Eagle Bancorp, Inc.

Good day, and thank you for standing by. Welcome to the Eagle Bancorp second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being

improved our funding mix by increasing deposits to reduce borrowings, maintained our high level of capitalization, and kept our asset quality metrics strong. Additionally, we continued to pay out our dividend and repurchase shares. Based on last night's closing stock price, our current annualized dividend yield was 6.47%. And during the quarter, we repurchased 1.2 million shares of our common stock at an average price equivalent to 67% of tangible value. On a combined basis, we returned capital of $42.9 million to our shareholders in the second quarter of the year. In regards to earnings, we are actively pursuing opportunities for continuous improvement. One way we are seeking to increase earnings is by taking steps to reduce expenses. In the first half of the year, we ceased originating residential mortgages and closed three branches. Earlier this month, we also made the difficult decision to enact a reduction in force and identified other cost savings throughout the bank. We also know that support for earnings comes from a strong commitment to underwriting and risk management. Throughout our history, these qualities have been a strength of EGLE and have served us well during times of economic turmoil. While loans grew for a seventh consecutive quarter, the increase was modest as we continue to focus on maintaining our risk-adjusted returns in an environment with high funding costs for deposits and borrowing. our team continues to be highly focused on deposit costs and is working hard to retain and expand existing relationships and attract new deposit accounts as well. This is not an easy task in this environment, but we have seen good results using reciprocal deposit platforms and helping other customers restructure their deposits. In regards to asset quality metrics, asset quality remains a strength, and while some metrics increase, they remain near historically low levels. Jan will discuss this next. With that, I'll hand it over to Jan.

Thank you, Susan, and good morning, everyone. The Washington, D.C. market area continues to be a source of strength to the banks. The unemployment rate in the Washington metropolitan statistical area fell again this quarter to 2.7% in May, which is just above the pre-pandemic low of 2.6% in December 2019. This gives us even more separation from the nationwide figure of 3.6% in June, which was up slightly and aligns more with the historical long-term difference relative to the national unemployment rate. This strength in the Washington area market can be seen in our asset quality metrics and our provision to the ACL. NPAs were 28 basis points to total assets. While this is an increase over last quarter, total NPAs were 30.7 million on a portfolio of 7.8 billion. The increase was primarily from one commercial office note in Northern Virginia of which a portion was charged off during the second quarter. There was one other notable charge off located outside the Washington, D.C. area in Baltimore, an office property, bringing the total net charge off for the quarter to $5.6 million. Loans 30 to 89 days past due were $41.4 million, up from $15.7 million at the end of the prior quarter. The current quarter past due is largely from one multifamily credit for $39.5 million. For the second quarter, we had an ACL provision of $5.2 million, which was somewhat lower than the provision last quarter. This combined with a relatively small increase in loans and the two charge-offs moved our ACL to loans at quarter end down one basis point to 1%. Our coverage ratio is 2.7 times non-performing loans. With regard to the lower ACL provision, the provision was primarily driven by a lower quantitative reserve, which is formula-based. This was partially offset by a higher reserve based on the Q&E portion of the credit model. The lower quantitative reserve was based on improvements in local unemployment data, as I mentioned earlier. The higher reserve and Q&E modeling was driven by a higher allowance for CRE office properties, partially offset by a lower allowance for accommodations and food service loans. Suboptimal return to work participation continues to limit increases in office occupancy. However, both the federal government and Amazon HQ2 have announced plans to increase their in-office presence in the fall. This quarter we're providing some additional geographic detail on CRE office loans secured by non-owner occupied commercial real estate loans. These credits were 12.6% of the total portfolio as of June 30th. We did not have any outstanding office construction loans at the end of the second quarter. Office properties are primarily located in the Washington D.C. market with 24.1% in D.C., 33% in the Maryland suburbs, and 34.9% in Northern Virginia, with an additional 8% located outside of these markets. To monitor our income-producing CRE credits, we continue to be proactive in reaching out to commercial clients well in advance of maturities to better understand the headwinds that could be facing these properties and work collaboratively with those borrowers to maximize returns to both the bank and the borrower overall in terms of credit we remain cautious and we will continue to exercise selectivity and to apply our customary strong underwriting standards having said that We see opportunities to continue to add high-quality commercial loans to the portfolio and maintain our pipeline as other loans run off. With that, I'd like to turn it over to Charles Levingston, our Chief Financial Officer.