Good day, ladies and gentlemen, and welcome to the Eagle Bancorp Fourth Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct 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 introduce your host for today’s conference call, Jim Langmead, Chief Financial Officer. You may begin sir.

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 2013 fiscal year, our quarterly reports on Form 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’d 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 specific earnings, margin or balance sheet guidance. Now, I’d like to introduce Ron Paul, the Chairman and Chief Executive Officer of Eagle Bancorp.

Thanks Jim. Good morning everyone. I’d like to welcome you to our earnings call to discuss the results of the fourth quarter and full-year of 2014. Thank you for joining us in this call this morning. In addition to Jim Langmead, also on the call this morning is our Chief Credit Officer Jan Williams. And Jim and Jan will both be available for questions later in the call. I am extremely pleased to discuss with you both the fourth quarter and the full-year of 2014, which was truly a busy and successful year for Eagle Bank. For the fourth quarter, we announced net income of $14.7 million, which is a 23% increase over the income of the fourth quarter of 2013, and is our 24th consecutive quarter of record increasing earnings. On an operating earnings basis, which exclude the impact of merger-related expenses from the Virginia Heritage transaction completed on October 31, income for the fourth quarter was $16.9 million, which represents a 41% increase over the fourth quarter of 2013 earnings of $12 million and a 14% increase over the third quarter of 2014 operating earnings of $14.8 million. Diluted earnings per share for the fourth quarter were $0.49 on a net income basis and $0.56 on an operating basis, a 24% increase from the operating earnings per share basis over the $0.45 per diluted share for the fourth quarter of 2013. The earnings per share figures include the impact of the additional shares issued in October in conjunction with the merger. In addition, we closed the year of 2014 with $5.2 billion in assets. These record levels of earnings and assets are attributable to both continued strong organic performance and the highly successful merger with Virginia Heritage Bank. For the full-year of 2014, we reported a net income…

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

Hi everyone, great quarter and congrats on the Virginia Heritage deal.

Thanks Catherine.

Thanks Catherine.

I have a question on the margin. Can you tell us how much your value accretion we saw in the margin this quarter?

Jim?

Catherine, I think the amount was pretty minor this quarter. There was some benefit. We estimated that the yield on the loans acquired from VHP including the fair value mark was about 5.45, otherwise the margin would - or the yield on loans would have been about 5.30. So there is about 5 to 10 basis points of benefit there in the quarter. As you know, the timing of the recognition is very choppy based on the amount of loans that are actually paid off, but we did have some benefit in that. But I’d also say that the loans that we originated were also originated at lower rates and when you match all that together, we actually got a slight decline in loan rates, loans yields in the fourth quarter versus the third quarter.

Okay, cool. And then can you update us on where loans have typically coming off and then coming on. You had given past couple of quarters?

Yes, the loans that were originated are coming on at around 5% and are going off the books at 5.30% or so. We’re losing around 30 basis points between the new loans and the paid off loans.

Okay, perfect.

By the way, am I Jim, those loan yields exclude them.

They include, I’m sorry.

So they include the fees?

Right.

Yes.

Okay, great. And one last thing on the margin. How did the indirect auto book impact that fair value accretion?

Yes, the indirect portfolio had an overall yield including the credit mark of 3.25%. So the mark we made on the indirect portfolio was around $800,000 which is call it 75 basis points or so. And then that gets accreted in based on the average life of the portfolio or indirect is around 2.5 to 3 years, but the yield including the credit mark is around 3.25%.

Okay. All right, perfect. Thank you very much.

Thank you.

Our next question comes from Casey Orr with Sandler O’Neill.

Good morning. Great quarter.

Thanks Casey.

Most of my questions were answered on the margin but I did want to - actually Ron you just addressed the organic growth levels in your opening remarks, but given the marks taken on the acquired loans this quarter, can you give us some color on how growth at Virginia Heritage turned out and maybe along those lines how customer attrition has been thus far which those Virginia Heritage customers?

Yes, the opportunity that we see in Northern Virginia with VHP and the tremendous staff that they have there is something that we subside. We have spent a tremendous amount of time both pre-closing and post-closing on meeting with the VHP customers and everything has literally just gone as we had expected. We had absolutely no attrition. We see tremendous opportunities with their customers because of our increased legal lending limit and with our products that we have be able to enhance to cross-sell. This being an end-market deal, many of their customers we knew, they knew us. And it’s given us a great opportunity to expand in that market.

Okay, great. And just back to the indirect auto book. How big it was that book I guess at year-end?

About $107 million.

Okay, great. And one last question. Are there any more merger expenses coming down the road or is that it?

We do not expect very many at all, Casey. We should be about finished. There could be some drips and drabs but I would say that we expected to get that all completed by the end of December. We expect very little if any in the first quarter.

Great. That’s it.

Also I want to add that the average life of the indirect is 26 months.

That’s helpful. Thanks for taking my question.

Thank you.

Our next question comes from Christopher Marinac with FIG Partners.

Good morning Ron and Jim. I was wondering if you could give us color on any attrition of the lending staff for VHP and perhaps so what’s normal in the state of the merger and maybe go back to how fidelity worked maybe years ago?

It’s exactly as we had hoped Chris. We really inherited a great group from VHP. We’re working with them regularly. They’re getting to understand Eagle’s philosophy, us theirs. There is an awful lot of time that’s spent in meetings and discussions, strategic and tactical. And we just have been very pleased with exactly as we hoped which is candidly we used them all than we did with fidelity and trust that has also worked well. The knowledge that VHP offers us from the Northern Virginia side is identical to the way F&T offered us in the DC side. So we’re very pleased in being able to round out the market which is exactly the strategic plan that the board came up with about four years ago.

Okay, great. And my follow-up separately Ron is just talking about sort of average deal size. Are you seeing any larger deals in general or there should be kind of typical with what you would see in the previous year or two?

So right now Chris, our average loan size really hasn’t changed much. We are seeing larger transactions because we have the opportunity to do them. It’s certainly not a marketing strategic approach that we have, but we have the $90 million legal lending limit which allows us and affords us the opportunity of not necessarily seeing larger deals but seeing more deals from the same borrower, which obviously is something that’s great for us because it does help your efficiency because of the way we know the customer. So we are seeing larger deals but it’s certainly shorts rush.

Okay. And I imagine that Lindsey’s appointment this week also ties into this as well, that you have opportunities there that you choose to.

Yes, I will tell you, I hope Lindsey is not listening but Lindsey has just been awesome for us. Lindsey will be an amazing addition to the strength that we have and really round out the whole C&I group. So we’re very, very excited. And see, this is a huge opportunity on C&I side.

Well, the customers that he and his team that new customers for legal are lot of these existing customers that you will do a different type of C&I work in the past.

Well, the mix is pretty much the same that we see. Bear in mind, Lindsey was not with the VHP team. So it really does give us an opportunity of both Lindsey’s contacts and book of business as well as the VHP book. There is a great opportunity of C&I lending in Northern Virginia. So we see that both Lindsey and the VHP team - Lindsey knows Northern Virginia extremely well will give us a great opportunity to penetrate that market.

Great. Well, and thank you for all the color.

Thanks Chris.

And I’m not showing any further questions at this time. I’d like to turn the conference back over to our host.

I’d like to thank everybody. 2014 was a very fruitful, exciting, energetic year and I think we’ve - well, I know that we’ve hit the ground running coming into 2015 and now our goal obviously is execute while we work so far to accomplish in 2014 and prior to that. So thank you very much everybody and speak to you again next quarter.

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day.