Eagle Bancorp's new CEO bets on deposits to reverse the exodus
Stephen Curley's first earnings call marks a pivot from cleanup to growth, anchored in core funding.
EGBN · Earnings Call · 2026-07-23
The New CEO's First Quarter
Eagle Bancorp's second-quarter earnings call on July 23 was Steve Curley's debut as President and CEO, and the message was as clear as the Washington skyline: the bank is done shrinking. “I have never seen a bank shrink to greatness.” — Stephen R. Curley, President and CEO · 2026-07-23 Curley, just three weeks into the job, laid out four priorities—asset quality, funding, operating performance, and capital—but the through-line was unmistakably growth. “We are not managing the bank with the objective of shrinking,” he emphasized. Instead, the plan is to build a stronger funding franchise and deliver responsible growth, an explicit break from the balance-sheet contraction that has defined the past two years. The numbers show why a pivot is needed. Net income fell to $6.9 million from $14.7 million in the prior quarter, driven by a $21.4 million provision and continued resolutions of problem assets. But the trajectory of credit metrics is improving: criticized and classified loans declined another $34.5 million to $759.6 million, down more than 30% from their peak. Curley said he personally visited nearly every special mention and substandard relationship over $7 million, a hands-on approach meant to signal that the portfolio is well understood and actively managed.Asset Quality: Still Working but Progress
While the credit cleanup is far from over, the tone has shifted from crisis to management. The entire $49.7 million held-for-sale balance is either sold or under contract, and CFO Eric Newell reaffirmed prior guidance that provision and charge-offs will moderate. “I stand by the original statement. Indicating our expectation of lower levels in the second half of 2026.” — Eric Newell, Chief Financial Officer · 2026-07-23 This echoes the prior quarter's assessment that Q1's provision run-rate was a reasonable baseline. In April, Newell had said, “If you look at the first-quarter provision expense as well as charge-offs, that is a decent run-rate for our expectation for the remainder of the year for each quarter.” — Eric Newell, Chief Financial Officer · 2026-04-23 The consistency suggests management believes the worst of the loss recognition is behind. The office portfolio, the source of much of the pain, saw reserves of $40 million held specifically against income-producing office assets. However, the concentration ratio for commercial real estate fell to 268% from 295%, moving further below the 300% regulatory threshold. The Asset quality narrative is now centered on a few idiosyncratic credits, not systemic deterioration.The Funding Pivot
The real headline of this call was the new CEO's obsession with deposits. Curley, a Western Alliance alumnus, made no secret that he sees the deposit base as the foundation of franchise value. He stressed that the bank will “take the opposite approach” to funding—building relationship-based core deposits before growing loans. “We will take the opposite approach. Build relationship based core deposits and create the capacity to support disciplined loan growth,” he said. The funding profile is already improving: brokered deposits fell $301.5 million in the quarter, while noninterest-bearing deposits rose 5.2% to $1.56 billion. Net interest margin expanded 5 basis points to 2.52%, helped by this mix shift. The business banking push is central to this strategy. Curley wants branches to become engines for core deposits and business banking, not just service centers. He also flagged that he is “evaluating our capital framework” and hinted that capital actions could be on the table once the credit cycle turns. That could include buybacks or a revised dividend policy—a meaningful development for a stock trading at 0.7x tangible book. C&I loans grew 24% year over year, a beacon of growth in an otherwise shrinking balance sheet. Evelyn Lee, head of C&I, said the focus is on new primary relationships, with diversified production and strong cross-selling of treasury management. She expects sustainable high-single to low-double-digit growth—a far cry from the CRE payoffs that have dominated recent quarters.Financials and Outlook
The financial picture remains challenged, but there are early signs of stabilization. Net interest income fell to $64 million, down from a peak of $83 million in 2022, but the margin has stopped eroding. Noninterest expense declined 30% sequentially, driven by lower FDIC insurance and disposition costs, lifting the efficiency ratio to 60.2% from 63.8%. Management narrowed the NIM guidance to 2.0–2.7% and expects noninterest expense to decline 7–11% for the year. Price to book remains depressed at 0.7x, well below the 2.5x seen in 2016, underscoring the market's skepticism. Yet the new leadership's explicit focus on funding and growth, coupled with a strengthened balance sheet, could begin to change that narrative.Curley's closing words capture the essence: the franchise is being fortified, not reinvented. With a new CEO, a clear strategic pivot, and a visible commitment to deposits, Eagle Bancorp is positioning itself for a return to growth in 2027. Whether the market buys it will depend on the execution of this deposit-led revival—and whether the last of the credit pain is truly behind.My objective is not to create a different Eagle Bank. it is to build a stronger Eagle Bank.