EGBN - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the Eagle Bancorp's Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions]. I would now like to hand the conference over to your speaker today Chief Financial Officer, Charles Levingston. ahead. go please Sir,

Charles Levingston

Good Eagle is Bancorp. Michelle. Financial Levingston, Officer of morning. you, Charles This Chief Thank

made may Before like that comments to begin remind this we the everyone some presentation, of Statements. considered Forward-Looking be I would during call the

of performance about formal our While promises establish quarter should has make performance, with Forward-Looking not guidance to and to it the the this been our over None are during past any we with made positive, respect this earnings. interpreted growth be cannot policy providing markets and future guidance. any Statements formal is our call as

of Company’s Form Form results from This GAAP of or a The materially which projected XXXX result XX-Q update future Our X-K does the to fiscal in reconciliations on reports those statements Statements made to required undertake any current Bancorp is quarterly filed financial any of the website to with on Eagle posted Form reports Forward-Looking contains commentary most Investor earnings the and include morning's by SEC the that information. the this release, as our actual for and in information not events factors comparable non-GAAP morning. unless developments identify differ section year, XX-K certain will Relations this new directly information or forward-looking our law. information. cause could

I detail. Jan and of return at I Credit quality credit the to with it her President our in our then take reports off would be available all us CEO, Bancorp three and now on or overview; start like questions. Susan turn end, website. Eagle our over financials the to loans will to to online At discuss Chief periodic will Officer, thoughts morning, from high-level and matters; the more Riel. website will Eagle a our discuss Susan President of Our then CEO are available will This SEC's Riel, Williams, us

Susan Riel

high XXXX. to welcome for Good another $XX quarter and remains pleased strength. Equity quarter for held and from an downward trend. is Similar asset quarter all I'm efficiency terms loans. with are modest levels. loans favorable high, great our key excluding Thank million, you, increase PPP at record credit last breaks quarter earnings and bank. morning it quality difference call a there risen everyone total A an report time a the to to Charles. again earnings the but to remains of of There the that almost loans, second last increase was in was sale has for

Focusing This on for on common still million last the end share. per which per X.X or locked includes sale XXX.X loans on The or of million XX.XX% the X.X continue quarters, quarter return share. average earnings allowance and quarter of was when the the to common of at for our and These quarter the commitments. XXXX, third losses down, assets. four the $X.XX credit over billion Earnings for equity, was earnings which build diluted nation unfunded reserved from XX.XX% was $X.XX totaled quarter earnings the items accelerated impacting loans income X.X included a larger PPP reversal average this the first, or of million assets equity. a XX were on and the X.XX% return interest tangible earnings from of million

for credit from and These with second losses, asset outlook loans. an economic of basis improved the And reserve were XX unfunded the and quarter a of quality combined Turning offs reversal net annualized XX allowance points points to the for average locally NPAs quality, to nationally basis charge and end of informed decision make ratios commitments. asset at our for was conservative assets. quarter

first half loans, was excluding the for million X.X reversal X.X reserves With X.XX% After of the million. the reversal of reversal loans. our of quarter, XXXX PPP for the total were the

leader ratio be of to we with an continue efficiency In of efficiency, quarter. XX.X% operating terms a for the

We our are to always approach expense prudent management. in

closed an the can Rosslyn, be write-off quarter, expiring there as combined expense had leasehold Virginia as amortized our our lease. upon this XXX,XXX fully no other been branches. the it about customers annual cost these expiration and had savings branch, lease, example, served Virginia be Northern we will and was pre-tax rental of For of The improvements, from and

the of have within all positions or at filled We be company. the employees are the also filling will brands pleased that working

XXX issued Additionally, redeem details and regulatory bank's we XXXX. this board debt million on given will the robust capital subordinated Charles later. more requested in and approval received of to levels, have

residential loans, discussing the I mention the of teams. FHA mortgage contributions again would Before like and once to

team line. Our bottom million, to residential great Even meaningfully quarter last off XXX to another mortgage X.X lots with mortgage loans contribute slightly had on continue again sales expect division the loans mortgage with will residential the we volume from and of million. mortgage quarter, of

also pursue earnings payoffs of income. assertively to higher Our new generating trade and increased, X.X originations the non-interest quarter-to-quarter. our division quarter volume than has smaller which transactions less loans, opportunities. call, to advances not has In more loan revenue from past are I and is while mortgage last and in from smooth intends quarter regard downs said the loan that this and for transactions larger FHA This division, Comparatively, value. included funding the team pay on million EagleBank decrease. division FHA premiums did stream well The FHA

later. for loans about result, loans will and by Jane loans a more detail As excluding sale in million. $XX PPP held increased this talk

the quarter expertise associated talking generated income. net PPP in costs interest nearly loans. still firm million during which processing fees and deferred was XXX loans with regarded a sale servicing about into PPP X.X we to million the of significant sell to our decision with accelerated in and The well While made ongoing a loans

Amazon's to focus and to new provide regard high to clients. hospital the of of contracting, to our started and XXX firms, retained large list that with serve platform were a loans already process, continue in to us we a includes quarter. just by The below reasons. our for In Additionally, PPP free and those on XXX those totaling a through remaining business government which international loans up million the million sale long service we technology retain and Federal government market, market, to personnel had and growing universities. enable second decided presence, during or loans, on domestic progress our several forgiveness the the many service with PPP will to customer level forgiven anchored a the The that loans moving and of substantial originating the systems forgiveness HQX, strong robust

EagleBank, September has market see Our since have been on return in possible many are hotels environment its remotely beginning where tourists home are the companies operating which returned workforce continues hybrid and restaurants to of pandemic have a open, business, doing XXth. the the full. Internally will of more

development We This to pleased shareholders. settlement also relates it we would for welcome hope next investigation, the update, XXXX. which have we about first the a to Commission's and July its EagleBank as Company to legal potential in discussions be resolution disclosed initiated have Commission's or months. the are the staff with few a investigation within regarding a commission resolve We

or discussions have potential Reserve the also settlement are Board's staff the investigation. Federal pleased Board Federal about the of with regarding Reserve initiated to we addition, resolution In a

Federal to the Company it resolve to hope manner. a Reserve in the Board's timely also investigation relates as We

the is press also to submission connection received SEC serve investigation. We response our the CFO is Wells with in the his disclosed the in to Charles SEC as continuing investigation. Wells in a Charles Charles in the that CFO. capacity and cooperating release to yesterday's Notice SEC ongoing Levingston with made Notice

While serve top of including consulted and other management comment financial remain as Company’s in and the And personnel. of function has we professionalism closely in external controls, finance members the the have decision the reporting, to the priority act advisors, and of want accuracy circumstances, and CFO. auditors. I We members independent work stockholders. its confident continue is the with a best of to can't it to that Company’s on Charles, making the Company’s and The of the disclosure Board the against disclosure that controls other of over Board we our the the Charles considered always Company number advisors and the Committee, allegations factors financial ensure to consultants board's stress evaluated as management, internal strong Company’s with the interests reporting. Disclosure maintains the to Company’s company Counsel, the and auditors, and Company’s outside independent Company’s The Controls

the further our comment SEC. on any this comment the Accordingly, is questions former to speculate with Q&A. ongoing, developments at are investigation interactions we potential we or employees time, cannot we on or and about obviously that directors these the answer during Given able speculate cannot investigation nor

per tangible rose was to like reiterate from value. Before Jan, focused up share over turning building value from we would ago. book per $XX.XX on Book XX% stockholder to year a I it ago, up a and year that share remain XX% $XX.XX to

also of is dividend work and dividends a the This our Eagle, their thank before I all our clients. that. quarter stock per would for the to share. from more employees our prices quarter $X.XX on prior of dividend like quarterly with yield per and Based commitment We hard share the up their puts for in-line support $X.XX $X.XX to to peers. $X.XX increased recent our

I and respect, both diversity to like Officer. would remain workplace turn Williams, we speaking over we in that, culture Additionally, a the duties of committed to to Credit With Chief communities our and Jan serve. inclusion the the

Janice Williams

good and Susan everyone. you, morning Thank

modest with earlier. PPP to mentioned held speak like would I First, to loans balances and loan exclusive that in of for Susan sale uptick the

for are with see loans opportunities large loans we factor able stage, returns. to more the said in As offer of to the are market. pricing in that, a In credit we continues and moving risk opportunities adjusted loans. Having efforts portion our PPP the new of quality particular, forgiveness on on our appetite has that be we focused through good a improved focus of are

be Of a lending course, to commitments going and time funding. loan there securing ultimately is lag between and always identifying

past to funding in and originations last in funded were uptick of the timing be Some new loan also quarters. the on lower loans Booked may for the quarter originated loans side. on related the several

did have significant large with funding a few loans quarter. we However, this

the the economically One of multifamily Commission Bethesda, Montgomery County, financing Housing loans and an million for Opportunities larger strong was Maryland. $XX

efforts our community to for opportunities bank, affordable local support able bring housing a we to As offer be community. these very to pleased to are

XXth, also June employment economy very the as DC was for to XX-days more Washington XX unfunded end the reversal losses February than redevelopment X.X% the of level reversal well quarter. to for We and primarily fell in the loans in Northwest in unemployment rate another X.X from million regards May. commitments. X.X million outlook a past the well for to for the the improved which In we million, The of as and properties The located allowance from credit XX funded dozen fell area for to the resulted reserved Washington seen during the metrics. due in improvement At years. forecasts lowest in loan portfolio X.X% period have credit

XXX%, in remains loans has XXX% X.XX%, for one was total the X.X coverage million XX.X points for end, partial down million, prior primarily With our for the a NPAs NPAs XX range the the to to At related XXX% closed points loans, sale excluding and for no sustained which Even performance losses down ratio quarter been allowance were of allowance and quarter down of quarters. stable turns July. loans by reversal, the losses, XX from point smaller PPP end. coverage where from quarter were six charge-offs office with a secured it exhibited assets off basis the NPAs basis Net which a dollars, prior note in non-performing our a return lower at the million million. for to to credit were loans, X.X quarter. charge-offs credit quarter in suburban chaos was early prior in was with from basis some The last non-performing with The XX.X status charge-offs. accrual property sale, loans but In from decline end. largest

it charge-offs partial the in industry principally Charles now of over a credits. C&I other our that, to other loans fully CRE like would charge-offs loan few With I Officer. smaller The Levingston, one small one Chief a of turn consistent resolved to Financial SBA and restaurant

Charles Levingston

for second second XXXX from very XXXX different quarter distinctly Thank you, and of and accelerated allowance quarter PPP the second sale, credit for of the from the income current contains as XXXX, we in loan environments, operations sale, Net costs of carry to Jan. we still and two interest losses release adjust reflects In we the whereas were PPNR income the the the a in reversals interest building quarter quarter added margin, with of earnings net and $X.X impact of have backed those net table. for million fees the into from income net COVID-XX the accelerated which table reserves. PPP the adjusted interest net down for out also income

for While adjusted net the quarter to a of quarter end. the comparison after the prior of from linked interest Non-interest change second down million little sale the reflects quarter. the margin (Ph) second a on the $X.X from from PPP up XXXX. XXXX income PPNR basis, prior was quarter. declined It in quarter quarter primarily was decline an from income prior $XXX,XXX prior This adjusted XXX in down was to two quarters. basis the the [XXX] On

made of for down million than on basis, the quarter. down While $X.X the increases was the mortgage offset linked PPP Non-interest sales the FDIC legal on million professional were expenses down decline PPNR, trade in FHA $X Most of Overall premiums expenses from was and more difference. and the prior the quarter. adjusted $X.X by salaries quarter fees million accelerated from in gain fees. the up and absent were income prior

of at quarter agency backed $X.X end and from last investment and quarter the Investments agency finally were prudently the the callable portfolio. $XXX bonds. slowly million, primarily reduction the deposits Investment quarter, prior quarter. securities from This $XXX second continue mortgage million this end billion, excess and we to of X% inflows deposit quarter quarter, in were like abated quarter $X XX-year securities This up resulted as the build million liquidity at down end. the prior

of off. doesn't to higher balance to known continue XX weighted Overall, quarter. hit it prior with a we weighted points nationally of issuance. had on Also, $XXX agreement quarter CDs funds additional of points the million our first cost of rate invested average from of in while in and investments, our show investment CDs XX-months quarter cost second $XXX a decreased up some the with in of XX run the quarter reverse a X.XX% a well term this total Additionally, cash. CDs These repurchase earnings to million XXXX average mature. the regarded bank in basis XXXX, basis In a of down

accelerate XXXX our Going X% need call it The of of X which capital in subordinated quarter, funds outpaced debt capital the our for a Bancorp by the consistently not tax cost savings of opportunity repayments, to of forward, assets. capital has basis. the The made however dividend bank the or because we a $X.X on level. for of enough million on bank back an annual the positively will Bancorp, at short basis minimal. in to capital August Susan. will Xst, our of but at as will reduction, and as at wrap the have Either into debt future This fund $X.X large quarterly our will be projects. fund well million capital redemption reduce Susan it to up. with impacted commercial is which the be have cover redemption risk debt will earnings fund debt. will based our a quarter cost The quarter. so impact generated of growth we the deferred the debt a million With from To of $X.X in third Tier is million tangible loan redemption that, hand first million early second that the I the on about to in $XXX this third possible to costs, pre $XXX prediction our rate a translates impact

Susan Riel

Thanks Charles.

I to past is that results investors due assets. to would operating the risk XX%. earnings, we efforts our assets. posted half Loans Total best are strive quarter for say on XX% to of up XX under into to million. to continue the equity second consecutive our second continue positive almost like XX community will $X we both points is we will But our performance capital of serve questions, its are ability. before deliver to and we As almost Common our of record and XXXX, move basis open based of NPAs XX-days the Bank

just raised The dividend depth. we in have approval got million and bank to scrub the is doing We $XXX well. redeem

call We questions. the your will up open for now

Operator

comes the Instructions] Thank Our of with you. Whitman Sandler. [Operator Piper first from line question Casey

open. line Please go Your is ahead.

Casey Whitman

Hey good just morning. started Wondering maybe with to related get the question. PPP

sale that the for to much the fees the balance that best for be $XXX balance? the what accelerated remaining also guess is Following the and portion and processing yet PPP your of timing in remaining the million realized how remaining PPP of fees have forgiveness like is

Charles Levingston

Casey. that net got million that or take deferred sheet $X less balance have for million million on $X than will $XXX PPP so less. Less I fees the on about a portfolio the little we in

your of imagine terms clip. gathering a have the challenges will decline to timing, over couple would been waited at mine, that meaningful if PPP but long. some they this their They moving is tale. I the and But next as In they I at information. have will as guess good those may loans, time in own be there quarters, see have along a end, tell stragglers pretty going we the of expect good

Casey Whitman

loan quarter. you thank to nice this see growth Helpful and the

new of have production pressure But the some the numbers on yields. do coming maybe? the versus was this quarter mentioned around You you on where last

Charles Levingston

Yes.

adjusted you So, just can basis, the on above yield see, to on XXX is XXX. our loans quarter an for as obviously, total

average on coming New production coupon right. weighted is

so quarter. just of X% is are of second impact around coming we where or in weighted basis ignoring costs So the below average the and the right deferred or fees

little that balance of drag create if sheet. on a the to, trend bit going a we So side of continues, obviously, that asset is will

Casey Whitman

now But number a jump with, dividend you you a think ultimately guys there are line should level? the just sort will think your target of mentioned, about right more have is capital, your level Understood. payout how Last of raised of about you appears kind I about let as yield in someone maybe or how we on question times recently, you do on. the to thinking ratio else

Charles Levingston

a Yes. capital. Obviously, we amount do, significant of hold

I a of of that have be is do it want concentration mindful place about and We ADC, shareholders going to we to we limitations is ADC that appear where return up about rock want us concentration gating judicious of imprudent are management, and CRE that but of stack hard it our group so that to really to that against capital, think sure a and if good for factor. are capital be make stewards larger larger holding, those But the peer you and somewhat we are capital number. to appropriate. the we CRE being we

Casey Whitman

Understood capital level have ADC should we the or do for call you and now that for? wait

Charles Levingston

finalized. it wait call Yes. would be is going slightly have in report I the prior from improved for it to But the quarters you to expectation. know my

Casey Whitman

for thanks taking the Alright call.

Charles Levingston

Thank you.

Operator

and you David line Seaport with Research comes Bishop of our Thank Partners. the next from question

Please Your open. line ahead. is go

David Bishop

you. Thank

I opportunity the narrative, to commercial larger originate projects. earnings for loans think in you the mentioned

size, Just loans in playing the just or curious maybe tenor or that has to see get the for that or of to average of of you your quality are just just here, how market you appetite terms seeing competition some increased and capital deals outlook in loan commentary larger strength the do out? the or given pullback

Susan Riel

the has and market appetite pricing you definitely our tight of a market seeing is that as and competition. But think know, is lot we tight. are increased. The the in is I there also

aggressively good had pursuing of recently. our So we a teams deals are there are success and have deal we and out

Janice Williams

coming also of I amount I the equity have are seem would an that that. would opportunities agree through to larger say incredible them. in with that

looking lot there is money for around deploy. a of place I think sitting still to

metrics strong. the deals on credit these has So larger been especially

the hand, pricing other them. tight on pretty the darn On is

So it is a balancing act.

David Bishop

the curious, currently relative commentary loan to last Just what was, towards the pipeline quarter?

Charles Levingston

pipeline. loan The

elevated $X $X.X million, close where we were to billion It to from is currently. slightly unfunded have which I last We commitment quarter, under just believe. is

David Bishop

the a then perspective, maybe direction future where point, growth. the to from here. maybe But look moving positive you the right the loan numbers a when in it start get at we to and Got see Charles, obviously, credit

Just ACL us where sense curious, what would think to if was us one back you the maybe at? update new you moving a be just ratio reserving what loan day you and the can growth give

Charles Levingston

about points calculation points, one Right, believe was here you is basis and PPP. we obviously, sitting are at our XXX basis day I right, exclude XXX XXX when

a little if So there get to a if room you is we is can it is, there. more is every a drift assume normal back then down one little that day different, bit environments there environment,

David Bishop

and Got comments it. I appreciate the securities. the

is doesn't If investment I you or that you XX% do loans, liquidity see of in into up market continue to that ratio see about funnel is excess again, some creeping that XX%? think the staff it

Charles Levingston

right Right. is place the Yes. you go to Certainly, can't get if likely, to loans. that the

judicious it. want that But we today growth. about again, use again loan I to as So word be, the the the to answer is

David Bishop

then terms you the quarter. Got third quarter? it. in and book mentioned I think the CDs update fourth opportunities - [log (Ph) reprising And Any off] of this from

Charles Levingston

yes. Right,

that So reprice average a $XX the of that basis XX-months. We million maturity $XXX basis came weighted of I with average those I about with XX-months of in points XXX at rate about reprice, some think off XX million had with was points, CDs turn. mentioned

you grind I that. off. think there opportunity CDs continue as is to more So down for are those seeing costs little roll the obviously And a funding

in time can the see basis press average weighted have the You releases, we have that for points. deposits rate we XXX that

there some those room continue down to still So is there drip if to reprice.

bring a our down rate deposit of couple pricing points. by basis on just slightly, a just We sheet did also

going be significant on a is one Again, million We sub have continue August we debt, funding to called will impact. to for $XXX to look opportunities improve costs. in the it

lot liquidity of the so means rate associated balance liquidity sheet, that the some if sense. that the cost make prices. think absolute reengage or at if you that excess feel we we So for is about liquidity, can points price, X% of from a capital today, on a $XXX basis three attractive million need on like that And capital standpoint, and million so with a the and $XXX those to very, point, comfortable clearly markets savings returns very obviously, hefty excess

but isn't necessarily there. now, right So the need

wanted, that discussion. So you find hopefully but more into information that

David Bishop

the of have amount CD maturities in you the Do maybe quarter dollar just the rate? third schedule fourth, and

Charles Levingston

have Not notes. my do is sure in are offhand. that I'm not that I we it something publishing.

David Bishop

it. Got

Okay, probably the jump else Thanks. line some I and will let off ask someone question.

Operator

and Thank Catherine comes question you our line KBW. next Mealor with the of from

line is go open. Your Please ahead.

Catherine Mealor

on follow-up you here deposit or in would when improves, you do like pipeline to just from the Maybe see kind and of your deposit other shrink, excess liquidity even to saw expect modest see quarter you deposits we continue this is conversation, growth basis growth? for can

Charles Levingston

I price. it Yes. is the it be - find of still and on looking liquidity we for as Still at flat we narrow this can going see, right out I around some a to at that as deposits home. far And see when relatively some point. there achieve spreads

So I being this relatively them see flat at point.

Catherine Mealor

about balance and and think for type, little of, double-digit the construction at pipeline changes was there helpful sheet. do you then appropriate growth. balances kind to I Can sort this of of your you maybe question bit, the historic of grower amount on to of growth want that loans what this Eagle improve been as the point, risk appetite on rate keep is like some But a Okay, kind of earlier. loan is continues that on what level a feel how it talk you in

feel period time longer your rate what of a over for of company? is what right like So you type growth

Janice Williams

Catherine, types going say, the a and marketplace we really, you being appetite renewed do at out have of into and would I aggressive looking are that in different have loans. more

favorably more future so construction far. have I that And in of be number much we lending. the We increasing looked what will seen have think on certain types upon based

are not like years in Charles. than it spot it the at in is X.X was a this and point time ago. economy much better averse to We feel

Charles Levingston

on want pricing the don't to got Again, compromise plenty to of deploy. credit. clearly We We is liquidity challenge.

on that pretty factor in flow a the question is is it Venn good prevalent lot the front? deals. there. I Deal diagram money is is with as to just that is willing there we So are be opportunities the [ph] out commercial are as of to gaiting fewer So that, channel do pricing chasing there, we what seems hear. There banking,

Catherine Mealor

Okay. on one one last And maybe is buyback. the

on dividends great your active and which the buyback, to of increase would in quarter see be significantly the You back this more the year? you pause expect was to buyback the half

Charles Levingston

for We changes and but that. are certainly the clearly be or we share initially dividend is, to for of that where make rely of metrics the metrics, it repurchasing want sure we going want shock the that reasonable to is shares. you look to any at to to to place, way additional there a shares continue of obviously, put sticker little right. evaluate shareholders, is a repurchase from plan best buying want in on rely the We more we on reasonable to There repurchase And, and what do price. are a bit a

we will Something at. continue to look

Catherine Mealor

much. so thanks Great,

Charles Levingston

you. thank Great,

Operator

Inc. and our you the Thank from with line Preston Brody of Stephens, question next comes

ahead. Your go line Please open. is

Brody Preston

to floating wanted reminder, levels? just portfolio. the I rate and follow-up you just give percent Could what at loans Charles, rate us percent floor a what floating loan currently are Hey bucket on of of is the

Charles Levingston

XX% so are talking I million. about Yes, about, floors just X.X under $X variable close is is or about so. that to excluding rate on have And billion think, under PPP, XX%, billion, $X have them, about we just you

Brody Preston

amount those floor floors, do at what their is currently Okay of levels? know, you and

Charles Levingston

a is portion. It significant

If a you you give second, me will that give I answer.

If you want to ask another question, get I it. to could

Brody Preston

will about commercial some the observer office has January, couple there Jan ask be buildings lately DC. in would question. been that in vacancies I Yes, great. articles at a increased

had with just there And guys may issue property a that and was small this to I wanted you I a charged or be quarter. so off office ask, think

office is, to you making seeing on of market? maybe I are So into broader you just kind broader provide if of in any ask some, just those some issues want vacancy are guess, I way the its can color portfolio what and your

Janice Williams

in going near-term, In there is project substantial uncertainty is there term. in that been that on office office we happen with in has DC was in rehab been we think really that else DC is new have side out market I producing. has one lot lease longer the have a don't is income really increased office and the what activity the that of to construction lately. seeing have we Everything

So significant we performance had and fairly blip period over the a haven't leases long time. of any in roll

impact, so and there it if probably, is going significant or years hitting. maybe et an be as think stress three cap rate, CRE cetera. to and do we or operating to lease we in in increases is pretty producing income loan comfortable for rollover I that tests So But going in values are immediate, be starts not declines to

here So of number where time work But an buffer to projects closed see are certainly in they in see starting the that are proper. that you area through leases of we is repositioning really to in country. more other as But in suburbs areas DC are something That than we think are are offer in of is place treading to things. lightly. we a in it a period there said, a

Brody Preston

Okay great, that. thanks for

Charles Levingston

it It that so you, that to the $X.XX floor. for it floors. XX% the million at are about And billion of Brody that so get portfolio is back only or it looks to of that like currently just XXX is are the

Brody Preston

a I you investigations, first But and and and both bit my Susan, loud you Okay you this I hear question, from for a a little on great, then update the clear. the of that. time appreciate I release, a guess in last you gave gave potential thank on And the the timeline, resolution. that was call

need question, quarter free this quarter I ask, changed a compelled if to you to something potential the made was relative But asking to there and stiff going you feel so the that to. do this on feel resolution? comfortable And Reserve for arm Federal them me feel give that last to

Susan Riel

where we increased coming are say had Reserve. with those would Federal has responses. the discussions have we you and And there I just know is the been both from SEC that that

Brody Preston

questions, Alright my taking you I appreciate much it. for great, thank very

Charles Levingston

Thanks Brody.

Susan Riel

Thanks Preston.

Operator

Christopher Montgomery next Thank And Janney the from Marinac with you. of our comes question Scott. line

ahead. go Please open. Your line is

Christopher Marinac

good to down wanted Thank credit morning. more Jan little you a drill quality. on just bit

mention soon trends what think on grades few of will that out might sort coming the Just play in of and next risk how we of quarters? kind curious kind see loans substandard special you

Janice Williams

loans at Well, I of deferrals the have the we next automatically start would come shifted going the completed. we onto been be list, to seeing to off, of because because all think of substantially are do deferrals quarter, watch end that the

performance off be So pulling see will as these the we contractual list. loans them sustained terms, having of under we

special As though. far mention substandard and as

pass to are we be have, loans. classified give - right the me to prediction, the in the increases seeing, not reason currently you really now, it that anything think are Given I'm state microscopic. of to - that that and that of not a I'm have would level portfolio but seeing going

Christopher Marinac

a in follow-up DC sort is and a just construction or then the do seeing properties greater of escalate sold has and and kind homes great Okay, with book are other front you plagiaristic to within end the of how high market? pre on sold often and pre

Janice Williams

residential on Okay. side? This is the

Christopher Marinac

Yes, primarily think I residential.

Janice Williams

residential Things market an seen People like the here definitely faster. is moving it are shortage. are this I inventory fire high. before. a have never Well, lot

presale so our had level of in the and come one, a have of because and We limited locked is presales. spec number of had we them a into two number got who high their situation and builders have

Now availability, to prices that that number of of really continue increase. to the the they size increase presales and because of looking are

is for low. tough to sure, but amazingly to XX-years I think, it seems the say be

sight end an see don't of right I a than now. am. that this I thinking XX-year predictor better is I'm for Charles the So in

Charles Levingston

Yes, in with - Right. high activity we in very couple be the residential to dips how weeks. for correlation couple drive we track of the that had strong seem to kind see another periods the We them seems a be of that may think nice. that with clearly Obviously, would over it last that of so.

Christopher Marinac

should that final longer kind any a for it we these and matters update information you the on disclosed, or matters see to on in you you, thank great, bit? take to to legal color that an back the just then Susan, in a expect incremental XX-Q will than few weeks Okay you a that question, of know, as provide

Susan Riel

at at we can't tell we this happens, will point. But predict update. If this obviously, something can't really that time. We

Christopher Marinac

here would say? And then, too a higher any is there next that be from or expense early is on this to it legal visibility presumably quarter

Charles Levingston

I the is revolution we matters, a is early clearly activity it I going too say. little approach illegal think Yes, these a to mean, as on increase. to

So that mindful be to thinking of is something it. as you are about

Christopher Marinac

I very thank much, you Okay, it. appreciate

Charles Levingston

Good.

Susan Riel

Thank you.

Operator

Research with our from Seaport the question David comes And Partners. line you. next Thank Bishop of

Please is ahead. Your go line open.

David Bishop

Yes hey.

Susan, I to in affordable follow-up opportunity housing quick preamble, program with at issue you that participate credit. I opportunity terms Are [Montgomery and of you are other County] curious know pushed? maybe around of the real drumbeat in there take affordability. to county had that participate governments that the to I seeing Northern Howard he that of other terms initiatives in advantage Virginia Just explore of being think mentioned is is think the housing out are housing just get here, if a [MoCo] DMV the in larger that an the from County and a maybe (Ph) the (Ph) maybe some opportunities counties some with or some build affordable surrounded to

Susan Riel

We a possibility. looking that at are as constantly

board. our bring opportunities, dealing and those are there So and looking to there and out are on people

David Bishop

low in terms And that. of on yields

can curious, on sort of opportunities Just yield that and of have? any and all discussion those you I pricing, types is provide

Janice Williams

is for Well I price deals. credit. strong a competition on lot In can't general, a you information of really specific give there pricing

with seeing portfolio, that I size mix acceptable levels. rate think tried increasing the are risk to of move we in And sure are correct the just we with the the make forward pricing adjusted we that. and

Susan Riel

Charles tight are tough, Jan, think holding is Pricing said compromising is the credit before on we or our not on I but requirements. Right, credit.

Charles Levingston

obviously, a pretty in Another lot Jan healthy that that large transactions, all factor when as and sponsors. matter the support we I an competitive and there and like those Susan sides liquidity said institution, do and are competitors threw is, with both get as you both have with our of

David Bishop

the color. I appreciate Understood,

Susan Riel

type community bring we and really of and great a with working our that lending thing our constituencies is It sort do home. enjoy being of to involved in

you an to you take call. if county happy it in and want throw have your So way. our opportunity I'm our got to

Operator

would remarks. I'm And turn no time. Susan the further I CEO, And for like to to you. showing back conference this closing at Thank her over questions Riel

Susan Riel

to want a forward join enjoying the all summer we questions of the say Have us a everyone few speaking in to months. your time we on you and look to great in the Just to again appreciate day. you closing, taking call. hope is and We

Operator

you call. Thank conference participating. for today's concludes This

great a now disconnect. have may You Everyone day.

Eagle Bancorp (EGBN) 22 Jul 212021 Q2 Earnings call transcript