Todd Clossin - President and CEO Robert Young - EVP and CFO.

Scott Valentin - FBR Capital Markets William Wallace - Raymond James John Moran - Macquarie Capital Catherine Mealor - KBW.

Good morning and welcome to WesBanco's Conference Call. My name is Denise, and I will be your conference facilitator today. Today's call will cover WesBanco's discussion of results of operations for the quarter ended June 30, 2015. Please be advised, all lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer period. [Operator Instructions] This call is also being recorded. If you object to the recording, please disconnect at this time.

Forward-looking statements in this report relating to WesBanco's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the Safe Harbor provisions of Private Securities Litigation Reform Act of 1995.

The information contained in this report should be read in conjunction with WesBanco's Form 10-K for the year ended December 31, 2014, and documents subsequently filed by WesBanco with the Securities and Exchange Commission, SEC including WesBanco’s Form 10-Q for the quarter ended March 31, 2015 which are available at the SEC's Website, www.sec.gov or at WesBanco's Website, www.wesbanco.com.

Investors are cautioned that forward-looking statements, which are not historical facts, involve risks and uncertainties, including those detailed in WesBanco's most recent Annual Report on Form 10-K filed with the SEC under Risk Factors in Part I, Item 1A.

Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements. WesBanco does not assume any duty to update forward-looking statements. WesBanco’s second quarter 2015 earnings release was issued yesterday and is available at www.wesbanco.com.

This call will include about 20 to 25 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 the company’s website. WesBanco’s participants in today’s call will be Todd Clossin, President and Chief Executive Officer and Robert H.

Young, Executive Vice President and Chief Financial Officer, and both will be available for questions following opening statements. Mr. Clossin, you may begin your conference..

Thank you, Denise. Good morning, everyone. Thank you for participating in WesBanco's second quarter 2015 earnings call. We're pleased you've joined us this morning to hear about our operating results.

This will [ph] be the first full quarter since our merger with ESB, I’ll be making some opening comments, Bob Young, our CFO will provide some financial highlights and I will moderate the question-and-answer period. A press release detailing the results of the second quarter was issued last evening.

A copy of the entire press release is available on our Website. We completed our conversion with ESB on April 24, approximately 10 weeks after we closed the deal and less than six months the time the deal was announced. We are ahead of schedule regarding salary and other ESB expense saves.

The ESB employees have been performing well and are being assimilated into our organization quickly. Many have now assumed expanded responsibility in the merged organization.

WesBanco achieved an 18.5% increase in net income, excluding after tax merger related expenses from the second quarter of last year and a 10.6% increase from the first quarter of this year. Our continued focus on driving positive operating leverage led to a revenue growth number of 18.5%, versus an expense growth number of 12.8% for the quarter.

These results allowed us to improve our efficiency ratio to a strong 56.1%, one of the better efficiency ratios in the industry. Loan growth excluding ESB stood at an annualized 7.2% rate for the first six months of 2015.

Loan originations reached $825 million for the first half of 2015 as compared to $625 million during the first six months of last year representing an increase of 32%.

As I mentioned during the first quarter earnings call, several larger construction loan pay-offs were delayed slightly from Q1, those larger pay-offs did indeed occur during Q2 totaling about $62.8 million.

Despite these pay-offs we still achieved a robust rate of growth of 5.8% annualized for the second quarter, which when averaged with the first quarter’s 8.5% annualized growth rate produced a combined 7.2% annualized rate for the first half of 2015.

Our loan diversification initiatives and specifically our C&I and home equity loan types continue to show nice results, with both growing in the double digit range 12% and 15% annualized respectively. Our net interest income increased for the eight consecutive quarter due to the previously mentioned strong loan growth offsetting a compressed margin.

We did experience earning asset margin compression as we sold approximately $579 million of ESB securities and reinvested those proceeds into securities at current market rates.

While we remained slightly asset sensitive after the portfolio restructuring the restructuring did compress margins on a near term basis more than was originally modelled at the time of the deal announcement. The ten year treasury rate declined from the fall of 2014 to the first quarter of 2015.

The spike in volatility had an impact on the year-to-date overall earning asset margin of approximately 12 basis points. We delayed the reinvestment timing of some of the securities redeployment in the late Q2 and were able to pick up some additional yield as the rates rose temporarily.

We believe in the long term value proposition of the ESB deal as we expect to redeploy securities and the higher rate loans overtime as we have accomplished with prior mergers.

Having a top ten Pittsburgh MSA market share, coupled with newly hired commercial lenders, increased home equity volume and new products introduced into the former ESB markets is anticipated to drive increased earnings despite the lower the modelled rate on the acquired securities portfolio.

We achieved $0.58 earnings per share on a core non-GAAP basis for the quarter and $1.17 earnings per share on a core non-GAAP basis for the first half of the year. Those numbers include approximately $0.02 in non-reoccurring salary and other operating expenses incurred from the February 10 closing date to the end of April conversion date.

The former ESB securities portfolio was also not fully invested until the end of June which accounted for another $0.02 of earnings. Adjusting for those two items in our run rate would have put us at approximately $0.60 per share for the quarter and $1.21 per share for the first six months of the year.

Our loan growth is running at an annualized 7% base, our non-interest income was up 5% annualized compared to the same period last year. Our efficiency ratio was in the mid-50s, our operating leverage continues to be positive and our credit trends continue to improve. We have solid momentum in our businesses.

We continue to evaluate M&A opportunities in our footprint and in urban areas contiguous to our existing markets. One last note to make before I turn this over to Bob Young, is that our efforts to hire C&I lenders in our urban markets continue to bear fruits as we hired several season bankers in the Cincinnati area over the past quarter.

Let me now turn it over to Bob..

Thank you, Todd. For the second quarter earnings exclusive of merger related expenses were $0.58 per share versus $0.64 last year and compared to $0.59 versus for the first quarter. Year-to-date per share earnings in the same basis were $1.17 versus $1.20 last year.

Additional operating expenses from the acquisition of ESB financials from the February 10th merger date until the end of April when our back office systems and branches were converted to WesBanco’s platform resulted in a penny per share in each quarter of such expenses beyond the noted merger related expenses.

Second quarter GAAP earnings were $0.56 per share with about $700,000 of after tax or $0.02 per share of merger related expenses. Six month GAAP earnings were $0.97 per share with $7.1 million or $0.20 per share in after tax total merger related expenses.

On a year-to-date basis, core ROA was 1.10 versus 1.15 last year and core return on tangible common equity was 14.5% compared to 16.2% last year. These measures continue to be above most recent published peer averages of 1.07% and 12.1% respectively. In addition, the peer efficiency ratio was 61.6% as compared to our core efficiency ratio of 56.2%.

On a pre-tax pre-provision basis, return on average assets without the merger related expenses was 1.73 year-to-date versus 1.76 last year.

Turning now to the balance sheet and to net interest income changes, net interest income grew 25.8% for the quarter and 21% year-to-date with the acquisition and loan growth over the past year the primary reasons for the increase.

The second quarter net interest margin decreased 20 basis points from 3.64% to 3.44% and it was down 14 basis points year-to-date from 3.63% to 3.49%. The margin was positively influenced by purchase accounting accretion from the mark-to-market of financial assets and liabilities.

The margin, net of all purchase accounting accretion and other onetime adjustments in both periods would have been 3.32% in the second quarter of 2015 and 3.38% year-to-date as compared to 3.57% and 3.58% in the same periods in 2014.

Factors influencing the significant growth in net interest income include approximately 33.2% higher average earning assets for the quarter versus 25.6% year-to-date. With about 25.7% growth in average loans, approximately 7.8% of this average growth was organic in nature.

The NIM, the net interest margin was down primarily due to a higher percentage of investments to total earning assets as a result of the acquisition and lower market yields on the restructured portion of the portfolio along with lower yields on a mark-to-market of the retained portion of the acquired investment portfolio.

Market rates were down significantly between announcement and acquisition, which affected both mark-to-market yields as well as what we could achieve in the market upon reinvestment of proceeds from disclosed securities.

An analysis of such lower available market yields versus our earlier expectations suggest the reduction impacted the margin by approximately 12 basis points for the first six months of 2015, comparing to fourth quarter actual investment yields.

Additionally, during the approximate three months between security sales and finalizing our replacement security purchases, we lost approximately $0.02 per share on earnings from the under invested portfolio that had not yet been fully invested. Those securities are now all fully invested.

Overall loan yields were also down by 10 basis points for the quarter as competition on new loans plus re-pricing of existing loans caused the decrease net of positive yield from purchase accounting.

Cost of funds helped to offset these factors as they were down to 0.41% for the quarter versus 0.52% last year while cost of deposits was down to 31 basis points versus 43 basis points in the prior period.

While certificates of deposit comprised a greater portion of deposits after the acquisition, CDs continue to re-price downward ending the quarter at 62 basis points versus 95 basis points last year. Non-interest bearing checking accounts grew 23.2% year-over-year including the acquisition and approximately 7% on an organic basis.

First half annualized deposit growth excluding both ESBs acquisition of deposits and CDs was 5.2% led by strong non-interest and interest bearing demand growth. Portfolio loans increased 988 million or 25% over the last 12 months with 701 million of the growth from ESB and 287 million in organic growth.

For the first half of the year, organic loan growth was 146 million which amounts to 7.2% on an annualized basis. Loan originations in the first half of 825 million were up 32% over the last year.

Loan growth was driven by increased business activity in our markets, additional lending personnel in our larger urban markets as Todd mentioned earlier, focussed sales calling efforts and continued improvement in loan origination processes. In addition, we achieved our business plan goals of increasing both C&I lending and home equity lending.

C&I loans, prior to adding an ESBs commercial portfolio increased 16.9% over the past year and 12% annualized since year end.

Legacy home equity lines of credit increased 20% year-over-year and 15% annualized since year-end due to consumer marketing campaigns, branch incentives and more competitive product offerings Turning now to non-interest income.

Non-interest income for the second quarter was about the same as last year as the 2014 second quarter benefited by a boldly [ph] death benefit of 1 million and about 200,000 security gains. Total fee income would have increased 1 million or about that extra fee income last year which impacted second quarter 2014 EPS by approximately $0.03.

Fee items increasing this year includes trust fees, up $0.3 million or 5.1%, service charges up $0.2 million or 4.2% mostly due to incorporating ESBs customers as well as certain fee schedule adjustments, electronic banking fee is up $0.2 million or 7% and gains on sales of other real estate owned and other assets up $0.3 million.

Factors influencing the 2.7% six month fee income increase include higher trust, electronic banking, mortgage banking and gains on sales of OREO and other assets offset somewhat by lower boldly [Indiscernible] income and securities gains. Turning now to non-interest expense.

Total expenses were up 12.8% in the second quarter or 5.2 million, exclusive 1.1 million in merger related expenses reflecting the addition of ESB’s operating expenses for the entire period including an extra $0.5 million or one time per share of personnel and IT expenses related to the late April data processing and branch conversions.

For the six month period, expenses net of merger related cost were up 10.9% or $8.8 million reflecting approximately four and two thirds months of acquired ESB expenses. The extra operating expenses for the six month period totalled 1.2 million or two pennies per share while merger related expenses totalled 10.8 million.

Most line items in non-interest expense were influenced from the acquisition for both three and six month periods with salaries and wages, employee benefits and occupancy related cost seeing the highest increases along with amortization of intangibles and FDI fee insurance from a higher asset base.

However, the integration of the two banking organisations produced an improved core efficiency ratio down nicely to 57.1% for the six month period as compared to 59.7% last year, and indicative of the cost savings achieved in the latter half of the quarter down to 56.1% for the second quarter.

As Todd mentioned, our overall cost savings plans are ahead of schedule to achieve the announced 50% of ESBs pre-acquisition run rate expenses.

Although we continue to add business unit revenue producing positions, to support our growth targets as well as certain risk and compliance management related positions as we track closer to 10 million in assets. I’d like to turn now to credit quality.

For the quarter, net charge offs of 3.1 million reflected a 1.3 million charge-off on a 5 million C&I credit unrelated to either the ESB acquisition or the energy industry.

As a result, the provision for credit losses increased to 2.7 million for the quarter from last year’s 0.8 million and it was 4 million for the six month year-to-date period versus 3 million last year. Despite the increase in net charge-offs as well as the provision, other credit quality metrics continued to improve.

With criticized and classified loans down 38.5 million were 31.7% from last June even with the acquisition adding over 12 million to criticized and classified totals in the first quarter.

Non-performing loans and non-performing assets while up in dollars from the acquisition year-over-year by approximately 10 million and 11 million respectively were down as the ratio as non-performing loans to total loans dropped from 1.26% to 1.24% and NPAs dropped from 87 basis points to 80 basis points of total assets.

Of note, past due loans also declined from 33 basis points of total loans to 26 basis points this year. Although higher for the second quarter, net charge-offs decreased to 21 basis points annualized for the six month period as compared to 25 basis points last year.

The allowance for loan losses to total portfolio loans was 88 basis points at the end of the quarter versus 1.16% last year as the pre existing allowance from ESB was not transferred under current acquisition accounting rules.

However, if the acquired ESB loans recorded at fair value with an appropriate credit market to date of acquisition were excluded from the loan totals, the allowance would represent 1.03% of total loans.

The credit portion of the total net loan mark represented approximately 3% of total ESB loans amounting to about $20 million with approximately $4 million of that allocated to impaired loans.

Shareholders equity, shareholders equity increased 38.9% or 306 million as of June 30 from year end due to the issuance of stock related to the acquisition and retained earnings slightly offset by lower accumulated other comprehensive income as market rates on securities resulted in lower, fair market valuation for the available for sale portion of the investment portfolio.

The Tier 1 leverage ratio was 9.29% at quarter end versus 9.88% at year end; Tier 1 risk based capital was 13.47% versus 13.76% and total risk based capital was 14.3% versus 14.81%. The decreases reflect the acquisition as well as the previously announced May pay-off of ESBs 36 million in junior subordinated debentures, otherwise known as troughs.

The new common Tier 1 ratio known as set one was a strong 11.71% far surpassing the initial requirement of 4.5% as well as the fully phased in 7% requirement by 2019. Tangible equity dropped slightly from 7.88% at year end to 7.68%, due primarily to the acquisition and the lower other comprehensive income.

All ratios were higher than originally projected, post the acquisition. Our strong equity ratios permitted bold declaration of 4.5% increase April dividend of one penny per share to $0.23 as well as the aforementioned ESB trough pay-off.

In summary then, we are very pleased with our overall performance for the first half of 2015 keeping our focus on both the successful integration of ESB and implementation of our organic growth plans including over 7% loan growth and a focus on achieving the intended cost savings from the acquisitions.

We were also pleased to see that our ESB partners supplemented with the recent team of blenders from another Western Pennsylvania Bank helped us achieve loan growth from the former ESB markets in the second quarter.

Our team in Pittsburgh if off to a great start and executing upon aggressive growth plans for the additional branches and counties now integrated into our previous Western PA market locations. This does now conclude our prepared commentary. And we will open the call for questions Todd Clossin will moderate the Q&A session.

Then we’ll turn the call now back to Denise for questions. Thank you..

Thank you, sir. [Operator Instructions] And our first question will come Scott Valentin of FBR Capital Markets. Please go ahead..

Good morning and thanks for taking my question..

Good morning, Scott..

Just with regard to the margin, I think Bob; you mentioned the core margin was 3.32% for the second quarter.

I’m just wondering given the puts and takes it sounds like, well, I’m guessing it should be relatively stable, but wondering if there’s any chance for upside, you talk about repositioning the securities portfolio -- I think securities portfolio, its about 30% of assets.

I’m just wondering what the goal is on that if its 25% or lower? And maybe what the impact on the margin could be going forward?.

Yes. I’ll let Bob handle the specifics on the margin. But just in general comment to respond your question about the size. We at WesBanco it’s currently worth about 25% of the balance sheet being in the securities portfolio. We’re comfortable in that range.

That’s the range we’d like to get back to it, we don’t have the time period associated with that, that’s obviously driven by number of factors such as loan growth, future acquisitions everything else, but ideally we’d like to get back to that 25% or so range..

So relative to the margin Scott, as you pointed out there’s about 11 basis points of impact year-to-date or 12 in the second quarter from purchase accounting. A lot of that is in the loan categories. Some of it is also in the CD bucket on the liability side.

And we project that most of that’s going to continue at a similar pace throughout the rest of the year. So, if you want to go back and focus on the gross rate which was 349 for the six months and 344 for the three months. At a high level we’re thinking that the high 330s, the low 340s is where we would have you target at this point in time.

While we have substantially completed the reinvestment strategy and the investment portfolio, some of the securities are experiencing higher prepayments and we may see a low higher amortization on those going through the rest of the year. Some of this also depends upon our loan growth for the rest of the year.

But I think in that general area is where we should land for the rest of the year..

Okay. It’s very helpful. Thanks. And just as a follow-up question. Todd, I think you mentioned loan growth. You had some payoffs that spilled over from the first quarter.

I’m just wondering kind of one maybe where the pipeline is in today versus where it was at the end of 1Q, just getting a sense of maybe where loan demand or loan originations are? And two, maybe a breakdown of the urban market strategy, you mentioned where focusing on growing presence in the urban markets, I think Columbus, Pittsburgh, Cincinnati, are the three markets.

Just what percent of loans are coming from those markets and -- think about the total originations for that quarter?.

Well, answer of the first part of the question, loan originations continue to be strong as I mentioned in my comments, up over 30% compared to the same period last year. So we’re seeing very strong robust loan growth. I think that comes from our past marketing efforts in the markets, but also the addition of additional lenders.

As I mentioned in the first quarter we hired a large number of lenders in the last year, so we’ve added few more in the Cincinnati market over the last quarter and we’re not done. We’ll continue to build on our markets further in the C&I side.

So, the originations were very good about, very strong originations focus and we’re seeing that across all of our markets. We’re seeing that across our legacy markets. We’re seeing that across some of the larger urban markets as well and it’ really coming in a variety of different areas.

You know the C&I focus and home equity focus obviously a big focuses of ours. So those are growing into double digits. And as I’ve mentioned before I guess the way to visualize it. I want the pie of loans to get bigger, but I want the C&I and I want the home equity piece to grow faster than the rest of the pie.

And that’s portfolio loan mix shift that we’re seeing, that we’re executing upon. And that started before I got here and I’m just continuing to try to carry it forward and accelerate it where I can. So that leads into the second part of the question which is regard to the kind of the lumpiness quarter to quarter.

In the first quarter, we had a solid quarter in originations, but we did not experience the payoffs that we were anticipating in the first quarter, but they were starting to drift into the second quarter. We had another strong quarter in originations in the second quarter, just the strong as the first quarter.

But the payoffs materialized in the second quarter, which had an impact on the second quarter growth rate. That’s why I think it’s important to look at the last six months as a better representation than either the first quarter with the second quarter by themselves.

As you know, we don’t give specific loan guidance going forward, but it is a lumpy business for us as we have construction loans like kind of other banks that tend to go to the permanent market and that tends to be driven by that secondary market characteristics and project timing and everything else.

So, yeah, I think going forward expect to see what you’ve seen in the past for us at WesBanco is kind of mid single-digit or so growth rates on the loan side, but from one quarter to the next it might bounce around a little bit and that’s why I’m working hard to build up the C&I book and being so aggressive with that is so that the peaks and valleys of the construction market tend to get balanced out a little bit.

But we’re seeing growth at really all of our markets not just the big urban market.

I’ve been pleased, I mean, more than pleased quite frankly with the level of talent that we’ve been able to attract into the organization and build upon and that’s the precursor to really the whole strategy, but my perspective of building out more C&I business and balancing out the portfolio and becoming really a diversified financial services company..

Thanks. That’s very helpful..

Sure..

Our next question will come from William Wallace of Raymond James. Please go ahead..

Good morning, William..

Thank you. Good morning guys. My first question is just a follow-up on the margin. I sort of make sure I understand pressure related to delaying some of the reinvestment of the cash from the ESB securities, you gave EPS terms of about $0.02.

What was the margin impact in the quarter?.

It would be approximately 2 basis points per quarter..

So the 332 would have been 336, had you invested fully at the current market yields that you’ve got?.

The 332 was the three month number, so look it versus the 338, so 342, either way you want to look at it, but yes..

Okay.

So the four basis point impact, in other words all else equal, margin will be up four basis points in the third quarter on a core basis?.

I think what we saw was the back up a little bit, from the time the deal is modelled to the time we closed and everything. The 10-year treasury had dropped 84 basis points or so. Five-year treasury was down 60 basis points.

We didn’t want to reinvest everything right at time because we knew it was at a low point, so we waited a little bit to reinvest to get some of those rates going back. And they did. They popped back up again, back 10 years, back up over 2% again and we were able to get some of that yield back.

But also as you know part of our portfolio is municipal securities as well too and availability of those securities you want to make sure you’re buying the ones you want to buy when you want to buy them, so it trickled that out overtime, but the impact of that is as Bob and our accounting teams have calculated, it is around $0.02 for the first half of this year and I think Bob your answer on that the margin impact to that, I don’t I can add anything to that..

Yes. Again that factors in to what I had said earlier about what we are targeting from margin for the rest of the year Wally, so that number is in there..

But that was a gap number you were giving, right?.

Right..

So what do you targeting for us the year on accretion then? Last quarter you said $6 million, but you’re already at $4.4 million for the year, so it can’t be $6 million [ph]?.

The loan accretion in the second half of the year is expected to be $1.2 million. There is also accretion coming on the time deposit side that would be in the area of $1 million to $1.3 million, those are the two primary buckets, Wally..

Okay. Thanks. That’s helpful..

Similar to the first half of the year, so said differently the 11 basis points to 12 basis points depending upon whether you’re looking three months or six months it should have a similar impact this year. It will drop next year because the time deposits have a very short life; the loans have a longer average life, depending upon prepayments..

Right. And that’s probably good segway to my next question which is you’re talking about the payoffs that you had in the second quarter and this has some spill into the third quarter.

I’m curious if those payoffs are those coming from legacy WesBanco customers, ESP customers or at the same mix of those customers in your..?.

They are current WesBanco customers we’ve been banking for number of years and it’s the construction and real estate numbers. You know they are putting up $10 million, $15 million projects, they stabilize, they go to the insurance industry and takes us out to those can occur anywhere between 12 months and 24 months.

We’ve seen that shorten up a little bit, it seems like they get this things up and they just start leasing, and then the permanent financing is willing to come in and its hard to gauge from one quarter to the next, I mean, from one year to the next you got a pretty good sense, but one quarter to the next you don’t.

So, you know you accept to fill that bucket up every quarter and we’re continuing to lend to these folks that are paying this off for the next project and their next project and we’ll continue to do as long as the economics of the projects make sense and portfolio concentrations and credit metric work for us..

I appreciate the color there.

And then the last question is, just as it relates to the trust fees and the sequential change that we saw [Indiscernible] was down, call it $500 or $600,000 sequentially, is there anything going on there is that seasonal or one time in nature?.

Yes. The first quarter typically has tax fees and that Delta is all most exactly the difference between the first and second quarter. I’d seen a write up this morning, I don’t know whether it was George Wally or another one that their comments on that, but we’ve in the past mentioned the seasonality.

It may have been exacerbate a little bit more this year because of a higher fees schedule on the tax fess, but that difference between first and second quarter is an annual fees, no event..

Okay. Its good figure this compared to last year. So appreciate the color..

I’ll pick up the tax prep, the tax prep fees were higher this year. And that’s reflected all on the first quarter. It’s possible that last year a little bit of that dribbled into the second quarter..

Okay, great. Thanks guys. I’ll hop up..

Sure. Thanks, William..

Our next question will come from John Moran of Macquarie Capital. Please go ahead..

Hey, good morning, John..

A quick question on the OpEx run rate, it sounds like if we back out the penny or $0.5 million or so, still kind of hang it around in there in April from ESB, would be at a reasonably good run rate with some saves kind of coming late in the quarter if I heard you right.

But then you mentioned plans to kind of reinvest in revenue initiatives, if you can give a little bit of help kind of understanding where that may track for the back half?.

Yes. And we have our normal salary increase in the middle of the year and that impact the salary line. But basically we anticipated getting $15 million in expense savings on $30 million to $31 million cost base, all of that previously disclosed. We’re well on the way towards getting that if you figure seven to eight months of that.

We’re targeting $10 million of that this year and the rest next in terms of run rate expectations. So, in terms of what we expect for the rest of the year off of the second quarter it’s a $1 million a quarter lower..

Okay. And then the other one….

That’s I don’t focus exactly on a $1 million, but it’s in that kind of ballpark if you will..

If I just add, just add on that part of your question there.

As we brought on these additional lenders in the market and that’s not just lenders, I mean, we’ve hired securities, licensed securities, bankers, private bankers, lot of revenue producing folks, we continue to rationalize the business in terms of funding a lot of those expenses with kind of more rational approach in some of our other markets where we’re going to reallocate resources to the highest growth potential areas of the bank and that’s a big part of the discipline in the way I want to look at things as we want strong operating leverage on any of the investments that we make and part of that is to make sure that we’re funding our investments with expenses we can take elsewhere out of the organization in areas that are less productive.

And I think we’ve done a pretty good job of that over the last year. And its part of the reason why we haven’t seen a lot of expense growth even though we’ve been bringing on a dozen or more C&I lenders and private banking, we added a number of private banking people, license securities reps and others..

Got it..

And to your question John, the latter two months of the second quarter were indeed lower than the months of March and April..

Okay. That is helpful. And then, I don’t want harp on this at single credit, but the slippage there on the one it sounds like it’s marked at $0.75 around numbers.

Can you give us a sense of what industry that is? And then as a kind of corollary to that, are you seeing any slowdown in particularly the Marcellus part of the footprint as kind of commodities continue to be under pressure?.

I would put in the category of manufacturing distribution with the credit -- the single credit in that area, isolated event, not related to anything else that we’re seeing. So I think from that perspective it is up to more to really say on that it will be dealt with as we move through the process here. The second part of your question was again….

I’m sorry, was just any slowdown that you guys are noticing in some of the shale areas of the…?.

Yes. The additional drilling for additional wells we’ve seen that slowdown significantly as the CapEx amounts are coming down, but the existing wells continue to run very, very strong and what we’re finding is people are using this slowdown in drilling activities and opportunities to build out the pipelines.

What we’re seeing was that was actually starting to -- the drilling was getting ahead of the pipeline building. You can drill the well, but you couldn’t get the gas out. Now the pipeline activity infrastructure is catching up with what’s going on, so if you get an increase in price again and the drilling wells we’ll continue.

But also I would mention that the technology is continuing to improve and actually the drop in price is probably accelerated the increase in technology to make the existing wells even more productive and more efficient. So, I didn’t mention it in my comments, but I’ve mentioned it before in prior quarters and the same things still holds true.

We are still seeing eight figure monthly deposit flows into our organization directly tied to checks from the gas companies to our customers into the bank. And that’s held steady for a number of months, and again that speaks to existing production of the wells that are already drilled. So that number maybe not be increasing as it would have otherwise.

But that base is still there and these are 50, 60 years of royalty streams that we’re benefiting from because over 90% of our footprint, our deposit footprint is in the Marcellus and Utica shale.

So that should give us a real nice advantage particularly when rates rise in the rising rate environment that we’ve got a steady flow of very low cost deposits coming into the bank to fund our growth..

Sure. Thanks very much for the color..

Yes. I’ve not seen anything really on the lending side and we didn’t -- we don’t lend to the big oil and gas companies, so it’s not really hasn’t been an impact for us. In the lower cost associated with the oil we’re seeing some benefits of that in our footprint as well too..

Great. Thanks very much..

Sure..

[Operator Instructions] The next question will come from Catherine Mealor of KBW. Please go ahead with your question..

Hey, good morning everyone..

Hi, Catherine..

Hey.

Now that you got fully in and the restructure behind you, can you comment on how if at all your asset sensitivity has changed and how your position for potential rise in rates this fall?.

Yes. I’ll let Bob to point on this specific information, we were asset sensitive before. We’re still asset sensitive. I would say we were slightly asset sensitive before. We’re still slightly asset sensitive as an organization. So I had a little bit of an impact but not a significantly material impact. We fully [ph] disclosed the rate shock analysis Bob..

It will be in 10-Q next week and it will be in our PowerPoint that we’ll post over the next couple of days. Let me just say as Todd said, we’re slight -- we’re still slightly asset sensitive slightly less, so at the end of the March timeframe as a result of the completion of the investment strategy and the associated borrowings.

So the numbers at the end of March are similar to where we at the end of June, Catherine..

Okay. Got it. And I just not to belabor this, I just wanted to be sure I’m here anyway. The guidance that you gave on the margin would be in the high 330s to low 340s, is that offers the gap margin or the core margin..

That’s off gap..

Okay. Perfect. All right. Thank you..

Thanks, Catherine..

At that this time, we will conclude the question and answer session. I would like to hand the conference back over to Todd Clossin for his closing remarks..

I just like to thank you all for being on the call this morning. I know this is a busy week with many companies, many banks issuing earnings releases but I appreciate you being on the call and the questions. Thank you and have a good week..

And ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines..