Good day, ladies and gentlemen. And welcome to the Eagle Bancorp Second 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) I would now turn the call over to your host, Jim Langmead, Chief Financial Officer of Eagle Bancorp. Please go ahead.

Good morning, everyone. Before we begin the presentation, I’d like to remind you that some of the comments made during this call maybe 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 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 earnings, margin or balance sheet guidance. Now, I'd like to introduce Ron Paul, the Chairman and Chief Executive Officer of Eagle Bancorp.

Thank you, Jim. I’d like to welcome all of you at our earnings call for the second quarter of 2014. Thank you for calling in this morning. As usual, in addition to Jim Langmead; Jan Williams, our Chief Credit Officer is also on the line with us this morning. Jim and Jan will both be available later in the call for questions. I am very pleased to announce that for the second quarter our operating earnings were $13.5 million, which is a record level of quarterly net income and a 16% increase over the second quarter of 2013 and 8% increase over the first quarter of 2014. Net income available to common shareholders on an operating basis increased 16% over the second quarter of 2013. Fully diluted operating earnings per share were $0.50 for the quarter representing a 14% increase from $0.44 in the second quarter of 2013. I am referencing operating earnings as opposed to net earnings since our second quarter 2014 earnings included $576,000 or $0.02 per diluted share of merger-related expenses from the planned acquisition of Virginia Heritage Bank, which we announced in early June. While those expenses are non-recurring, we felt that for comparative purposes, it would be more relevant to use earnings and financial ratios, which exclude those merger expenses. I will comment more about the merger later in my remarks. We have spoken many times about how important consistency is to our -- to EagleBank. We are pleased to note that for the 22nd consecutive quarter we are announcing record earnings that once again the earnings growth was the result of strong results across several key performance measures not just one factor. We continue to expand revenue driven primarily by loan growth combined with an exceptional net interest margin. We also realized growth in…

Thank you. (Operator Instructions) Our first question comes from Catherine Mealor with KBW. Your line is open.

Good morning, everyone.

Hi. Catherine.

Good morning.

Ron, can you talk a little bit about the growth this quarter, and how much of it came from the Detroit, D.C. market versus Northern Virginia market? It feels like the Northern Virginia market, even before Virginia Heritage was an area focus for you’ll and you’ve had some recent hires there. Just trying to get a sense as to how much momentum you’re already feeling in that market?

Catherine, I don’t know the breakout specifically between Northern Virginia and D.C. and Montgomery County. I will tell you, it's pretty much consistent with the way it’s been in previous quarters. There's really been no recent hires in the Northern Virginia marketplace, but we still see it as a huge opportunity, especially with the Virginia Heritage merger and we believe there’s a tremendous growth. Well we know there is tremendous growth, these reports are showing the growth in the North Virginia marketplace and we can be there to capitalize on it. So the answer is that we’ve been pretty consistent over the past few years.

Okay. And maybe follow-up on the expenses, really great improvement in the efficiency ratio this quarter, more than we expected. As we think about expenses moving forward, is there -- is this kind of bottom in terms of the absolute dollars and we’ll see slow growth moving forward and really just getting nice operating leverage from continued strong revenue growth. Is there any way to lower the expenses further? I would doubt it, but why I asked the question?

Good question. We’re building more and more into the technology system that we have as an example, just a minor part. But if you think of about year ago, we spent a lot of money on the encompass system which is a technology assisted by residential real estate group. That’s allowed us to be able to scale back on the staffing side. From the branches, remember that two years ago, we increased the number of branches pretty significantly and that we’re building more and more into the growth of those branches. So I would tell you that do I see a dramatic decrease in expenses, absolutely not. I think that we’ve always said the mid-to-high 40s is where we believe that we can maintain. Again every quarter, it’s going to have some hiccups one way or the other. But from a longer term perspective, the range that we’re in, we feel pretty good about. Obviously with the Virginia Heritage merger, there will be a little hiccups up or down there. But again we feel over the longer term the efficiency that we have with the infrastructure is something that we certainly not going to miss. Building that infrastructure was so important, putting in the system that we put in a couple of years ago, allows us to go to a $10 billion bank at least. So these are all the things that we’ve invested in the past that we’re probably seeing the benefits of.

Great. Thank you very much. Congrats on a great quarter.

Thanks Catherine.

(Operator Instructions) Our next question comes from Casey Orr with Sandler O'Neill. Your line is open.

Good morning.

Good morning, Casey.

Just wondering what your thoughts are right now, managing that loan deposit ratio. Now that it’s creeping up to 100%. Are you comfortable with that growing over 100% or where do you see that growing in the next few quarters. What’s the idea of level for you guys?

We believe that 95%, 97% is a comfortable level. Bear in mind that we have the opportunity should we need to of significant liquidity out in the market place. Our interest rates we continue to drop. So should we decide that we need liquidity, we can increase rates as well as we have significant secondary sources. We have a drop in the CDs that we have outstanding, the wholesale funding. So we feel very comfortable in that 95%, 97% range because we believe that we have the availability of raising adding liquidity. I also might add as we’ve just answered on the Catherine’s question that the new branches that we have are seeing a lot of activity. So we do see the ability for continuing those deposits and we’re constantly working with our existing customers on being able to cross sell them by increasing the DTAs which obviously is the ideal answer to funding loan growth.

Okay. Great. That’s helpful. And Jan, maybe can you elaborate a little on that one, large commercial loan that got resolved this quarter. Did you have to take any charge-offs on that?

We did not. It was really a timing matter related to the state and going through the administration and negotiating these sale of assets and resolution of multiple creditor claims.

Okay. Thank you guys. Good quarter guys.

Thanks Casey.

Thanks Casey.

I am clearly showing no further questions at this time. I will now turn the call back over to Ron Paul for further remarks.

Again I like to thank everybody for calling in today. Looking forward to another great quarter next quarter and appreciate everybody participating in the call. Thanks very much. Have a great summer.

Ladies and gentlemen, that does conclude today’s conference. You may all disconnect and everyone have a great day