EAGLE BANCORP INC Q1 FY2025 earnings call

• Susan Riel mentioned net income of $1.7 million for the quarter, noting continued earnings pressure but a resilient balance sheet. Emphasized the need to improve performance and execute strategy to drive sustainable results, with focus on DC market diversification beyond federal government. • Kevin Geoghegan discussed the $26.3 million provision for credit losses, with $13.9 million related to the office overlay. Talked about allowance for credit losses, nonperforming loans, past due loans, criticized and classified loans, and specific loan examples including office, government contracting, and multifamily loans. • Eric Newell reported net income of $1.7 million or $0.06 per diluted share, compared to prior quarter's $15.3 million. Discussed capital position, net interest income, noninterest income, noninterest expense, and updates to full-year 2025 guidance including NIM, noninterest income growth, and tax rate.

Net income for the quarter was $1.7 million. The balance sheet remains resilient. Commercial lending portfolio grew period end by $109.1 million or 4.3% over 12/31/2024. Deposits grew in the first quarter by $146.2 million, largely through time deposits in digital and branch channels. Capital levels are high, liquidity is strong, and the balance sheet is well-positioned to weather volatility. The allowance for credit losses increased to $129.5 million at 3/31, representing coverage of total loans at 1.63%, increasing 19 bps from the prior quarter. Nonperforming loans were $200.4 million at 3/31, a decrease of $8.3 million from the prior quarter. Net charge-offs totaled $11.3 million in the first quarter or an annualized 57 bps of average loans.

• NIM outlook for full-year 2025 adjusted downward based on higher interest expense in the first quarter. • Noninterest income growth revised from flat to 35 to 40% to account for the $200 million BOLI transaction. • Full-year 2025 loan growth expected to be between 2-8%. • Tax rate range updated to 15 to 17% due to the BOLI transaction and purchase tax credit transaction.

• Uncertainty in the Washington DC market, particularly related to the office sector and federal budget tightening. • Credit conditions in the office portfolio, including office property valuations and potential downstream effects of federal budget cuts. • Risks associated with government contracting relationships, including contract cancellations, cash flow challenges, and exposure to USAID.

Q: Justin Crowley asked about specific drivers of the reserve build in the office portfolio and valuation trends, 2026 maturities, GovCon portfolio, and margin sensitivity.

A: Eric Newell and Ryan Riel discussed the management qualitative overlay for office portfolio driven by appraisals, substandard office loans carrying 18% in the reserve, and Kevin Geoghegan talked about GovCon portfolio. Eric Newell detailed factors driving NIM forecast including a third-party payment processing relationship, investment portfolio cash flows, and deposit growth.

Q: Catherine Mealor inquired about office portfolio exposure to government agencies, anecdotes from clients, BOLI transaction modeling, and deposit costs.

A: Ryan Riel said less than 5% of office lease space has government agency exposure. Eric Newell discussed BOLI transaction fee income modeling. Eric Newell and Ryan Riel talked about opportunities to reduce deposit costs through strategic initiatives like growing relationship deposits and digital channel growth.

Q: Christopher Marinac asked about aggressive loan resolutions, appraisal updates for 2026 maturities, and C&I portfolio growth.

A: Susan Riel and Ryan Riel mentioned loan sales are on the table with cost-benefit analysis. Kevin Geoghegan and Eric Newell discussed appraisal updates for maturities. Ryan Riel noted positive indications of growth in the C&I pipeline due to new team members and increased activity