Good day, ladies and gentlemen, and welcome to the Eagle Bancorp third quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. Later we’ll have a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder today’s conference is being recorded. I would now like to turn the conference over to your host for today, Mr. Jim Langmead, Chief Financial Officer. Sir, you may begin.

Thank you, and good morning, everyone. Before we begin the presentation, I'd like to remind you that some of the comments made during this call may be considered forward-looking statements. Our Form 10-K for the 2012 fiscal year, our quarterly reports on Forms 10-Q and current reports on Form 8-K identify certain factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made this morning. The company does not undertake to update any forward-looking statements as a result of new information or future events or developments. Our periodic reports are available from the company or online on the company’s website or the SEC website. I would also like to remind you that while we think that our prospects for continued growth and performance are good, it is our policy not to establish with the markets any earnings, margin or balance sheet guidance. Now I would like to introduce Ron Paul, the Chairman and Chief Executive Officer of Eagle Bancorp.

Thank you, Jim. I would like to welcome all of you to our earnings call for the third quarter of 2013. We appreciate you calling in this morning and your continued interest in EagleBank. In addition to Jim Langmead also on the call with me this morning is our Chief Credit Officer, Jan Williams. Jim and Jan will both be available later in the call for questions. I am very pleased to announce record quarterly earnings for EagleBank. Net income for the quarter was $11.8 million, which is a 22% increase over the third quarter of 2012. Our focus on our core banking activities of making loans, taking deposits and building relationships continues to produce balanced results for key performance indicators including core revenue growth, the net interest margins, loan and deposit growth, solid credit quality, the efficiency ratio and our capital position remain our disciplined approach. This collective performance has resulted in consistent earnings per share as well as increases in our ROAA and ROAE. For the third quarter of 2013, net income available to common shareholders also increased 22% over the third quarter of 2012, growing from $9.5 million to $11.6 million. Fully diluted earnings per share were $0.44 for the quarter, which represents a 10% increase from $0.40 of earnings per share in the third quarter of 2012. The growth rate of earnings per share includes the impact of those shares issued in the ATM offering and underwriting equity offerings during the fourth quarter of 2012. ROAA has increased from 1% in the third quarter of 2011 to 1.27% in the third quarter of 2012 and is now 1.35% for the most recent quarter, a consistent approach. ROAE on average equity has also shown a very favorable trend increasing from 12.55% two years ago to 14.37% for…

(Operator Instructions). Our first question comes from Scott Valentin from FBR Capital. Your line is open.

Good morning. Thanks for taking my question. Just with regard to the margin, it was up a little bit like I think from the second quarter ‘13 to this quarter about four basis points. I am just curious in terms of competition what you are seeing, I assume those loan yields, you’re able to hold may be loan yields or increase loan yields linked quarter. Just wondering if you can comment on the price competition and maybe underwriting competition you are seeing for both C&I and commercial real estate?

As I mentioned, Steve the competition is definitely there. I will say that over the past few months the long-end of the competition has changed where we have seen four and a quarter 10 year money, we are not seeing that as much as we did probably six, nine months ago. The competition is there obviously, we play not off the competition, but off the relationship. And for us we've been able to maintain a solid pricing model based on the service that we provide. The NIM is as you know is a combination of a lot of ALCO processes. As I mentioned in my comments, we've been able to reduce our liquidity at fed funds and we've been able to swap out of the loans held for sale into higher yielding loans. So the constant management to the ALCO process is something that we spend an awful lot of time managing.

No really not. Obviously everybody is concerned, it’s certainly top of the conservation on a regular basis, but we’ve been able to resolve all those issues by just talking about that we’re here to discuss any issues that you need whether it’s advances on lines of credit when appropriate or advances on contracts. So it really does play into our overall mantra on being entrepreneurial and working with our customers on a regular basis.

Okay. Thanks very much.

Thank you. Our next question comes from Stephen Scouten from KBW. Your line is open.

Thanks. Good morning gentlemen. Thanks for taking my call.

Hey, Steve.

A follow-up question on the NIM in regards to, as I looked at the details of the NIM it looked like securities yields were up a decent amount this quarter. Was there any change to your, the types of investments that you were putting money towards or any change that occurred there. And also the drop in CD rates, any additional detail that you could garner there?

Jim?

Yeah Steve on the investment portfolio, the mix is essentially the same as at the end of September as it was at the end of June. The pick-up in yields was due to primarily the mortgage-backed portfolio where we have some premium coupon bonds where that premium was much slower as rates went up and the prepayment assumptions have really been reduced in that whole mortgage-backed market as you know. So lesser premium amortization, better yields all together that’s been a sector we’ve been in for some time. And that’s the reason for the increase in yields in the investment portfolio. On the cost of money, you’re correct. We have reduced in that speedy area, much of that is due to allowing alternative funding sources to roll off. We’ve had, we do manage the banks with some broker deposits. We haven’t needed those broker deposits in some time and the maturities of those monies that we took into the bank 3 or 4 year ago are now rolling off at higher rates that will continue for the next year or so. And so we are getting lower overall funding cost.

Just if I could add just to that is, let’s not forget the comments that we’ve had in previous quarters on the amount of liquidity that we worked on to retain at the beginning of the year because of the uncertainty of what TAG would happen. So we have been able to reduce that liquidity into higher pricing loans.

Okay, great. And one other question I had was, have you guys seen any change really in the residential real estate markets in your area, I saw that there was maybe not a large, but a small quarter-over-quarter decline in commercial and residential construction lending. Any market changes that you are seeing or anything to speak of there or is that just some [system] [ph] loans that matures in kind of redeploying that capital?

Steve, if you look out the window in my office, you’d see more cranes than you’ve ever seen before. It’s unbelievable the amount of development that’s going on, we’re here in Bethesda, but there are pockets in the city that are just absolutely booming. We’ve had accelerated pay-offs in our loans because they are working like they’re suppose to be working. So we have seen a lot of activity, we have seen a lot of demand, we are obviously very cautious because the amount of construction, one could argue there is an overbuilding going on. But again, remember that our whole philosophy on lending is we are not lending into that 300 unit multi-family project. We are lending into the 30 unit boutique project which is really our sweet spot and those units were the condos or rentals or just leasing and selling as fast as they are built.

Great. Well, thanks for the color guys.

Okay. Thank you.

Thank you. (Operator Instructions) Our next question comes from Christopher Marinac from FIG Partners. Your line is open.

Thanks and good morning. Ron, could you tell us a little bit about I guess the differences between the average loan yields that you are seeing on new transactions, whether you think of a C&I or a commercial real estate transaction compared to the overall yield that we saw in the third quarter?

Chris, we are definitely seeing a drop in what we are getting paid off versus the new loans that are being booked. But I can tell you it’s not - it’s still significantly higher than the market in the loans that we’re booking. Again it goes back to that customer service; the customer service side is still getting us that three-eighths of a point premium because of what we’re doing in terms of timeliness. What’s interesting for us is that some of the loans that we are booking at higher rates than competitors is larger size loans, which is certainly good for us. But we are seeing a drop, but again we are, on the offset to that we are seeing a significant increase in our DDAs, so the cost of the funds to fund that lower yielding loan is a lot less, as Jim mentioned, our wholesale funding continuous to run off. So the net side which is obviously what we have been able to maintain the NIM is a balance of a lot of different things. So we are seeing a drop in loan yields, but we are seeing the ability to manage the ALCO process to be able to get us where we need to be.

Okay. And then as you sort of, are you still focused on five years in terms of maturity as you would be often consider or anything longer than that?

Absolutely, we are five years or less, as I said in my comments, we are about 26 months is our average pricing change. We will go out further than five years if required to, but it’s with the reprising model where virtually everyone in our loans have [floors] and that’s been a huge benefit for us over at least five years longer than that. And we really get no push back on that roll.

Okay. So.…

The loan growth that we’ve been able to maintain is indicative of the fact that we’re providing a service otherwise we wouldn’t have the double-digits like we are having versus our peers. And it’s just; it really does come back to that customer service side.

Great. Thanks, again. There is a second question on the mortgage business. As we transition into a full purchased mortgage business, do you expect hiring additional producers there or do you want to manage that piece of the revenue stream to be a larger percentage or about the same going forward?

We have always taken the same position, the residential real estate although a great product for us is an ancillary product for us, no different than SBA is. We are, we have been, we will always be spread income bankers. The residential side, we recently were able to hire a very large producer. And we were really honored to be able to get him to join us. But it’s a managed process for us, it’s managing the overhead on a regular basis as I’ve mentioned before unlike some other banks. We only have two offices, so our fix costs are very low, it’s a matter of managing the variable side which we have been able to do significant reductions in staffing needs which is pretty indicative of the industry. So we are being opportunistic, no different than we are throughout the rest of the bank but it’s certainly not driving force behind the bank.

Okay, very good, thank you for the color.

Thank you. We have a follow up from Scott Valentin from FBR Capital. Your line is open.

Hey, I apologize, I missed the question. But with regard to the mortgage banking, I know you said it’s a key part of the business or it’s a important part of the business going forward. Just wondering in terms of the mix of originations what you saw during the quarter purchase versus refi? And you also mention maybe some staffing adjustments, if you can talk maybe the impacts you will have on maybe personnel expense going forward?

Scott, just to clarify the first point, this is not the key part in our business. So I just want to clarify that. We are totally focused on the spread income side, SBA and other non-interest income is a part of it but not a major part of it. Jim you want to touch on some of the revenue side?

Scott, just I think the question about the purchase money side. Roughly half of the production in the third quarter was purchase money and that’s a good new story, that’s a higher number than it was in the third quarter of 2012. So the activity we have in purchase money business is increasing. In terms of staffing we are working hard to kind of rightsize the operation, recognizing that the volume has been less. We certainly think we are making money in this business; we want to continue to get the staffing correct based upon the volumes that are expected going forward. So it is a process month-to-moth and we are very much on top of the situation with regard to estimates of growth and things of that nature. But it's not a significant -- as we said in our comments, not a significant part of our revenue or bottom line performance.

The other part to that, if I could jump in Scott, is that we have become preferred lenders to a number of the builders and that’s not only out customers, but that’s also throughout the industry. So, it gives us an opportunity to be able to get the first shot at that end loan. We are certainly competitive on our pricing model. I think we excel on our service side. So a lot of the preferred lenders whether it’s a single-family home or a condominium, we have been able to get them to sign up with us as being a preferred lenders. So that -- as the market changes and the refinances slowdown, I think we're way ahead of the curve on the ability for us to get those end loans.

Okay. Thank you very much.

Okay.

Thank you. I show no further questions at this time and I would like to turn the conference back to Mr. Ron Paul for closing remarks.

Just want to thank everybody for being on the call, looking forward to another great quarter. And it's hard to say now, but happy New Year to everybody and we will speak to you in January.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect at this time.