PEOPLES BANCORP INC. (Nasdaq: PEBO)
                 TELECONFERENCE CALL TO DISCUSS 1Q 2003 EARNINGS
                        Wednesday, April 16, 2003 3:00 PM


FACILITATOR:
Good afternoon, and welcome to the Peoples Bancorp conference call. My name is
Brooke, and I will be your conference facilitator today. At this time I would
like to welcome everyone to Peoples Bancorp's discussion of results of
operations for the quarter ended March 31, 2003.

Please be advised all lines have been placed on mute to prevent background any
noise. After the speakers' remarks, there will be a question and answer period.
If you would like to ask a question during this time, simply press star and
number one on your telephone keypad and questions will be taken in the order
they are received. If you would like to withdraw your question, press the pound
key.

This call is also being recorded. If you object to the recording, please
disconnect at this time.

Please be advised commentary in this call may contain projections or other
forward-looking statements regarding future events or Peoples' future financial
performance. These statements are based on management's current expectations.
The statements in this call which are not historical fact are forward-looking
statements and involve a number of risks and uncertainties, including, but not
limited to, the interest rate environment; the effect of federal and/or state
banking, insurance, and tax regulations; the effect of technological changes;
the effect of economic conditions; the impact of competitive products and
pricing; and other risks detailed in Peoples' Securities and Exchange Commission
filings. Although management believes that the expectations in these
forward-looking statements are based on reasonable assumptions within the bounds
of management's knowledge of Peoples' business and operations, it is possible
that actual results may differ materially from these projections. Peoples
disclaims any responsibility to update these forward-looking statements.

Peoples' first quarter earnings statement was released yesterday and is
available on the internet under the "Bulletin Board" section in the upper right
hand corner of the home page of peoplesbancorp.com. This call will include about
20 minutes of prepared commentary, followed by a question and answer period,
which I will facilitate.

Peoples Bancorp's participants on today's call will be Robert Evans, President
and Chief Executive Officer; Jack Conlon, Chief Financial Officer; and Mark
Bradley, President and Chief Operating Officer of Peoples Bank, and Peoples
Bancorp's investor relations executive. All three gentlemen will be available
for questions following opening statements.

Mr. Evans, you may begin your conference.


MR. ROBERT EVANS:
Thank you. Good afternoon and thanks for joining us.

In the first quarter, Peoples reported earnings per share of 51 cents, in line
with our expectations issued in early March regarding first quarter results.

Net interest margin compression due to the sustained low rate environment,
combined with slower non-interest income growth, caused first quarter earnings
to be lower than previous quarters. Plus, our investment growth strategy
designed to offset the impact of new common shares was not completed until early
February, which caused us to start the year a little slower than we would have
liked.

In the first quarter, we also had over $40 million of investments mature or
prepay, primarily in the form of prepayments of mortgage-backed securities.
These cash flows are being reinvested at lower rates and also impacts short-term
profitability.

On the positive side, we have been able to move Peoples Bancorp to an asset
sensitive position as we prepare for the inevitable upturn in interest rates. We
still believe that being asset sensitive is the correct longer-term position for
Peoples, but interest rates have not yet moved in our favor. At March 31, our
simulation data indicates that an interest rate increase of 100 basis points,
that's 1%, over a 12-month period beginning in April would increase net interest
income by about $350,000 in that one-year period. Conversely, if interest rates
were to drop 50 basis points in the same period, net interest income would
decrease about $150,000. This is basically a neutral position and we are
comfortable with our interest rate risk position, especially considering the
uncertainty of the rate environment.

The sluggish economy has caused us to stay vigilant on the quality of our
assets, and we are pleased to continue to report that nonperforming asset ratios
remain in line with, or better than, many of our peers. Nonperforming assets
improved to 0.34% (thirty-four one hundredths of 1%) of total assets at March
31, due primarily to a renegotiated loan moving to "performing" status. Compared
to year-end 2002, total loan delinquencies have decreased and are now less than
1.50% of total loans.

Total net chargeoffs were also lower in first quarter compared to both fourth
quarter 2002 and the first quarter of last year. Our lenders' continue to focus
on adding quality loans, and our allowance for loan losses is now 280% of
nonperforming loans. The quality of Peoples' total loan portfolio remains good,
with a fully adequate reserve, based on our current analysis of the risks in the
loan portfolio.

Peoples' overall focus remains long-term, and we will do the little things that
make the difference in times of economic challenge. Our commitment to top-notch
customer service through innovative delivery methods will continue to drive
earnings opportunities, and I believe we have an energized, focused sales force.

Our emphasis in 2003 will be core deposit growth through our "Freedom Checking"
campaign designed to add more customers or strengthen the relationships we
already have with clients. Another key for Peoples in 2003 is loan growth
through our recently opened Delaware, Ohio, loan production office, and through
dedicated mortgage loan originators that give us more concentrated home loan
coverage in all of our markets. We think a simple focus on quality financial
products, combined with a continuous will to win more customers, provides the
framework to create more value for our shareholders.

There is no question we have to roll up our sleeves in 2003 to match earnings
results of last year. A key will be the rate environment and the timing of the
upswing in interest rates. Mortgage banking revenues can give us the boost to
short-term earnings needed in this very low rate environment, plus we are
focusing on cost control initiatives to ensure that we are wisely allocating
resources to projects that provide long-term benefits.

On May 9th, we expect to complete our planned acquisition of Kentucky Bancshares
Inc. and their $120 million in bank assets and $190 million of trust assets. The
integration has progressed well, and we look forward to introducing ourselves to
the thousands of new customers in areas in and around Ashland, Kentucky.
Including the cost savings from closing our current Peoples Bank office in
nearby Russell, we expect the Kentucky Bancshares acquisition to add 2 or 3
cents in earnings per share in the second half of 2003.

We will continue to look for growth opportunities via mergers and acquisitions,
as we try to put our recently issued capital to work. With our Price/Earnings
ratio currently lower than many peers, it will be a little tougher for us to be
able to pay premium prices for certain Mergers &Acquisitions opportunities, but
we will continue to refine our process and take the necessary steps to grow our
company through acquisitions.

I will now ask Mark Bradley, President and Chief Operating Officer of our lead
subsidiary (Peoples Bank), to provide additional executive management comments
regarding current financial performance and future outlook.


MR. MARK BRADLEY:
Thank you. In the first quarter, the road to growing profits was a little bumpy,
as interest rates and the sluggish economy combined to challenge our numbers. On
the bright side, asset quality ratios are better. However, we experienced an
increase in Other Real Estate Owned (or "OREO") due to a commercial loan that
has been on nonaccrual status moving to OREO.

To follow up on asset quality and provide guidance on second quarter loan loss
provision, we remain concerned about the "soft" economy and therefore anticipate
continuing our first quarter "traditional" loan loss provision of $750,000 in
the second quarter. If you remember, we also accrue an amount each quarter for
overdraft losses, and that number is variable, based on losses experienced in
the Overdraft Privilege program plus a formula for aging overdraft balances.

For traditional loan loss provision, we think there are still too many unknowns
with our local and national economies to consider lowering our provision despite
the improved asset quality and delinquency numbers at March 31. Especially with
the rise in OREO, we believe that a conservative "wait-and-see" approach for
loan loss provision makes more sense at this time.

As mentioned earlier, in February we completed the leverage strategy that will
offset dilution of the new common shares issued in recent months. The spread on
assets is 1.70%, which is a little better than projected during planning for the
capital issuance. The leverage strategy will be in full force in the second
quarter and therefore offset the dilutive impact of the new common shares issued
in late 2002 and early 2003.

Continuing our margin discussion, we continue to be pressured by many commercial
loan customers who want lower loan rates. Even though prepayment penalties exist
in many cases, we review each loan on a case-by-case basis to ensure we are not
losing good long-term customers due to our inflexibility on rates. We have had
rate concessions on nearly $30 million of commercial loans since the start of
the year, which has further compressed net interest margin. Some of this
compression will be offset in the second quarter due to the downward repricing
of a $30 million public funds deposit, but we anticipate some further loan rate
compression due to intense competition.

We experienced some loan growth in the first quarter, with all of it occurring
very late in the quarter through a $12 million commercial loan secured by real
estate. Until that point, loans were basically flat, with personal loans
decreasing $7 million due to slower indirect lending activity and personal loans
being consolidated into other loans like home equity loans. Plus, real estate
loan balances dropped due to many loans being refinanced to longer-term, lower
fixed rate loans at Peoples through our secondary mortgage offering. Commercial
loan growth picked up the difference in retail loan balances.

In the second quarter, we expect minimal, if any, organic growth due to slower
economic conditions and a penchant for credit "quality" versus "quantity." Our
newest loan production office in new Delaware is situated in one of the fastest
growing counties in Ohio and gives us even better access to commercial customers
in cities like Delaware, Marion, Marysville, and points in between.

With our loan production offices in Fairfield and Licking Counties, we like to
say we have Columbus "surrounded", and look forward to being able to add some
quality credits to our portfolio through our Delaware office. Opening offices
like the one in Delaware gives us the best chance to grow loans long-term and to
meet our 2003 goal of 1% to 3% organic loan growth.

On the real estate loan production side, gains on mortgage banking increased to
$230,000 in the first quarter (from $135,000 in the fourth quarter of 2002).
Since mid-2002, we have sold over $25 million of real estate loans to Fannie Mae
and retain servicing rights on those loans.

Mortgage banking is an important part of our short-term earnings growth strategy
as we refocus several Peoples Bank lenders to be better positioned to serve the
real estate lending needs of our customers. It is not our goal to "bulk up" our
mortgage banking operations just in time to see the real estate refinancing
cycle come to a close. We are building our mortgage banking operation for the
long haul, because we believe that a real estate loan and a basic checking
account are the anchor products to successful long-term financial relationships
with our customers.

We have been able to reallocate some human resources to minimize additional
staffing needs, but will need to hire a couple of office managers or personal
bankers in key offices to maintain high levels of customer service.

Non-interest income growth has been challenged by the sluggish equity markets,
upon which many of our asset management fees are based. Fiduciary and brokerage
fees are down from last year, and revenues generated from sales of fixed
annuities have stabilized and slightly decreased compared to our record sales in
2002.

Overdraft and NSF fees were down slightly compared to the linked quarter, as
total revenues in the first quarter were $1.4 million compared to $1.6 million
in the fourth quarter of 2002. In all likelihood, the variance is due to
increased usage during the shopping season over the holidays of late fourth
quarter. On the bright side, our provision for loan losses for overdrafts was
reduced in the first quarter due to losses beginning to stabilize in this
product offering. First quarter provision totaled $81,000 compared to $183,000
in the linked quarter. Typically we accrue between 15% and 20% of total revenues
as provision for bad debt, but losses were lower in the first quarter, which
allowed us to reduce the provision. Additional revenue growth opportunities
should be available once the Kentucky Bancshares acquisition is complete, since
Overdraft Privilege is not currently offered by Kentucky Bancshares.

Non-interest expense increased $443,000 compared to the fourth quarter of 2003,
although it is important to note that fourth quarter expense was about $300,000
lower than normal due to year-end adjustments related to our medical insurance
accrual. Without this adjustment, operating expense in the first quarter
increased less than 2% compared to the linked quarter, which we believe is
acceptable.

We will continue to look for ways to control operating expenses in these tougher
economic conditions. We know that our professional costs will decrease in the
second quarter due to a reduction in the percentage of revenues paid to the
consultant who helped us implement Overdraft Privilege. This could reduce
non-interest expense by about $50,000 depending on revenues in the second
quarter. Such consulting fees disappear altogether in March 2004.

We are also carefully reviewing our marketing and sales management budgets to be
certain all costs are well spent. It is important for us to continue investing
in marketing activities that result in the greatest chance to sell our products,
and to that end, we continue to plow forward on our CRM/Profitability project
and hope to have improved customer contact management and basic profitability
information ready by the third quarter of 2003. This significant investment -
the better part of $1.6 million -will enhance our CRM capabilities to see a 360
view of every customer, offer an integrated sales package to potential
customers, and speed up the sales cycle. This project will be amortized over a
period of 5 to 7 years and should not have a material impact on short-term
earnings.

In the first quarter we introduced a bigger, better free checking account that
is designed to capitalize on the investment in services we have made in recent
years, creating powerful core deposit growth opportunities. Our new "Freedom
Checking" product offers imaging, internet banking technologies, Overdraft
Privilege, ATM, phone access, and free online billpay.

Our growing branch network and extended hours in some offices is an investment
in doing what it takes to successfully compete for core deposits. Our systems
have the capability to add many more customers, and we are working on marketing
plans to better inform the customers and prospects in our markets that we want
their deposit accounts and are ready to demonstrate to them why Peoples Bank is
the best choice for all their financial needs. Our goal in 2003 is to grow
demand deposits to 13% of total customer funding sources (from year-end 2002's
11%) and ultimately to 15% of total customer funding sources by the end of 2004.

Earlier we briefly discussed our interest rate risk position, and frankly, we
like where we are at March 31, because it gives us the most flexibility going
forward to be prepared for any moderate movement in rates. Plus, with Kentucky
Bancshares being asset sensitive, our potential for earnings growth gets even
stronger if rates increase in the second half of 2003.

With the investment growth strategy now completely on the books, we project
overall net interest margin to hover between 3.70% and 3.80% in the second
quarter, assuming a flat rate environment, compared to 3.87% in the first
quarter. Some of our liabilities have repriced lower, such as the public funds
account mentioned earlier, although decreases in earning asset yields will
probably offset most of what we pick up from that repricing.

We have also lowered our rates on savings accounts to reflect the very low rate
environment and will continue to review our cost structure to ensure we are
paying fair rates compared to what we can earn in the market and through loan
opportunities. Our best CD rates are 3 and 5-year products, as we continue to
extend time deposit maturities for the inevitable increase in interest rates.

As mentioned earlier, the Kentucky Bancshares acquisition is progressing as well
as can be expected. Our integration teams are doing a wonderful job preparing
for the merger, and the Kentucky Bancshares personnel have made our job easier
with their knowledge of their customer base and market areas.

As part of the Kentucky Bancshares acquisition and the transition of the five
full-service offices of Kentucky Bank & Trust to Peoples Bank offices, we will
close the current Peoples Bank Russell office concurrently with the May 9
completion date of the Kentucky Bancshares acquisition. We believe Kentucky Bank
& Trust's Russell office gives our current and future customers the best
location in Russell to do their banking. The cost savings are part of our
overall integration plan for the Kentucky Bancshares acquisition and will still
give us 8 offices in Greenup, Boyd, and Carter Counties in northeastern
Kentucky. After the acquisition, we will rank second in the three county market
with 8 full-service locations, and third in the market with over $140 million of
total deposits, a good situation we are confident can be made even stronger with
our retail offerings.

In summary, our first quarter results of operations, although lower than we
would like to see, prepares us well for the future, assuming interest rates
cooperate. Our investment growth strategy is in place, asset quality is strong,
and cost control measures are being review everyday.

We will continue to manage for the future. We cannot control the market dynamics
surrounding the financial services industry, the interest rate environment, or
uncertainty of the political situation in the world.

We will make the best of a tough short-term earnings situation, and turn this
low rate environment to an advantage by stressing asset quality over risky loan
growth. We will extend liabilities, and look to reprice liabilities downward
when competitively possible.

We believe in our strategy for profitable growth, and acquisitions remain key to
our future. Our financial goals continue to be average operating EPS growth of
7-10% per year, and are best achieved in better economic conditions and normal
rate environments.

This concludes our commentary, and I will open the call for questions. Once
again, this is Mark Bradley, and joining me today as part of Peoples' executive
management team are Bob Evans, President and CEO, and Jack Conlon, our CFO who
is also participating by phone today. So, you might hear some give and take from
us as we try to answer your questions properly.

I will now turn the call back into the hands of our call facilitator, who will
once again explain the Q and A session and the steps necessary to ask your
questions. This call is now open for questions.



                          QUESTION AND ANSWER SESSION

FACILITATOR:
If you would like to ask a question at this time, please press "star" then the
number "one" on your telephone keypad. We'll pause for just a moment to compile
the Q&A roster.

Your first question comes from Bret Rabatin of FTN Securities.

MR. BRETT RABATIN (FTN SECURITIES):
Good afternoon. I got a couple questions for you. First, I wanted to discuss the
fee income a little further. If you could talk about the fee income was a little
lower in a couple of places this quarter than I thought it would be. If you
could just discuss the results this quarter versus three and fourth Q last year,
and then your expectations going forward for subsequent other three quarters.

MR. BRADLEY:
OK Bret. This is Mark. We mentioned the overdraft privilege number being down a
little bit. The fourth quarter I think was seasonally high, so that number came
back to normal a little bit. Also on the investment and insurance side, the low,
the sluggish equity markets have not; we have not been able to grow our revenues
in that area because of the market value upon which those fees are based. P&C
insurance revenues are a little - have grown a little bit. Due to the harder
insurance markets that they are not by far, they are by far the minority of the
revenues in that area. So the overdraft privilege combined with the fiduciary
revenues along with investment and insurance revenues being down those are the
biggest changes in the first quarter. Some of that is seasonal, the rest of it
is related more to when the equity markets bounce back.

MR. RABATIN:
OK. Were there specifically - can you discuss your thoughts for subsequent, you
mentioned seasonality, can you talk about the rest of the other three quarters
and your expectations.

MR. BRADLEY:
I'll try to address that. I'm sorry I didn't answer that the first time. This is
Mark. Probably, you know we had the acquisition coming on in the second quarter.
So, that will definitely have an impact on all those revenues, because we'll be
buying some revenues streams. But, organically I do expect some non-interest
income growth in the second quarter as we get the free checking program rolled
out. I think we'll see some additional overdraft revenues there from that
program. But, the fiduciary and insurance and investment commission revenues
streams will probably be flat organically until those equity markets bounce
back. Jack, I didn't know if you had anything to add to that.


JACK CONLON, CHIEF FINANCIAL OFFICER:
No, that really is what I was going to say Mark. The real area, if you look at
organic or internally generated growth as opposed to the KBI acquisition, the
big area that we have opportunity once things turn around would be in the
fiduciary and insurance areas. It was indicated earlier, the fees on fixed
annuities are down and the markets overall are just not producing or generating
a lot of fees from that area of our business. I really don't see that changing a
lot, at least through the next several quarters if not all the way through 2003.

MR. BRADLEY:
Hey Bret this is Mark. One more thing, we do expect mortgage-banking revenues to
increase throughout 2003 as we focus more on home lending. I think I talked
about that at length in the prepared commentary that we were able to recognize
$230,000 of revenue in the first quarter. And, that was still under what I'll
call the old program where we didn't have a focus group of 8-10 lenders out
there generating these loans and working it like we know we can. So, there's
another revenue opportunity for us in the next three quarters, because if rates
stay down, we would expect the refinancing boom to continue at least in the next
couple of quarters.

MR. RABATIN:
OK. And then, in regards to asset quality, it was a pleasant surprise to see the
reduction in delinquencies, and then there were also reduction NPAs and lower
charge offs, and want to, giving your guidance for the rest of the year in terms
of provisioning, can you discuss (1) what you think about the potential for
additional commercial NPAs to surface and then (2) what your thoughts are on the
relative loan loss reserve.

MR. EVANS:
Bret, this is Bob Evans. We make those provisions, of course, quarter by quarter
as we do our necessary provisions for the loan loss reserve. But, we're very
encouraged by the first quarter and we give some consideration to reducing the
provision in the first quarter but decided that prudence was probably the best
part of valor in this case until the economy and other things prove to us that
this downturn in past dues and non-performing is for real. We believe it is, and
look forward to the possibility at least of reducing the provision.

MR. BRADLEY:
Bret, this is Mark. I would echo those comments exactly. We are not predicting a
lot of loan growth in 2003, but if we get it, it will probably be in the
commercial area on our balance sheet. I think the loan loss provision is
something we'll look at again very hard in the second quarter. As Bob said, we
teetered right on the edge of this quarter, but we believe in our numbers and we
would like to see another quarter of lower delinquencies before we adjust our
provisions.

MR. RABATIN:
OK, and then can you discuss what subset of commercial is experiencing lower
delinquencies. And, the question I always ask you guys is even with the economy
here is that you're still not seeing any problems with the hotel/motel
portfolio.

MR. EVANS:
We'll start with the hotel/motel portfolio. We really have not seen
difficulties, our loans are performing well, and I believe we had one account to
move from non-performing to performing this quarter, which is also a good sign.
The second part of your question, I think I'll let Mark take a shot at.

MR. BRADLEY:
Yeah Bret. Comparing December to March numbers, I think all loans, in fact, all
loan categories across the board saw decreases in delinquencies so there's no
real commercial segment I can identify. It's really an across the board
reduction, which is good news. Certainly we have the non-accrual loan of about
$800,000 moved to OREO and that helps our numbers from a loan delinquency
perspective but it's still a non-performing asset. But there is no one
commercial segment that led the charge per-se. So, I think that's good news;
it's more of an across the board than a specific line item.

MR. RABATIN:
OK. One last question, then I'll turn it over to someone else. In terms of the
loan growth, or in terms of loans in the first quarter, were there any
participations or credits guys got from other lenders.

MR. BRADLEY:
The answer is yes. The loan that was the large loan at the end was actually
generated by Kentucky Bancshares, so that has a loan participation for the next
40 days. But, the real response is no. There were not many new participations.
That's kind of a special case.

MR. RABATIN:
OK, thank you.

MR. BRADLEY: You're welcome.

FACILITATOR:
Your next question comes from Don Taylor of Franklin Advisory Services.

MR. DON TAYLOR (FRANKLIN ADVISORY SERVICES):
Hi. I got a couple of things. First off, could you give the relative importance
of assets repricing downward versus locking in lower long-term rates cause the
effect of net interest margin.

MR. EVANS:
I don't know if we can quantify that for you Don, but we'll give you a feel for
it.

MR. TAYLOR:
I mean, you know, order of magnitude. Which one is more important.

MR. EVANS:
I think Jack would be able to give you a little better answer to that question.
Jack, are you there.

MR. CONLON:
Yeah, I was jumping in Bob. Hi Don. In order of magnitude right now, which is
the I'm going to use the term "has the most impact to us" it would still be
assets repricing downward in particular commercial loans could have longer fixed
rates built into them that our customers have come to us. And, you know we have
made great concessions, and I think Mark did a real good job talking about that
and so did Bob in the prepared commentary. It'll be the asset side.

MR. TAYLOR:
Now, is that twice as significant.

MR. CONLON:
At this point and time, it probably would be 1.5 times, Don, just roughly. A lot
of that too is on the liability side where we've come close to hitting almost a
4 in what can be done in terms of repricing. We're expending as well, I think,
as we said earlier in terms of our CDs.

MR. EVANS:
One thing that is helping us Don is the ability to grow our non-interest
deposits a little. I've worked for many years in this bank to get our
non-interest deposits or checking type deposits above 11% of our total deposits.
We're now getting there. We're at about 12 now I believe and shooting for 13.
But, our long -term objective, of course, is to get it up around 15% where we
think we ought to be in the long run. We're making progress on that, so that's a
plus.

MR. TAYLOR:
The $800,000 loan that came other real estate owned, is there plans to dispose
of that.

MR. BRADLEY:
Oh, most definitely. That will take some time. That property is located in Ohio,
and our chief lender is working with brokers in that area to sell that property.
So, that is something we'd love to sell in the second quarter, but obviously
that all comes down to price.

MR. TAYLOR:
Now, just if you could repeat for me on the interest rate sensitivity, was that
plus $350,000 for up 100 basis points and minus $150,000 for down 100.

MR. BRADLEY:
That is correct.

MR. EVANS:
No, down 50. We don't measure down 100.

MR. TAYLOR:
I understand. It was down $150,000.

MR. EVANS:
That is correct.

MR. TAYLOR:
OK. Now the last thing, from the investment leverage strategy, is that being run
separately from the rest of investment portfolio.

MR. CONLON:
I'll jump in. This is Jack again. No it is not. We initially did run it
separately and the numbers Mark referred to such as the net-margin of about 1.7%
was based on that initial strategy, but we just rolled it into the portfolio. As
we get run-off, it will be reinvested as appropriate in either investment
instruments or more preferably obviously would be higher earning assets such as
loans. So, we're just going to treat it as a normal part of the portfolio from
this point.

MR. TAYLOR:
Now, how did you try to set up your interest rate sensitivity in that
investment, relative to what you already had.

MR. CONLON:
Well, the way we tried to set it up, we tried to set it up that the majority of
our cash flows and the opportunity to reprice cash flows obviously was much more
favorable on the asset side than was on the liability side. And, that's really
the structure that we have with the blend of investment instruments generating
more cash flow than on the asset side as opposed to liability side. We pretty
much use fixed term borrowings 1, 2, 3, 4 & 5-year repos for the most part to
fund the assets.

MR. TAYLOR:
At what margin on that are you, do you need to be to eliminate the dilutive
impact of the share issuance.

MR. CONLON:
Well, the volume that we've done it's dilutive at the 170. Excuse me; it's
non-dilutive at the 170.

MR. TAYLOR:
Do you think it became non-dilutive a little bit before that.

MR. CONLON:
Yeah, actually it did. It would have become non-dilutive at around 160.

MR. TAYLOR:
OK. That's good, thanks.

FACILITATOR:
Your next question comes from Ron Peterson of Sandler O'Neill and Partners.

MR. RON PETERSON (SANDLER O'NEILL):
Good afternoon. First, one easy question. Bob in your opening remarks you
mentioned something about mortgage backed prepaids. I missed the dollar amount.
Could you repeat that please.

MR. EVANS:
Let me see if I can.

MR. CONLON:
I think we had, was it 50 million.

MR. BRADLEY:
It was 40 million.

MR. EVANS:
Yeah that's right, 40 million.

MR. PETERSON:
OK. And, that to the margin, have you calculated like a core margin separating
the bank from the leverage strategy and if so, what was that.

MR. BRADLEY:
Jack, I can jump in on that one. I asked our AL people to do that, and the
number is in the low 4.10% to 4.15%. You know, in the low four teens I'll call
it. So that would be the number if we didn't do the leverage strategy, what
would core margin be, and I think that's your question Ron.

MR. PETERSON:
Yeah. Thank you. And, also in talking about the rate sensitivity, you mentioned
something about I guess your comment included if rates rise later this year. I
assume that's your base case-assuming rise when you're doing your sensitivity
analysis.

MR. CONLON:
No, I think I can answer this Ron, if I understand your question correctly. When
we run scenarios, we include a base case where rates do not change. We run a
case where rates go up 100 basis points, and we run our case where rates decline
50 basis points. Our base case at this point would have the yield curve and the
rates staying basically the same.

MR. PETERSON:
OK.

MR. CONLON: If that helps you.

MR. PETERSON:
It looks like I believe most people would not expect rates to raise maybe not
until sometime in 2004. So, I guess if you're assuming rates staying the same.

MR. EVANS:
We're not trying to predict the rates, that's for sure. We're just trying to
predict what our balance sheet's going to do and our income statement is going
to do under those circumstances.

MR. PETERSON:
And if rates remain unchanged throughout the rest of those in 2003 and into
2004, what happens to the margin.

MR. CONLON:
It was indicated earlier Ron, this is Jack again. We expect it to stay in the
370 to 380 range.

MR. PETERSON:
OK. Thank you.

FACILITATOR:
Again, I'd like to remind everyone, in order to ask a question, please touch
star and the number one on your keypad. Please hold for further questions.

At this time there are no further questions. Gentlemen, do you have any closing
remarks.

MR. BRADLEY:
Yes, I just want to thank everyone for participating. Those were very good
questions. I hope we answered them the best we could. We do look forward to the
rest 2003, and thanks again for participating in today's call. This call is
over.

                                END OF TRANSCRIPT

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