Ken Lovik - Senior Vice President, Investor Relations Claude E. Davis - President and Chief Executive Officer Anthony M.

Stollings - Executive Vice President and Chief Financial Officer

Scott Siefers - Sandler O'Neill & Partners LP Emlen B. Harmon - Jefferies LLC Taylor Brodarick - Guggenheim Securities LLC Andy Hedberg - RBC Capital Markets John Barber - Keefe Bruyette & Woods Inc.

Bryce W. Rowe - Robert W.

Baird & Co. John Rodis - FIG Partners LLC

Thank you, Jessica. Good morning everyone and thank you for joining us on today's conference call to discuss First Financial Bancorp’s third quarter 2013 financial results.

Discussing our operating and financial results today will be Claude Davis, President and Chief Executive Officer, and Tony Stollings, Executive Vice President and Chief Financial 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 third quarter 2013 earnings release as well as our SEC filings for a full discussion of the company’s risk factors. The information we will provide today is accurate as of September 30, 2013, 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.

Thanks, Ken and thanks to those joining the call today. We are pleased to report net income of $14.9 million or $0.26 per diluted share for the third quarter.

Return on assets was 96 basis points and return on tangible common equity was 10% for the quarter. Our results for the quarter were impacted by several non-operating expense items that in total reduced pre-tax earnings by approximately 2.4 million or $0.02 per share.

Excluding these items return on assets was 1.05% and return on tangible common equity was 11.02%. Loan growth continued to be solid as we achieved our sixth consecutive quarter of growth in our uncovered portfolio.

Average balances were up $102.7 million or 12.4% on an annualized basis compared to the prior quarter, reflecting our strong growth throughout the year. We continue to demonstrate our ability to compete well against both the large regional and the smaller community banks as our diversified product set, coupled with our relationship-based approach provides multiple avenues for loan growth.

Our C&I, owner occupied CRE and franchise finance groups had particularly strong quarters and our specialty finance and residential mortgage teams made solid contributions as well. Ending balances were up $48.8 million or 5.7% on an annualized basis as we experienced a higher level of payouts compared to the prior two quarters.

Additionally we had anticipated some late third quarter production that didn't ultimately fund until October. When combined with our strong pipeline of new business at the end of the quarter, which was up over 12% compared to the end of the second quarter we feel very optimistic on our prospects heading into the year-end.

Total deposit balances for the quarter were down slightly, less than 1% compared to the linked-quarter, driven in part by declines in CD balances due to continued low rate environment and seasonality. As a result of the deposit rationalization work we have executed over the last 18 months focused primarily on higher rate CDs at single service clients we have right sized the composition of the deposit base with over 80% now consisting of non-time core accounts.

Looking forward we are focused on strategies to drive deposit growth as this will be key to overall organic balance sheet growth. Two new products are Indexed Money Market account and relationship CD have produced growth and newer products such as our Work/Life program, HSA and a promotional CD marking the company’s 150 year anniversary as well as client incentives for multiple products are showing early signs of success.

Additionally we will soon be introducing a new indexed checking and small business checking products that we expect to drive additional growth. Adjusted non-interest income was down $1.4 million compared to the linked quarter.

Tony will provide more details on the drivers of that but I wanted to briefly comment on some strategies in place that we believe will drive fee revenue growth going forward. For example in wealth management we have rolled out new investment strategies to capture more discretionary business from our existing clients and generate new business growth in our primary markets.

Additionally our Retirement Plan Services segment is gaining traction as we market the product and cross sell to our commercial client base. In our mortgage line of business, like the rest of the industry gain on sale income was down as originations declined during the quarter.

However two positive aspects to our growing mortgage business are, first, our model is focused on purchase business and we have never been overly reliant on the re-finance wave. Third quarter originations were almost 70% purchased, up from about 60% during the second quarter.

And second we have recently become an approved servicer for Fannie Mae and Ginnie Mae and are launching a third-party origination channel with origination sourced from multiple channels including smaller community banks. Moving briefly now to asset quality, net charge-offs declined almost 20% compared to the linked quarter and totaled 34 basis points of average uncovered loans on an annualized basis.

Overall the level of non-performing assets was down slightly or less than 1%. The non-accrual loans declined $4.1 million or 6.6% as resolution strategies and pay-offs on some larger credits occurred during the quarter.

We did expect some additional non-performing loan resolutions during the quarter and these remain on track but the timing has been pushed to the fourth quarter or first quarter of 2014. We continued to make excellent progress on the efficiency plan during the quarter as operating expenses on an adjusted basis declined over $3.6 million during the quarter.

All-in issues have been fully implemented and on an annualized run-rate basis we estimate that we will exceed our original announced $17 million target of expense savings. Based on actual results to date we remain firmly on pace to realize 85% of the original target and full year 2013 results with all savings from the original plan to be realized in 2014 a year after.

Throughout the process related to the original plan we identified opportunities for further efficiencies that we are currently in the process of implementing. We expect these new initiatives to produce an additional $5 million of cost savings that should be realized in 2014's full year results and like the original efficiency plan will result in savings across multiple expense categories.

By our intense focus on efficiency however we feel we have more than sufficient capacity to continue executing on balance sheet and revenue growth strategy. We will continue to invest in our business lines and allocate resources in areas and market that should provide strong growth opportunities while still carefully managing expense.

In conjunction with the earnings release we announced our quarterly dividend of $0.15 per share to be paid January 2nd. While we no longer pay out the variable dividend our dividend rate translates into a 3.8% yield based on yesterday’s closing price and is still on the upper end compared to peer institutions.

As we mentioned in the earnings release we did not repurchase any share during the third quarter as we hit our 1 million share annual target as of June 30. We do expect to begin the second year of the share repurchase plan and will be in the market during the fourth quarter.

Capital levels continue to remain strong as we ended the quarter with a tangible common equity ratio of 9.6%, a tier one ratio of 15.26% and a total capital ratio of 16.53% which are all well above our long term targets for the company. We understand and know the key to achieving solid long term EPS growth will be the effective deployment of our excess capital which we conservatively estimate to be at least $100 million under the most constraining ratio and after factoring in the expected the impact of Basel III.

The three capital management strategies we are focused on are M&A, organic growth and a balanced capital management strategy consisting of dividends and share repurchases. If over time our M&A and organic growth strategies do not sufficiently utilize our capital and generate acceptable EPS growth we will consider additional strategy.

With regard to M&A our strategy remains unchanged. We remain interested in whole bank or branch acquisitions within our three state footprints as well as other contiguous markets, growth opportunities and characteristics similar to our existing franchise.

We also remain interested in looking at non-bank financial services providers such as asset generators or fee revenue providers that fit strategically with our commercial consumer, wealth management or mortgage businesses. In summary our overall performance is solid as strong expense management offset declines in net interest income and fee revenue.

We are in a transition period right now where strong organic loan growth is being offset by the headwinds of the declining covered loan portfolio which is further exacerbated by our aggressive resolution of those credits we intend to exit prior to loss year expirations. This is going to continue to challenge our ability to grow net interest income over the next several quarters.

However from an overall earnings perspective execution of our strategies related to efficiency, fee revenue and deposit growth as well as continued focus on building fine relationships and leveraging our diversified credit product set could help to mitigate the impact of further declines in the covered loan portfolio. With that I’ll now turn to over Tony for further discussion.

Thank you, Claude. Our third-quarter adjusted pretax pre-provision earnings of $26.4 million, which excludes certain items related to covered loan activity as well as other significant items, was essentially unchanged quarter-over-quarter.

As shown on slides three and four of the supplement this was 1.69% of average assets on an annualized basis. Total interest income declined $2.8 million or 4.5% compared to the linked quarter due to lower interest income earned on loans, a modest decline in interest income earned on investment securities and higher amortization of the indemnification assets or covered loans.

The decline in interest income on loans was primarily the result of an average balance decline in covered loans of approximately $81 million or 12.3% and a 37 basis point decline in the yields earned on that portfolio compared to the linked quarter. Additionally the average balance of the FDIC indemnification assets declined approximately $23 million or 21.5% during the quarter due to increased asset resolution activity, which contributed to a 455 basis point increase in the negative yield earned on the indemnification assets and further impacting net interest income and margin.

The indemnification asset balance at September 30, 2013 is $78.1 million or 15% of covered loans down from a balance of a $130.5 million or 16% of covered loans one year ago. The level of asset resolutions experienced during the quarter while high was not totally unexpected.

Many of these resolutions were the result of several years of workout and asset management efforts by our loss share team. And while it is sometimes difficult to predict the timing of these resolution efforts we expect them to remain elevated given the relatively short timeframe remaining on the commercial loss share agreements.

The impact from covered loan activity was partially offset by another strong quarter of loan production, as we saw a $103 million or 3.1% linked quarter increase in average uncovered loan balance, as well as modestly higher loan fees. However we continue to feel the impact of the current low interest rate environment as the yield earned on new loan originations during the quarter was approximately 78 basis points lower than the average yield on loans that paid off during the period.

Modestly lower interest income from investment securities resulted from a $116 million or 6.8% decline in average balances compared to the linked quarter, partially offset by the 12 basis point increase in the portfolio yield which was largely driven by stabilization and premium amortization during the period. As the investment portfolio is now similar in size to the level of 12 months ago, we have begun to reinvest the portfolio run-off generally using a barbell approach of 60% to 70% fixed rate and 30% to 40% floating rate.

The overall duration target remains in the four year timeframe and dependent on loan demand, the investment portfolio could increase up to a $100 million from now and the end of the year. Total interest expense and net interest margin continued to benefit from the impact of the company's deposit strategy, declining approximately $500,000 compared to the linked quarter.

The cost of funds related to interest bearing deposits declined four basis points while the average balance of interest bearing deposits declined $139 million or 3.7% during the quarter. Including non-interest bearing deposits our total cost of deposits funding declined three basis points to 24 basis points for the quarter.

In addition to reducing the balance of higher cost, non-core relationship deposits we have significantly improved the quality of the deposit rates as total non-time deposits now comprise over 80% of total deposits compared to approximately 76% a year ago. While there may be some limited opportunities for further improvement in our cost of fund we remain focused on both commercial and retail deposit growth initiatives as Claude discussed in his comments.

To this end we've launched several new products in recent months including an index money market account which has grown to almost $200 million in balances with approximately 50% new money and promotional and relationship CD products that improved our CD retention rates from 68% at June 30 to 87% at September 30. Creating long-term franchise value to our core deposit base remains a strategic objective.

Net interest margin declined 11 basis points to 3.91% from 4.02% for the linked quarter, primarily as a result of the balance and yield changes on covered loans and the FDIC indemnification assets discussed earlier. As I mentioned we are now in the final 12 months of the five year coverage period for commercial assets acquired in the FDIC-assisted transactions of 2009.

This is important as the yield on the indemnification asset is the result of our modeling efforts related to expected cash flows on the covered loans and the claim with the FDIC and may be subject to volatility due to fluctuations in the amount of the timing of those cash flows versus our modeled expectations. We expect a negative yield earned on the indemnification assets to remain elevated going forward and note the potential for further volatility over the remaining life of these agreements.

Finally I would note that all the major components of the net interest margin showed positive trends during the quarter with the exception of those related to covered loans in the indemnification assets. Moving now to non-interest income, excluding reimbursements due from the FDIC other covered loan activity and other items is noted in the Table one of the release, third quarter non-interest income declined approximately $1.4 million from the linked quarter to $50 million.

The decrease was primarily driven by lower bank card income, net gains on sales of residential mortgages, client derivative fees and the portfolio valuations related to client derivatives, all partially offset by higher service charges on deposits during the period. While we don’t normally speak to the volatility in the quarterly derivative portfolio valuation, this quarter the fluctuation in value resulted in lower reported non-interest income, compared to the second quarter of approximately $800,000.

The decrease in bank card income during the quarter was related to incentive fees recognized during the second quarter while lower net gains on sales of residential mortgages, client derivative fee income and fluctuation in derivative portfolio valuations were influenced by interest rate movements over the past six months. Non-interest expenses for the third quarter excluding deferred and FDIC and covered asset expenses associated with the implementation of our efficiency plan and other items as noted in table two of the release of $44.4 million as compared to $48.1 million in the second quarter.

The decrease in non-interest expenses compared to the linked quarter was due primarily to lower salaries and employee benefits, occupancy cost, professional services expenses and fixed-asset related losses during the quarter. As noted in the release we are planning a second phase of efficiency initiatives expected to result in approximately $5 million of additional reductions.

These initiatives should all be in place by the end of this year and we expect to realize the full impact during 2014. Overall we continue to be pleased with our performance with respect to expense management and feel we are making solid progress in developing an efficient, scalable operating platform.

Income tax expense for the quarter was $7.6 million, resulting in an effective tax rate of 33.9% compared with income tax expense of $6.5 million and an effective tax rate of 29% in the second quarter. While the effective tax rate during the second quarter was impacted by state tax gains and an adjustment related to the resolution of an unconsolidated former owned subsidiary the effective tax rate for the third quarter was in line with our expectations and should remain stable going forward.

Turning briefly to covered asset net credit cost on covered assets for the quarter were $1.4 million, as highlighted on page eight in the supplement which shows the individual components of credit and FDIC related items associated with those assets. Credit cost on covered assets can vary from quarter-to-quarter and are impacted by actual charge-offs, changes estimates for both the timing and amount of expected cash flows and continued mix shift as the covered loan portfolio matures.

Finally with respect to interest rate sensitivity we expect to maintain a relatively neutral sensitivity position under a plus 100 basis point parallel rate shift and be slightly asset sensitive under plus 200 basis point rate shift as of September 30th. We continue to evaluate strategies, to manage our balance sheet including hedging and the reinvestment strategies related to the investment portfolio in order to balance the mix with fixed and floating rate assets and to manage duration close to the shorter end of the curve.

I will now turn the call back over to Claude.

Thanks Tony, and Jessica we are now happy to open the call for questions.

Good morning guys.

Hi, Scott.

Good morning.

Tony, maybe first question for you just on the margin, given the volatility that’s in from the covered portfolio as you weigh sort of all the puts and takes and understanding that the covered pieces is going to continue to stay pressured for a little while. What would be your best guess as to where the [FGE][ph] margin kind of flushes out in coming quarters?

Well, Scott you win the price. We figure this to be the first question.

In Q2 we said that we are expecting over the balance of the year a decline of 10 to 15 basis points and we had 11 here in the third quarter. It is almost entirely driven by what we’ve talked about in terms of the resolution strategies and just the shorter time period remaining on the agreement with the FDIC.

So it’s really, really hard to say could there be another 11 basis point drop, I don’t know but it is going to drift down. The thing that we do know right now regarding the indemnification assets this is a blended rate.

We do a mid quarter evaluation of the portfolio. So what you see here is a blended rate.

We do expect the negative yield to grow more negative here in the fourth quarter and beyond. Beyond that it’s really up to resolution, the level of resolution activity and just very hard to say.

I know say it’s a long answer to not a very long response and not very good answer for you but it’s just really difficult to predict.

No, I understand that, I appreciate the color. I guess if I am taking away the appropriate messages it sounds like on a core basis even though there might be just some typical modest pressure you feel pretty good about things but it’s really just the covered portfolio that is the kind of volatility factor.

It absolutely is and the other components and other drivers of the margin are trending positively. So we feel good about where we’re headed related to loans and deposits and the investment portfolio is forming well.

It is really isolated on the covered loan and indemnification asset.

Okay I appreciate that color and then maybe just switching gears a little Claude on the expense side, so you’ve got next year will be full run rate of the current efficiency initiatives and you outlined the additional 5 million or so and I guess all of the equal that 5 million would equate to about the amount of growth that you’ve had on a typical year so on a per share basis and expenses going back over longer period of time. So in the aggregate would you think that core expenses could be flat or down next year or will there be additional investment spending that might put some upward pressure on total cost in spite of the plans you guys have announced?

Let me -- Tony's probably got a better handle just in terms of run rate guidance. So, Tony?

Yeah, the way I would think about it Scott is look at the third quarter here we think that we’re at a pretty good level and that should be kind of our base going forward if you annualize that, take the five off you’re probably going to get in the range of where we think we’re going to operate next year.

Okay, all right, that sounds great I appreciate it guys.

Thanks, Scott.

Hey, good morning guys.

Good morning.

Wanted to continue I guess on the kind of on the expenses and the magnitude actually, the expenses you realized from the first plan. I kind of take a look at table two in your press release and back up some of the improvement like non covered OREO, marketing, maybe a couple of $100,000 for like mortgage commissions.

It seems like the expenses was down $3 million quarter-over-quarter and I know you guys had about $15 million out of the $17 million in expense in original expense saving plan were done last quarter. So to me it seems like several million upside on that kind of 17 million plan that you laid out, could you give us a little bit of color just about how much better you did than what your original expectations were?

I threw a bunch of math at you, that’s why.

I don’t know if I can give you specific numbers but I can tell you that we did over achieve little from what we thought and had a few more strategies that we were able to put in place. Yeah, I don’t if we can quantify that necessarily in the context of $17 million.

Would it be fair to say that the magnitude is in kind of several million dollar range on an annual basis?

We'd have to look at that, I'd have to look at that.

I think what I said earlier around working off the fourth quarter or the third quarter expense base, the adjusted base is really the way to look at it.

Okay. That’s fair.

If we could talk about the M&A environment a little bit you guys continue to look -- I would be interested in just kind of hearing your -- kind of hearing your impression of what’s happening like kind of [bid out] [ph] spread that we’ve heard a fair amount about and maybe within that if you could address - we obviously in a few transactions lately where the sellers had been private institutions and so maybe a little bit more willingness to sell, where there is may be more skin in the game, you don’t have a kind of the management versus agency problem, is there I guess have you seen any difference between potential targets and willingness from kind of private sellers versus public?

I don’t know that I would speak to private versus public Emlen but I would tell you I think as we’ve said in past calls like I mentioned in the last quarter call we continue to be out actively kind of meeting with other banks. And I feel like that the [bid out] [ph] spread is narrowing, that the conversations are productive, there's certainly no suggestion as to whether or not we can get a deal done but we do feel good about the opportunities that are out there.

We feel good about the conversations that are happening. And it remains one of our key strategies for deployment of what we describe as the excess capital position that we have.

And I would just reiterate that point that we really prefer to deploy that 100 million of excess capital as we’ve defined it in my script in growth strategies. So that would be what I would comment.

I think some of your points are very appropriate and may make sense but I don’t know that we have enough conversations out there to be able to say it's different public-private.

Got you, all right thanks. And then I guess one last quick one for me, just on the pace of one-offs, or kind of the covered asset book, obviously that accelerate some I mean is the decline we saw this quarter kind of what we should expect going out the next several quarters here?

This was a record quarter if you will in terms of activity. Honestly I’ll be surprised if it stayed at this kind of level, certainly higher than our trends up for this quarter but probably not at the level that we saw this quarter.

Okay, great. Thanks for taking the questions.

Great, thank you. I just had a question about the franchise finance lending you cited it in the release as source of strength.

Kind of where, what type of growth do you experience and also have you added on new customers or just organic growth at your existing? Thank you.

Sure. Yeah in the franchise finance space just to remind everyone we primarily finance quick service restaurants clients and predominantly among 15 to 20 times up and it’s continued to be a space that we view as strategic for the company that we want to grow.

You’ve seen some payoffs in that space just because there is a lot of acquisition activity going on among franchisees but our new origination has been both from kind of existing clients and may be there perhaps acquiring new franchises but also with new clients as we continue to have a pretty active business development effort which identifies franchises. We are not doing business within our target comp that our sales people continue to actively call on.

So it’s a bit of both.

Great. Thank you.

Hi, guys this is Andy Hedberg in for Jon.

Hi, Andy.

Just a quick one on loan growth. You talked about some of the deals within the 4Q just curious if the pace of growth accelerated throughout the quarter and then in terms of spreads are they holding in there fairly well relative to historical quarters?

I don’t know that the pace accelerated during the quarter. I think we, as I mentioned what we saw late in the fourth quarter we expect that some deals, larger deals are going to close towards the end of the third quarter, that’s towards the end of October which is not unusual.

But as we’ve shown over the last few quarters we continue to have pretty solid new originations and pretty solid loan growth in the uncovered book. We expect to have to continue what can happen and we saw a little bit of it as I mentioned as well, that we had some pay off, not because of anything negative just normal business activity, either a project gets sold or something occurs.

So with our pipeline of 12% with some deals slipping to the fourth quarter we feel good about the fourth quarter production. The one I would add I would put to that is, one of the things we are seeing in the commercial real estate space is that as values have improved and you are seeing stabilized projects being sold or going to market because of the time for those investors to monetize some of those projects that may be they have not been able to in the last few years.

So it seems few payoffs related to that but in terms of new originations it's just been a solid quarter and that continues into the fourth quarter.

Okay that’s helpful. And then one in terms of capital, you talked about the buyback coming back in the equation next quarter.

But just curious of where your excess capital fits today , I know this is probably more of a permanent change but is there a possibility that you get more aggressive on the dividend payoffs?

You know our Board looks at it every quarter and as one of those will continue to evaluate that we are very sensitive and I think we’ve shown over time, that we try to be shareholder friendly and what we think is the right approach to capital management. Today where we sit is with the plan around our $0.15 per share a quarter dividend plus the buyback program that will return 60% to 80% of current earnings.

And so with that program as it is if we don’t see balance sheet growth than our excess capital position will just build beyond the $100 million plus that it is today. So we are very focused on deploying that capital.

As I mentioned we prefer to do it through M&A and through organic growth because we think that’s a better return to shareholders. If some point in the future and I can’t define what that future point is, if we don’t see the opportunity to deploy it that’s where I mentioned we’ll look at additional capital management strategies.

But I think the important thing for investors to understand is that we think we have real leverage opportunity with our capital base that exceeds many of our peers. And we are very focused on that and we’ll be very transparent about how we intend to deploy it and there is a whole, as I mentioned a whole range of options to do that but with growth clearly being our first choice.

Okay, great thanks guys that's all I had.

Good morning, it's John Barber filling in for Chris.

Good morning.

Just related to the Andy loan growth question. what would be the loan growth on non-covered portfolio have been in the third quarter if there is few closings hadn't slipped into October?

You know I am not -- I don’t have those numbers right in front of me. It was a few larger deals so I don’t have and I would hate to hazard a guess but I would focus more on the pipeline as 12% up over 2Q as the best kind of future indicator.

Okay that’s fair. And then just on the incremental $5 million cost saves that you’ve identified and you said was over, cross multiple line items but are there any particular areas that you’d expect you might get more that the 5 million might be more geared towards?

I don’t think it's going to be heavily weighted one area or another. I mean we are looking at and have been for a while looking at all of our discretionary spending.

We are still going through a number of branch rationalizations so it's going to be a mix of things.

Okay. And then the last one I had, there has been some turnover in the past few months in your management level.

Could you just speak to the strength of the bench at First Financial?

You bet. Yeah we feel very good about our team kind of here and to this point we have been able to I think replace almost every position that we changed with internal talent that we immediately were able to put in place and that's a part of our ongoing process we work on with the board at succession planning.

So yeah we feel very good about that. At the same time we're always are actively looking for good talent to join the organization new.

So yeah we feel very good about where we are at from both the management team as well as a sales staff perspective.

Great. Thank you.

Operator The next question comes from Bryce Rowe with Robert W. Baird.

Thanks. Good morning.

Good morning Bryce.

Tony wanted to get a feel for I guess the deposit balances. We have seen declines in the deposits portfolio for many of the last, I don't know, 10 quarters.

So kind of sounds like might be at an end to the declining down with the core deposits up as much they are now. So just wanted to get a feel for what to expect there on the deposit side?

Yeah Bryce this is Claude. We have seen a decline and as we mentioned a couple of time part of that has been managed as we thought we were going to be in a protracted kind of low rate environment.

We really as we called it have gone a deposit rationalization approach. We were pretty aggressive in terms of our pricing approach, that the reduced deposit cost especially after our acquisitions in '09 and '11 where we had acquired kind of pieces or parts of four entities all of whom had much higher than peer deposit cost and so we needed to go through a process of working through that and changing the mix, especially the CD portfolio.

We do feel like we have reached the end of that process. Now that's not to suggest one quarter or another just can be perfect growth from here.

But to the point and the comments I mentioned in my script, we aggressively changed our deposit product approach. We really began to incent heavily a lot of our sales staff and look at new strategies there.

So we would expect on balance overtime that we'll begin to see deposit growth again and deposit growth is more reflective I think in the market that we are in and in our position in those markets. The part that we look at which has been positive that we continue to see good core account growth, which is more important for us.

But we are really focused now on overall deposit growth as a key strategy. So I would expect going from here you should began to see overtime good deposit growth.

Okay and that's helpful, Claude and then one just kind of clean up question on the cost saving initiative. Tony is the run rate to use the kind of modeled in this $5 million cost save number is it the $44.4 million from table two of the release?

No, it's probably a little lower than that. You have some ORE losses and some of the loss share.

I mean I probably use something in the mid 43s.

Okay. Thank you.

Good morning guys. Thanks for taking my question.

Good morning John.

Just a quick question back on the covered portfolio. So if you had run off this quarter of about $100 million and I guess based on the slide presentation, I guess you expect to keep about $358 million which implies additional run off of about $160 million.

Is that sort of the right way to look at it over the next year or so, the 160 million run off?

Yeah. I will let Tony speak to it.

They only have 358, you are right, those are relationships that we want to retain John. But what happens just even with our legacy loan book, you can’t see it because it’s mixed with new originations but that 358 number we will continue to trip down well both through normal amortization as well as pay-off, refinances, property sales et cetera.

And so what you can’t see necessarily as fairly is that 358 number will continue to drift down. I think it represented about half of the 100 million run off this quarter, was in that likely to retain bucket but we may be picking up pieces and parts of that in those relationships in the uncovered book.

So while we don’t disclose relationship changes, that’s the way it works on the balance sheet if that makes sense. So you are going to see run-off in both of them.

We’re just trying to retain the relationship in that 358 bucket that you referenced.

So basically the stuff that you want to retain if you renew something it goes out of the covered portfolio into the non-covered portfolio essentially?

Well it can come out of the covered because it’s possible that those types of changes would require us to no longer -- it would be now be [any] longer for loss year coverage. But it would still be in the accounting frame work that it's been in for the last four years.

The other part of your question John around the 160 million we’re not going to get all out of that. We’re not going to be totally successful and if you fast forward on a big picture level of what we might look like there a year from now, our hope and goal is that about 160 would be a relatively small number of let’s call them non-performing or subpar credit.

They would have an allowance, they would still be marked, we are just trying to move that 160 down to as low a level as possible.

Okay. That makes sense.

And one other question for you Tony just wanted to make sure I heard your comment on the securities portfolio. Did you say that you could potentially see it go up about $100 million between now and year-end I guess depending on loan growth?

Yeah that’s right. I mean we’re back to kind of our pre-leverage strategy levels and we are looking to add to the portfolio in a more measured way around fixed and float and some duration.

So I think it’s likely again depending on loan growth you could see that portfolio growth between now and end of the year.

Super, thanks guys.

Thank you.

Great thanks, Jessica and I would just thank everyone for joining our call today and your interest in First Financial Bank. Thank you.