EGBN - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by. Welcome to the Eagle Bancorp Second Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today's conference is being recorded. to Charles conference Levingston. like Chief to now Officer, Financial would hand over the the I Please ahead. go

Charles Levingston

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

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

formal our over the loan any performance. future should promises performance quarter with providing policy to our been with this guidance is establish not our formal any to interpreted be statements While None and positive, or have markets about the And past guidance. as of call growth made our we make respect it cannot this during earnings. forward-looking

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

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

Susan Riel

focus I'm credit successful our relationship-first us report the everyone. focus of model, moving model. morning, Good of helped another which the forward become pleased quality, efficiency, be Charles. has economic areas been all These was demonstrating our Greater us on bank both of you, a leader bank resilience and operating DC culture, the numerous and founded, had operating the and successful to our strength a downs. Thank market. Since helped ups through Washington in determination also to and continue quarter,

our opportunity deep balance client there for and connections that are customers. and review In is few comment the on. sheet to fact, I'd creates quarter, our strong highlights it In a like and second value

pleased are the in to reached principle have we off, with an First SEC. agreement

it of us investigation with past were agreement per severe with their represents earnings we the the quarter, share. negatively bank. in Reserve per past that legal advanced While for discussions Moreover, release, discussed With SEC issue. this moving $X.XX major of earnings the diluted Federal to absent our for the step this Board a impacted a diluted said, as are earnings the principle $X.XX earnings in settle share,

that with of - we We our assuming the prior probable to probable to a of are upcoming or to filing But we outcome have estimable the the are we are an investigation. any of reasonably determine predict the reach unable able we XX-Q. agreement have timing losses Fed,

increase. was from by quarter news XX-Q deposits. an the $XX Loans in adjustments million. the the second quarter was loans, We better to loans, Other and improved in the financials prior increase included of This and PPP good increase the will million $XX for third a credit quality disclosure. consecutive quarterly reflect quarter the increased applicable necessary metrics, excluding our mix

basis growth loan credit primarily non-performing solid assets quality our risk were quarter’s end. Eagle metrics And remained quarter quarter. founding, we time, XX it quarter team, same strong, on had since a a by was assets our had credit Exceptionally which At management CRE points driven strong the another be at of will our focus of hallmark forward. been has for recovery net and a the continue This $XXX,XXX. to going

terms bearing improved, to mix of average In non-interest increased of deposit. funding, average our as funding deposits XX.X%

in - and CRE beyond pipeline, efforts. And as pipelines quarter $XXX prior the lending million were to teams, from be up our quarter Additionally, teams billion $X.X as strong commitments our end. their to unfunded the active remained continued their lending at end, C&I calling

of and housing financings, housing. in in, Area needed two announced transit and affordable for Metropolitan In $XX In Washington the benefit million We opportunities financing equity Heights announced Columbia commitment the a project Amazon's our also first proud are we $XX adjacent to the we our affordable to have Transit partnership new success is County a County also in had to financing for of June, Authority. a April, operate from the community, support construction project George's also the much of in million project communities million with Montgomery Neighborhood Prince we apartments fund. project and housing This commission, $XX DC. providing

ample stock share. per over equates $XX.XX This This a quarter, the our remain end of dividend capital shareholders, returning dividend quarter to prior cash and on our share. And portfolio. we us continue per arise, a At $X.XX grow the price closing total focused of XX.XX% yield of As loan dividend. value to of increasing on prudently is more risk-based room of based the dividends. our X.X%, an for opportunities $X.XX gives the annualized night's increase to Board declared last

Inclusion mentorship I'd to and Equity continues our recently groups. like say that Diversity, employee launched Before turning Council to make two it We & program, to program progress. scholarship over Jan, a resource a

these personally Our full and and support. Black be Employee earlier the in will professionally We our give year, groups in Network women's group our these this this launched month. - rewarding [ph] launched groups lamp and employees participating participation believe earlier

Now, Jan loans give our Credit Officer Chief credit will insight and into us quality. the some Williams, market,

Jan Williams

and Thank Susan morning you, good everyone.

in continues DC Not remained show Washington consumers than little at are some is Spending market a unemployment Construction better June. government, their C&I contractors to financial remain to credit of real clients being and of While our in than position. the borrowers. office our side, government and economic conditions low the improve. Where completed Area metrics C&I that background, industrial on see and the economy. more to The play strength. May, With the forward. expenditures delaying continues in a with to rate has do softening rather deterioration environment the are the figure nationwide business X.X% continue from estate X.X% local Statistical Metropolitan hold market projects in in in projects capital to softening and financing in Washington relative district in changing, by out, and do side strong we and part commercial new the any quality decisions, the and see the surprisingly, steady acquisitions commercial delays own on is how central moving mergers

real were up $XX.X quarter. the at from Non-performing to and estate the assets days Susan XX XXX,XXX recovery on for $X.X Also, were in mentioned, quarter, a loans has improvement were high sale down charge-offs credit and basis past small X.XX%, to we million, ratio which of quarter. prior primarily NPAs million, result $XX due the to was the fell prior net loans XX had quarter residential estate of quarter. non-performing of the And single credit one mostly gross recoveries relationship XX on which driven losses Total of from a XXX% $X.X last and points generated in one were commercial assets. several one coverage XXX%, charged-off, sale slightly prior down loans from million for from million which Our This $X.X loans X.XX% $X.X gain. end partially real the as commercial primarily up our OREO allowance from two the million, quarter end with to of relationship. family of of from the our construction million, notes

inflation, to risk of of to allowance the Partially In quarter. were release generally this criticized did losses, particularly quality, were a abatement asset and with loss estate credit of changes portfolio sold relationship while offset have credits With reserves in made and adjustments the the during recession. model, higher uncertainty to interest potential for were as particular make of given CECL been the the the specific adjustments the down. improvements pandemic real the in rate, components issues our default quarter, quarter of related XXX,XXX were the adjustments economy. in for headwinds past rates and regards associated offsetting for the no of classified adjustments provision these the terms from environmental classifications, with broader the We portion increased, and to where qualitative higher the notes for commercial during the

We also added Officer. loans to like Chief in in adjustment it food the to properties service DC and Charles office Levingston, maintained Central that, industry for I'd Washington and District. previously our turn the accommodation With Business for over Financial

Charles Levingston

Thank you, Jan.

market million, interest comment to was like $X.X income up on million which income, with rates on and the up $X.X on on statement the on driven paid rates from deposit accounts. higher up money I'd new savings prior was increasing quarter. the was yields increase loans. First, interest average loan some adjustable by higher loans expense rate primarily $X.X and income balances, Net Interest on changes million, in higher

increase by the interest points. quarter. in as in the the from X.XX%, increase second loan which but rates balances, deposit increase outflows The up was yield rate points, impact overall the helped reduction average in rates from offset net XX on partially impact were prior XX for the reduced Overall of excess interest the deposit deposit XX XXX, X.XX%, well and excess increase accounts. reduced announcement up basis includes the quarter the liquidity FOMC after raised liquidity as securities, the same earning margin and X.XX%, basis was yield of average up outflows from was Our - excess to basis the in deposit The rates deposit quarter. deposit points

side sheet, the XX On the points, funds up basis the points. cost was basis balance of other of XX

terms rate of quarter end, In sensitivity, we at [ph] or variable loans. loans floors. of at of still XX% $X $X.X And asset their loans are our billion variable rate have rate billion

basis pricing million off XX basis $XXX of XX come would date. hike when these already move the occurred see off loans hit of June, With rate floor. million in the of will floor that points points, $X $XXX their we the billion another loans another With their

provision for We had five the $XXX,XXX losses. provision of to credit quarters Looking consecutive a contrast at of the in reversals. small

agreement as overall quarter Non-interest SEC reduction of This revenue of non-interest rising of items Most rates largely earnings principle past $XX.X improved this most metrics two credit by a past down was consumer the difference in quarter, million. notably our were swing or as this tax with income then this fees mentioned, of $XX.X quarter, accrual to Jan The majority and million was collected - quarter. again These As and included was or quarter expense. were prior as no the against in Both down volume in driven again economy, million. decline the several associated home. down, these mortgage interest aggregate in fewer impacted quarter accounted items uncertainty represent notable this this streams. million. salaries the one-time one-time rates between $XX.X in The quarter the this had one-time accrual reduced fees loan tech higher a purchasing of benefit. tax was the of the $X in and and prior benefits as a and for refinancing -

from swing reversal move small credit for provision the pre contributing Another of This the $X.X a was a provision. tax losses million. of a to factor was

savings a those with was up balance [ph] market the decline fund declined outflows and million, [ph] On dividends remained outflow Those were as by on ratios in also $XXX the prior mentioned as declined by As along I'll $XXX money and notable available quarter, earnings balances of the outflows was prior million outflow deposit continue assets The reduction short million, the from mix, past for a funds by funding declined end strong. in earlier, driven term $XX.X XX.X% quarter. less $XX.X being improved liquidity Susan? to by The Susan Capital loans assets being in $XXX rose this prior lower quarter. excess mark XX% on securities, to bearing $XX.X hand And the million. to used rise from values reduction offset XX.X% PPP mark were million. assets short The balance the balance quarter securities $XX.X deposits funds, some $XX.X for back rates off. I increased available-for-sale the assets declared up improved quarter-over-quarter down during to primarily quarter excluding from at short at quarter These securities new sale average primarily that, accounts. our changes a on drove securities This as also securities, loans quarter. the down XX%, This of was $XXX million our down million wrap ratios carrying deposits balances largely non-interest deposit increased. driven available-for-sale to loan million were based of risk-weighted equity. is million. million. slightly, from as borrowings of end the term million, to risk-weighted to it down end as sheet excess $XX.X ratio by liquidity, slightly deposit sheet, Potentially, in from loan the ratios Other Equity With prior quarter $XX.X based on the reduction ran or this up interest in up. to on

Susan Riel

Charles. Thanks,

our the credit first And many up it with how provide I'd through wrap cycles. our relationship reiterate culture to served well maintain leadership customers in superior to strong our our position conservative on us to we like and commentary, that As is our us service allows community. focus credit has

now work. up to for And their the questions. of and to and for like diversity our a culture Eagle communities employees all all we would we of serve. With at us hard inclusion will workplace I committed always, open all of respect, remain in as Lastly, both it the thank that,

Operator

KBW. you. Thank We Mealor have [Operator question Instructions] a Catherine from with

open. Your line is

Catherine Mealor

Hey, good morning.

Susan Riel

Catherine. Hi,

Charles Levingston

Good morning, Catherine.

Catherine Mealor

to back you half to just want going are where margin talk of start - us, could the saw us maybe quarter, the sense perhaps if could just us quarter? or maybe about to deposit costs these as and next you the July give to I with June you help in a where Thanks.

Charles Levingston

know, move deposits Sure, we of half the quarter, of thing. to in the we - certainly you in back rates. think saw on Yeah, in I the terms what chose increase

and we as really FOMC our maintaining you know, be depositors. the make know, you move, As saw know, to, it's their thinking prudent you continue to proactive

you rate And, XXX making anticipate market right be sit rates commensurate Our - does move at here would as we've top money with about with moves we'll points. now, that, basis done know, I what recently.

Catherine Mealor

that on of Okay. deposit this And just felt you kind to outflows balances? then back would quarter Was how half deposit the about see the to Or in any anything continue of year? expect one-off? was there you

Charles Levingston

that I - wouldn't I think No, necessarily not right.

swift saw you cost And, focused the up as say moves shaking the the competition as the to, we customers our we - with pretty deposit what caveat some what more this that in balance up, average you at happen basis the here you bearing move rates rate of about almost could, on quarter with of disintermediation, an know, non-interest to forward. you relates and XX% go lower out some were But, for previously So was on could result second point, know, I sheet. have the maintaining quarter. deposits deposits think happy know, in we're it know, and reaching and

our supporting cost in element positive a certainly that's So of funds.

Catherine Mealor

Okay.

for the coming view the balance of year of sheet some this [indiscernible] half deposits, or that off? to expect back of you the your kind So actually is do flat is [indiscernible]

Charles Levingston

know, what outflows necessarily see I any in to at say the catalysts any might to But we glaring quarter. say, don't future you second for deposit hard hard point, like saw significant, know this the what, It's you yeah, hold. right,

Catherine Mealor

continue. And great do that reason the capital great. it's into when you see in more been that Okay, dividend not the active you're to then increases But you And be something your any may why pull plan? think buyback?

Charles Levingston

to Yeah. We're capital. it your relates as options evaluating

quarter dividend we this by continue prudent evaluate $X.XX was every in that that we know, increase as an to move we'll You quarter, and determined forward. rate the

Catherine Mealor

any Thank Okay. and in questions. back then step you. there out if other jump I'll

Operator

a go We question Instructions] Christopher Scott. [Operator have Marinac Janney Please ahead. from Montgomery from

Christopher Marinac

I Hey, on about turnover had occurred lending year-to-date? that team thanks. morning, to additions the that want has ask you've your any production side Good any or and

Susan Riel

Well, in it year, we seen haven't have we that's And the recently. out. had turnover but earlier leveled

I think unusual. the terms second of lending mean, quarter We've was intact. strong group seen, pretty in I maintaining not our that's

bonus in quarter. I time think lenders a after move make first lot their of the

bringing team in been and some consistent. our we very been that have banks. strong market do new very think lenders I here a We executives from have concept successful in have larger

And much in that pretty Maryland. we're We feeling presence in have Virginia, Northern relationships, and pretty continuity those strong. good DC there's

Jan Williams

I a many us with only what's continues to like would concern and on be in human throughout The going our capital thing for to add industry. bank for the is

Christopher Marinac

appreciate mention general see a you just could play Well, it. other how thank both Just for the I [ph] change next potential or two special as in and do know, any you shifts of of indicators that. just indicators? any credit early off credit that kind And to question, you quarters? three curious Jan,

Jan Williams

really know, You we haven't.

assets and down to Our classified has continued assets. quality actually credit in improve, criticized we're and

this better. been have we never of that a have seen recession, no It's loan dues from potential past evidence the point. that our in but headwind book ironic at there's Our

Christopher Marinac

going Great. a just want generally estate think real been, know, how about kind back of LTVs they the kind cycle, LTVs? question. to reminder have And are just related I more book want of than would they lower past the you mean, of on you

Jan Williams

average in XX%. real portfolio to value the is estate The loan

to office. that we we're time time. XX%. that where value, go close throughout on we are But particular, to comfortable average on loan we XX% occupied with the with - where we owner have doesn't mean very portfolio. we we don't doesn't And It a keep a up very from in watch Now, don't mean to loans do are

Christopher Marinac

Great. taking much Thank my questions. for you very

Operator

And from KBW. [Operator go Catherine Mealor Please Instructions] ahead.

Your line is open.

Catherine Mealor

on one loan have to kind of of yields the Thanks. up try margin just I you're also, the loan you what seeing if talk the conversation in indication yields. were quarter? where wonder with at pricing? could on follow maybe any of Chuck, you loan just about And end

Charles Levingston

anticipating obviously, that's Well, I are the right later mean, XXX you XXX, volumes is, month, meets. you I or basis where sure, markets I'd XX the know, are money around say point new And, move, expect believe I the coming basis this points certainly, so. on, FOMC know, another when

So, I you to expect that would to know, continue benefit.

We are know, months, income. asset-sensitive, on an points the X.X results would a million, know, - in And, XXX modeling basis you [ph] balance additional additional a, shock know, interest that's about sheet over still you beta I an at XX X.X% you again, rather, static XX net deposits. that's say, on

moves. I impact a So positive anticipate result additional would those of as

Catherine Mealor

Very great. you. Thank helpful. Okay,

Operator

the Riel Thank you. Susan that, with comments. to final for And call I'll CEO, her pass our back

Susan Riel

we us you've forward look So the and you've the We you. want the summer that today be appreciate seeing just questions to taken enjoying - Thank been fall. are to the and with say in that you time to speaking you hope asking. again to you

Operator

Thank conclude ladies and with our program. you. gentlemen, that, we And

day. You disconnect. a may Have now wonderful

Eagle Bancorp (EGBN) 21 Jul 222022 Q2 Earnings call transcript