Eagle Bancorp, Inc.

Good day, and thank you for standing by. Welcome to the Eagle Bank Corp, Inc. First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Eric Newell, Chief Financial Officer of Eagle Bancorp, Inc. Please go ahead.

Good morning. This is Eric Newell, Chief Financial Officer of Eagle Bancorp. Before we begin the presentation, I'd like to remind everyone that some of the comments made during this call are forward-looking statements. The current market environment is uncertain and we cannot make any promises about future performance and caution you not to place undue reliance on these forward-looking statements. Our Form 10-K for the 2024 fiscal year and current reports on Form 8-K, including the earnings presentation slides, identify risk factors that could cause the company's actual results to differ materially from those reflected in any forward-looking statements made this morning, which speak only as of today. 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 to the SEC, contains reconciliations of this information to the most directly comparable GAAP information. Our periodic reports are available from the company, online at our website, or on the SEC's website. With me today is our chair, president, and CEO, Susan Real, Chief Lending Officer for Commercial Real Estate, Ryan Reel, and our Chief Credit Officer, Kevin Gagan. I'll now turn it over to Susan.

Thank you, Eric. Good morning, everyone. Last night, we reported net income of $1.7 million for the quarter. While this reflects continued earnings pressure, our balance sheet remains resilient. We recognize the need for improved performance and remain focused on executing our strategy to drive stronger, more sustainable results. Our first quarter earnings reflect our previously discussed strategy of prudently managing valuation risk by thoughtfully incorporating all known risks into our loss and loss modeling. As Kevin will discuss in more detail later on in this call, we updated our assumptions regarding probability of default and loss given default for our office portfolio, which drove an increase in the qualitative overlay for office loans and in the allowance for loan loss reserves. As a consequence, our overall provision for credit losses materially increased. As sentiment shifts and market risks present themselves in an uncertain and volatile environment, particularly around office valuations, we want to make sure that we are adequately reserved for these uncertain outcomes. We remain focused on the fundamentals of the banking business and maintaining our franchise value. Eagle Bank operates from a position of strength. Capital levels are high, liquidity is strong, and our balance sheet is well positioned to weather continued volatility. We also remain focused on executing on our discipline strategy that positions Eagle Bank and our clients for long-term success. The first quarter of 2025 saw encouraging results from our commercial lending platform as those loans grew period end by $109.1 million or 4.3% over December 31, 2024. New additions to the CNI team have settled in, and we're seeing the impact of those hires reflected in growth and improving market penetration. We expect growth in our commercial lending portfolio to enhance franchise value as we bolster our position as the go-to community bank in the greater Washington, D.C. metro area. Deposits grew in the first quarter by $146.2 million. largely through time deposits in our digital and branch channels, demonstrating our ability to attract funding and providing further support to the bank's overall liquidity strength. There's no question that uncertainty remains as the market adjusts to changes under the new administration. Shifts in the federal workforce and the broader implications of government spending are still unfolding. Importantly, our modest exposure to government contracting and GSA-linked assets reduces our sensitivity to changes in federal budget spending. Moreover, the DC economy extends well beyond the federal government. It includes world-class educational institutions, a growing technology-driven private sector, and a robust tourism industry. all of which support the region's diversification and long-term stability. We believe in this market and community and our geographic presence here. We believe our role as a top local community lender and our deeply rooted relationship-first values create a strong competitive advantage. These qualities and this market are a recipe for long-term value for both our shareholders and our clients. While we remain optimistic about the long-term strength and resilience of the Washington, D.C. region, we must also acknowledge that sustained pressure on office property valuations in our market. Over the past five quarters, we have built reserves and focused on capital preservation, steps that have strengthened our capacity to absorb losses. Looking ahead, we will explore asset disposition strategies for office loans, to reflect evolving short and intermediate-term valuation risk. As market conditions develop, our cost-benefit analysis will similarly evolve, and we may take a more proactive approach to dispositions. This may result in higher near-term credit costs, but is aligned with our objective of reducing non-accrual, criticized, and classified loans. and improving the quality of our loan portfolio. As we continue to navigate a complex operating environment, we remain focused on preserving capital and maintaining financial flexibility. Given persistent uncertainty in the credit conditions, particularly in the office portfolio, we believe it is both necessary and responsible to align all aspects of our capital deployment strategy with the realities of forward-looking earnings. We are actively reassessing capital allocation priorities, including shareholder return strategies, as we continue to pursue our goals of long-term franchise value and capital accretion. Our overarching objective remains to maintain a resilient capital base capable of supporting both strategic growth and prudent risk management. Our team is inspired by the progress we've made and the future possibilities and opportunities available to us as an organization. With our core banking fundamentals intact and our strategic efforts taking root, we are confident in our ability to execute on our goals. With that, I will turn things over to Kevin.