Eagle Bancorp, Inc.

Good day and thank you for standing by. Welcome to the Eagle Bank Corp. Second Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. After the presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to the Chief Financial Officer, Charles Livingston. Please go ahead.

Thank you, Carmen. Good morning. This is Charles Levingston, Chief Financial Officer of Eagle Bancorp. Before we begin the presentation, I would like to remind everyone that some of the comments made during this call may be considered forward-looking statements. While our loan growth and performance over this past quarter have been positive, we cannot make any promises about future performance, and it is our policy not to establish with the markets any formal guidance with respect to our earnings. None of the forward-looking statements made during this call should be interpreted as our providing formal guidance. Our Form 10-K for the 2021 fiscal year and current reports on Form 8-K identify certain risk factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made this morning. Eagle Bancorp does not undertake to update any forward-looking statements as a result of new information or future events or developments unless required by law. This morning's commentary will include non-GAAP financial information. The earnings release, which is posted in the investor relations section of our website and filed with the SEC contains reconciliations of this information to the most directly comparable GAAP information. Our periodic reports are available from EGLE online at our website or on the SEC's website. This morning, Susan Riel, the President and CEO of Eagle Bancorp, will start us off with a high-level overview. Then, Jan Williams, our Chief Credit Officer, will discuss her thoughts on the local economy, loans, reserves, and credit quality matters. Then I'll return to discuss our financials in more detail. At the end, all three of us will be available to take questions. I would now like to turn it over to our President and CEO, Susan Riel.

Thank you, Charles. Good morning, everyone. I'm pleased to report the bank had another successful quarter, demonstrating both our determination to continue moving forward and the strength and resilience of our operating model. Since the bank was founded, our operating model focus has been on efficiency, credit quality, and a relationship-first culture, all of which helped us become a leader in the greater Washington, D.C. market. These areas of focus also helped us be successful through numerous economic ups and downs. In fact, it is our deep client connections and strong balance sheet that creates opportunity and value for our customers. In the second quarter, there are a few highlights I'd like to review and comment on. First off, we are pleased to have reached an agreement in principle with the SEC. While this negatively impacted our earnings this past quarter, it represents a major step for us moving past the legal issue. With that said, earnings were 78 cents per diluted share. Absent the agreement in principle with the SEC, earnings were $1.20 per diluted share. Moreover, as discussed in the earnings release, We are in advanced discussions with the Federal Reserve Board to settle their investigation of the bank. We are unable to predict the timing of any outcome of the investigation, but assuming we are able to reach an agreement with the Fed or we determine we have probable losses that are reasonably estimable prior to the filing of our upcoming 10Q, We will reflect the necessary adjustments to the applicable second quarter financials in our 10-Q disclosure. Other good news for the quarter included an increase in loans, improved credit quality metrics, and a better mix of deposits. Loans increased by $41 million from the prior quarter end, and excluding PPP loans, the increase was $68 million. This was the third consecutive quarterly increase. This quarter's loan growth was primarily driven by our CRE team, which had another solid quarter. At the same time, our credit quality metrics remained strong. Non-performing assets were 19 basis points on assets at quarter end, and we had a net recovery for the quarter of $674,000. and many more. Our exceptionally strong credit risk management has been a hallmark of EGLE since our founding and it will continue to be a focus going forward. In terms of funding, our funding mix improved as average non-interest bearing deposits increased to 37.9% of average deposits. Additionally, our CRE and CNI teams, their pipelines remain strong as the lending teams continue to be active in their calling efforts. And beyond our pipeline, unfunded commitments worth $2.3 billion at quarter end, up $251 million from the prior quarter end. We are also proud of our commitment to the communities we operate in and have also had success in providing much needed financing for affordable housing. In April, we announced financing of a $54 million project to support affordable transit adjacent apartments in partnership with Prince George's County and the Washington Metropolitan Area Transit Authority. This is also the first new construction project to benefit from Amazon's Housing Equity Fund. In June, we announced two financings, a $48 million project for the Montgomery County Housing Opportunities Commission and a $25 million project in the Columbia Heights neighborhood of D.C. As more opportunities arise, our total risk-based capital of 15.81% gives us ample room to continue to prudently grow the loan portfolio. And for our shareholders, we remain focused on increasing value and returning cash dividends. At the end of the quarter, our board declared a dividend of 45 cents per share. This is a five cent increase over the prior quarter dividend. This equates to an annualized dividend yield of 3.7% based on last night's closing stock price of $49.05 per share. Before turning it over to Jan, I'd like to say that our Diversity, Equity, and Inclusion Council continues to make progress. We recently launched a mentorship program, a scholarship program, and two employee resource groups. Our women's group launched earlier this year, and our Black Employees Network launched earlier this month. We believe participation in these groups will be personally and professionally rewarding. and give the employees participating in these groups our full support. Now, Jan Williams, our Chief Credit Officer, will give us some insight into the market, loans, and credit quality.