Good morning and welcome to the Bryn Mawr Bank Corporation Second Quarter 2014 Earnings Conference Call. (Operator instructions) Please note this event is being recorded. Now I would like to turn the conference over to Duncan Smith. 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 bmtc.com. Ted Peters, Chairman and 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 pass code is 10048017. 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 these 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 Securities and Exchange Commission located on our website. Thanks. Now I like to turn the call over to Ted.

Thanks Duncan. First of all I like to thank all of you for joining our conference call today. I hope you’ve had a chance to review our second quarter earnings press release that we issued yesterday after the market closed. The continued increase in our quarter-over-quarter earnings is very satisfying and endorsement of our sound business strategy and encouraging sign of an improving economy. Before I delve into the results for the quarter I would like to update you on the progress of our pending merger with Continental Bank. The staff and management of both institutions have been hard at work preparing for the merger, which I'm pleased to report is moving along as anticipated and is scheduled to close towards the end of the fourth quarter. We are very excited to joined forces with Continental and to expand our footprint into many desirable new markets. We reported net income of $7.6 million and diluted earnings per share of $0.55 for the second quarter of 2014, which was 21.6% and 19.6% increase respectively from the same time last year. For the three months ended June 30, 2014 we saw increases in net interest income and wealth management revenues and a decrease in the provision for loan and lease losses between periods. These improvements were partially offset by a decrease in the gaining on sale of residential mortgage loans. Some of the significant factors contributing to the results for the second quarter of 2014 as compared to the same period in 2013 included non-interest income increased $1.5 million or 8.5% to $19.4 million compared with the same period in 2013. The increase was largely a result of $172 million or 12% increase in average loans. Partially offsetting this growth was a decrease in average available for sale investment securities of $54…

(Operator instructions) And the first question comes from Chris McGratty with KBW.

Hi, good morning guys. It is actually Mike Perito stepping in for Chris.

Hi, Mike. How are you?

Good, thanks. Ted a quick question on your capital deployment comments there on under prepared remarks, so pro forma for Continental you guys are pretty much at the $3 billion, $8 billion goal, going forward is there any change in I guess your emphasis, would you guys look more for wealth deals at this point, are you guys still pretty open to doing either or?

Yes. We are – first of all, let me mention Mike to everybody on the phone that we have the usual cast of suspects here. We have Joe Keefer, our Chief Lending Officer, and Duncan Smith, our Chief Financial Officer; and Jeff Halberstadt, our Corporate Secretary and Chief Risk Officer; and Frank Leto, who has been recently promoted to President and COO and will be my successor at the end of the year. So I should mention he is here. Basically as we – we are agnostic whether we do a wealth deal or a bank deal. There is a lot of bank activity going on out there. Let me tell you, I think this year we will probably see in the nation 250, 275 bank deals and I think in the following year you will see a lot more. We – you know, we – even we close Continental that will be our third bank deal and we have also done, you know, three wealth deals in the last five or six years. We have looked at a lot of situations, but we are very particular on two fronts. One that has to make financial sense, you know, it has got to be accretive to earnings and accretive in a meaningful way, and the other thing it has to make strategic sense. You know, it has got to fit in with what we are doing, you know, geographically for business volumes or something like that. We plan to continue to be very active in the acquisition business. We like to do at least one bank acquisition in a year, and then maybe fill in with some other wealth acquisitions or other lines of business. We are presently – Frank Leto is leading a project right now on updating our strategic plan when he comes in and takes over on January 1st and he has engaged senior management on that and we have a formal directors retreat coming up. I think it is October, you know, to go over the whole thing. I probably can’t say what that plan is going to be, but it certainly is going to be a lot more [383], three was a little catchy, even though the future plan is a lot more complicated than that. But we certainly want to continue to grow and grow organically and grow inorganically as well.

Okay, great. Thanks, and then just another quick question on the expenses, I appreciate the commentary on the infrastructure investment, but given your comments there on M&A being a part of your future and are there any – do you guys – are you comfortable with your current compliance build out from a expense point of view. We've seen a little bit more scrutiny from regulators recently, any color there would be helpful. Thanks.

Well, first of all, all banks, including ourselves, have really beefed up the compliance area, and beefed up the enterprise risk management area. In fact, we hired a separate person to run the enterprise risk management group, Jeff, a couple of years ago. So these costs are there, and actually it is one of the reason that subverting increased mergers is because of this high kind of cost. Most of our increase has been, Mike has been in the IT area, where our IT budget and maybe Duncan can give us more general numbers, but it has maybe doubled in the last three or four years, and we believe that we want to grow the organization and not only be at $3 billion, $8 billion organization but maybe at some point be a $5 billion and $15 billion that we need to really improve our infrastructure quite a bit. So, we put a lot into that. Duncan you have any other comments on some of these extra cost we have been incurring in the last few years.

With respect to compliance, we pride ourself in what we do, and we certainly don’t skimp in that area, and we continue to invest in the appropriate levels of compliance, certainly. As far as the expenses in there, you know, the run rate of 20 points – we are at $20.6 million there for the quarter, obviously the merger expense if you take them out, that brings down a little bit. But there are numerous items going each way, some benefit, some expenses, and so I would say that the run rate there is probably more like the $20 million number, and we will start to increase a little bit. With respect to the IT expenses, when you are in the research mode and you are trying to figure out exactly which pieces you are going to build or buy, you expense all that. But once you get into the actually start the project and start to build it, then some of that gets capitalized and will get expensed over a 5 to 10 year time period. So, we are just in the beginning stages of 3 or 4 very big projects that will continue over the next couple of years. So there will be pressure there, but in the long run you will see other capacity to handle more volume or you will see some cost reductions in other areas. So there will be, you know, a return on that investment. You just don’t see it immediately and it takes a little time to come through.

I think it is good Duncan, the primary example is about a year ago we had six or seven different phone systems due to the acquisitions everything else now. Now we have one phone system and expenses to deal with a big project. On the other hand I think we lowered our telephone costs or communication cost significantly internally. So those are the type of things we are working.

Okay, thanks. So, $20 million run rate that grows slightly as you guys continue to invest in your business and which should benefit results, you know, further down the line if I’m hearing you guys correctly?

Yes, that is correct.

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

Thank you.

Thank you and the next question – thank you and the next –

We are having trouble hearing here.

Can someone go into the [Indiscernible].

Leave it. He can’t hear us though.

Mike can you hear us?

I can hear you guys, and I don’t know if I am still unmuted.

Yes. You are connected.

Okay.

This is the operator.

Okay. Go ahead Mike, or the operator.

Are you ready for the next question?

[Indiscernible]. I am ready for the next question.

Thank you. Our next question comes from David Darst from Guggenheim Securities. Please go ahead. David Darst – Guggenheim Securities: Good morning.

Good morning David. How are you? David Darst – Guggenheim Securities: Doing great. Joe, I wondered if you could give us a little bit color on your loan demand and maybe how you are looking at the expansion markets that you will be in for next year and what are your expectations for growth and then just also maybe cover credit and it sounds like trends were pretty good and should we expect to see a lower provision in loss rate going forward for a couple of quarters?

Yes, I will be happy to David. So we had a very, very strong quarter. The annualized growth rate was over 12%, and if I look at the pipeline, you know, going into the third quarter, it is down a little bit from you know, where we were going into the second quarter, but it is still very, very good. So, I anticipate that we will continue to show high single digit loan growth, and I’m very encouraged. What seems to be happening is we capitalized on the First Bank of Delaware acquisition and that is really paying dividends. I don’t think people realize how accretive and that was a small acquisition, but how accretive and profitable that has been for us. Also our recent hires have really been able to move accounts into the bank, and you know, I see that continuing. So I think for the year we will probably come in at 8% or 9% loan growth and I feel good about that. Once Continental happens, I think that is going to be a very, very strong market for us. We are meeting with the lenders regularly over there. We are getting to know one another. I think they have accounts that they have been limited to as far as their expansion because of legal lending limit or, you know, they can’t lend as much as we can. So we even started meeting with some of those customers. So I think the first thing would be, you know, expand upon their existing base where we can do more. I’m also excited that it gets us into the SBA business, which we looked at from time to time, but never really pulled the trigger on. So I’m excited about that as well. So I think that it gets harder and harder the bigger you get, but I think we will outperform our peers in the market with respect to loan growth for the next couple of years. Oh, credit quality.

Credit quality and [Indiscernible].

Yes, the credit quality, you know, we were always pretty good that way and we were always striving to get our non-performings down below that 0.5% level. So, my bias, you know, Duncan may disagree he is the one that does all the work, is that our provisioning will be lower than where it has been say in its fourth quarter, first quarter and second quarter of this year. So, not the second quarter. I don’t think we will have a negative provision, but it will be lower than what you have seen. That is my bias anyway.

To comment on the provision, excluding this quarter, our range for the prior four quarters was $750,000 to $1 million. And so, going forward as you said, I don’t think we would – one of the factors that brought the provision down besides the improvement in the quality is some of the qualitative factors and when these qualitative factors change it is more formula driven than it used to be a long time ago. So you kind of follow formulas, but it is trending, I mean it is trending the right way. So I would expect provision to be equal to a certain percentage of loan growth. So if loan growth is higher, the percentage will be up, the dollars will be proportional and then any direct charge-offs that would come through, we would add them and so I think, you know, I would say maybe more on the lower range – lower end of what we have experienced the four prior quarters. David Darst – Guggenheim Securities: Okay, got it, and then if you look at your loan yields, they continue to be pretty steady with just supporting your margin right around the 4% level, and then it seems to fluctuate based on how you manage your liquidity, is there anything that is changing on that front?

Well, I think for the last four quarters we have been over the 4% number, and for those last 5 quarters I have been saying it is going to go down 3 to 5 basis points per quarter. So you're making me look like a liar here but I still think it's going to go down 3 to 5 basis points per quarter, you know, even 1 to 2. But, you know, the mix, you can see the deposit costs are flat lined down to 40, 42 basis points. So all in costs on the interesting bearing liabilities. So, that kind of flat lined, but we are seeing stronger pricing on the loan growth for a while there. I think Joe is getting a call every other day to lower the rate and I think that has stopped, still getting some of it, but certainly not at the – so, maybe we have also flat lined the constantly refinancing at significant lower rates. So – but there is competition out there. So you are seeing competitive rates, competitive pricing for the loan business. David Darst – Guggenheim Securities: Okay, great. Okay, thanks.

Thank you. (Operator instructions) And we do have a question from Matthew Breese from Sterne Agee. Matthew Breese – Sterne Agee: Good morning guys.

Good morning Matt. Matthew Breese – Sterne Agee: I was hoping you could touch on the overall size of the securities portfolio, has that been coming down for three or four quarters now and given that capital is actually up a little bit, up quite a bit from last year, I was hoping you could just touch on how you intend to deploy that capital and if – if your security portfolios could increase as a result?

It is a good question. with respect to the securities portfolio, it is probably about as low as we want to take it because you have lots of – you need as your primary liquidity source. We have about 30 million to 50 million in cash flow for the next six months coming back to us, but we are also looking at the Continental portfolio, just, you know, not actually, but you know, thinking on pro forma basis, they have a much higher loan portfolio percentage of assets than we do. So – and they have a much longer portfolio. So we are keeping ours short. Theirs is a lot longer. So we are thinking, you know, collectively how it might look going forward. Matthew Breese – Sterne Agee: So, and then as far as capital we really need to through the merger and then get all the loan marks and all that good stuff done and kind of re-evaluate but we did the dividend increase that Ted talk about here and we are happy with the capital levels but we don't want to make too many changes in what’s working right now.

Matt, clearly we have too much capital. I mean we have been accumulating capital pretty quickly and which is good, I guess is a good problem to have but we want to have some powder because we want to keep doing the acquisitions if they make sense. The continental acquisition bring the capital level down a little bit but really not that much but it gives us plenty of room to keep doing some things especially if you do a wealth acquisition, the wealth acquisition is 100% just comes of a tangible common equity which is almost always our goodwill. So to answer to your question, we know the capital is too high, our target is 8% and well over 9 but it will, hopefully, over the next couple of years come down. Matthew Breese – Sterne Agee: Great and then on the deal front, Ted in the past you have said it wouldn't be out of the question to see another deal announced in 2014 along with Continental. Do you still feel that way and do you still feel like prospects are pretty strong to get something done, something else done?

Well there is always lots of conversation going on out there and we would hope to sometime in the very-very late fall, maybe right around the end of the year, or early next year maybe announce another acquisition. We have to be sensible on couple of things, we have regulatory applications in there so we don't want to get them come up by announcing something too soon but we would hope to maybe announce something else right around the New Year. We will see or we might announce nothing. We are not sure but we – I think our plan is try to do a one bank acquisition a year and then also we do wealth acquisitions to other non-bank acquisitions that will be great too. Matthew Breese – Sterne Agee: And how conversations done meaning have discussions picked up over the past three to six months, are you finding that there is more willing sellers in your nearby markets?

Absolutely, yes. It's been really a big change in the last couple of years. Just a lot more conversations out there and lot more people meeting, lot more conversations, lot more chatter, and this is talking to all the investment bankers, just talking to other banks that's just – there is a lot more activity out there. As I said earlier in my remarks, in my comments, I really think we are going to -- 2014 is going to be a good strong year for acquisitions to be announced and then 2015 is going to even take off more. Now, at this date, there is about 6900 banks in this country, 6900 if you sort of define them as people of FDIC insurance and there is absolutely no doubt in my mind that in six or seven years that number will be down about 4500 and so there is going to be a lot of stuff currently going on. Matthew Breese – Sterne Agee: Alright, thank you very much.

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

Yes we have no closing comments but we do appreciate everybody calling in and many of you who are calling our shareholders and we appreciate that and we are going to continue to work hard to gain, to keep your confidence and thank you very much.

Thank you. That concludes today's teleconference Thank you for attending today’s presentation. You may now disconnect. Have a nice day.