Q2 2026 Eagle Bancorp Inc Earnings Call

July 23, 2026

Operator: Good day, and thank you for standing by. Welcome to Eagle Bancorp Inc.'s Q2 2026 Earnings Conference Call. At this time, all participants are on 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 one one on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Eric Newell, Chief Financial Officer of Eagle Bancorp. Please go ahead.

Speaker #1: 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 11 on your telephone.

Speaker #1: You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Eric Newell, Chief Financial Officer of Eagle Bancorp.

Speaker #1: Please go ahead.

Speaker #2: Good morning. This is Eric Newell, Chief Financial Officer of EAGLE BANCORP. Before we begin the presentation, I would like to remind everyone that some of the comments made during the call are forward-looking statements.

Eric Newell: Good morning. This is Eric Newell, Chief Financial Officer of Eagle Bancorp. Before we begin the presentation, I would like to remind everyone that some of the comments made during the call are forward-looking statements. 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 fiscal year 2025 and current reports on Form 8-K, including the earnings presentation slides, identify important factors that could cause the company's actual results to differ materially from 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, future events, or developments, unless required by law. This morning's commentary will also include non-GAAP financial information.

Speaker #2: 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 fiscal year 2025 and current reports on form 8-K, including the earnings presentation slides, identify important factors that could cause the company's actual results to differ materially from any forward-looking statements made this morning, which speak only as of today.

Speaker #2: EAGLE BANCORP does not undertake to update any forward-looking statements as a result of new information, future events, or developments unless required by law. This morning's commentary will also include non-GAAP financial information.

Speaker #2: The earnings release, which is posted in the investor relations section of our website, and filed with SEC, contains reconciliations of this information to the most directly comparable GAAP information.

Eric Newell: The earnings release, which is posted in the investor relations section of our website and filed with the SEC, contains reconciliations of this information to the most directly comparable GAAP information. Our periodic reports are available from the company online on our website or on the SEC's website. With me today is our new President and CEO, Steve Curley, our Chief Lending Officers, Ryan Riel and Evelyn Lee for commercial real estate and C&I respectively. I would now like to turn it over to Steve.

Speaker #2: Our periodic reports are available from the company online on our website, or on the SEC's website. With me today is our new President and CEO, Steve Curley.

Speaker #2: y. Our chief lending officers, Ryan Riel and Evelyn Lee, for commercial real estate and CNI, respectively. I would now like to turn it over to Steve.

Speaker #3: Thank you, Eric. And good morning, everyone. Before I start the quarter, let me say how honored I am to join EAGLE as its new president and CEO.

Stephen Curley: Thank you, Eric, and good morning, everyone. Before I start the quarter, let me say how honored I am to join Eagle as its new President and CEO. This is a franchise built over decades through strong client relationships, deep community ties, and an exceptional and seasoned team of bankers. While I've only been with Eagle for three weeks, I spent that time meeting and talking with employees, customers, shareholders while conducting an intensive review of the business. Those conversations have reinforced what attracted me to Eagle in the first place, a strong franchise, talented people, and significant potential. My immediate priorities are clear: maintain disciplined execution, preserve our culture, and make decisions grounded in a thorough understanding of our franchise, our markets, and our best opportunities. Investors are looking for results, not promises.

Steve Curley: Thank you, Eric, and good morning, everyone. Before I start the quarter, let me say how honored I am to join Eagle as its new President and CEO. This is a franchise built over decades through strong client relationships, deep community ties, and an exceptional and seasoned team of bankers. While I've only been with Eagle for three weeks, I spent that time meeting and talking with employees, customers, shareholders while conducting an intensive review of the business. Those conversations have reinforced what attracted me to Eagle in the first place, a strong franchise, talented people, and significant potential. My immediate priorities are clear: maintain disciplined execution, preserve our culture, and make decisions grounded in a thorough understanding of our franchise, our markets, and our best opportunities. Investors are looking for results, not promises.

Speaker #3: This is a franchise built over decades, through strong client relationships, deep community ties, and an exceptional and seasoned team of bankers. While I've only been with EAGLE for three weeks, I spent that time meeting and talking with employees, customers, shareholders, while conducting an intensive review of the business.

Speaker #3: Those conversations have reinforced what attracted me to EAGLE in the first place: a strong franchise, talented people, and significant potential. My immediate priorities are clear: maintain disciplined execution, preserve our culture, and make decisions grounded in a thorough understanding of our franchise our markets and our best opportunities.

Speaker #3: Investors are looking for results, not promises. You'll judge us by what we do, not what we say, and that's exactly how we intend to earn your confidence.

Stephen Curley: You'll judge us by what we do, not what we say, and that's exactly how we intend to earn your confidence. With that, let me turn to the four priorities receiving my greatest attention. First is asset quality. The issues within the portfolio have been identified, are well understood, and are being actively managed. Addressing them transparently is essential. It builds confidence in our financial reporting and gives investors greater clarity into the strength of the franchise. Our objective here is simple: maximize recoveries and minimize loss. We will continue to take a disciplined asset-by-asset approach to problem credits, reducing uncertainty around our future credit performance. Consistency will be key to strengthening investor confidence. To support that effort, we're recruiting a new chief credit officer, an important leadership role that will help shape the future of our credit organization.

Steve Curley: You'll judge us by what we do, not what we say, and that's exactly how we intend to earn your confidence. With that, let me turn to the four priorities receiving my greatest attention. First is asset quality. The issues within the portfolio have been identified, are well understood, and are being actively managed. Addressing them transparently is essential. It builds confidence in our financial reporting and gives investors greater clarity into the strength of the franchise. Our objective here is simple: maximize recoveries and minimize loss. We will continue to take a disciplined asset-by-asset approach to problem credits, reducing uncertainty around our future credit performance. Consistency will be key to strengthening investor confidence. To support that effort, we're recruiting a new chief credit officer, an important leadership role that will help shape the future of our credit organization.

Speaker #3: With that, let me turn to the four priorities receiving my greatest attention. First is asset quality. The issues within the portfolio have been identified, are well understood, and are being actively managed.

Speaker #3: Addressing them transparently is essential. It builds confidence in our financial reporting and gives investors greater clarity into the strength of the franchise. Our objective here is simple: maximize recoveries and minimize loss.

Speaker #3: We will continue to take a disciplined, asset-by-asset approach to problem credits, reducing uncertainty around our future credit performance. Consistency will be key to strengthening investor confidence.

Speaker #3: To support that effort, we're recruiting a new Chief Credit Officer, an important leadership role that will help shape the future of our credit organization.

Speaker #3: In the meantime, we've benefited from the experience and guidance of Bill Perotti and Dan Callahan, who have been working closely with the bank since last fall.

Stephen Curley: In the meantime, we've benefited from the experience and guidance of Bill Perotti and Dan Callahan, who have been working closely with the bank since last fall. The team has made meaningful progress over the last 18 months. I see additional opportunities to strengthen credit oversight, portfolio management, and risk discipline. We're also beginning the search for our next chief human resource officer following a planned retirement. As I look at the organization, it is critical we strengthen our bench. We need to bring in new expertise where appropriate, while also developing and advancing the strong team already in place. At the same time, we will continue to invest in technology, processes, and capabilities that can help us better serve customers. Our second priority is improving our funding profile and deposit base. Too often, banks start by growing loans and then figuring out how to fund them.

Steve Curley: In the meantime, we've benefited from the experience and guidance of Bill Perotti and Dan Callahan, who have been working closely with the bank since last fall. The team has made meaningful progress over the last 18 months. I see additional opportunities to strengthen credit oversight, portfolio management, and risk discipline. We're also beginning the search for our next chief human resource officer following a planned retirement. As I look at the organization, it is critical we strengthen our bench. We need to bring in new expertise where appropriate, while also developing and advancing the strong team already in place. At the same time, we will continue to invest in technology, processes, and capabilities that can help us better serve customers. Our second priority is improving our funding profile and deposit base. Too often, banks start by growing loans and then figuring out how to fund them.

Speaker #3: The team has made meaningful progress over the last 18 months, and I see additional opportunities to strengthen credit oversight, portfolio management, and risk discipline.

Speaker #3: We're also beginning the search for our next Chief Human Resource Officer, following a planned retirement. As I look at the organization, it is critical we strengthen our bench.

Speaker #3: We need to bring in new expertise where appropriate, while also developing and advancing the strong team already in place. At the same time, we can we will continue to invest in technology, processes, and capabilities that can help us better serve customers.

Speaker #3: Our second priority is improving our funding profile and deposit base. Too often, banks start by growing loans and then figure out how to fund them.

Speaker #3: We'll take the opposite approach: build relationship-based, core deposits, and create the capacity to support disciplined loan growth. We are not managing the bank with the objective of shrinking.

Stephen Curley: We'll take the opposite approach, build relationship-based core deposits, and create the capacity to support disciplined loan growth. We are not managing the bank with the objective of shrinking. Our objective is to build a stronger funding franchise, improve asset quality, and position Eagle to deliver responsible growth. The sequencing matters. Growth remains part of this bank's future. We operate in one of the most attractive banking markets in the country. The Washington metropolitan region offers significant opportunities to deepen customer relationships, generate core operating deposits, and support high-quality lending activity. We're going to make the most out of our position in Washington and win new customers and grow valuable deposit franchise. Our third priority is improving operating performance. That means generating stronger returns from the investments we make across the organization. An important part of that effort is expanding our business banking capabilities and increasing branch productivity.

Steve Curley: We'll take the opposite approach, build relationship-based core deposits, and create the capacity to support disciplined loan growth. We are not managing the bank with the objective of shrinking. Our objective is to build a stronger funding franchise, improve asset quality, and position Eagle to deliver responsible growth. The sequencing matters. Growth remains part of this bank's future. We operate in one of the most attractive banking markets in the country. The Washington metropolitan region offers significant opportunities to deepen customer relationships, generate core operating deposits, and support high-quality lending activity. We're going to make the most out of our position in Washington and win new customers and grow valuable deposit franchise. Our third priority is improving operating performance. That means generating stronger returns from the investments we make across the organization. An important part of that effort is expanding our business banking capabilities and increasing branch productivity.

Speaker #3: Our objective is to build a stronger funding franchise and prove asset quality, and position EAGLE to deliver responsible growth. Sequencing matters, but growth remains part of this bank's future.

Speaker #3: We operate in one of the most attractive banking markets in the country. The Washington Metropolitan region offers significant opportunities to deepen customer relationships, generate core operating deposits, and support high-quality lending activity.

Speaker #3: We're going to make the most of our position in Washington, and win new customers and grow a valuable deposit franchise. Our third priority is improving operating performance.

Speaker #3: That means generating stronger returns from the investments we make across the organization. An important part of that effort is expanding our business banking capabilities and increasing branch productivity.

Speaker #3: While our branches successfully serve our long-term customer relationships, they have the potential to be an engine for core deposit and business banking growth. We'll remain disciplined on expenses, while continuing to invest where we see attractive long-term returns.

Stephen Curley: While our branches successfully serve our long-term customer relationships, they have the potential to be an engine for core deposit and business banking growth. We'll remain disciplined on expenses while continuing to invest where we see attractive long-term returns. The fourth area receiving my attention is capital. One of the strengths of this franchise is its capital position. I recognize that capital allocation is an important topic for shareholders and investors. As part of my broader review of the bank, I am evaluating our capital framework, including how we think about capital levels, capital flexibility, and the best ways to create long-term shareholder value. While it's too early to discuss specific capital targets or potential capital actions, we are approaching this topic thoughtfully and deliberately.

Steve Curley: While our branches successfully serve our long-term customer relationships, they have the potential to be an engine for core deposit and business banking growth. We'll remain disciplined on expenses while continuing to invest where we see attractive long-term returns. The fourth area receiving my attention is capital. One of the strengths of this franchise is its capital position. I recognize that capital allocation is an important topic for shareholders and investors. As part of my broader review of the bank, I am evaluating our capital framework, including how we think about capital levels, capital flexibility, and the best ways to create long-term shareholder value. While it's too early to discuss specific capital targets or potential capital actions, we are approaching this topic thoughtfully and deliberately.

Speaker #3: The fourth area receiving my attention is capital. One of the strengths of this franchise is its capital position, and I recognize that capital allocation is an important topic for shareholders and investors.

Speaker #3: As part of my broader review of the bank, I am evaluating our capital framework, including how we think about capital levels, capital flexibility, and the best ways to create long-term shareholder value.

Speaker #3: While it is too early to discuss specific capital targets or potential capital actions, we are approaching this topic thoughtfully and deliberately. Capital is a strategic asset, and we want to ensure we are deploying it in a manner that supports both the safety and soundness of the bank, as well as the long-term interests of our shareholders.

Stephen Curley: Capital is a strategic asset, and we want to ensure we are deploying it in a manner that supports both the safety and soundness of the bank, as well as the long-term interests of our shareholders. As we make progress in asset quality, funding, operating performance, and our capital framework, our longer-term strategic direction will come into sharper focus. Eagle already has a strategy, and we've been executing against it. My responsibility is to build on that work, evaluate where we're making progress, identify areas where we can improve, and determine where adjustments may enhance our ability to create long-term value. Over the coming months, I'll continue to learn the organization, the market, and the opportunities available to us. In the meantime, I'm going to focus on execution.

Steve Curley: Capital is a strategic asset, and we want to ensure we are deploying it in a manner that supports both the safety and soundness of the bank, as well as the long-term interests of our shareholders. As we make progress in asset quality, funding, operating performance, and our capital framework, our longer-term strategic direction will come into sharper focus. Eagle already has a strategy, and we've been executing against it. My responsibility is to build on that work, evaluate where we're making progress, identify areas where we can improve, and determine where adjustments may enhance our ability to create long-term value. Over the coming months, I'll continue to learn the organization, the market, and the opportunities available to us. In the meantime, I'm going to focus on execution.

Speaker #3: As we make progress in asset quality, funding, operating performance, and our capital framework, our longer-term strategic direction will come into sharper focus. EAGLE already has a strategy, and we've been executing against it.

Speaker #3: My responsibility is to build on that work, evaluate where we're making progress, identify areas where we can improve, and determine where adjustments may enhance our ability to create long-term value.

Speaker #3: Over the coming months, I'll continue to learn the organization, the market, and the opportunities available to us. In the meantime, I'm going to focus on execution.

Speaker #3: As we demonstrate progress, we'll provide additional perspective on our long-term priorities, our capital objectives, and our vision for creating sustainable shareholder value. I'm optimistic about the future.

Stephen Curley: As we demonstrate progress, we'll provide additional perspective on our long-term priorities, our capital objectives, and our vision for creating sustainable shareholder value. I'm optimistic about the future. We have a strong franchise, a dedicated team here at EagleBank, a valuable market position, and clear priorities. I look forward to updating you on our progress. With that, I'll turn it back over to Eric to review the quarter.

Steve Curley: As we demonstrate progress, we'll provide additional perspective on our long-term priorities, our capital objectives, and our vision for creating sustainable shareholder value. I'm optimistic about the future. We have a strong franchise, a dedicated team here at EagleBank, a valuable market position, and clear priorities. I look forward to updating you on our progress. With that, I'll turn it back over to Eric to review the quarter.

Speaker #3: We have a strong franchise, a dedicated team here at Eagle, a valuable market position, and clear priorities. I look forward to updating you on our progress.

Speaker #3: With that, I'll turn it back over to Eric to review the quarter.

Speaker #2: Thank you, Steve. During the quarter, we reported net income of $6.9 million, or $0.23 per diluted share, compared to $14.7 million the previous quarter.

Eric Newell: Thank you, Steve. During the quarter, we reported net income of $6.9 million, or $0.23 per diluted share, compared to $14.7 million the previous quarter. The decline primarily reflects elevated provision expense, a smaller interest-earning asset base, and continued resolutions associated with addressing problem assets and strengthening the overall health of the balance sheet. We believe that the issues within the portfolio are identified, understood, and are actively being managed. Our approach continues to be straightforward: recognize problems early, reserve adequately, pursue resolution, and maximize recovery. With that context, let me walk through the Q2 asset quality trends, and I'll begin with our concentration metrics. The Q2 saw continued reductions in both our CRE and ADC concentrations as expected payoffs, asset resolutions, and completion of construction projects contributed to further reduction in the concentration risk.

Speaker #2: The decline primarily reflects elevated provision expense, a smaller interest-earning asset base, and continued resolutions associated with addressing problem assets and strengthening the overall health of the balance sheet.

Speaker #2: We believe the issues within the portfolio are identified, understood, and are actively being managed. Our approach continues to be straightforward, recognize problems early, reserve adequately, pursue resolution, and maximize recovery.

Speaker #2: With that context, let me walk through the second quarter asset quality trends. I'll begin with our concentration metrics. The second quarter saw continued reductions in both our CRE and payoffs. Asset resolutions, and completion of construction projects contributed to further reduction in the concentration risk.

Speaker #2: Our CRE concentration ratio which measures CRE loans as a percentage of total risk-based capital and reserves declined to 268 percent at quarter end from 295 percent the prior quarter, moving further below the 300 percent threshold.

Eric Newell: Our CRE concentration ratio, which measures CRE loans as a percentage of total risk-based capital and reserves, declined to 268% at quarter end from 295% the prior quarter, moving further below the 300% threshold. Our ADC concentration ratio ended the quarter at 66%. Turning to criticized and classified assets, combining substandard, special mention, and held for sale loans, balances declined by approximately $34.5 million during the quarter to $759.6 million at 30 June, compared to $794.1 million at 31 March. As shown on slide 16 of our investor deck, criticized and classified balances have now declined more than 30% from their peak in the Q3 of 2025. As a percentage of Tier 1 capital and ACL, criticized and classified assets declined to 58.1% at quarter end, compared to 65.7% at year-end 2025. During the quarter, we experienced approximately $216 million of downgrade activity.

Speaker #2: Our ADC concentration ratio ended the quarter at 66 percent. Turning to criticized and classified assets, combining substandard special mention and health for sale loans, balances declined by approximately 34.5 million during the quarter to 759.6 million at June 30th, compared to 794.1 million at March 31.

Speaker #2: As shown on slide 16 of our investor deck, criticizing classified balances have now declined more than 30 percent from their peak in the third quarter of 2025.

Speaker #2: As a percentage of tier-one capital and ACL, criticized and classified assets declined to 58.1% at quarter-end, compared to 65.7% at year-end 2025.

Speaker #2: During the quarter, we experienced approximately 216 million of downgrade activity. Of this total, 102 million relates to multifamily loans, of which three loans represent all of the downgrade activity, and of that, 35 million has paid off after quarter end.

Eric Newell: Of this total, $102 million relates to multifamily loans, of which three loans represent all of the downgrade activity, and of that, $35 million has paid off after quarter end. The two remaining loans, representing $64 million, are undergoing restructuring activities with no future losses anticipated. Turning to held for sale loans. At quarter end, held for sale balances totaled $49.7 million, and importantly, that entire balance is currently under contract or have sold since quarter end. During the quarter, we transferred $155 million into held for sale and had $162 million of sales, resulting in a gain on sale of loans totaling $2.3 million. As criticized and classified balances improved during the quarter, so did non-performing loans, declining to $111.1 million or 1.68% of total loans.

Speaker #2: The two remaining loans representing 64 million are undergoing restructuring activities, with no future losses anticipated. Turning to health for sale loans, at quarter end, health for sale balances totaled 49.7 million and, importantly, that entire balance is currently under contract or have sold since quarter end.

Speaker #2: During the quarter, we transferred 155 million into health for sale and had 162 million of sales resulting in a gain on sale loans totaling 2.3 million.

Speaker #2: As criticizing classified balances improved during the quarter, so did non-performing loans. Declining to 111.1 million, or 1.68 percent of total loans. Our focus remains on the broader trend, and we continue to expect criticizing classified loans to decline from current levels and remain meaningfully below where they stood at year-end 2025.

Eric Newell: Our focus remains on the broader trend. We continue to expect criticized and classified loans to decline from current levels and remain meaningfully below where they stood at year-end 2025. We are starting to see some upgrades from the watch category, and that category has fallen 50% from its peak and gives us confidence that inflows into criticized and classified will fall in subsequent quarters. Provision for credit losses totaled $21.4 million during the quarter. While elevated, the provision reflects our continued effort to proactively address problem assets and maintain appropriate reserve coverage as credits migrate through the risk-rating process. The entire provision expense can be attributed to disposition activities that took place during the quarter. The allowance for credit losses ended the quarter at $121.1 million or 1.83% of total loans.

Speaker #2: We are starting to see some upgrades from the Watch category, and that category has fallen 50 percent from its peak, and gives us confidence that inflows into Criticized Classified will fall in subsequent quarters.

Speaker #2: Provision for credit losses totaled $21.4 million during the quarter. While elevated, the provision reflects our continued effort to proactively address problem assets and maintain appropriate reserve coverage as credits migrate through the risk-rating process.

Speaker #2: The entire provision expense can be attributed to disposition activities that took place during the quarter. The allowance for credit losses ended the quarter at $121.1 million, or 1.83 percent of total loans.

Eric Newell: Included within that balance is approximately $40 million of reserves allocated specifically to our income-producing office portfolio, reflecting our continued conservative approach to reserving for that sector. Net charge-offs totaled $47.9 million during the quarter. Of that, $18.5 million were charge-offs for loans being transferred from held for investment to held for sale. 30 to 89-day past due balances increased by $26.1 million to $44.1 million during the quarter. As of today's earnings call, one loan with a balance of $35.4 million was subsequently paid off in full. As a result, we do not view the quarter-end balance as indicative of a broader deterioration in delinquency trends. Turning to operating performance. Despite further balance sheet reduction in elevated credit costs, the franchise continued to generate positive earnings, improved pre-provision net revenue, and capital growth during the quarter.

Speaker #2: Included within that balance is approximately $40 million of reserves, allocated specifically to our income-producing office portfolio, reflecting our continued conservative approach to reserving for that sector.

Speaker #2: Net shard drops totaled 47.9 million during the quarter, and of that, 18.5 million were shard drops for loans being transferred from held for investment to held for sale.

Speaker #2: 30 to 89-day past-due balances increased by 26.1 million to 44.1 million during the quarter. As of today's earnings call, one loan with a balance of $35.4 million was subsequently paid off in full.

Speaker #2: As a result, we do not view the quarter-end balance as indicative of a broader deterioration in delinquency trends. Turning to operating performance, despite further balance sheet reduction and elevated credit costs, the franchise continued to generate positive earnings improved pre-provision net revenue and capital growth during the quarter.

Speaker #2: We continue to be encouraged by the momentum in C&I, where strategic talent acquisition, along with the bank's strong reputation for service and execution, is yielding a strong pipeline of opportunities for primary new relationships.

Eric Newell: We continue to be encouraged by the momentum in C&I, where strategic talent acquisition, along with the bank's strong reputation for service and execution, is yielding a strong pipeline of opportunities for primary new relationships. C&I loans are up by 24% year-over-year. Production is well diversified and credit quality in that portfolio remains strong. Importantly, the strength of our relationship-focused model is also evident in CRE. Despite a $1.7 billion reduction in CRE loans year-over-year, deposits associated with the portfolio declined by only $152 million, demonstrating the durability of our core deposit franchise. As a result, the CRE portfolio deposit funding ratio improved to 36%, up from 27% a year ago, reflecting the success of our relationship-focused strategy and the significant progress we've made in improving the portfolio's funding profile.

Speaker #2: C&I loans are up by 24 percent year over year. Production is well diversified, and credit quality in that portfolio remains strong. Importantly, the strength of our relationship-focused model is also evident in CRE.

Speaker #2: Despite a 1.7 billion reduction in CRE loans year over year, deposits associated with the portfolio declined by only 152 million, demonstrating the durability of our core deposit franchise.

Speaker #2: As a result, the CRE portfolio deposit funding ratio improved to 36 percent, up from 27 percent a year ago, reflecting the success of our relationship-focused strategy in the significant progress we've made in improving the portfolio's funding profile.

Speaker #2: Net interest income declined 1.3 million to 62.4 million, primarily reflecting continued commercial real estate payoffs and the resulting reduction in average earning assets, partially offset by improvement in our funding mix.

Eric Newell: Net interest income declined $1.3 million to $62.4 million, primarily reflecting continued commercial real estate payoffs and the resulting reduction in average earning assets, partially offset by improvement in our funding mix. pre-provision net revenue was $29.1 million, an improvement of $1.4 million from the prior quarter. The increase was driven by lower non-interest expense, which declined $4.7 million to $44 million primarily due to lower FDIC insurance expense driven by improved risk and performance metrics, as well as reduced expenses related to loan dispositions. Altogether, these factors produce an efficiency ratio of 60.2% compared to 63.8% in the prior quarter. As we previously discussed, one of our objectives is to improve earnings power of the bank. While we're not where we want to be, we are making measurable progress.

Speaker #2: Pre-provision net revenue was 29.1 million, and improvement of 1.4 million from the prior quarter. The increase was driven by lower non-interest expense, which declined 4.7 million to 44 million primarily due to lower FDIC insurance expense driven by improved risk and performance metrics.

Speaker #2: As well as reduced expenses related to loan dispositions. Altogether, these factors produced an efficiency ratio of 60.2 percent compared to 63.8 percent in the prior quarter.

Speaker #2: As we previously discussed, one of our objectives is to improve earnings power of the bank. While we're not where we want to be, we are making measurable progress.

Speaker #2: Year-to-date pre-provision net revenue to average assets was approximately 109 basis points, an improvement from 2025 and a step towards our intermediate target of roughly 150 basis points.

Eric Newell: Year to date, pre-provision net revenue to average assets was approximately 109 basis points, an improvement from 2025 and a step towards our intermediate target of roughly 150 basis points. Pivoting to funding. Period end deposits declined $406.4 million from the prior quarter, driven primarily by lower savings, money market, and brokered time deposits. However, the overall funding profile continued to improve as broker deposits declined $301.5 million, reflecting our ongoing strategy to reduce higher cost wholesale funding and replace it with more stable relationship-based deposits. Non-interest bearing deposits increased to $1.56 billion or 5.2% from the prior quarter, contributing positively to both funding costs and net interest margin. While total core deposits declined during the quarter, driven in part by C&I, where deposits were incrementally lower on a linked quarter basis, the portfolio continues to show strong trends as we onboard new relationships.

Speaker #2: Pivoting to funding, period-end deposits declined $406.4 million from the prior quarter, driven primarily by lower savings, money market, and brokered time deposits. However, the overall funding profile continued to improve as brokered deposits declined $301.5 million, reflecting our ongoing strategy to reduce higher-cost wholesale funding and replace it with more stable, relationship-based deposits.

Speaker #2: Non-interest-bearing deposits increased to 1.56 billion, or 5.2 percent, from the prior quarter, contributing positively to both funding costs and net interest margin. While total core deposits declined during the quarter, driven in part by C&I, where deposits were incrementally lower in a linked quarter basis, the portfolio continues to show strong trends as we onboard new relationships.

Eric Newell: While total core deposits declined during the quarter, driven in part by C&I, where deposits were incrementally lower on a linked quarter basis, the portfolio continues to show strong trends as we onboard new relationships.

Speaker #2: From a profitability perspective, that improvement was reflected in net interest margin, which expanded 5 basis points to 2.52%. The expansion was primarily driven by the funding mix optimization that included less reliance on brokered time deposits, which helped mitigate the impact of lower average cash balances, CRE paydowns, and increased borrowing costs.

Eric Newell: From a profitability perspective, that improvement was reflected in net interest margin, which expanded 5 basis points to 2.52%. The expansion was primarily driven by the funding mix optimization that included less reliance on brokered time deposits, which helped mitigate the impact of lower average cash balances, CRE paydowns, and increased borrowing costs. There was roughly 2 basis point adverse impact on NIM due to the sale of a loan with COVID deferred interest that was not collected on. Turning briefly to our forecast for 2026, which you can find on slide 11 in our investor deck. There are changes to revisions for the outlook for average deposits, average loans, and average earning assets. These revisions predominantly reflect the actual reductions that occurred in the H1 and do not reflect continued declines in the H2 of 2026.

Speaker #2: There was roughly 2 basis point adverse impact on NIM due to the sale of a loan with COVID deferred interest that was not collected on.

Speaker #2: Turning briefly to our forecast for 2026—which you can find on slide 11 in our investor deck—there are changes to revisions for the outlook for average deposits, average loans, and average earning assets.

Speaker #2: These revisions predominantly reflect the actual reductions that occurred in the first half and do not reflect continued declines in the second half of 2026.

Speaker #2: We have also narrowed our net interest margin outlook to 2.60% to 2.70%, compared to our prior range, reflecting greater visibility into the earning asset mix and deployment opportunities.

Eric Newell: We have also narrowed our net interest margin outlook to 2.6% to 2.7% compared to our prior range, reflecting greater visibility into the earning asset mix and deployment opportunities. In addition, we have improved our non-interest expense outlook to a decline of 7% to 11% year-over-year compared to our previous expectation, and that is primarily driven by lower FDIC insurance expense. We continue to expect non-interest income growth of 15% to 25% for the year. As I indicated on our last call in response to a question about provision and charge-off levels, I had determined that Q1 provision and charge-off levels are a reasonable run rate for the remainder of 2026. While the Q2 run rate is higher, I stand by the original statement indicating our expectation of lower levels in the H2 of 2026.

Speaker #2: In addition, we have improved our non-interest expense outlook to a decline of 7 to 11 percent year over year, compared to our previous expectation, and that is primarily driven by lower FDIC insurance expense.

Speaker #2: We continue to expect non-interest income growth of 15% to 25% for the year. As I indicated on our last call, in response to a question about provision and charge-off levels, I had determined the Q1 provision and charge-off levels are a reasonable run rate for the remainder of 2026.

Speaker #2: While the second quarter run rate is higher, I stand by the original statement, indicating our expectation of lower levels in the second half of 2026.

Speaker #2: With that, I'll turn the call back over to Steve for some closing remarks before we open up the line for questions.

Eric Newell: With that, I'll turn the call back over to Steve for some closing remarks before opening up the line for questions.

Speaker #1: Thank you, Eric. Before we move to questions, let me make a couple of final comments. Since joining EAGLE, I have spent a significant amount of time reviewing the portfolio alongside our credit and special asset teams.

Stephen Curley: Thank you, Eric. Before we move to questions, let me make a couple final comments. Since joining Eagle, I spent a significant time reviewing the portfolio alongside our credit and special asset teams. Together with our director of special assets, I've personally visited almost all of our special mention and substandard relationships greater than $7 million, as well as several of our larger watch relationships. These visits have reinforced my belief that we understand the challenges within the portfolio, have realistic plans to address them, and are taking appropriate action to drive resolution. What I found was not a portfolio full of surprises. I found a portfolio with known issues, active resolution plans, and teams focused on executing against them. Asset quality remains my foremost area of focus.

Steve Curley: Thank you, Eric. Before we move to questions, let me make a couple final comments. Since joining Eagle, I spent a significant time reviewing the portfolio alongside our credit and special asset teams. Together with our director of special assets, I've personally visited almost all of our special mention and substandard relationships greater than $7 million, as well as several of our larger watch relationships. These visits have reinforced my belief that we understand the challenges within the portfolio, have realistic plans to address them, and are taking appropriate action to drive resolution. What I found was not a portfolio full of surprises. I found a portfolio with known issues, active resolution plans, and teams focused on executing against them. Asset quality remains my foremost area of focus.

Speaker #1: Together with our Director of Special Assets, I've personally visited almost all of our special mention and substandard relationships greater than $7 million, as well as several of our larger watch relationships.

Speaker #1: These visits have reinforced my belief that we understand the challenges within the portfolio, have realistic plans to address them, and are taking appropriate action to drive resolution.

Speaker #1: What I found was not a portfolio full of surprises. I found a portfolio with known issues, active resolution plans, and teams focused on executing against them.

Speaker #1: Asset quality remains my foremost area of focus. I don't believe there is a substitute for getting into the field. Seeing the properties firsthand, meeting borrowers, and working alongside the team's responsible for resolving the problem credits.

Stephen Curley: I don't believe there is a substitute for getting into the field, seeing the properties firsthand, meeting borrowers, and working alongside the teams responsible for resolving the problem credits. I'm encouraged by what I've seen so far at Eagle. We have a strong franchise, very talented people, an attractive market position, and a clear set of priorities. One of the things that attracted me to Eagle was its reputation for relationship banking and exceptional client service. After spending the last several weeks meeting with employees, customers, shareholders, and members of the community, Eagle's reputation is very well deserved. What attracted me to the organization before I joined has been reinforced by what I've experienced since arriving. The relationships first culture is real. It's evident in how our teams serve customers, how they support one another, and how they approach long-term relationships within our community.

Steve Curley: I don't believe there is a substitute for getting into the field, seeing the properties firsthand, meeting borrowers, and working alongside the teams responsible for resolving the problem credits. I'm encouraged by what I've seen so far at Eagle. We have a strong franchise, very talented people, an attractive market position, and a clear set of priorities. One of the things that attracted me to Eagle was its reputation for relationship banking and exceptional client service. After spending the last several weeks meeting with employees, customers, shareholders, and members of the community, Eagle's reputation is very well deserved. What attracted me to the organization before I joined has been reinforced by what I've experienced since arriving. The relationships first culture is real.

Speaker #1: I'm encouraged by what I've seen so far at EAGLE. We have a strong franchise, very talented people, and attractive market position and a clear set of priorities.

Speaker #1: One of the things that attracted me to EAGLE was its reputation for relationship banking and exceptional client service. After spending the last several weeks meeting with employees, customers, shareholders, and members of the community, EAGLE's reputation is very well deserved.

Speaker #1: What attracted me to the organization before I joined has been reinforced by what I've experienced since arriving. The relationships-first culture is real. It's evident in how our team serves customers, how they support one another, and how they approach long-term relationships within our community.

Steve Curley: It's evident in how our teams serve customers, how they support one another, and how they approach long-term relationships within our community. That's what makes Eagle special, and it's one of the reasons I'm so excited about the opportunity ahead. My objective isn't to create a different EagleBank, it's to build a stronger EagleBank. Thank you for your time and for your continued interest in our company. With that, I'll turn it over to the operator, and we're happy to take some questions.

Speaker #1: That's what makes EAGLE special, and it's one of the reasons I'm so excited about the opportunity ahead. My objective isn't to create a different EAGLE Bank.

Stephen Curley: That's what makes Eagle special, and it's one of the reasons I'm so excited about the opportunity ahead. My objective isn't to create a different EagleBank, it's to build a stronger EagleBank. Thank you for your time and for your continued interest in our company. With that, I'll turn it over to the operator, and we're happy to take some questions.

Speaker #1: It's to build a stronger EAGLE Bank. Thanks for your time and for your continued interest in our company. And with that, I'll turn it over to the operator, and we're happy to take some questions.

Speaker #3: Thank you. Ladies and gentlemen, if you would like to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced.

Operator: Thank you. Ladies and gentlemen, as a reminder, to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question coming from the line of Justin Crowell with Piper Sandler. You'll now listen.

Speaker #3: Please stand by while we compile the Q&A roster. Our first question is coming from the line of Justin Crowley with 5%. We’ll now open the line.

Justin Crowell: Hey, good morning.

Justin Crowley: Hey, good morning.

Speaker #4: Hey, good morning.

Speaker #5: Hey, Justin.

Eric Newell: Hey, Justin.

Justin Crowell: Welcome, Steve. Good to be with you and everyone else on the call today. I was wondering if you could start out providing a little more detail on the makeup of the charge-offs in the quarter. It looked like the majority of that came outside of the office portfolio, and that appeared to be on that one loan, that one DC loan that was on non-accrual. Just beyond that, just curious if you could give more detail on the other types of credits taking marks and just what loss severity looks like.

Speaker #4: And welcome, Steve. Good to be with you and everyone else on the call today. I was wondering if we could start out providing a little more detail on the makeup of the charge-offs in the quarter.

Justin Crowley: Welcome, Steve. Good to be with you and everyone else on the call today. I was wondering if you could start out providing a little more detail on the makeup of the charge-offs in the quarter. It looked like the majority of that came outside of the office portfolio, and that appeared to be on that one loan, that one DC loan that was on non-accrual. Just beyond that, just curious if you could give more detail on the other types of credits taking marks and just what loss severity looks like.

Speaker #4: It looked like the majority of that came outside of the office portfolio. And that appeared to be on that one loan that one DC loan was on non-accrual.

Speaker #4: And so just beyond that, I'm just curious if you could give more detail on the other types of credits taking marks, and just what loss severity looks like.

Speaker #5: Yeah, Justin, I can start with that. The majority of charge-offs in the quarter related to the disposition strategies that we deployed. So you'll note in our DAC, there's a walk on the held-for-sale loans.

Eric Newell: Yeah, Justin, I can start with that. The majority of charge-offs in the quarter related to the disposition strategies that we deployed. You'll note in our deck, there's a walk on the held-for-sale loans. I think it's $155 or $156 million that was transferred in. We had strategies in place for those assets that were transferred in. When we transfer it from held for investment to held for sale, that results in that charge-off. There's one other charge-off that is related to one of the loans that's currently non-accrual as we continue to work through that disposition strategy as well.

Speaker #5: I think it's $155 million or $156 million that was transferred in. And we had strategies in place for those assets that were transferred in. When we transfer it from held for investment to held for sale, that results in that charge-off.

Speaker #5: And then there's one other charge-off that is related to one of the loans that's currently non-accrual as we continue to work through that disposition strategy as well.

Speaker #4: Okay, but is that like, is that like multifamily, or what's driving that? If I saw the chart correctly, it looked like the held-for-sale additions in office were kind of flat.

Justin Crowell: Okay. Is that like multifamily, or what's driving that? If I saw the chart correctly, it looked like held for sale additions and office were kind of flat. Just wondering what else might be in there.

Justin Crowley: Okay. Is that like multifamily, or what's driving that? If I saw the chart correctly, it looked like held for sale additions and office were kind of flat. Just wondering what else might be in there.

Speaker #4: So, just wondering, what else might be in there?

Ryan Riel: Justin, the loan that Eric was commenting on last is an office loan.

Speaker #5: Justin, the loan that made up the that Eric was commenting on last was an office loan is an office loan.

Speaker #4: Okay, gotcha. And then I guess, Eric, any thoughts on the trajectory of charge-offs beyond the balance of this year? Just as we get beyond '26, is getting back to somewhere closer to 50 basis points, is that what you'd call normalized?

Justin Crowell: Okay. Got you. I guess, Eric, any thoughts on the trajectory of charge-offs beyond the balance of this year? Just as we get beyond 2026, is getting back to somewhere closer to 50 basis points, is that what you'd call normalized? Is that fair? If so, how long does it take to revert back to that kind of a level?

Justin Crowley: Okay. Got you. I guess, Eric, any thoughts on the trajectory of charge-offs beyond the balance of this year? Just as we get beyond 2026, is getting back to somewhere closer to 50 basis points, is that what you'd call normalized? Is that fair? If so, how long does it take to revert back to that kind of a level?

Speaker #4: Is that fair? And, if so, how long does it take to revert back to that kind of a level?

Speaker #5: Well, when I look at where we're at as of June 30th for the criticized classified portfolio, and in my prepared commentary, I call this out.

Eric Newell: Well, when I look at where we're at 30 June for the criticizing classified portfolio, and in my prepared commentary, I called this out, there is the watch category, which we are not showing here, but that is the lowest pass category. That category has come down by 50% from its peak. We are also seeing some of the criticized and classified have positive trends, so they might upgrade, and that could cause that total criticizing classified portfolio to come down. I think from my perspective, I look at that total portfolio, and as we continue to show that portfolio decline towards year-end and even into 2027, that could potentially see non-accrual and charge-offs. As the overall portfolio declines, so will the charge-offs, and so will the non-accrual loans. It is not linear, but to me, as the overall portfolio gets smaller, so will the incidence of charge-offs.

Speaker #5: There's the watch category, which we're not showing here. But that's the lowest pass category. That category has come down by 50% from its peak.

Speaker #5: And we're also seeing some of the criticized and classified have positive trends. So, they might upgrade, and that could cause the total criticized and classified portfolio to come down.

Speaker #5: So, I think from my perspective, I look at that total portfolio, and as we continue to show that portfolio decline towards year-end and even into 2027, that could potentially feed non-accrual and charge-offs.

Speaker #5: But as the overall portfolio declines, so will the charge-offs, and so will the non-accrual loans. It's not linear, but to me, as the overall portfolio gets smaller, so will the incidence of charge-offs.

Eric Newell: It is not linear, but to me, as the overall portfolio gets smaller, so will the incidence of charge-offs.

Speaker #4: Okay, that's helpful. And then maybe just shifting over to loan growth—I think previously you guys had talked about material reduction in CRE through the first half of the year, which we've obviously seen.

Justin Crowell: Okay. That is helpful. Then maybe just like shifting over to loan growth. I think previously you guys had talked about material reduction increase through the H1 of the year, which we have obviously seen. Then a return to growth in the H2. Is that still kind of how you are thinking about things?

Justin Crowley: Okay. That is helpful. Then maybe just like shifting over to loan growth. I think previously you guys had talked about material reduction increase through the H1 of the year, which we have obviously seen. Then a return to growth in the H2. Is that still kind of how you are thinking about things?

Speaker #4: But then a return to growth in the back half—is that still kind of how you're thinking about things?

Speaker #5: Justin, we're confident that we can stabilize balances. Through the back half of the year, we've already engaged with clients going back six to nine months.

Ryan Riel: Justin, we are confident that we can stabilize balances through the H2 of the year. We have already engaged with clients, and going back six, nine months, to get back into the production mode. That will happen. Stabilizing will happen. Growth is probably not going to happen in the H2 of this year.

Speaker #5: To get back into the production mode. So that will happen stabilizing will happen. Growth is probably not going to happen in the second half of this year.

Speaker #4: Okay, so that is going to be a function of ramping production and doesn't necessarily mean that any additional moves into health for sale are going to necessarily slow?

Justin Crowell: Okay, that is going to be a function of ramping production and does not necessarily mean that any additional moves into held for sale are going to necessarily slow?

Justin Crowley: Okay, that is going to be a function of ramping production and does not necessarily mean that any additional moves into held for sale are going to necessarily slow?

Speaker #5: I think the held-for-sale tool, or mechanism for disposition of underperforming assets, is certainly a tool that we'll continue to use. My expectation, absent inflow, and during this quarter as I mentioned in my prepared comments, is that most of that portfolio has since been sold or is under contract to sell.

Eric Newell: I think the held for sale tool or mechanism for disposition of underperforming assets, it's certainly a tool that we'll continue to use. My expectation, absent inflow during this quarter, as I mentioned in my prepared comments, most of that portfolio has subsequently sold or is under contract to sell. That could potentially be at a zero balance at 30 September.

Speaker #5: So that could potentially be a zero balance at 930. And importantly too, Justin, year to date through 630, we've seen just under 400 million dollars of multifamily credits pay off in full that were six that were watch or criticized and classified assets.

Ryan Riel: Right. Importantly too, Justin, year to date through 30 June, we've seen just under $400 million of multifamily credits pay off in full that were watch or criticized and classified assets. Many of those assets, as we've talked about in this setting, don't contain loss content, and the market can absorb and has absorbed the principal balances that are there.

Speaker #5: So many of those assets, as we've talked about in this setting, don't contain loss content and the market can absorb and has absorbed the principal balances that are there.

Speaker #4: Justin, one other thing I just want to say, just to make sure we're answering your question—we're going to arrest the decline in the balance sheet in the back half of the year.

Stephen Curley: Justin, one other thing I just want to say, just to make sure we're answering your question. We're going to arrest the decline in the balance sheet in the back half of the year. We will return to a growth footing in 2027.

Steve Curley: Justin, one other thing I just want to say, just to make sure we're answering your question. We're going to arrest the decline in the balance sheet in the back half of the year. We will return to a growth footing in 2027.

Speaker #4: And we will return to a growth footing in 2027. Okay, gotcha. And maybe just one last one, bigger picture here. Just as you kind of continue down this process, you learn more about these workout strategies.

Justin Crowell: Okay. Got you. Maybe just one last one, bigger picture here. Just as you kind of continue down this process, you learn more about these workout strategies. I know it's early, but Steve, would love to kind of hear your thoughts here. Just again, higher level, just any early thoughts on potential changes to the strategy that you're thinking about at this stage?

Justin Crowley: Okay. Got you. Maybe just one last one, bigger picture here. Just as you kind of continue down this process, you learn more about these workout strategies. I know it's early, but Steve, would love to kind of hear your thoughts here. Just again, higher level, just any early thoughts on potential changes to the strategy that you're thinking about at this stage?

Speaker #4: And I know it's early, but Steve, we'd love to kind of hear your thoughts here. Just again, higher level, just any early thoughts on potential changes to the strategy that you're thinking about at this stage?

Stephen Curley: Honestly, coming in, I had looked as part of my due diligence process before taking the job I looked at statistics, portfolios, reports, and I talked to board members about asset quality and got comfortable. Still, nonetheless, when you show up, it's what's in the report and what you see with your eyes is slightly different. Honestly, that's why I went and saw every substandard and special mention that I could get to. To me, the past feels materially different than the future because every asset, as you drive up to an asset, you either are like, "Oh, that's not too bad," or you get a pit in your stomach. I really actually rolled up on a lot of the assets and it felt pretty good.

Steve Curley: Honestly, coming in, I had looked as part of my due diligence process before taking the job I looked at statistics, portfolios, reports, and I talked to board members about asset quality and got comfortable. Still, nonetheless, when you show up, it's what's in the report and what you see with your eyes is slightly different. Honestly, that's why I went and saw every substandard and special mention that I could get to. To me, the past feels materially different than the future because every asset, as you drive up to an asset, you either are like, "Oh, that's not too bad," or you get a pit in your stomach. I really actually rolled up on a lot of the assets and it felt pretty good.

Speaker #2: Honestly, coming in, I had looked as part of my due diligence process before taking the job. I looked at statistics, portfolios, reports, and I talked to board members about asset quality and got comfortable.

Speaker #2: But still, nonetheless, when you show up, it's what's in the report and what you see with your eyes is slightly different. And so honestly, that's why I went and saw every substandard and special dimension that I could get to.

Speaker #2: And to me, it feels—the past feels materially different than the future, because every asset, as we drive up to an asset, either you're like, "Oh, that's not too bad," or you get a pit in your stomach.

Speaker #2: And I really actually rolled up on a lot of the assets and felt pretty good. And then as I work through the with the special assets team, there was a very clear plan on each asset and what we're going to do.

Stephen Curley: Then as I worked through with the special assets team, there was a very clear plan on each asset and what we're going to do. What's it going to take to upgrade it? What does the borrower need to do? If the borrower doesn't take X action, what's our response to that? Honestly, I felt pretty good after getting out in the field and looking at all the loans and all the underlying properties.

Steve Curley: Then as I worked through with the special assets team, there was a very clear plan on each asset and what we're going to do. What's it going to take to upgrade it? What does the borrower need to do? If the borrower doesn't take X action, what's our response to that? Honestly, I felt pretty good after getting out in the field and looking at all the loans and all the underlying properties.

Speaker #2: What's it going to take to upgrade it? What is the bar we need to meet? If the bar doesn't take X action, what's our response to that?

Speaker #2: And so, honestly, I felt pretty good after getting out in the field and looking at all the loans and all the underlying properties.

Speaker #4: Great, I will leave it there. Thank you so much, guys.

Justin Crowell: Great. I will leave it there. Thank you so much, guys.

Justin Crowley: Great. I will leave it there. Thank you so much, guys.

Speaker #5: Thanks, Justin.

Eric Newell: Thanks, Justin.

Speaker #1: Thank you. Our next question, coming from the lineup, David Schiaparini. Would Jeffrey feel on his mouth?

Operator: Thank you. Our next question coming from the line of David Chiaverini with Jefferies. Your line is now open.

Speaker #6: Hi, thanks for taking the questions. And maybe following up on that last question, with a big picture one, Steve, only three weeks at the bank, but where do you see the most immediate opportunity during the turnaround at Eagle Bank?

David Chiaverini: Hi, thanks for taking the questions. Maybe following up on that last question with a big picture one. Steve, only three weeks at the bank, where do you see the most immediate opportunity during the turnaround at EagleBank? What is the lowest hanging fruit that you'll be focused on?

Speaker #6: What is the lowest-hanging fruit that you'll be focused on?

Stephen Curley: Well, I really do think it's arresting the decline in the balance sheet. I've never seen a bank shrink to greatness. From my perspective, there's actually, it's kind of a coiled spring here with people ready to move forward and produce. You have to get through the asset quality issues first, you got to make sure you have a strong balance sheet and that you have capital to grow. I think everybody's confident in that, I feel really good about the production franchise. I spent a lot of time on asset quality, now I look forward to going on a lot of sales calls. I think the biggest opportunity is really just, I think everyone's building a fantastic business in C&I think an immediate opportunity is really to start booking real estate loans again.

Steve Curley: Well, I really do think it's arresting the decline in the balance sheet. I've never seen a bank shrink to greatness. From my perspective, there's actually, it's kind of a coiled spring here with people ready to move forward and produce. You have to get through the asset quality issues first, you got to make sure you have a strong balance sheet and that you have capital to grow. I think everybody's confident in that, I feel really good about the production franchise. I spent a lot of time on asset quality, now I look forward to going on a lot of sales calls. I think the biggest opportunity is really just, I think everyone's building a fantastic business in C&I think an immediate opportunity is really to start booking real estate loans again.

Speaker #2: Well, I really do think it's arresting the decline in the balance sheet. I mean, I've never seen a bank shrink to greatness. And so from my perspective, there's actually it's kind of a coiled spring here with people ready to move forward and kind of produce you have to get through the asset quality issues first and you got to make sure you have a strong balance sheet and that you have capital to grow.

Speaker #2: But I think everybody's confident in that. And so I feel really good about the production franchise and I spent a lot of time on asset quality, but now I look forward to going on a lot of sales calls.

Speaker #2: And so, I think the biggest opportunity is really just—I think everyone's building a fantastic business in C&I—but I think the immediate opportunity is really to start booking real estate loans again.

Speaker #2: I know we're below 300%, but, I mean, 250, 260 is not where we want to be either. So, I feel good about commercial real estate and moving forward with that, with a disciplined credit approach.

Stephen Curley: I know we're below 300%, 250, 260 is not where we want to be either. I feel good about commercial real estate and moving forward with that with a disciplined credit approach. I also think there's a lot of opportunity with the branch network and having the branches go out in a significant calling effort and building business banking. Right now, what I'm going to focus on is what we do well and improving on that. Once we're done with that and we've got the momentum in the franchise, we'll look at some new things.

Steve Curley: I know we're below 300%, 250, 260 is not where we want to be either. I feel good about commercial real estate and moving forward with that with a disciplined credit approach. I also think there's a lot of opportunity with the branch network and having the branches go out in a significant calling effort and building business banking. Right now, what I'm going to focus on is what we do well and improving on that. Once we're done with that and we've got the momentum in the franchise, we'll look at some new things.

Speaker #2: And then I also think there's a lot of opportunity with the branch network and having the branches go out and then significant calling effort and building business banking.

Speaker #2: And so right now, what I'm going to focus on is what we do well and improving on that and then once we're done with that and we've got the momentum in the franchise, we'll look at some new things.

Speaker #6: Great. Thanks for that. And that's a good segue into my follow-up on CNI loan growth. So very strong up 24% year over year. Can you talk about the outlook here?

David Chiaverini: Great. Thanks for that. That's a good segue into my follow-up on C&I loan growth. Very strong, up 24% year-over-year. Can you talk about the outlook here, areas or verticals showing the most strength within C&I and the hiring pipeline?

Speaker #6: Areas or verticals showing the most strength within CNI and the hiring pipeline?

Speaker #3: Sure. Thanks, David. So just a couple of things. So I've been at Eagle for just under 24 months. And one thing I can say with certainty is we've just benefit from a great franchise here at Eagle Bank.

Evelyn Lee: Sure. Thanks, David. Just a couple of things. I've been at EagleBank for just under 24 months. One thing I can say with certainty is we just benefit from a great franchise here at EagleBank. We've had a strategy that includes really ginning up the production machine that was here, adding some really nice new talent in the market. We have the benefit of some fantastic bankers who are really well-known here in the DMV. That's afforded us opportunities to bring in new primary relationships. That is the growth strategy. What I would say about going forward is normalized growth for us will probably look more like high single digits, low double digits. We're really pleased with the momentum we've been able to build, kind of growing into that leveling out.

Speaker #3: So we've had a strategy that includes really ginning up the production machine that was here, and then adding some really nice new talent in the market.

Speaker #3: We have the benefit of some fantastic bankers who are really well known here in the DMV. And that's afforded us opportunities to bring in new primary relationships.

Speaker #3: And that is the growth strategy. What I would say about going forward is, normalized growth for us will probably look more like high single digits, low double digits.

Speaker #3: But we're really pleased with the momentum we've been able to build, kind of growing into that leveling out.

Speaker #2: And what I've been really pleased to see is the discipline of the cross-sell on the deposit side. They go after the loan. They're booking loans.

Stephen Curley: What I've been really pleased to see is the discipline of the cross-sell on the deposit side. They go after the loan, they're booking loans, they're cross-selling deposits and treasury management as a function of their sales process, which I think reflects a much more sophisticated approach than you see at most community banks.

Steve Curley: What I've been really pleased to see is the discipline of the cross-sell on the deposit side. They go after the loan, they're booking loans, they're cross-selling deposits and treasury management as a function of their sales process, which I think reflects a much more sophisticated approach than you see at most community banks.

Speaker #2: But their cross-selling of deposits and treasury management as a function of their sales process, which I think reflects a much more sophisticated approach than you see at most community banks.

Speaker #3: And then I didn't respond first time around to your sector question. We have some areas of expertise where we really execute well, but the growth is very diversified.

Evelyn Lee: I didn't respond first time around to your sector question. We have some areas of expertise where we really execute well, the growth is very diversified. That's our goal. We're not looking to outpace growth in a particular industry segment. We really want the book to grow in a way that's balanced.

Speaker #3: And that's our goal. We're not looking to outpace growth in a particular industry segment. We really want the book to grow in a way that's balanced.

Speaker #6: Very helpful. Thank you.

David Chiaverini: Very helpful. Thank you.

Speaker #1: Thank you. Our next question coming from the lineup, Catherine Miller with KPW. You're on. Please go ahead.

Operator: Thank you. Our next question coming from the line of Catherine Mealor with KBW. Your line is now open.

Speaker #7: Thanks. Good morning.

Catherine Mealor: Thanks. Good morning.

Speaker #5: Good morning, Catherine.

Eric Newell: Good morning, Catherine.

Catherine Mealor: I wanted to ask about the reserve. As I look at the balance between charge-offs and reserve release over the past couple quarters, your reserve release has been about 50% of your charge-offs. I don't know if that's just a coincidence that it was around that same level the past two quarters. I'm just trying to think about how we should be modeling the pace of reserve release relative to the level of charge-offs that we're modeling. Because I think those are a little bit of a shot in the dark from where we sit. I think the provision is the hardest thing to model. Right? Just kind of curious how you're thinking about how those two things play off each other, and then how we should really just be thinking about perhaps provision levels in the H2. Thanks.

Speaker #7: I wanted to ask about the reserve. As I look at the balance between charge-offs and reserve release over the past couple of quarters, about 50% of your reserve release has been about 50% of your charge-offs.

Speaker #7: And so I don't know if that's just a coincidence that it was around that same level the past two quarters, but I'm just trying to think about how we should be modeling the pace of reserve release relative to the level of charge-offs that we're modeling.

Speaker #7: Because I think both are a little bit of a shot in the dark from where we sit. I think the provision is the biggest, is the hardest thing to model, right?

Speaker #7: So, just kind of curious how you're thinking about how those two things play off each other, and then how we should really be thinking about, perhaps, provision levels in the back half of the year.

Speaker #7: Thanks.

Eric Newell: Hey, Catherine. This is Eric. I would look towards my comment that I made in the Q1 where I was asked about the pace of provision and charge-offs, I had indicated that the Q1 is a good proxy for what you could see for the full year. While this quarter is a little bit higher, our expectation is that provision expense and charge-off will be lower in the H2. There is some provision expense coverage release that you'll expect at year-end. I just don't believe it will be at the pace that you've been seeing in the H1. Some of the release or in terms of coverage, the reduction in the coverage ratio that you saw this quarter was related to a charge-off on a individually evaluated loan. There was reserve sitting there at 31 March.

Speaker #5: Hey, Catherine. This is Eric. I would look towards my comment that I made in the first question or first quarter where I was asked about the provision the pace of provision and charge-offs.

Speaker #5: And I had indicated that the first quarter is a good proxy for what you could see for the full year. And while this quarter is a little bit higher, our expectation is that provision expense and charge-offs will be lower in the back half.

Speaker #5: So there is some provision expense coverage release that you'll expect at year-end. I just don't believe it will be at the pace that you've been seeing in the first half of the year.

Speaker #5: Some of the release, or in terms of coverage, the reduction in the coverage ratio that you saw this quarter was related to a charge-off on an individually evaluated loan.

Speaker #5: So there was reserve sitting there at March 31. We got additional information from the client about that and how we're going to resolve and restructure it.

Eric Newell: We got additional information about from the client and how we're going to resolve and restructure that resulted in us charging off the specific reserve on that loan. I don't think you're going to see a much more meaningful coverage reduction to loans like you saw in the H1.

Speaker #5: And that resulted in us charging off the individual specific reserve on that loan. So I don't think you're going to see a much more meaningful coverage reduction to loans like you saw in the first half of the year.

Speaker #2: And Catherine, I want to just tell you, we're always going to have a fully funded reserve that appropriately reflects the risk in our loan portfolio.

Stephen Curley: Catherine, I want to just tell you, we're always going to have a fully funded reserve that appropriately reflects the risk in our loan portfolio. I think last year we had to catch up quite a bit. We're always going to have a fully funded ACL that reflects the risks in our portfolio, and you'll be able to rely on that number.

Steve Curley: Catherine, I want to just tell you, we're always going to have a fully funded reserve that appropriately reflects the risk in our loan portfolio. I think last year we had to catch up quite a bit. We're always going to have a fully funded ACL that reflects the risks in our portfolio, and you'll be able to rely on that number.

Speaker #2: I think last year we had to catch up quite a bit, but we're always going to have a fully funded ACL that reflects the risks in our portfolio.

Speaker #2: And you'll be able to rely on that number.

Catherine Mealor: Okay, great. Maybe over to deposit cost. It's interesting. There's such a narrative right now about higher deposit costs and how competitive it is. As I look at your deposit costing, you're among the highest of your peers. As you improve your deposit mix, do you think there's actually the opportunity for you to continue to lower deposit costs? Are we more just, it's just so competitive that we're kind of stable at these levels with higher rates?

Speaker #7: Okay. Great. Great. And then maybe over to deposit costs. It's interesting. There's such a narrative right now about higher deposit costs and how competitive it is and as I look at your deposit costs and you're among the highest of your peers.

Speaker #7: And so as you improve your deposit mix, do you think there's actually the opportunity for you to continue to lower deposit costs? Or is it just so competitive that rates—

Speaker #5: I do. I do think there is an opportunity. There's a to me, there's a little bit of an elasticity effect there. So if you have somebody that has very low deposit costs given the composition and mix of their book, relative to us, they are experiencing some pressure.

Eric Newell: I do. I do think there is an opportunity. To me, there's a little bit of an elasticity effect there. If you have somebody that has very low deposit costs, given the composition and mix of their book relative to us, they are experiencing some pressure. Since we're already a high-cost payer, I think that we have more opportunity to reduce our costs more than some of the other folks that are feeling that pressure. We've been demonstrating that in H1 of the year. I will continue to show NIM expansion in H2 of the year as that activity continues.

Speaker #5: But since we're already a high-cost payer, I think that we have more opportunity to reduce our costs than some of the other folks that are feeling that pressure.

Speaker #5: And we've been demonstrating that in the first half of the year. And I will continue to show NIM expansion in the back half of the year as that activity continues.

Catherine Mealor: Okay, great. Thank you. Welcome, Steve. Looking forward to working with you.

Speaker #7: Okay, great. Thank you. Welcome, Steve. Looking forward to working with you.

Speaker #2: Thank you.

Stephen Curley: Thank you.

Steve Curley: Thank you.

Speaker #1: Thank you. Our next question in the queue is coming from the lineup: Steve Moss with Raymond James. You're on, Steve.

Operator: Thank you. Our next question in queue coming from the line of Steve Moss with Raymond James. Your line is now open.

Speaker #8: Good morning.

Steve Moss: Good morning.

Eric Newell: Morning, Steve.

Speaker #5: Good morning, Steve.

Speaker #8: Morning, Ryan. Steve, starting off with you here, welcome aboard. I'm just curious to hear—you started your introductory comments with deposits here.

Steve Moss: Morning, Ryan. Steve, starting off with you here, welcome aboard. Just curious here, you started with your introductory comments on deposits here. Just thinking about your background at Western Alliance, I know you ran a number of deposit-rich verticals. Just kind of curious if you're thinking about maybe adding something like that here at Eagle.

Speaker #8: And just thinking about your background at Western Alliance, I know you ran a number of deposit risk verticals. Just kind of curious if you're thinking about maybe adding something like that here at Eagle.

Speaker #2: Honestly, I was reflecting on that last night because I'm also a shareholder still there. And they had a good quarter. But I think when I started at Western Alliance, we were about $6 billion in assets.

Stephen Curley: Honestly, I was reflecting on that last night because I'm also a shareholder still there, and they had a good quarter. When I started at Western Alliance, we were about $6 billion in assets, and now they're just closing in on $100 billion, largely organically. When I think about that coming over here, I do really want to lean into what we're already good at. I'm highly confident in our ability to identify some new opportunities to grow loans, grow deposits, and build some new businesses. I do want to fortify the franchise first, I will tell you, I'm going to wake up every morning with a keen focus on low-cost granular deposits. I think that is the most accretive thing any CEO can do is what's our funding profile look like? What does our deposits look like?

Steve Curley: Honestly, I was reflecting on that last night because I'm also a shareholder still there, and they had a good quarter. When I started at Western Alliance, we were about $6 billion in assets, and now they're just closing in on $100 billion, largely organically. When I think about that coming over here, I do really want to lean into what we're already good at. I'm highly confident in our ability to identify some new opportunities to grow loans, grow deposits, and build some new businesses. I do want to fortify the franchise first, I will tell you, I'm going to wake up every morning with a keen focus on low-cost granular deposits. I think that is the most accretive thing any CEO can do is what's our funding profile look like? What does our deposits look like?

Speaker #2: And now they're just closing in on $100 billion largely organically. So when I think about that coming over here, I do really want to lean into what we're already good at.

Speaker #2: But I'm highly confident in our ability to identify some new opportunities to grow loans, grow deposits, and build some new businesses. I do want to fortify the franchise first.

Speaker #2: But I will tell you, I'm going to wake up every morning with a keen focus on low-cost granular deposits. I think that is the most accretive thing any CEO can do is what's our funding profile look like?

Speaker #2: What is our deposits look like? What are the costs of those deposits? How are they cross-sold into our customers? And are we generating treasury management fees?

Stephen Curley: What are the cost of those deposits? How are they cross-sold into our customers? Are we generating treasury management fees? I don't know what businesses I'm going to build yet, I'm confident that I'm going to find something, that business is going to be focused on deposits, the lower the cost those deposits are, the better.

Steve Curley: What are the cost of those deposits? How are they cross-sold into our customers? Are we generating treasury management fees? I don't know what businesses I'm going to build yet, I'm confident that I'm going to find something, that business is going to be focused on deposits, the lower the cost those deposits are, the better.

Speaker #2: So, I don't know what businesses I'm going to build yet, but I'm confident that I'm going to find something, and that business is going to be focused on deposits. The lower the cost of those deposits, the better.

Speaker #8: Okay, appreciate that color there. And then my next question here, just in terms of the criticized classified loans: there are a number of loans in both buckets that mature this quarter — in fact, the largest special mention and the largest substandard loan mature this quarter.

Steve Moss: Okay. Appreciate that color there. My next question here, just in terms of the criticized classified loans. There are a number of loans in both buckets that mature this quarter. In fact, the largest special mention and largest substandard loan mature this quarter. Just kind of curious what your guys' expectations are around resolution or if there's going to be an extension here on those types of properties. In particular, the $56 million apartment in Prince George's County, the storage facility in Montgomery.

Speaker #8: Just kind of curious what your guys' expectations are around resolution, or if there's going to be an extension here on those types of properties.

Speaker #8: In particular, the $56 million apartment in Prince George's County, and then the storage facility in Montgomery.

Speaker #2: Right. Thanks, Steve. We have, as part of our standard operating procedure, we engage on maturities six to nine months before that engage with clients where there's challenges with the asset.

Eric Newell: Right. Thanks, Steve. As part of our standard operating procedure, we engage on maturities six to nine months before that, engage with clients where there's challenges with the asset. We're engaged actively, there's active resolution plans, as Steve mentioned in his comments, for each of the loans that are in there. On those two specific loans, our expectation and belief is that the multifamily loan in Prince George's County will be restructured for a longer-term basis, on a longer-term basis, that restructure will result in an improved risk profile for that asset. The expectation on the self-storage facility in Montgomery County is that that will be paid off in full by the end of the year.

Speaker #2: We're engaged actively, and there are active resolution plans, as Steve mentioned in his comments. For each of the loans that are in there, on those two specific loans, our expectation and belief is that the multifamily loan in Prince George's County will be restructured on a longer-term basis.

Speaker #2: On a longer-term basis, that restructure will result in an improved risk profile for that asset. And the expectation on the self-storage facility in Montgomery County is that that will be paid off in full by the end of the year.

Speaker #8: Okay. Great. And then in terms of the in terms of the other additions on the list here, several were apartment buildings and mixed-use and condo type stuff.

Steve Moss: Okay, great. In terms of the other additions on the list here, several were apartment buildings and mixed-use and condo type stuff. Just kind of curious, is there any common theme with regard to those properties? I know it's a bunch of them are in DC.

Speaker #8: Just kind of curious, is there any common theme with regard to those properties? I know a bunch of them are RNDC.

Speaker #2: Yeah. So you're breaking up a little bit there, Steve, but two-thirds of the inflow of the $216 million is comprised of four assets.

Eric Newell: Yeah. You're breaking up a little bit there, Steve, but two thirds of the inflow of the $216 million is comprised of four assets. One of which, $34.5 million, Eric mentioned in his prepared remarks that paid off subsequent to quarter end, so that paid off in full. That was $35 million. We're in active discussions on the other two multifamily properties that we believe will result in upgrades in the near term. The other asset is an ongoing resolution plan that we have that's a maturity that's farther out there.

Speaker #2: One of which, 34 and a half million dollars, Eric mentioned in his prepared remarks that that paid off subsequent to quarter end. So that paid off in full.

Speaker #2: That was $35 million, where there are active discussions on the other two multifamily properties that we believe will result in upgrades in the near term. The other asset is an ongoing resolution plan that we have, with a maturity that's farther out there.

Speaker #8: Okay, great. And then in terms of the CNI loan growth this quarter, continuing three very strong quarters of growth, I'm just kind of curious—what are you guys seeing for origination yields, and what's the typical average loan size these days?

Steve Moss: Okay, great. In terms of the C&I loan growth this quarter, continuing three very strong quarters of growth. Just kind of curious, what are you guys seeing for origination yields? What's the typical average loan size these days? How much are you guys the lead versus participating?

Speaker #8: And how much are you guys the lead versus participating?

Evelyn Lee: Steve, you were breaking up a little bit, I think I heard enough parts of your question. Come back if I don't answer them all. As I mentioned when I answered the prior question, I think when you look forward, you can anticipate C&I growth that's more high single digit, low double digit. In terms of participations versus new primary relationships, the business development strategy is heavily focused on new primary relationships. One way that I kind of keep tabs on that is the growth in treasury management revenue. That's growing at a nice clip. I'm very pleased with that. While we certainly do some clubbing with other community banks, we've entered into a handful of participations, if you looked at the production, it's dominated by either small clubs where we have significant deposits or ancillary and primary new relationships.

Speaker #3: Steve, you were breaking up a little bit, but I think I heard enough parts of your question. But come back if I don't answer them all.

Speaker #3: As I mentioned, when I answered the prior question, I think when you look forward, you can anticipate CNI growth that's more high single digit.

Speaker #3: Low double digit. In terms of participations versus new primary relationships, the business development strategy is heavily focused on new primary relationships. And one way that I kind of keep tabs on that is the growth in treasury management revenue.

Speaker #3: That's growing at a nice clip. I'm very pleased with that. So while we certainly do some clubbing with other community banks and we've entered into a handful of participations, if you looked at the production it's dominated by either small clubs where we have significant deposits or ancillary and primary new relationships.

Speaker #3: In terms of new, I think you asked about new average loan size. Is that right?

Evelyn Lee: In terms of new, I think you asked about new average loan size, is that right?

Speaker #2: Yeah.

Steve Moss: Yeah.

Evelyn Lee: Okay. If you look at the portfolio, generally, typical relationship is somewhere between $5 and $10 million in exposure for us in C&I. As we do new loan production, we're really trying to serve the true commercial and lower middle market client. While new loan production is a little on top of that, a little bit larger than that, it's still in the band you would expect. Think typically $7 to $15 or $20 million for a new relationship.

Speaker #3: Okay. I mean, so if you look at the portfolio generally, a typical relationship is somewhere between $5 million and $10 million in exposure for us in C&I.

Speaker #3: And as we do new loan production, we're really trying to serve the true commercial and lower middle market client. So while new loan production is a little on top of that, a little bit larger than that, it's still in the band you would expect.

Speaker #3: So think typically $7 to $15 or $20 million for a new relationship.

Speaker #2: And I just want to kind of reinforce that position. This happened before I joined, but the company since last year really has been very cognizant of the size of loans that they close.

Stephen Curley: I just want to kind of reinforce that position. This happened before I joined. The company since last year really has been very cognizant of the size of loans that they close and selling down pieces of things that are larger, whereas perhaps in the past, they would've kept the whole amount. Loan size discipline and concentration is being managed, and I think frankly, that's some of the challenges Ryan faces. Some of the payoffs are $60 million, $70 million, and we have to do two, three loans to replace that. It takes a little while to build the production staff and the manufacturing capacity to do that. To me, it's well worth it. I'd rather have three $30 million loans than one $90 million loan, and that's kind of the approach they've been taking, which I was pleased to see when I got here.

Steve Curley: I just want to kind of reinforce that position. This happened before I joined. The company since last year really has been very cognizant of the size of loans that they close and selling down pieces of things that are larger, whereas perhaps in the past, they would've kept the whole amount. Loan size discipline and concentration is being managed, and I think frankly, that's some of the challenges Ryan faces. Some of the payoffs are $60 million, $70 million, and we have to do two, three loans to replace that. It takes a little while to build the production staff and the manufacturing capacity to do that.

Speaker #2: And selling down pieces of things that are larger whereas perhaps in the past, they would have kept the whole amount. So loan size discipline and concentration is being managed and I think frankly, that's some of the challenges Ryan faces will some of the payoffs are 60, 70 million dollars and we have to do two, three loans to replace that.

Speaker #2: And so it takes a little while to build the production staff. And the manufacturing capacity to do that. But to me, it's well worth it.

Steve Curley: To me, it's well worth it. I'd rather have three $30 million loans than one $90 million loan, and that's kind of the approach they've been taking, which I was pleased to see when I got here.

Speaker #2: I'd rather have 330 million dollar loans than 190 million dollar loans. And that's kind of the approach they've been taking, which I was pleased to see when I got here.

Speaker #8: Okay, that's great color. And just my one last question on the commercial side—just kind of curious, where are new origination yields for the commercial book these days?

Steve Moss: Okay. That's great color. Just my one last question on the commercial is just kind of curious, where are new origination yields for the commercial book these days?

Speaker #3: When you say where are they geographically?

Evelyn Lee: When you say where are they, geographically?

Speaker #2: No, no. What's the yield of—?

Stephen Curley: No, what's the yield?

Steve Curley: No, what's the yield?

Steve Moss: The yield.

Speaker #8: The yield.

Evelyn Lee: I believe, you can keep me honest here, I think we're in the mid 200 basis point range over index.

Speaker #3: Oh, I believe I mean, you can keep me honest here. I think we're in the mid-200 basis point range.

Evelyn Lee: I believe, you can keep me honest here, I think we're in the mid 200 basis point range over index.

Speaker #2: Yeah.

Eric Newell: Yeah, I would say, because I observe loan committee, but we're probably between 225 to 275 over is most of the origination activity.

Speaker #3: Over DEX?

Speaker #2: Yeah, I would say, because I observed loan committee, we're probably between 225 to 275 over is most of the origination activity. And I think that yield reflects the risk of the portfolio.

Stephen Curley: I think that yield reflects the risk of the portfolio. That's the appropriate yield for the risk that we're taking, and that's why we're comfortable with high single, low digit growth because it's good yield, but it's good credit.

Steve Curley: I think that yield reflects the risk of the portfolio. That's the appropriate yield for the risk that we're taking, and that's why we're comfortable with high single, low digit growth because it's good yield, but it's good credit.

Speaker #2: That's the appropriate yield for the risk that we're taking, and that's why we're comfortable with high single-digit, low double-digit growth—because it's good yield, but it's good credit.

Speaker #8: Okay, great. I really appreciate all the color here today. Thank you very much.

Steve Moss: Okay, great. I really appreciate all the color here today. Thank you very much.

Speaker #1: Thank you. Our next question in the queue is coming from the line of Christopher Marinette with Green Capital LLC. Your line is now open.

Operator: Thank you. Our next question in queue coming from the line of Christopher Marinac with Janney Montgomery Scott. Your line is now open.

Speaker #5: Hey, thanks. Good morning. I wanted to ask about CNI deposits, how new inflows are occurring, and the new account openings in CNI that we may not see from the slide last night.

Christopher Marinac: Thanks. Good morning. Wanted to ask about C&I deposits and how new inflows are occurring and kind of new account openings in C&I that we may not see from the slide last night.

Speaker #3: Yeah, sure. So I think I've been really pleased with the new primary relationship additions that the team has been making since I joined the bank, and I think that's really what shows in that 14% year-over-year growth in deposits.

Evelyn Lee: Sure. I think I've been really pleased with the new primary relationship additions that the team has been making since I joined the bank. I think that's really what shows in that 14% year-over-year growth in deposits. I will note that in our portfolio, we have a handful of really great long-dated clients that are impacted either by seasonality or by transaction timing. A good example of the former would be our charter school portfolio where we receive a lot of funding at a certain time of year and then draw that down across the 12 months. A good example of the latter would be a class action law firm where inflows can really come in heavy and then get dispersed out. On a quarter-by-quarter basis, you could see some variability. I'm pleased with that kind of overall trend.

Speaker #3: I will note that in our portfolio, we have a handful of really great long-dated clients that are impacted either by seasonality or by transaction timing.

Speaker #3: So a good example of the former would be our charter school portfolio, where we receive a lot of funding at a certain time of year and then draw that down across the 12 months.

Speaker #3: And a good example of the latter would be a class action law firm, where inflows can really come in heavy and then get dispersed out.

Speaker #3: So, on a quarter-by-quarter basis, you could see some variability, but I'm pleased with that kind of overall trend. I think I mentioned one of the other metrics that we keep an eye on is the treasury management revenue growth, period over period.

Evelyn Lee: I think I mentioned one of the other metrics that we keep an eye on is the treasury management revenue growth kind of period-over-period, and that's been climbing at a nice clip. To me, that's really indicative of new account openings, new primary relationships where you're getting all the treasury, all the payables and receivables. Overall, I think very strong positive trends.

Speaker #3: And that's been climbing at a nice clip. To me, that's really indicative of new account openings, new primary relationships where you're getting all the treasury all the payables and receivables.

Speaker #3: So overall, I think there are very strong positive trends.

Speaker #5: And then you’re incenting your team to bring in new deposits. So, there’s been a whole behavior shift that we just haven’t seen the balances realized yet.

Christopher Marinac: Then you're incenting your team to bring in new deposits. There's been a whole behavior shift that we just haven't seen the balances realized yet.

Evelyn Lee: We're definitely incenting the team on new deposits. I would argue we are seeing the benefits given the percentage growth that we've seen over the last four quarters. It's absolutely an important part of the incentive plan.

Speaker #3: We're definitely incenting the team on new deposits. I mean, I would argue we are seeing the benefits, given the percentage growth that we've seen over the last four quarters.

Speaker #3: But it's absolutely an important part of the incentive plan.

Speaker #5: And then, Steve, maybe the same question for you and me. As you've built deposit frameworks over the years, how important are incentives, and is that something that we'll hear more about in the next few quarters?

Christopher Marinac: Steve, maybe the same question for you. As you've built deposit frameworks over the years, how important are incentives, and is that something that we'll hear more about in the next few quarters?

Speaker #2: Yeah, I think 50% is leadership and direction, and 50% is incentives because, I mean, you have to back up what you say with actions.

Stephen Curley: Yeah. I think 50% is leadership and direction, 50% is in incentives because you have to back up what you say with actions. To me, I'm going to wake up every day thinking about and asking about deposits, and that will percolate through the culture pretty quickly. I want to make sure that the people that grab onto that we reward them appropriately. Early in my career, I was more of a loan officer, and it was a low-interest rate environment, and it was like, yeah, get a loan, and it was pretty easy to fund it. Since rates started rising, I just have had a real sea change. The value of a franchise is its deposits.

Steve Curley: Yeah. I think 50% is leadership and direction, 50% is in incentives because you have to back up what you say with actions. To me, I'm going to wake up every day thinking about and asking about deposits, and that will percolate through the culture pretty quickly. I want to make sure that the people that grab onto that we reward them appropriately. Early in my career, I was more of a loan officer, and it was a low-interest rate environment, and it was like, yeah, get a loan, and it was pretty easy to fund it. Since rates started rising, I just have had a real sea change. The value of a franchise is its deposits.

Speaker #2: But to me, I'm going to wake up every day thinking about and asking about deposits. And that will percolate through the culture pretty quickly.

Speaker #2: But then I want to make sure that the people that kind of grab onto that, that we reward them appropriately. So, early in my career, I was more of a loan officer.

Speaker #2: And then as a low interest rate environment and it was kind of like, yeah, get a loan and it was pretty easy to fund it.

Speaker #2: And then, since rates started rising, I’ve just had a real sea change. It’s the value of a franchise—it’s its deposits.

Speaker #2: And so, every day I wake up thinking about deposits, and how can I get them, and how can I get more, and how can I cross-sell TM.

Stephen Curley: Every day I wake up thinking about deposits and how can I get them, and how can I get more, and how can I cross-sell TM. People can hear that, but it takes them a little while to learn how to do it and be good at it. I think they're through that transition. Once they are good at it, they should certainly be rewarded for that behavior. You will hear more about that, and I think the change is well underway.

Steve Curley: Every day I wake up thinking about deposits and how can I get them, and how can I get more, and how can I cross-sell TM. People can hear that, but it takes them a little while to learn how to do it and be good at it. I think they're through that transition. Once they are good at it, they should certainly be rewarded for that behavior. You will hear more about that, and I think the change is well underway.

Speaker #2: And it takes a little while for people to hear that, but it takes them a little while to learn how to do it and be good at it.

Speaker #2: And I think they're through that transition. And then, once they are good at it, they should certainly be rewarded for that behavior. And so, you will hear more about that.

Speaker #2: And I think the change is well underway.

Speaker #3: One other thing just to mention is obviously we can grow new primary relationships, but if we have a relationships going out the back door, that can be futile.

Evelyn Lee: One other thing just to mention is obviously we can grow new primary relationships, but if we have relationships going out the back door, that can be futile. I've been very pleased with the client retention that the team has exhibited. I know Eric mentioned in his prepared remarks the deposit retention CRE as compared to the loan reduction. I think the team has done a really good job on retention and maintenance of the franchise and the brand. Now we're driving new relationships.

Speaker #3: So, I've been very pleased with the client retention that the team has exhibited, and I know Eric mentioned in his prepared remarks the deposit retention in CRE as compared to the loan reduction.

Speaker #3: So I think the team has done a really good job on retention and maintenance of the franchise and the brand, and now we're driving new relationships.

Ryan Riel: Chris, just to pile on too, on the incentive side of that question, we've implemented in recent times an incentive plan that covers our entire branch network and our business bankers that's enhanced and deposit-heavy. That behavior, to Steve's point, over time, you will see the results of that behavior change.

Speaker #2: And Chris, just to pile on too, on the incentive side of that question, we've implemented in recent times an incentive plan that covers our entire branch network and our business bankers.

Speaker #2: That's enhanced and deposit-heavy, so that behavior, to Steve's point, over time you will see the results of that behavior change.

Christopher Marinac: Great. Thank you all for your input on that. Just one last asset quality question, which is, would foreclosures be something that you would do more of, and would that kind of accelerate further credit risk recognition?

Speaker #5: Great. Thank you all for your input on that. Just one last asset quality question: Would foreclosures be something that you would do more of, and would that kind of accelerate further credit risk recognition?

Speaker #2: Yeah, I'm not afraid of foreclosures. And sometimes that's the best way; sometimes, an expedient way or, in a very distressed or difficult situation, a note sale is better.

Stephen Curley: Yeah. I'm not afraid of foreclosures. Sometimes that's the best way. Sometimes an expedient way or in a very distressed or difficult situation, a note sale is better. The reality is sometimes you have to foreclose, and if that's what we have to do to get resolution on the assets, that's what we're going to do. Oftentimes a foreclosure process will result in the borrower realizing the seriousness of the situation and taking the appropriate action to protect their assets. Foreclosing on properties will be part of our resolution plans.

Steve Curley: Yeah. I'm not afraid of foreclosures. Sometimes that's the best way. Sometimes an expedient way or in a very distressed or difficult situation, a note sale is better. The reality is sometimes you have to foreclose, and if that's what we have to do to get resolution on the assets, that's what we're going to do. Oftentimes a foreclosure process will result in the borrower realizing the seriousness of the situation and taking the appropriate action to protect their assets. Foreclosing on properties will be part of our resolution plans.

Speaker #2: But the reality is sometimes you have to foreclose. And if that's what we have to do to get resolution on the assets, that's what we're going to do.

Speaker #2: And oftentimes a foreclosure process will result in the bar or realizing the seriousness of the situation and taking the appropriate action to protect their assets.

Speaker #2: So, foreclosure—foreclosing on properties—will be part of our resolution plans.

Christopher Marinac: Great. Thanks again, Steve. Thank you everybody for hosting us this morning.

Speaker #5: Great. Thanks again, Steve. And thank you, everybody, for hosting us this morning.

Speaker #2: Thank you.

Stephen Curley: Thank you.

Steve Curley: Thank you.

Speaker #1: Thank you. And I'm showing over two questions in the Q&A queue at this time. I will now send the call back over to the company President and CEO, Mr. Steve Curley, for any closing comments.

Operator: Thank you. I'm showing no further questions in the Q&A queue at this time. I will now turn the call back over to the company President and CEO, Mr. Stephen Curley, for any closing comments.

Speaker #2: Well, I just want to thank everybody for their participation and questions during the call. I just want to reiterate how proud I am to be here at Eagle, and how much I'm looking forward to the future here.

Stephen Curley: Well, I just want to thank everybody for their participations and questions during the call. I just want to reiterate how proud I am to be here at Eagle and how much I'm looking forward to the future here. We look forward to connecting with you guys again next quarter. Thank you.

Steve Curley: Well, I just want to thank everybody for their participations and questions during the call. I just want to reiterate how proud I am to be here at Eagle and how much I'm looking forward to the future here. We look forward to connecting with you guys again next quarter. Thank you.

Speaker #2: And we look forward to connecting with you again next quarter. Thank you.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Q2 2026 Eagle Bancorp Inc Earnings Call

Request DemoDemo

Eagle Bank

Earnings