategic distinctions we have made related to our 2009 acquisitions materially impact our reported operating results. So to aide in better understanding our strategic activities I will focus primarily on the ongoing or strategic aspects of our business. Our Q2 2012 GAAP earnings per diluted share were $0.30. The quarter’s earnings were impacted by several nonrecurring items that Claude has already touched on so I will speak briefly to the major components of our operating performance in the quarter. Our adjusted pre-tax, pre-provision earnings as shown on Slides #3 and #4 of the supplement were $30.2 million for the quarter, or 1.92% of average assets. Adjusted pre-tax pre-provision earnings which excludes certain items related to covered loan activity as well as significant nonrecurring items were down quarter-over-quarter due to a decline in net interest income which was partially offset by higher fee revenue. Total interest income was down $3.2 million compared to the linked quarter, due primarily to lower interest income earned on loans resulting from a 6.9% decline in the average balance of covered loans outstanding, and to a lesser extent a decline in the yield earned on the uncovered loan portfolio. Total interest expense declined $1.3 million compared to the prior quarter due to lower interest expense on deposits. As a result, net interest income on a linked quarter GAAP basis decreased $1.9 million. We were pleased with our ability to maintain a strong net interest margin during the quarter which declined only two basis points to 4.49%. We continued to execute…

Thanks, Frank. And Valerie will now be happy to open up the call for questions.

Okay, we will now begin the question-and-answer session. (Operator instructions.) The first question comes from Scott Siefers of Sandler O’Neill. Scott Siefers – Sandler O’Neill & Partners: Good morning, guys. I guess the first question I wanted to ask is on the efficiency analysis you guys are going to be embarking on. I was just looking for a little more color I guess, maybe in terms of what the overriding goal of what that will be. To the extent that you’ve already rationalized geographies, so what are the main things you’re going to be focusing on? And then maybe your top-level thoughts on timing – I mean we know when the start will be but when you would hope to be finished with the analysis, sort of the process you’re going through, how you’ll communicate the results to people like us, etc.

You bet, Scott. Yeah, the first stage of it we wanted to complete was the branch consolidation plan which as we mentioned we did the first [ten] of those at the end of Q2 and then the other six will be happening in Q3. So the impact of those have not yet been seen in our results, so we should begin to see that start to show up in the Q3 numbers. The analysis we’ll be doing should be substantially complete by the Q3 call when we will at that point give an update as to where we’re at and the impact of those changes. The process we’re going through in addition to what we’ve already disclosed on the branch consolidation plan is to literally look at every part of the company, and the way we’re looking at it is we’ve developed what we call key performance indicators for all parts of our business which really focus on for lack of a better term capacity management and making sure that the business that we are doing justifies the expense base that’s dedicated to each part of our business. And so now that we have those KPIs as we call then in place in most parts of the business we’ll be going through that capacity management analysis, determining where we have excess costs and then coming up with a plan to reduce it. And that’s the process we’ll go through and that’s the part of the process that we should be able to disclose substantially all of that work by the Q3 call. Scott Siefers – Sandler O’Neill & Partners: Okay, that’s perfect – I appreciate the color there. And then, Frank, I had a question for you just on Basel III. Now Claude, you mentioned at a top level you’re still comfortable with how you look under Basel III but I was wondering if you might be able to put any more specifics around it. And then Frank, I guess specifically for you I was wondering if there’s a little bit of an impact to your guys’ capital ratios with the expiration of the loss share agreement next year I believe. Does that kind of factor in any differently under Basel III versus Basel I and how are you guys thinking about that dynamic?

Sure, and Scott, I would say our analysis took a very conservative view across all areas of the balance sheet. I think as you can appreciate not all of the points that are addressed in the [MPRs] are necessarily readily available for analysis from any financial institution so we took a very conservative view and just assumed the worst as far as treatment on any area of the balance sheet and reached the conclusions that Claude articulated.

Including loss share. Scott Siefers – Sandler O’Neill & Partners: Okay.

And we mentioned next year actually ours expire in mid-2014. Scott Siefers – Sandler O’Neill & Partners: That’s right, sorry. Excuse me. Good, I think that does it. Thank you very much.

The next question comes from Chris McGratty of KBW. Chris McGratty – Keefe Bruyette & Woods: Good morning, guys. Frank, with the improving loan growth this quarter can you just help us in thinking about the size of the investment portfolio going forward?

Sure. I would say that the investment portfolio is largely going to be driven by what we see on the funding side of the deposit portfolio in particular. We’ve given ourselves a boundary if you will around our overnight borrowings position to support the investment portfolio because there is some seasonality in our deposits as you saw this quarter with public funds. So you know, I would say barring any significant changes in our deposit portfolio I would expect to see the investment portfolio stay about the size that it is and maybe decline if we are successful in seeing some good solid loan growth. Chris McGratty – Keefe Bruyette & Woods: And on that point on the growth, can you update us on where pipelines are today? You maybe said they were stable but any additional color about kind of back half of the year growth expectations for loans?

Sure, yeah. We’ve talked about in the last quarter’s call that we saw a nice pipeline increase at the end of Q1 which translated into 30% higher Q2 originations. With that level of origination in Q2 we saw the pipeline decline some as you would expect with those fundings but still very strong. So at least at this point we’re optimistic but we’re also concerned and cautious related to just all the economic news that’s out there. So I think our sales team is doing a great job of being out aggressively pursuing new clients and retaining existing clients, so we’re still cautious but optimistic. Chris McGratty – Keefe Bruyette & Woods: Great. On the investment portfolio, one more for you, Frank: what are you buying in terms of duration and yield? Just if we are to keep the portfolio flattish what are you buying to offset the maturing cash flows?

Sure, right now the duration is right around, just under four years, about 3.8 years; and the yield is about 1.5%. Chris McGratty – Keefe Bruyette & Woods: Okay. And last, what’s the tax rate we should use going forward?

I would say it looks similar to what we’ve experienced in prior quarters. This quarter was an anomaly due to an adjustment but it should be, probably best case maybe 20 basis points lower than it has been. Chris McGratty – Keefe Bruyette & Woods: Great, thanks.

The next question comes from Jon Arfstrom of RBC Capital Markets. Jon Arfstrom – RBC Capital Markets: Thank you; good morning, guys. Just a follow-up on the pipeline or loan growth question, specifically on commercial real estate it’s one of the better quarters, maybe the best quarter I’ve seen in quite a while. Is there anything specific going on there or anything that drove those balances in the quarter?

I wouldn’t say. It was a combination of some good wins. It’s certainly an area we were being cautious in just because of what’s going on in the economy but you know, Jon, we’ve seen some nice opportunities there to do some very high-quality deals and we were able to get those closed and funded in Q2. So I wouldn’t say anything out of the ordinary but we are beginning to see, especially for good cash flow-supported deals, more interest by buyers in that market. And so yeah, I would say in general we’re seeing some improvement there. Jon Arfstrom – RBC Capital Markets: Okay. The term “cautious” comes up periodically in the dialog here – what’s the borrower mood like? Has it changed at all? Is some of the negative macro news impacting the borrowers in your view?

I think it is. You know, it just seems like it stops and starts as it relates to mood and attitude which is kind of reflected in the overall economic mood. So I would say that tends to be more of what impacts it to the negative, it’s more the macroeconomic. Many of our clients are still doing well. I think there’s been some softness that happened in Q2 but in general I think it’s more just macro news and environment that’s caused it I’d say more than anything. Jon Arfstrom – RBC Capital Markets: Okay. And then just a quick credit question: on the three separate commercial and real estate credits, obviously without that $6 million additional provision the numbers would be a little bit better here. But is there anything specifically or is there a story in terms of what drove that? Was it some kind of a portfolio review or are these just three larger credits that experienced some difficulties at the same time? Just some more color there would help.

Sure. Yeah, Jon, one of the credits was just a classified credit that just got to a place where we pushed for some change in action that caused the further downgrade and reserving. The other two I believe were more valuation adjustments related to just ongoing appraisals that we do on troubled credits, so no unusual events related to portfolio reviews other than just our normal process. Jon Arfstrom – RBC Capital Markets: Okay, thank you.

The next question comes from Emlen Harmon of Jefferies. Emlen Harmon – Jefferies & Co.: Good morning. Just a quick one kind of tied into loan growth: you did see kind of the legacy or non-covered loan yields drop a good amount this quarter. Can you help give me a sense of how much of that is due to kind of you guys being more aggressive in growing that book and going out there and pricing aggressively versus just kind of general re-pricing of the portfolio and whether we should expect declines of the same magnitude going forward as you guys stay aggressive on loan growth?

Yeah. I would say we’re more aggressive. Certainly yields, our rates have come down in the last two months as we all know the ten year has come down substantially. And so yes, I think market rates have come down on loans so that is part of what you’re seeing reflected. It’s also just ongoing renewals that occur that when they occur they tend to, especially if they’re term loans will adjust in pricing. But other than that in terms of our approach to the pricing models and other things we’ve had no change. So it’s just more kind of the current rate curves and just re-pricing of loans, so no change other than that from a policy perspective. Emlen Harmon – Jefferies & Co.: Got you. So it seems like the degree decline that we saw this quarter, maybe a couple more quarters of that as the book just kind of re-prices down through the year.

Yeah, I think the whole industry is going to have some of that. Emlen Harmon – Jefferies & Co.: Yep, okay. Thanks, I appreciate it.

The next question comes from Bryce Rowe of Robert W Baird. Bryce Rowe – Robert W. Baird & Co.: Thanks. I just wanted to follow up on Emlen’s question there. Was there an interest reversal in the quarter related to the three credits that you provided for?

There was. We don’t have that number.

Yeah, on a couple of the credits yes but it would not have a material impact. Bryce Rowe – Robert W. Baird & Co.: Okay. And then Frank, the $2.2 million of nonrecurring expenses, was it spread out across the expense line items or was it concentrated in salaries or occupancy?

Yeah, most of the number is salary investment but it is spread out as you would expect across all categories including occupancy, but the bulk of it yes, it was a salary benefit. Bryce Rowe – Robert W. Baird & Co.: Okay, last question. I guess the six branch consolidations/exit, can you guys tell us which ones they are? And then that is being offset if I remember correctly by a couple new branches coming online in Cincinnati?

Yeah, four of the six that we’re closing, four are in-store locations in markets in Indiana where we have no other presence. And then two others are consolidations in existing markets where we’ll continue to have an ongoing presence. And you’re correct in that we opened up a small downtown location in Cincinnati that would be more akin to an in-store type expense level, and then we also opened up in the mid part of Q2 an office in a suburb or in a part of Cincinnati. So part of the expense for that office would have been in the Q2 results. Bryce Rowe – Robert W. Baird & Co.: Okay, so no more planned openings for the balance of the year?

We have one other location on the East side of Cincinnati that we are planning but we have not yet started construction, so my guess is that would come on in Q1 2013. Bryce Rowe – Robert W. Baird & Co.: Okay, thank you. I appreciate it.

(Operator instructions.) The next question comes from Kenneth James of Sterne Agee. Kenneth James – Sterne Agee & Leach: Hi, good morning. I wondered if you could touch on maybe the retention rate of acquired customers in the cover portfolio and then just kind of about the pace of runoff this quarter – a little faster than it had been? And I’m just wondering, I would think as these portfolios mature and as the bad stuff gets worked out in the early period that the rate of runoff would slow towards something like normal amortization. So I was just kind of curious if you can give some color on that.

Yeah, I would say that on the covered loan portfolio, I would say we have been fairly successful in retaining those relationships. We’ve used strategic; we haven’t disclosed an absolute dollar amount but it has been successful. And if you’ll recall we do differentiate between strategic and nonstrategic, nonstrategic being those that are in markets that our outside of our Ohio/Indiana/Kentucky footprint and also those that are credit challenged. But no, we have been very pleased with those retention rates, and I would say as far as a rate of change the rate of change has certainly slowed within the last six, eight quarters. Kenneth James – Sterne Agee & Leach: Okay. Was there some out of market strategic stuff, or I guess credit challenged stuff in the covered portfolio that kind of got worked out this quarter or moved out, I guess?

Yes, and there are prepayments and contractual activity and we disclosed that in one of the tables. But yeah, I would say some behavior is difficult to predict in the covered loan portfolio, but as far as what we want to keep in that strategic portion we have had good success there. Kenneth James – Sterne Agee & Leach: Okay, and if you get a maturity and you get a renewal does it automatically go into your regular, or while there’s a loss share agreement in place can you actually keep that covered?

Yes. There are some very strict conditions that we need to adhere to but it is possible to renew and maintain coverage. Kenneth James – Sterne Agee & Leach: Okay, and then lastly would you say generally your borrower base is in the aggregate still deleveraging or have reached neutral and just haven’t thought about re-leveraging yet as far as like the loan growth demand?

Sure. I would kind of qualify my statement that I’m going to make by saying this is more anecdotal than statistical in terms of not looking at it that way in terms of the portfolio. But in general from the anecdotal perspective I would say people are either staying static or continuing to de-lever, and we can look at that by our line utilization rates as one kind of indicator as an example and just other discussions. But our line utilization rate just as an example in our commercial lines has actually gone down in the last couple of quarters, so still at levels that we’ve not, you know, are historically low levels. So just based on a couple of those data points yes, I think they’re staying static or de-levering more then levering up at this point. Kenneth James – Sterne Agee & Leach: And lastly, can you refresh me on maybe the utilization rate? Is it low 40%’s, high 30%’s?

It’s one, I just don’t have the product type. We look at it across all of ours but it would be more in the mid-40%’s for what we call core commercial. Kenneth James – Sterne Agee & Leach: Alright, thanks a lot guys.

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

Yes, thank you, Valerie, we appreciate it. I just want to make one other comment before we conclude, and that is that if you’re not already aware we will be hosting our first Investor Day on the afternoon of August 15th in Cincinnati. The event will be webcast and we will be distributing details soon through a press release. If anyone has any questions regarding the event please feel free to contact Ken Lubbock and his information is listed in our earnings release and on the Investor Relations portion of our website. So thank you all for participating.

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