Good morning and welcome to the Bryn Mawr Bank Corporation Q4 2013 Earnings Conference Call. (Operator instructions.) Please note that this event is being recorded. Now I would like to turn the conference over to Mr. Duncan Smith, Executive Vice President and Chief Financial Officer. Mr. Smith, please go ahead.

Thank you, Keith, and thanks everyone for joining us today. I hope you had a chance to review our most recent press release. If you have not received our press release it is available on our website at www.bmtc.com. Ted Peters, our CEO of Bryn Mawr Bank Corp has some comments on the quarter and our strategic initiatives. After that we’ll take your questions. The archives of this call will be available at Bryn Mawr Bank Corp’s website or by calling 877-344-7529 and the replay passcode #10038761. A replay will be available approximately two hours after this call concludes. Before we begin please be advised that during the course of this conference call management may make forward-looking statements which are not historical facts. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include but are not limited to the words “may,” “will,” “would,” “could,” “should,” “likely,” “possibly,” “probably,” “potentially,” “predict,” “contemplate,” “continue,” “believe,” “expect,” “anticipate,” “outlook,” “project,” “forecast,” “are optimistic,” “are looking,” “intend,” “plan,” “target,” “estimate,” or words or phrases of similar meaning. Forward-looking statements by their nature are subject to risks and uncertainties. A number of factors, many of which are beyond the corporation’s control, could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements. All forward-looking statements discussed during this call are based on management’s current beliefs and assumptions and speak only as of the date and time they are made. The corporation does not undertake to update forward-looking statements. For a complete discussion of the assumptions, risks, and uncertainties related to our business you are encouraged to review our filings with the SEC located on our website. Thanks. Now I’d like to turn the call over to Ted, thank you.

Good, thanks Duncan. First of all I’d like to thank everyone for joining our conference call today. I hope you’ve had a chance to review our Q4 earnings press release that we issued yesterday after the market closed. Bryn Mawr Bank Corporation had a very good 2013 and we intend to keep running hard in 2014. We reported net income of $6.5 million for Q4 2013 which was a 22% increase from the same period last year. Diluted earnings per share of $0.47 for Q4 2013 was a $0.07 per share increase from Q4 2012. For the year ended December 31, 2013, net income of $24.4 million was a 15.6% increase from 2012. It should be noted that the net income for 2013 included pre-tax due diligence and merger-related expenses of $1.9 million. Diluted earnings per share totaled $1.80 for 2013 which was a $0.20 increase from 2012. Although this is non-GAAP, our earnings per share for 2013 adjusted for merger, due diligence and other extraordinary expenses and income we feel came in at $1.89. We are pleased with our continued strong quarterly and annual results and are very proud of our earnings. Some of the significant factors contributing to the results for Q4 2013 as compared to the same period in 2012 included increases in net interest income and wealth management revenues. Our wealth assets continued to grow, reaching $7.3 billion at year end. Market appreciation along with the continued success of the division’s strategic initiatives contributed to this growth. Partially offsetting these improvements were decreases in gains in the sale of residential mortgage loans and investment securities available for sale as well as increases in salaries and employee benefits and other operating expenses. Significant loan growth in the second half of 2013 provided a healthy increase in our…

Thank you. We will now begin the question-and-answer session. (Operator instructions.) And the first question comes from Jason O’Donnell with Merion Capital Group. Jason O’Donnell – Merion Capital Group: Good morning. My first question relates to the stronger loan growth that you’ve experienced over the last couple of quarters in the commercial loan categories. I’m wondering if you could give us some sense of the granularity of production; in other words is the bulk of that growth in CRE and C&I being driven by a relatively small number of borrowers or are you seeing a more widespread improvement?

Thanks, Jason. I’m going to have Joe Keefer answer that. I just wanted to mention who else is in the room: Joe Keefer, our Chief Lending Officer; Frank Leto who runs our Wealth business; and Duncan Smith, our CFO. So Joe, why don’t you handle that question please?

Yeah, thank you Ted. Jason, a lot of the C&I growth are smaller granular credits. We actually reviewed that a couple of days ago, and I kind of like that because we’re spreading our eggs and we expect that to continue. Jason O’Donnell – Merion Capital Group: Okay, that’s helpful. And then on the C&I side specifically, are you seeing any improvement in line utilization and overall investment activity in your clients?

There’s a little bit of that but most of it is again taking market share from other banks. We’ve been very successful in the last couple of years in attracting strong relationship managers from other banks. So if we hired two say in the middle of last year their production in ’13 was very strong. And again, we just hired another two in ’13 and we expect their production to be strong in ’14. So we have that coupled with… And I’m very happy with our team – a very strong existing team that you know, is still doing very, very well.

I should add, Jason, that we now have four loan centers. We have our hub loan center here in Bryn Mawr; we have one in Westchester; we have one in Media and then we have one in the state of Delaware down in Wilmington. And we’d love to get a fifth one sometime. So we believe, I certainly believe that commercial lending is really going to be a core for us going forward in our profitability. Jason O’Donnell – Merion Capital Group: Okay, that’s helpful. And then I just have one modeling question: on the noninterest income side, there was a loan, there was some noninterest income tied to a loan that had been acquired previously that was paid off in Q4. What was the amount of that item?

Jason, that was a mark that we put on a loan on the first Keystone acquisition a number of years ago, and that loan ended up paying off. And there was approximately a $600,000 gain on that. I sort of alluded to earlier in my comments that that gain basically was offset by a number of other events – a prepayment penalty on a Federal Home Loan Bank advance from the beginning of the year which was $350,000. We enhanced the rank and file corporate bonus pool. In addition we had some special IT expenses this year. So even though we had that unusual gain of $600,000, in my mind certainly it was more than offset by other special events that happened during the year. So we sort of negated that in our mind. I think if you look at our numbers you can see that we had really no security gains this year – I think we had a very slight loss. And you saw we had $1.8 million of merger expense primarily for the Midcoast merger which didn’t happen. We called that off as you kind of remember. So once again, we internally normalize our earnings and take a look at them. We come out with $1.89. Jason O’Donnell – Merion Capital Group: Okay, thanks a lot.

Thank you. (Operator instructions.) And the next question comes from Chris McGratty with KBW. Chris McGratty – Keefe Bruyette & Woods: Hey, good morning guys. Joe, to follow up on the loan growth question is it fair to assume that some of the growth in the back half of the year may have come at the expense of the first half of ’14? Or should we be expecting kind of double-digit growth organically for this year?

No. You know, we look at the pipeline report monthly and quarterly and the last two… We actually had three strong quarters of growth last year and we were flat in Q1. And if I look at the pipeline going into 2014 it’s down a little bit but not significantly. So when I look out for the whole year we’re actually planning for about 7% loan growth and we have a stretch goal that beats that. Chris McGratty – Keefe Bruyette & Woods: Okay. And then Duncan, in terms of the investment portfolio you talked about lower liquidity and the cash flows and the securities book being put into the loan portfolio. What’s the outlook for the investment book in terms of size going forward?

Well, it’s around $290 million, $300 million. I would say it’s probably going to stay around that number. As we add deposits and funding we’d like to keep that, say $290 million, $300 million level. Relative to the size of our balance sheet we do have a very small portfolio so we’ll take a look but by the end of the year we’ll probably be at that $300 million number still.

And Chris, as you probably noticed our loan to deposit ratio has been creeping up the last five or six quarters, which we like – we’re up to I think about a 98% loan to deposit ratio. We really have a lot of flexibility on deposits as you can see. We’ve just been running off CDs on purpose, so we always have the ability to go out and recapture that market if we want to or get more involved in that market. So as Duncan said, around $300 million, we feel comfortable there – we probably don’t want to get a whole lot lower than that.

And if I can just comment and say in December we added wholesale CDs of about $16 million and our terms were three to three-and-a-half years, and our all-in rate was about [1.10%]. So it’s not a bad rate for a three-year CD, so those kinds of dollars are available. The brokers who are calling would like to do that for us every day. Chris McGratty – Keefe Bruyette & Woods: Just to close a little bit on the margin, can you help us with the near-term expectations for the NIM. And you guys do have some accrete-able yield – one of your larger Pennsylvania banks has been struggling with kind of the headwinds from that portfolio. I was wondering if you could kind of talk about the near-term margin. Is there any risk where there’s a quarter where the NIM falls materially because of accrete-able yield?

Just to comment before I turn it over to Duncan, I mean we’ve been very pleased that our net interest margin slowly increased over the last year and a half. Not a lot of banks can say that. But it’s something, Chris, that we’ve worked really, really hard at to maintain that. So Duncan, why don’t you take your crystal ball out and tell Chris where we’re going to be?

Okay, with respect to the accrete-able yield there is accrete-able yield in there every quarter since the last bunch of quarters since Keystone and First Bank of Delaware. That is coming in ratably over probably a three- to five-year time period, so it will start to run down but it won’t… Barring any payoffs it should wind down over like a three-year plus period. So there’s no expected big drop off coming anytime soon relative to the accrete-able yield. Chris McGratty – Keefe Bruyette & Woods: Okay, so it’s kind of like aside from that the margin, if you get the loan growth, should be reasonably stable?

Well I’ll say it is a crystal ball. I think the pressures out there are that we’ll get net interest income growth. The loan book at [5.02] for the quarter is probably, with new stuff we’re booking it’s probably going to be slightly less than that. And with respect to interest costs, our total interest bearing deposit cost was 22 basis points the last two quarters. That’s been coming down for the last five, three to five years, and so it may have reached the bottom. If you look at the last four quarters, 26, 24, 22, 22. So I think we’ve kind of reached the bottom there, so we may see a slight degradation of the margin on a go forward basis, a basis point or three per quarter. But that’s just a crystal ball guess, and barring any, if we did another merger than the accrete-able yield piece comes back up. So it really depends on how successful Joe is in getting loans – good loans, quality loans at good yields – and where deposit prices go.

No pressure, Joe. Yeah, one of the good things that’s happened, Chris, is when the yield curve steepened and the ten year went up and everything we stopped seeing some of the crazy pricing. And we were seeing some larger banks coming in that have like fifteen years 3.99% fixed, ten years 2.99%, so kind of crazy kinds of stuff. And that, when the yield curve jumped six or eight months ago that kind of stuff kind of went away which was good for absolutely everybody. Now that being said I’m sure the bigger banks are blaming us but whatever. But it’s gotten a little more rational out there.

With respect to margin we are adding as I said three- to five-year either wholesale CDs or advances while rates are very attractive – especially yesterday they took a big drop down from year-end. And so we’ll see that coming in, and then the investment portfolio yields, that’s up at 1.64. So we should see some decent reinvestment rates coming back. Chris McGratty – Keefe Bruyette & Woods: Great. Just a last question on succession, Ted, any update?

Yes, the Board has formed an independent committee of three directors that are handling this. I’m on that committee ex officio. We have hired an outside search firm and the search firm has sourced a number of candidates and we have an internal candidate as well. We would expect everybody has been interviewed one time around, and we would expect I’d say by March to have an announcement – probably late March to have an announcement. Chris McGratty – Keefe Bruyette & Woods: Great, thanks.

Thank you. And the next question comes from Matthew Breese with Sterne Agee. Matthew Breese – Sterne Agee & Leach: Good morning, everybody. I was hoping we could touch on core expenses a little bit. Kind of backing out the seasonal items this quarter where would you expect core expenses to settle out in 2014?

Okay, I’ll turn it over to Duncan in a second but let me just make a comment. One area where we’ve seen a lot of increase the last couple years has been, and by design, is our IT area because I think it’s an area, Matt, where we got behind a little bit in what we’re doing, our capabilities. And we’ve done five mergers as you know in five years, and that put a little stress on the organization in that area and the core processing areas. So our IT budget, I don’t have the exact numbers in front of me, I think has almost doubled in the last three years. And so we’re spending a lot more money there and that’s one of the effects that we’re having. We’re always trying to watch personnel expenses tightly; it’s always tough. But I’ll turn it over to Duncan – once again what do you think is going to be happening with noninterest expenses going forward?

Well, if you look over the last five quarters we’ve been relatively stable, ranging from $19.3 million up to $21.0 million. And that includes the merger costs. So you have to smoothen out the merger costs, but we don’t… Other than the IT costs and normal costs for healthcare, which are always going up everywhere, we’re adding staff judiciously as needed. So we’re trying to match revenue increases on the wealth side and the loan side, adding the staff when the revenue comes onboard. So you should see a proportionate increase there. So you know, I don’t think you’re going to see anything unusual other than we’ve got a slight inflation; we’ve got probably a little bit in the, we’ve hired a couple key people; benefit costs and then the IT. So I would say you could put a 3% to 5% increase, somewhere in that range on total normalized noninterest expense. Matthew Breese – Sterne Agee & Leach: But nothing will drop off from this quarter to Q1 due to seasonal-related items. You expect it to be relatively flat.

Yeah, I’d say relatively flat. I can probably tell you if there’s 15 items that come down, there’s going to be 14 that come back up.

The other thing, Matt, with the mortgage volume falling off obviously our incremental expense in the mortgage area is going to fall off, so your commission-based whatever. We had some people, some temps in that area and those temps are no longer with us. So we’ll see a little bit of reduction in expenses certainly in that area but the revenue has fallen off. Matthew Breese – Sterne Agee & Leach: Okay. And then Ted, I was hoping you could touch on M&A. Given your retirement by the end of this year and a successor to be named relatively soon, what’s the desire of the franchise to do a deal in the midst of a change at the helm?

Well, we’ve been very active in M&A. As I mentioned we’ve done five deals in five and a half years; the sixth deal, which was the Midcoast deal we canceled in October and it since came out publicly why we canceled it. We are very active in the M&A area. We’re always talking to people. There’s a lot more chatter out there, a lot more conversations going on out there. We’re getting more calls from investment bankers about things that may or may not be available. I think the Board and myself and executive management would like to do another merger this year, and I don’t think that my leaving really kind of affects that one way or the other. I’m still going to be here till the end of the year so maybe a good job to keep me out of trouble would be to you know, facilitate an acquisition or whatever. But we’re agnostic whether it’s a wealth acquisition or whether it’s a bank acquisition. My personal belief is we’ll have something happen this year and we’re going to keep the same standards though. I mean it has to be accretive to earnings. We will not do anything that’s not accretive to earnings from day one, obviously taking out your closing costs; and it has to obviously have some strategic value at that strategic value as well. So we’ll see what happens. It’s probably one area, Matt, where I’m right now spending most of my time. I just got back from The Acquire Conference out in Phoenix which only had 800 investment bankers and bankers out there, a little bit of a feeding frenzy. And there was just a lot more conversation about things going on – can you be an $800 million bank and still survive, a $1 billion bank, all those kinds of conversations, and the pressures we have on in the industry. So our goal is to be a buyer, absolutely to be a buyer. We’re very fortunate that we have good currency, and to answer your question specifically my leaving at the end of this year will really have no impact on our strategy to do one or two acquisitions this year. Matthew Breese – Sterne Agee & Leach: Great, thank you very much.

Thank you. And as there are no more questions at the present time I would like to turn the call back over to management for any closing remarks.

Well once again thank you, everybody, for joining us. We appreciate all the analysts which cover us. We’re always available if you have phone calls or questions to give us a ring. And with that we will sign off and we’ll be talking to you formally in another three months. Thank you very much.

Thank you. This conference is now concluded. Thank you for attending today’s presentation. You may now disconnect. Have a nice day.