EGBN - Earnings call 3 2023 | Eagle Bancorp, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Eagle Bancorp Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to your speaker today, Charles Levingston, Chief Financial Officer of EagleBank. Please go ahead.

Charles Levingston

Liz. you, Thank Good morning. Financial Chief of Bank. Levingston, Eagle Officer Charles is This

guidance We I to comments future remind Before forward-looking during we that performance, like presentation, the statements. forward-looking interpreted it our statements guidance. this considered should be be formal the begin made are and to everyone to providing promises earnings. the markets establish would some during call is respect with may make cannot any this about made of None as formal not any policy with of the call

projected XXXX Our for on this made year XX-K risk the materially the Form in for identify results morning. those June X-K XXXX, the factors any reports fiscal current forward-looking actual and cause could differ company's and statements XX-Q that certain XX, to Form from

is Bancorp morning's to not of the most directly SEC, by information any or as information. which unless statements this will events the contains commentary undertake to include law. release, the earnings new forward-looking information required a or posted reconciliations financial with developments result future section This The Investor of comparable does website filed Eagle in update information. non-GAAP of and our Relations GAAP

online are at reports the SEC's website available periodic the from or on Our our company website.

like Susan now turn Riel. would to our CEO, to I it President and over

Susan Riel

Thank you, Charles. Good morning, everyone.

our Eagle us build shareholders. goals new Before serve deeper us we of start, Eric finance value our continue and our bench to our Adding of member a management and talent support accomplish long-term Eric like senior and more to for as I a team CFO and Bancorp. to would to Newell and team customers as enables to welcome gives our

economy, today discuss follow detail. quarter, Charles reserves joined to late then return loans, on with local and our us the normal format more financials As the we quality credit And discussing her thoughts matters. Dan Eric will in our in

I questions. to making an our quarter Eric in us on am performance will uncertain third be build end, continued are take the and environment. of three we the to pleased operating At available that progress the

saw the During in third deposit paydowns debt. of short-term the with and of stabilization inflows margins a an quarter, and both improvement funding we and mix earnings

working to in the deposit build deposit diligently drive to growth are our base. capabilities we front, core On

have out scalable approach multipronged We a a sustainable to and growth build deposit strategy.

X highlight will focus I of the for team. EagleBank areas

treasury program assist management First, us C&I product maintaining our will and enhancing in suite and relationships. building

Next, as in banking augment our brand we our are footprint. well us region in-footprint outside platform, increase working to of develop the digital and DMV opportunities as deposits our our of share to leverage growth to enhance allowing market deposit

metro existing Finally, D.C. ways to network looking Washington, our leverage geographies, exploring customer at increase contiguous to lower-cost to we acquisition branch the EagleBank's physical drive better and in presence are to how market.

future about initiatives, contribute these the sheet we will I This rate With improve mix. excited to have ability today's high of to progress balance challenges in environment. repositioning EagleBank's grow made deposit of meet the to our and am the the

initiatives smaller that addition highlighted, a there on team. In I larger other many are we the have initiatives to working are as

balance sheet, keeping side quality. other we the asset On also the on focus of our are

of underwriting history in conservative asset us a and superior market worked well have that has for of We quality times proven stress.

pulled exposures. to have and teams We special multifamily together office our assess expert

will a borrowers of put best in that EagleBank position confident light difficult and rate our the in our teams the environment. operating interest and are We approach taking are

the that, and Jan. over hiring excited strategies. it about of add that turning Buck, to in it the I execution Chief I'll Jan, who Officer, want these be am guidance to over I instrumental Administrative With our leadership Karen of new to will through Before hand providing

Janice Williams

to nationwide economic strength the the area up in Washington market Washington Thank yet in X.X% numbers. The strength source rose local up of rate workers everyone. returning unemployment to which X.X% metropolitan mirrors X.X% morning, government continues market area asset This office the great be figure, in quality good even The the you, area in August, This September, D.C. in with Washington, statistical and a from be in from Susan, in not grew June. from May. in our seen the change X.X% the can metrics. in to

multifamily The were SBA million, which total discussed $XX.X million, total of The All of for for $XXX,XXX. XX the primarily past assets. Nonperforming loans. quarter from X was There $XX million last due increase was charge-off a the quarter basis were we X $XXX,XXX. charge-offs points totaling as one assets credit was $XX.X quarter. were which for net

the from Loans and to one nonperforming assisted credit due previously living up $XX the at were Northern status. the quarter. million prior past was XX one in days primarily The of moving end to office multifamily migration in from Virginia the of increase million, the offset quarter mentioned from property by $XX.X Maryland, prior XX facility

For provision balances, even quarter. the provision quarter end at basis loans a to of to X our points million. But and ACL ACL charge-offs than was we $X.X X.XX%. This quarter, the X the higher the third had with last somewhat was to higher up loan

funded from were unfunded construction loan quarter-end as This unfunded added reduction For projects our a in a had primarily commitments and reversal. to balances. was commitments

reserves the partly it the was corresponding early-stage reserves provision, to in reserves driven With forecast. prepayment speeds The as the loan slowing market. the well and increases offset driven by to higher with was commercial The longer during combined interest increase as higher in real overall particularly in categories by in increase categories due reserve. ACL certain loan life quarter, quantitative in qualitative qualitative rates, improvements past in modest carry dues that in higher in was smaller increases regards quantitative weakness reserve the estate a perceived increase due by primarily to unemployment in growth primarily

Northern XX% the million located any the office construction prior of CRE XX% office We estate the commercial located from in and These in $XXX XX% loan with additional primarily at nonowner-occupied on the Washington, quarter. are XX% by third down Columbia, office credits. properties the end, or outside quarter were outstanding Focusing portfolio D.C. real have and market These Virginia loans at $XX markets. an million in secured the of suburbs not did loans these the end quarter. of X.X% District in of Maryland loans

and our income-producing achieve collaboratively maturities results properties including that monitor interest be be To in a headwinds out beneficial to proactive of could in the bank borrowers. advance to both higher commercial we clients better their facing, to and CRE credits, well understand continue work significantly to to environment rate the reaching the

terms to and underwriting will loans our run portfolio we exercise standards. the to we high-quality off. selectivity loans to cautious, see underwriting, maintain that, other portfolio and to Overall, remain said continue opportunities of and apply to commercial continue add Having credit we as to in customary strong our

to it Charles. to With turn that, over I'd like

Charles Levingston

was goals. This funding quarter we another Jan. improve to Thanks, good were our of our able that in strategic mix, one

of to million quarter, time At organically the This broker as by success $XXX our and deposits During with accounts $XX and million. same by money $XXX of million. deposits deposits met time, million by XX.X% increase efforts deposits. up market deposits increased gather $XXX down led savings to the were and declined was

to million, collateral a borrowings, FHLB more up unchanged. of our cost we which rate advances. and deposits requirements higher our have opportunity paying XXX% took the attractive borrowings $XXX BTFP With remain reduce down by

sheet, disruption it and much quarter mix On in the at how of borrowings the balance now our end at the March. closer of market end deposits is to before looked December

reduced billion by to compared to to XXXX, climbed $X.X the year-end. into the accounts. to item, to deposits million though, billion During move $X.X that continues interest-bearing quarter, customers compared of end billion borrowings at the deposit short-term $XXX is were at $X.X change One and

average a For $XXX or or million the $XXX were noninterest-bearing deposits quarter, and bigger deposits interest-bearing much XX.X%, off down million XX.X% were up base.

to of the much XX% were seeking This combined the deposits quarter. end at July, rate increase XX the deposits, basis Customers noninterest-bearing increase Fed X.XX%. XX accounts of raised cost our a is after increase interest-bearing prior of shortly XX% average prior our by the points. basis lower XX most quarter, of by lines the basis increase funds a down points of points higher quarter's and to than across out product from For

talking are on continue our we cost of with commentary about funds, As margin. I'll

X quarter, multifamily loan down the our the net prior and one adversely the accounts points. income Interest the by in interest for and status interest basis X from $X.X Columbia, down points quarter. was nonperforming million, basis reversal reversal the income was entering in X.XX%, all change This This by of net a the margin quarter. District because margin impacted reduced of was million of $X.X

the was strong This this growth timing reversal the existing income of Before statement, end. moving XXX% at we million, $XXX the with for quarter commitments. up that Even the growth in our down but loans loans drove provision unfunded quarter loan-to-deposit ratio quarter. construction some loans, on the deposits with reason loan from to of increase XX% to prior on experienced of was in funding the the

to for growth bottom of reflected the the targeted stabilization income asset quality the a losses. for in reduce which quarter million at strong rate balance was maintain of Looking credit compared of result line, is the efforts net metrics, the improve expense $XX.X in million prior our earnings $XX.X This mix, our sheet and the to quarter. are provision

changes rate interest interest there mentioned last on impacting to we compared on loans lag Fed income in expense is as Additionally, deposits. as quarter, a

is versus has the As market new from rates expense higher GAAP rate benefit and the interest beginning loans rate changes. the variable increases, the of reduce to the from Fed resetting slowed pace at loans

down fees. up expense noninterest $X.X and an from the primarily higher to Other primarily was due from included prior of million overall were offset $XXX,XXX improvement, quarter $XXX,XXX the noninterest expenses, by items prior the nonrecurring down impacting on lower fund quarter showed FDIC quarter-over-quarter higher fees, from were which quarter, assessment earnings which FDIC because prior income, income

and expenses, need not we but do over invest In prided compares increase proxy ourselves in company efficient, run operate have we XX.X%, on that regards we always efficiency recognize We we've a savings to This quarters being we expect in expenses in highly quarter past to was the peers. our aim continue to several goals, cost which next meaningful well due strategic realized rate our of XXXX manner. in the will achieve year-to-date. to to the that to to

company. capital the strength a of Lastly, remains core

Our tangible terms support improved last we was quarter. to expect. financial ratio customers in our all services flexibility was borrowing of aggregate the which common the provide peers XX.XX%, our capacity at $X.XX us higher but quarter billion, one than our proxy of gives and And equity which liquidity, end to

Susan hand short I'll that, a it for to With back Susan? wrap-up.

Susan Riel

Thanks, Charles.

future. all excited EagleBank's about We are

and improve and ability demonstrated to our earnings balance We the have margin. sheet stabilize both

and underwriting to conservative continue We but team team efficiency. expertise meet Eagle the peer-leading to meet a to challenges. and relationship-first our is. day strong management thank employees succeed gives our to to recent closing, also and commitment our of today's at would least, depth added additions not And all to our like leadership last, culture, certainly who In make work meeting it hard every success the us senior

we for will that, questions. up now With open

Operator

Our KBW. first Mealor Instructions] line comes with Catherine question [Operator from the of

Catherine Mealor

start maybe process an I but update with some something -- about remember Jan, update or that portfolio were like today kind last office your of were you Can will credit. capacity. were looking I I last like? range at office on months this quarter was was us kind that just think in and -- then you of the in like talked you And maturing in next $XXX versus of XX million any what the quarter? of in $XXX give looks it loans it you quarter, $XXX,

Janice Williams

in there no -- is extensions through These office loans past million think, Sure. market now about as that I office were in quarter going be longer-term loans on, seeing for right We worked really refinance. with to $XXX extensions. the are more really

to So one sponsor, what working with a building, extent, Each is doing guarantors. certain each we're particular is, unique.

the also uses. We alternative are continued use and office of exploring

based future. did we the moving forward valuations. more we for to fairly have with That initially, that been I large have in we the think mean think won't that room and underwriting on nonperforming successful -- loans I a doesn't amount But of we've in absorb that. pretty declines

we're customers in process went work that continue to going the significant and And now. merited in with the that as office anticipating sector interest of charge-offs bank best not to I'm we're So see and borrower. and the to going extensions right

Catherine Mealor

And helpful. to loans special substandard of a very Okay. see Great. in remind That's us was office? Can nice the categories. and then are mention how it you your stability much substandard

Janice Williams

million. $XX million; have $XX we I have we million; the have can. In nonperforming we million. category, mention, we category, watch, Special the $XX in substandard $XX have

Catherine Mealor

moving you you're still or great in talk It total can to the But see Okay. noninterest-bearing margin. seeing but about the Great. increase was over of you within deposits, customer those hard bottom? so of that then you in seeing it's decline know the what's mix to that All as think shift here category. But trends your And on balances And you right. base? as I will what a gut anecdotes kind were kind of shift in or sit you to -- just today, where forecast. your

Charles Levingston

Yes, are. Obviously, deposits different where rates in being with around of clearly history We're to had noninterest-bearing we've days sure. a a long XX%. environment they very maintain able these

cash sit to that months for idle And so that some folks of earning the last them. has and XX disintermediation cash or just seen these have that wanting over been not on the we've

migration. of My observation is most that

just around you Fed also quarter-over-quarter to average capture And we of wanting kind sense itself My the balances that I average, deposits. but higher to moved to expect for yields this look very a of has on of lends at term maintain are. us If notion where longer, into staying would people is the deposits we here, those. noninterest-bearing solid base that have

the her place we for at expectation there. to management in pour additional pretty treasury and accounts remarks, same are as And more in in yield in out Susan some services with time, see my to we're the order to efforts terms will where continued attract of earlier migrating maybe continue baseline. in as a those be mentioned some build happy to is and there But looking operating

Catherine Mealor

today. Okay. was with book? did remind part you office Great. your can office, ask, in associated go thing the I office the if reserve one the wanted you your All of could actually, right. what And forgot back is ACL to us to increase I -- And I

Janice Williams

the some was now. no impairment right have We the with reserves reserve office of portion did the office that on have we although associated portfolio, portfolio

I the think not go that move away. the to from a extent would was increase that associated to that was portion but the So loan of impaired, it's Obviously, with associated a performing that reserve would nonperforming.

our there. in and office feeling buffer think the I about provides market our general overlay us some

have special then three in We loans, about X% reserve X% have, loans substandard portfolio Watch allocable on about is of that's -- about past and the of in terms the substandard the is office, mention. XXX. we and the one to is quarters,

Operator

comes from the of question next Sandler. Whitman Casey Piper with line Our

Casey Whitman

moved other any LTVs you in Just about loans? have of just talk on be we details sticking on might reserves around those with this past helpful. credit. we Maybe the can terms X each Jan, us, then due address Can can the size any the X any loans or of X those Or you give just that quarter. specific of details would them? And

Janice Williams

living Sure. home They assisted The occupied. facility estate is are both nursing real secured. owner

an would appraisal, the loan not would There's that about that. million. an reserve impairment loan, on So that associated CRE current go impaired Based on each our also with not that be it's not was office of side, portfolio. a part $XX they're there so

an in office impairment. of the It process based on appraisal there extended December a XXXX, side, that done. the On was that year. extension no done was is for of loan in the was having And

Casey Whitman

you? take of or and lenders strategy to branch with might remarks, out you Can -- how the the execute? wanted some network what's to talked long make prepared might of think your potentially the in just expanding All hiring right. you I just markets Susan, address your building sense that about this or some would DMV. I for Thank that outside And of you. sort more of start a about broader talk

Janice Williams

flushing will strategy as opportunities but on Casey, also. that loan bring some and of we're what still growth areas we maintain contiguous looking our still brand slight some out, far but branch production deposit for at may potentially as they

But we those that. we So explore we consideration as into of will take opportunities. open to are that all

Casey Whitman

Okay. you, credit just question. more Stay tuned. one Back to Jan,

credit address of kind you What syndications shared can your national you Just exposure? have?

Janice Williams

Wharf part mention. only well of by one well, is rated and there. We the done It have of it's actually largest that's this as The the loans minimal. pretty is team year. special complex, It's very couple a national performing

doing So change and But on on shows well that been books. that is how a pretty in portfolio... rating we as our that's it is the up quite in that's the casino-related we England, that's changes, When will of our a books project and in And well. it area. successful deal also past have D.C. a New piece

Operator

remarks. call closing session. the That I'd for turn to Riel question-and-answer concludes to today's Susan back like

Susan Riel

and join next questions today, to we to Thank quarter. and with you, look the you on We speaking appreciate your day. call taking time great a Have you're everyone. the us forward again

Operator

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

You may disconnect. now

Eagle Bancorp (EGBN) 26 Oct 232023 Q3 Earnings call transcript