Good morning and welcome to Peoples Bancorp’s Conference Call. My name is Chad, and I will be your conference facilitator today. Today’s call will cover discussion of the results of operations for the quarter ended September 30, 2013. [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 may contain projections or other forward-looking statements regarding future events or Peoples’ future financial performance. These statements are based on 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 including but not limited to the success; impacted timing of strategic initiatives; the impact of competitive products and pricing, the interest rate environment; the effect of federal and/or state banking, insurance and tax regulations; changes in economic conditions and other risks detailed in Peoples’ Securities and Exchange Commission filings. Although management believes that the expectations in these forward-looking statements are based on reasonable assumptions within the bounds of management’s knowledge of Peoples’ business and operations, it is possible that actual results may differ materially from these projections. Peoples disclaims any responsibility to update these forward-looking statements. Peoples’ third quarter 2013 earnings release was issued this morning and is available at peoplesbancorp.com. This call will include about 15 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 be Chuck Sulerzyski, President and Chief Executive Officer; and Ed Sloane, Chief Financial Officer and Treasurer; and each will be available for questions following opening statements. Mr. Sulerzyski, you may begin your conference.

Thank you, Chad. Good morning. We are pleased you have joined us for our call. Besides providing the third quarter highlights, Ed and I will give you a high level look at our 2014 expectations today. As we reported earlier today, Peoples Bancorp third quarter earnings were $2.5 million, or $0.23 per share. Both of these amounts were lower than recent quarters due largely to one-time expenses. The largest of these was a $2.2 million tax expense from surrendering our bank-owned life insurance. We also incurred $446,000 of pension and acquisition cost during the quarter. In total, these items reduced our earnings by $0.23. Outside the one-time cost, our third quarter results were positive. For the second straight quarter, we had double-digit annualized loan growth, and our net interest margin improved. Fee-based revenues remain strong driven by growth in our insurance and investment businesses. Operating expenses were managed in line with our expectations. Bottom line earnings also were helped by additional recoveries of prior loan losses during the quarter. After a slow start to the year, period end balances are nearing our 2013 goal of 8% to 10% growth. Consumer loan balances continue to benefit from increased production within our indirect business. On the mortgage side, balances grew more than expected despite a slowdown in originations because of high long-term rates. The linked quarter growth reflects the strong pipeline we built up as rates were increasing. We also have benefited from the fact that new home sales are comprising nearly 40% of our 2013 originations. This amount is higher than recent years. Within the commercial portfolio, new production remains steady during the third quarter. However, overall growth was limited by some unexpected payoffs and ongoing efforts to improve the quality of this portfolio by changing the mix. Over the last…

Thanks, Chuck. During the third quarter, our management team was busy planning and preparing for the Ohio Commerce Bank acquisition. We are pleased to have finalized this transaction earlier this month. Now, our attention turns to executing the integration plan and serving the financial needs of our new customers. We are excited by the long-term growth potential of this new market in the greater Cleveland region. While it is early in the integration process, our modeling has not changed significantly from what we discussed during last quarter’s call. We still expect annual earnings accretion of $0.11 to $0.14. This range does not include any potential synergies from offering our insurance and investment services to existing Ohio Commerce customers. Additionally, capital dilution remains manageable with 4% dilution of tangible book value per share and a 70 basis point decrease in our tangible common equity ratio. In terms of the fourth quarter impact, one-time acquisition costs are expected to approximate $950,000, or roughly $0.06 per share after-tax. Most of this amount relates to data processing conversion costs. As a result, acquisition costs will be more than offset - will more than offset the incremental earnings. Turning back to third quarter operating results, as Chuck noted earlier, our bottom line earnings were negatively impacted by the BOLI surrender. However, we believe the long-term benefits of this decision for our shareholders were too good to pass up. Specifically, our annual BOLI income had decreased from nearly $1.7 million to essentially zero for the last few quarters. By surrendering, we have the opportunity to redeploy nearly $15 million inter-earning [ph] assets that will generate annual income of at least $1 million. Given the impact of this transaction, we were pleased with third quarter results and our success in several key areas. Most notably, our net…

Thanks, Ed. In the third quarter, we saw our earnings momentum continue to build. Much of the success is tied to the many strategic initiatives implemented during the past 2 years. While more work is needed in some areas, we are pleased with our overall progress to-date with our long-term strategic goals. As discussed in prior calls, one of our strategic goals is to generate positive operating leverage each year. We’ve realized at the start of the year, that achieving this goal in 2013 would not be easy. Revenue growth was being challenged by the low interest rate environment. At the same time, we were continuing to make investments in our future, which carried some significant cost. As we start the fourth quarter, it does not appear, we will have positive operating leverage for 2013. Although we held expenses in check, we were not able to overcome the slow start to loan growth and greater than expected margin compression. Thus overall revenue growth had been weaker than we had expected. We are disappointed to come up short this year with positive operating leverage. However, the prospects of achieving this goal in future years are much greater than it was a year ago. We have built capacity to be a much bigger and better company. We also have the infrastructure to drive meaningful revenue growth for many quarters to come. Along these lines, our strong fee-based businesses continue to be a major asset for the company. We have capabilities that many banks in our region lack, including some of the largest national banks. These include robust retirement plan services and comprehensive insurance products. Thus we have a competitive advantage that directly benefits our revenue growth potential. The other key driver of revenue growth is our ability to produce meaningful loan growth…

[Operator Instructions] Our first question comes from Scott Siefers with Sandler O’Neill.

Actually I just wanted to make sure I understand the expense guidance for the fourth quarter. It sounds like you’re going to have some additional moving parts, but if we can get there any additional well, I guess one, if we get past the one-time costs related to Ohio Commerce and then any additional pension curtailment costs is, simply something in the $17.25 million dollar range, in other words sort of this quarter’s core number plus that incremental $550,000 from run rate Ohio Commerce cost, is that a good bogey for the base to start as we look in the fourth quarter?

Scott, yes, that would be correct. Again, we indicated about $950,000 in acquisition expenses. Overall, revenue generation from Ohio Commerce was about $400,000, bottom line.

Yes, okay. All right, and then Chuck I was wondering if you could just talk a little bit about the competitive dynamic as it relates to the loan portfolio, where you’re seeing things, I guess most intense and where do you - where if anywhere, do you have any relief on pricing or structure?

Well, in terms of structure, I'll take that off the table, because that we just won’t play with. So we’re willing to compete on price. We don’t really as a practice compete on structure. For the most part, our business comes from the larger regional banks. We compete against a lot of smaller community banks and - or smaller regional banks like a top National, or United, or WesBanco or Community Bank and Trust. And as a general statement, they don’t take our customers and we don’t take theirs, not for lack of effort, but I think the execution is pretty strong in all. And we tend to get our opportunities from the larger banks: Huntington, Chase, PNC, Fifth Third, et cetera. We continue to see opportunities there with regularity. It is competitive, but I will tell you that in our footprint one of the benefits of our footprint is any sizeable loan with service data in Columbus, or Cleveland, or Pittsburgh, or Cincinnati where we have good mature experience, capable people able to make quick decisions in these towns and that really is what distinguishes us from the competition and why we are confident that we’re going to grow this loan portfolio in that 10% neighborhood for years to come. On the consumer side, we have historically, really not focused on that business. So we have the benefit of growing off of a small denominator. The major players in that space, Wells Fargo, the Chases, the Fifth Thirds, the Huntington, we are able to do business with local dealers. The dealers in our footprints are generally smaller dealers, are not getting quite the coverage from those other players in terms of the sales interaction that we’re able to provide and lot of folks like to do business locally. So that’s the advantage that, that we have in that - in that space.

[Operator Instructions] Our next question comes from Chris McGratty with KBW.

This is Mike stepping on for Chris. I guess, first starting on the 68% to 70% efficiency target. For next year, do you guys think you could get there, is it the combination of revenue and expenses, it sounds like you guys talked mostly on the revenue side in your prepared remarks. Are there any costs and issues anything like that you would consider to get to that target, or is it pretty much all on the revenue side?

Mike, when we look out at next year, we are pretty excited about the double-digit revenue growth, and we are anticipating expense growth to be 1% probably close to the 2% or less than the revenue growth, which will help that ratio. We think longer-term, we’re going to be able to widen that gap between revenue growth and expense growth. So next year, the 10% plus revenue growth is something that is very exciting to us, some of it help some acquisitions, but even if you look underneath the covers on that, right now we are sitting here with 4% more checking accounts than we had last time this year. We see incredible increases in our retirement plan balances, just our cross-selling between the different lines of business, the amount of insurance and commercial activity going back and forth. And our model is not built to be the most efficient . The investment business, the insurance business, those are very high ROE businesses with a bit of a higher expense process. And then from a sales perspective, we’re really trying to be complicative and cover a wide array of needs, not only in the banking, but the insurance retirement plans need et cetera, for the wholesale customers, and then on the consumer side, both the insurance and the investment needs. So we will get more efficient over time, and the opportunity to get more efficient comes not only as we grow at a faster rate. But we have really in the last couple of years made meaningful investments that really rectify, I’d say, 10 to 15 years of deferred investments in systems and buildings and so forth. So we’re pretty optimistic that, next year you’ll see revenue growth 1.5% to 2% more than expense growth and that over time we’ll be able to widen that range.

And then on the size of the investment portfolio, in the context of your expected loan growth, should we expect the balance sheet to grow or are you guys still expecting to remix the assets a little bit and fund some of that loan growth with the shrink in your securities portfolio?

Yes, Mike, this is Ed. We will certainly be looking at that as we go through next year. We’ve talked about this relative to the BOLI in the past that we would take some of those proceeds and redeploy from the investment portfolio and the loan portfolio provided we had loan growth, and that’s still very much a strategy of ours. And then we also look at it in terms of securities portfolio as a percentage of our total earning asset or total asset base and continuing to bring that down. The Ohio Commerce transaction really helps us naturally to get there. They had a very small investment portfolio and we added close to $100 million in commercial loans. So naturally from that and then we’ll continue to look for opportunities throughout the course of 2014 to reduce the securities portfolio as a percentage of assets even further.

Okay. And then just one more quick question from me on the effective tax rates. I saw on the release, you guys said you’re expecting 32% for the fourth quarter. Is that a fair number for 2014, as well at least I think echo here?

It is.

This concludes our question-and-answer session. I’d like to turn the conference back over to Mr. Sulerzyski, and Mr. Sloane for any closing remarks.

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

Thank you very much. The call is now concluded. You may now disconnect your lines.