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Eagle Bancorp, Inc. Announces Net Income for First Quarter 2020 of $23.1 Million and Total Assets of $10.01 Billion

Company Release - 4/22/2020 4:15 PM ET

BETHESDA, Md., April 22, 2020 (GLOBE NEWSWIRE) -- First and foremost, at a time of great stress and health related matters in our country, owing to the coronavirus pandemic (“COVID-19”) worldwide, we wish all our shareholders, clients, bank analysts and others who support and follow our company to stay well. Banking is integral to a community’s welfare and here at EagleBank, we are working hard to stay focused and meet our ongoing commitments to clients old and new.

Eagle Bancorp, Inc. (the “Company”) (NASDAQ:EGBN), the parent company of EagleBank (the “Bank”), today announced quarterly net income of $23.1 million (basic and diluted earnings per common share of $0.70) for the three months ended March 31, 2020, as compared to $33.7 million net income (basic and diluted earnings per common share of $0.98) for the three months ended March 31, 2019.

Excluding nonrecurring costs in the first quarter of 2019 related to share based compensation awards and the resignation of our former CEO and Chairman amounting to $6.2 million ($0.13 per diluted share), earnings for the first quarter of 2019 were $38.3 million ($1.11 per diluted share).   

Summary Financial Analysis

“For the first quarter of 2020, we are pleased to report continued growth in total loans and total deposits, continued superior operating leverage, and stable asset quality,” noted Susan G. Riel, President and Chief Executive Officer of the Company. Ms. Riel continued, “Capital levels remain strong and the Company’s assets ended the first quarter of 2020 at $10.01 billion, representing 19% growth over the first quarter of 2019, with total shareholders’ equity of $1.18 billion. Net income in the first quarter of 2020 resulted in an annualized return on average assets of 0.98% and an annualized return on average tangible common equity of 8.39%.”

Ms. Riel added, “Under accounting principles generally accepted in the United States (“GAAP”), the Company adopted the new standard for determining Loan Loss Allowances, termed “CECL”. This adoption as of January 1, 2020, in combination with first quarter 2020 loan loss provisioning taking into account COVID-19 matters, had a pronounced impact on both retained earnings and first quarter loan loss provisioning.” This matter is discussed further below.

The Company’s performance in the first quarter of 2020 as compared to the first quarter of 2019 was highlighted by growth in average total loans of 8.7%, growth in average total deposits of 10.0%, a net interest margin of 3.49%, and total revenue of $85.2 million. Ms. Riel noted that the Company focuses more on growth of average balances year over year since that measure relates more directly to income statement results. As compared to the fourth quarter of 2019, average loan growth in the first quarter 2020 was 1.6% and average deposits declined by 0.4%. Deposit growth tends to be seasonally lower in the first quarter of each year. The efficiency ratio, which measures the ratio of noninterest expense to total revenue, for the first quarter of 2020 was 43.83% as compared to 43.87% for the first quarter of 2019.

During the first quarter of 2020, the Company incurred annualized net charge-offs of 12 basis points of average loans. Nonperforming loans were down slightly at March 31, 2020 ($47.0 million or 0.60% of total loans) as compared to December 31, 2019 ($48.7 million or 0.65% of total loans). We experienced an increase in other real estate owned (“OREO”), which totaled $8.2 million at March 31, 2020 as compared to $1.5 million at December 31, 2019. The increase was due to foreclosures involving two ultra high-end residential properties located in Washington, D.C. Both properties were managed by a single sponsor who was unable to sell and defaulted on both notes. The evolution of the COVID-19 pandemic and related containment and relief measures will determine how the impacts will be reflected in our loan portfolio, including these measures, over time.

The pipeline of loan commitments remains strong although the Bank has seen additional draws on committed lines of credit during the second half of the first quarter. Ms. Riel added, “For the first quarter of 2020, period end loan balances grew 3.9% over December 31, 2019, and total deposits increased by 11.3%. Management continues to focus on achieving relationship development and growth while ensuring the existing portfolio is appropriately monitored for any potential deterioration in credit.”

The net interest margin was 3.49% for the first quarter of 2020, 4.02% for the first quarter of 2019, and 3.49% for the fourth quarter of 2019. The net interest margin in the first quarter of 2020 and the fourth quarter of 2019 was stable at 3.49% due to a sharper decline in the cost of funds, which more than offset declining yields on loans and investments. In a quarter when the average one month LIBOR rate declined by 39 basis points, our cost of funds declined by 9 basis points and our yield on earning assets was down by 8 basis points (loan yields declined by 11 basis points). We have also been able to maintain about a 30% mix of average noninterest bearing deposits to total deposits, which is favorable. Sharply lower market interest rates over the past four quarters and a continuing relatively flat yield curve maintains pressure on the Company’s net interest margin. The decline in the net interest margin in the first quarter of 2020, versus the same period in 2019, was due to a decline in the yield on earning assets of 65 basis points exceeding the decline in the cost of funds of 13 basis points, as we elected to increase funding to meet a strong loan demand. The significant decline in market rates (one month LIBOR averaged 110 basis points lower in the first quarter of 2020 versus the first quarter of 2019) negatively impacted our large variable and adjustable rate loan portfolio. The yield on our loan portfolio was 5.07% in the first quarter of 2020 versus 5.62% in 2019. Interest rates are now at a point where loan floor rates are operative, which will mitigate further loan yield declines. Ms. Riel noted, “Even considering the decline in the net interest margin, Management believes that the Company has historically maintained a superior net interest margin compared to peers.”

Total revenue (net interest income plus noninterest income) for the first quarter of 2020 was $85.2 million, or 2% below the $87.3 million of total revenue earned for the first quarter of 2019. In addition to the effect of lower margins on net interest income (down 2%), gains on loan sales were negatively impacted by COVID-19 as described below.

As noted earlier, our asset quality measures remained solid at March 31, 2020. Annualized net charge-offs were 0.12% of average loans ($2.2 million) for the first quarter of 2020 as compared to 0.19% of average loans for the first quarter of 2019. At March 31, 2020, the Company’s nonperforming loans amounted to $47.0 million (0.60% of total loans) as compared to $40.3 million (0.56% of total loans) at March 31, 2019 and $48.7 million (0.65% of total loans) at December 31, 2019. Nonperforming assets amounted to $55.3 million (0.55% of total assets) at March 31, 2020 compared to $41.7 million (0.56% of total assets) at March 31, 2019 and $50.2 million (0.50% of total assets) at December 31, 2019. The evolution of the COVID-19 pandemic and related containment and relief measures will determine how the impacts will be reflected in our loan portfolio, including these measures, over time.

The first quarter of 2020 saw significant disruption in the outlook over credit quality, particularly in certain industries, as COVID-19 resulted in the closure of businesses across the region as stay-at-home orders were given in the various municipalities in which the Company operates. Among those industries most clearly impacted is the Accommodation and Food Service industry. Exposure to this industry represents 9.7% of the Bank’s loan portfolio as of March 31, 2020. Management is closely monitoring borrowers and remains attentive to signs of deterioration in borrowers’ financial conditions and is proactively taking steps to mitigate risk as appropriate, including placing loans on nonaccrual status. There is uncertainty regarding the region’s overall economic outlook given lack of clarity over how long COVID-19 will continue to impact our region. Management has been working with customers on payment deferrals to assist companies in managing through this crisis. These deferrals amounted to 32 notes representing $45 million in outstanding exposure as of March 31, 2020 and 234 notes representing $298 million in outstanding exposure as of April 16, 2020. Some of these deferrals might have met the criteria for treatment under U.S. GAAP as troubled debt restructurings (TDRs), while many did not. None of the deferrals are reflected in the Company’s balance sheet and asset quality measures, however, due to the provision of the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) that permits U.S. financial institutions to temporarily suspend the U.S. GAAP requirements to treat such short-term loan modifications as TDR. These provisions have also been confirmed by interagency guidance issued by the federal banking agencies and confirmed with staff members of the Financial Accounting Standards Board. Other loan portfolio areas of concern and additional COVID-19 loan related matters are discussed below.

The new accounting standard known as the current expected credit loss (“CECL”) standard (ASC 326) was adopted by the Company in the first quarter of 2020. The new standard requires a significant change in how banks assess credit risk and establish reserves for possible future loan losses. Two significant changes under the new standard are the requirement to establish loan loss reserves at loan origination considering the entire life of the loan and to estimate lifetime loss reserves by modeling a forecast that is impacted by economic factors.

Under the CECL standard and based on the January 1, 2020 effective date, the Company made an initial adjustment to the allowance for credit losses of $10.6 million along with $4.1 million to the reserve for unfunded commitments. This adjustment increased the ratio of the allowance to total loans from 0.98% at December 31, 2019 to 1.09% at January 1, 2020. In accordance with adoption of CECL, the initial January 1, 2020 adjustment was to retained earnings, net of taxes. Based on our ongoing risk analysis and modeling through March 31, 2020, under the CECL allowance methodology, the Company further increased the allowance for loan losses to 1.23%, which reflects COVID-19 risks as of March 31, 2020. Management believes to the best of its knowledge that its allowance for credit losses, at 1.23% of total loans (excluding loans held for sale) at March 31, 2020, is adequate to absorb potential credit losses within the loan portfolio at that date. The portion of the provision related to COVID-19 matters was about two thirds of the quarter’s reserve build. As noted above, uncertainty remains about the duration of the COVID-19 pandemic and its impacts, although further significant negative impact may occur and the Company continues to monitor its loan portfolio and borrowers. Under the prior accounting standard known as the incurred loss model, the allowance for credit losses was 0.98% at both March 31, 2019 and December 31, 2019. The allowance for credit losses represented 205% of nonperforming loans at March 31, 2020, as compared to 174% at March 31, 2019 and 151% at December 31, 2019.

“The Company’s productivity remained strong in the quarter,” noted Ms. Riel, “and the efficiency ratio of 43.83% reflects management’s ongoing efforts to maintain superior operating leverage. Further, the annualized level of noninterest expenses as a percentage of average assets was 1.58% in the first quarter of 2020 as compared to 1.52% in the first quarter of 2019. The Company’s goal is to maximize operating performance without inhibiting growth or negatively impacting our ability to service our customers. Ms. Riel further noted, “Our total deposits at March 31, 2020 averaged $384 million per branch as compared to the FDIC’s most recently reported regional average of $141 million per branch.”

COVID-19 Discussion Matters

Employee Matters:

Management continues to thank and acknowledge the flexibility and engagement of our hard working employees during this crisis. As the COVID-19 pandemic has unfolded, our workforce has transitioned to majority remote access operations. Our information technology infrastructure has afforded our organization the ability to work predominantly remotely with little interruption as we continue to service the needs of our clients. While we continue to strive to have the majority of our employees operating from home, there are some functions that require a physical presence at our banking offices. Employees are maintaining safe distances and we have provided more frequent cleaning of our facilities to maintain a safe environment. Management remains connected to employees through periodic company-wide telephonic meetings and regular notifications and updates through both email and the Company’s intranet.

Branch Hours:

Branch hours and availability have been modified in consideration of the safety of our employees and clients. While lobbies are closed at all of our branches, six branches across the Bank’s footprint remain available to our clients having drive-up windows open during regular business hours.

The CARES Act:

Enacted March 27, 2020 the CARES Act included several provisions designed to provide relief to individuals and businesses as well as the banking system. Among the more significant components of this legislation for our Company was the creation of the $350 billion Paycheck Protection Program (“PPP”). Loans made under the PPP are fully guaranteed as to principal and interest by the Small Business Administration (“SBA”), whose guarantee is backed by the full faith and credit of the U.S. Government. PPP-covered loans also afford borrowers forgiveness up to the principal amount of the PPP-covered loan if the proceeds are used to retain workers and maintain payroll or make mortgage interest, lease and utility payments. The SBA will reimburse PPP lenders for any amount of a PPP-covered loan that is forgiven.

As an SBA preferred lender, the Bank is actively participating in the PPP program, and began processing applications once the SBA began accepting applications. The SBA funding authority expired prior to the complete submission of many applications, where we experienced heightened demand for the PPP program. We are working hard to meet the needs of our customers, and will be using our best efforts to process as many eligible applications as we can in the likely event the program is reauthorized.     

Loan Portfolio Exposures:

Industry areas of potential concern within the Loan Portfolio are represented below as of March 31, 2020:

   
IndustryPrincipal Balance (in 000's)% of Loan Portfolio
Accommodation & Food Services$761,3469.7%
Retail Trade  89,7531.1%


Concerns over exposures to the Accommodation and Food Service industry and retail are the most immediate at this time. Accommodation and Food Service exposure represents 9.7% of the Bank’s loan portfolio as of March 31, 2020 among 349 customers. Retail trade exposure represents 1.1% of the Bank’s loan portfolio.  The Bank has ongoing extensive outreach to these customers, and is assisting where necessary with PPP loans and payment deferrals or interest only periods in the short term as customers work with the Bank to develop longer term stabilization strategies as the landscape of the COVID-19 pandemic evolves. The duration and severity of the pandemic will likely impact future credit challenges in these areas. 

In addition to the foregoing specific industries, the Bank has exposure not included in the above industry data secured by commercial real estate loans secured by the below property types as of March 31, 2020:

   
Property TypePrincipal Balance (in 000's)% of Loan Portfolio
Restaurant$40,0310.5%
Hotel   40,7510.5%
Retail391,1584.97%


Although not evidenced at March 31, 2020, It is anticipated that some portion of the CRE loans secured by the above property types could be impacted by the tenancies associated with impacted industries.  The Bank is working with CRE investor borrowers and monitoring rent collections as part of our portfolio management process. 

Liquidity and Backup Sources:

Our primary and secondary sources of liquidity remain strong. Over the last 12 months our average deposits have increased by 10% and we maintain a very liquid investment portfolio, including significant overnight liquidity. Average short term liquidity was $606 million in first quarter of 2020, which is above EagleBank’s average needs. Secondary sources of liquidity amount to $2.95 billion.

Share Repurchases:

While the Company’s capital position remains well above regulatory well capitalized levels, due to the heightened volatility of the stock market and uncertainty regarding the impact of COVID-19, the Company’s remaining authorization to repurchase shares has been put on hold. For the first quarter of 2020, the Company repurchased 1,182,841 shares (72% of authorized shares) at an average cost of  $37.31 per share. The Board of Directors and Management continue to monitor this area and may enter the markets from time to time as determined appropriate.
             
Dividends:

Management believes that our capital position remains very strong and at this time, we expect to maintain our quarterly dividend.

Balance Sheet Analysis

Total assets at March 31, 2020 were $10.01 billion, a 19% increase as compared to $8.39 billion at March 31, 2019, and an increase of 11% as compared to $8.99 billion at December 31, 2019. Total loans (excluding loans held for sale) were $7.84 billion at March 31, 2020, a 9% increase as compared to $7.17 billion at March 31, 2019, and a 4% increase as compared to $7.55 billion at December 31, 2019. Loans held for sale amounted to $60.0 million at March 31, 2020 as compared to $20.3 million at March 31, 2019, a 196% increase, and $56.7 million at December 31, 2019, a 6% increase. The investment portfolio totaled $858.9 million at March 31, 2020, an 11% increase from the $772.2 million balance at March 31, 2019. As compared to December 31, 2019, the investment portfolio at March 31, 2020 increased by $15.6 million or 2%.

Total deposits at March 31, 2020 were $8.14 billion compared to $6.68 billion at March 31, 2019, a 22% increase and $7.22 billion at December 31, 2019, a 13% increase. Total borrowed funds (excluding customer repurchase agreements) were $567.8 million at March 31, 2020, $467.4 million at March 31, 2019 and $467.7 million at December 31, 2019.

Total shareholders’ equity increased 3% to $1.18 billion at March 31, 2020 compared to $1.15 billion at March 31, 2019, and decreased by less than 1% from $1.19 billion at December 31, 2019. The increase in shareholders’ equity at March 31, 2020 compared to the same period in 2019 was primarily the result of growth in retained earnings offset by the day one CECL entry of $10.9 million net of taxes, $44 million in stock repurchases, and dividends declared of $7.2 million. The Company’s capital ratios remain substantially in excess of regulatory minimum and buffer requirements, with a total risk based capital ratio of 15.69% at March 31, 2020, as compared to 16.22% at March 31, 2019, and 16.20% at December 31, 2019, both common equity tier 1 (“CET1”) risk based capital and tier 1 risk based capital ratios of 12.40% at March 31, 2020, as compared to 12.69% at March 31, 2019, and 12.87% at December 31, 2019, a tier 1 leverage ratio of 11.58% at March 31, 2020, as compared to 12.49% at March 31, 2019, and 11.62% at December 31, 2019. In addition, the tangible common equity ratio was 10.90% at March 31, 2020, compared to 12.59% at March 31, 2019 and 12.22% at December 31, 2019. Tangible book value per share was $33.54 at March 31, 2020, an 11% increase over $30.20 for the same period in 2019.

Detail Income Statement Analysis

Net interest income decreased 2% for the three months ended March 31, 2020 over the same period in 2019 ($79.7 million versus $81.0 million), resulting primarily from lesser average yields on loans (5.07% versus 5.62%) despite growth in average earning assets of 5%. The net interest margin was 3.49% for the three months ended March 31, 2020, as compared to 4.02% for the three months ended March 31, 2019.

The provision for credit losses was $16.4 million for the three months ended March 31, 2020 as compared to $3.4 million for the three months ended March 31, 2019. The higher provisioning in the first quarter of 2020, as compared to the first quarter of 2019, is primarily due to the implementation of CECL and the impact of COVID-19 on our expected future credit losses. Net charge-offs of $2.2 million in the first quarter of 2020 represented an annualized 0.12% of average loans, excluding loans held for sale, as compared to $3.4 million, or an annualized 0.19% of average loans, excluding loans held for sale, in the first quarter of 2019. Net charge-offs in the first quarter of 2020 were attributable primarily to commercial real estate loans ($2.3 million).

Noninterest income for the three months ended March 31, 2020 decreased to $5.5 million from $6.3 million for the three months ended March 31, 2019, a 13% decrease, due substantially to lesser gains on the sale of residential mortgage loans ($825 thousand versus $1.3 million) resulting from $2.6 million in hedge and mark to market losses attributable to the Federal Reserve’s large purchase of mortgage backed securities combined with sharp declines in servicing right valuations associated with investor uncertainty surrounding COVID-19. Net investment gains were $822 thousand for the three months ended March 31, 2020 compared to $912 thousand for the same period in 2019. Residential mortgage loans closed were $193 million for the first quarter of 2020 versus $93 million for the first quarter of 2019.

The efficiency ratio was 43.83% for the first quarter of 2020, as compared to 43.87% for the first quarter of 2019. Noninterest expenses totaled $37.3 million for the three months ended March 31, 2020, as compared to $38.3 million for the three months ended March 31, 2019, a 3% decrease. Noninterest expenses in the first quarter of 2020 increased 16% compared to noninterest expenses of $32.2 million for the first quarter in 2019 excluding nonrecurring salaries and benefit costs defined below owing substantially to increased legal expenses discussed below.

Salaries and benefits costs decreased by $5.8 million. The Company recognized $6.2 million of nonrecurring charges related to share based compensation awards and the resignation of our former CEO and Chairman, Ron Paul, in March 2019. In addition, health insurance claims increased by $409 thousand during the first quarter of 2020 relative to the first quarter of 2019. FDIC expenses increased $308 thousand due to a higher assessment base resulting from growth in total assets. Other expenses decreased $717 thousand, due primarily to lower broker fees ($1.1 million) partially offset by higher telephone expenses ($173 thousand) associated with the transition to a new phone provider.

Legal, accounting and professional fees increased $5.3 million. Legal fees and expenditures of $4.6 million for the first quarter were primarily associated with previously disclosed ongoing governmental investigations and related subpoenas and document requests and our defense of the previously disclosed class action lawsuit, where we filed a motion to dismiss on April 2, 2020. These elevated legal expenses included substantial expenses associated with the reviews by the Special Compliance Committee and the Audit Committee, with the assistance of outside legal counsel, of the facts and circumstances associated with these various governmental investigations and legal proceedings.  These reviews have since concluded. The amount of legal fees and expenditures for the quarter is net of expected insurance coverage where we believe we have a high likelihood of recovery pursuant to our D&O insurance policies but does not include any offset for potential claims we may have in the future as to which recovery is impossible to predict at this time.

The effective income tax rate for the first quarter of 2020 was 26.5% as compared to 26.1% for the first quarter of 2019. During the first quarter of 2020, the Company recorded a discrete item related to restricted stock awards vesting that increased the effective tax rate.

The financial information which follows provides more detail on the Company’s financial performance for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 as well as providing eight quarters of trend data. Persons wishing additional information should refer to the Company’s Form 10-K for the year ended December 31, 2019 and other reports filed with the Securities and Exchange Commission (the “SEC”).

About Eagle Bancorp: The Company is the holding company for EagleBank, which commenced operations in 1998. The Bank is headquartered in Bethesda, Maryland, and operates through twenty branch offices, located in Suburban Maryland, Washington, D.C. and Northern Virginia. The Company focuses on building relationships with businesses, professionals and individuals in its marketplace.

Conference Call:Eagle Bancorp will host a conference call to discuss its first quarter 2020 financial results on Thursday, April 23, 2020 at 10:00 a.m. eastern daylight time. The public is invited to listen to this conference call by dialing 1.877.303.6220, conference ID Code 2947417, or by accessing the call on the Company’s website, www.EagleBankCorp.com. A replay of the conference call will be available on the Company’s website through May 7, 2020.

Forward-looking Statements: This press release contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” “could,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market (including the macroeconomic and other challenges and uncertainties resulting from the COVID-19 pandemic, including on our credit quality and business operations), interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. For details on factors that could affect these expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, in the Company’s upcoming Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in other periodic and current reports filed with the SEC. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company’s past results are not necessarily indicative of future performance. All information is as of the date of this press release. Any forward-looking statements made by or on behalf of the Company speak only as to the date they are made. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.             

CONTACT:
Michael T. Flynn
301.986.1800


    
Eagle Bancorp, Inc.   
Consolidated Financial Highlights (Unaudited)   
(dollars in thousands, except per share data) 
 Three Months March 31,
  2020   2019 
Income Statements:   
Total interest income$103,801  $105,134 
Total interest expense 24,057   24,117 
Net interest income 79,744   81,017 
Provision for credit losses 16,422   3,360 
Net interest income after provision for credit losses 63,322   77,657 
Noninterest income (before investment gain) 4,648   5,379 
Gain on sale of investment securities 822   912 
Total noninterest income 5,470   6,291 
Total noninterest expense 37,347   38,304 
Income before income tax expense 31,445   45,644 
Income tax expense 8,322   11,895 
Net income$23,123  $33,749 
    
Per Share Data:   
Earnings per weighted average common share, basic$0.70  $0.98 
Earnings per weighted average common share, diluted$0.70  $0.98 
Weighted average common shares outstanding, basic 32,850,112   34,480,772 
Weighted average common shares outstanding, diluted 32,871,831   34,536,236 
Actual shares outstanding at period end 32,197,258   34,537,193 
Book value per common share at period end$36.79  $33.25 
Tangible book value per common share at period end (1)$33.54  $30.20 
Dividend per common share$0.22  $- 
    
Performance Ratios (annualized):   
Return on average assets 0.98%  1.62%
Return on average common equity 7.67%  12.12%
Return on average tangible common equity 8.39%  13.38%
Net interest margin 3.49%  4.02%
Efficiency ratio (2) 43.83%  43.87%
    
Other Ratios:   
Allowance for credit losses to total loans (3) 1.23%  0.98%
Allowance for credit losses to total nonperforming loans 204.83%  173.72%
Nonperforming loans to total loans (3) 0.60%  0.56%
Nonperforming assets to total assets 0.55%  0.50%
Net charge-offs (annualized) to average loans (3) 0.12%  0.19%
Common equity to total assets 11.83%  13.69%
Tier 1 capital (to average assets) 11.58%  12.49%
Total capital (to risk weighted assets) 15.69%  16.22%
Common equity tier 1 capital (to risk weighted assets) 12.40%  12.69%
Tangible common equity ratio (1) 10.90%  12.59%
    
Loan Balances - Period End (in thousands):   
Commercial and Industrial$1,773,478  $1,510,835 
Commercial real estate - owner occupied$971,634  $990,372 
Commercial real estate - income producing$3,827,024  $3,370,692 
1-4 Family mortgage$104,558  $101,860 
Construction - commercial and residential$969,166  $1,044,305 
Construction - C&I (owner occupied)$114,138  $64,845 
Home equity$78,228  $87,009 
Other consumer$2,647  $3,140 
    
Average Balances (in thousands):   
Total assets$9,469,285  $8,455,680 
Total earning assets$9,176,174  $8,185,711 
Total loans$7,650,993  $7,038,472 
Total deposits$7,696,764  $6,987,468 
Total borrowings$485,948  $266,209 
Total shareholders’ equity$1,212,802  $1,128,869 
    
  1. Tangible common equity to tangible assets (the "tangible common equity ratio"), tangible book value per common share, and the annualized return on average tangible common equity are non-GAAP financial measures derived from GAAP based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders' equity by common shares outstanding. The Company calculates the annualized return on average tangible common equity ratio by dividing net income available to common shareholders by average tangible common equity which is calculated by excluding the average balance of intangible assets from the average common shareholders’ equity. The Company considers this information important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios and as such is useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions. The table below provides a reconciliation of these non-GAAP financial measures with financial measures defined by GAAP.
     
     
GAAP Reconciliation (Unaudited)    
(dollars in thousands except per share data)    
 Three Months EndedThree Months Ended
 March 31, 2020 March 31, 2019 
Common shareholders' equity$1,184,640  $1,148,488  
Less: Intangible assets (104,695)  (105,466) 
Tangible common equity$1,079,945  $1,043,022  
     
Book value per common share$36.79  $33.25  
Less: Intangible book value per common share (3.25)  (3.05) 
Tangible book value per common share$33.54  $30.20  
     
Total assets$10,014,081  $8,388,406  
Less: Intangible assets (104,695)  (105,466) 
Tangible assets$9,909,386  $8,282,940  
Tangible common equity ratio 10.90%  12.59% 
     
Average common shareholders' equity$1,212,802  $1,128,869  
Less: Average intangible assets (104,697)  (105,581) 
Average tangible common equity$1,108,105  $1,023,288  
     
Net Income Available to Common Shareholders$23,123  $33,749  
Average tangible common equity 1,108,105   1,023,288  
Annualized Return on Average Tangible Common Equity 8.39%  13.38% 
     
  1. Computed by dividing noninterest expense by the sum of net interest income and noninterest income. The efficiency ratio measures a bank’s overhead as a percentage of its revenue.
     
  2. Excludes loans held for sale.


Eagle Bancorp, Inc.     
Consolidated Balance Sheets (Unaudited)     
(dollars in thousands, except per share data)     
      
AssetsMarch 31, 2020 December 31, 2019 March 31, 2019
Cash and due from banks$7,177  $7,539  $6,817 
Federal funds sold 28,277   38,987   15,403 
Interest bearing deposits with banks and other short-term investments 904,160   195,447   99,870 
Investment securities available for sale, at fair value 858,916   843,363   772,229 
Federal Reserve and Federal Home Loan Bank stock 39,988   35,194   34,995 
Loans held for sale 60,036   56,707   20,268 
Loans 7,840,873   7,545,748   7,173,058 
Less allowance for credit losses (96,336)  (73,658)  (69,943)
Loans, net 7,744,537   7,472,090   7,103,115 
Premises and equipment, net 13,687   14,622   15,798 
Operating lease right-of-use assets 25,655   27,372   28,928 
Deferred income taxes 30,366   29,804   31,763 
Bank owned life insurance 76,139   75,724   73,865 
Intangible assets, net 104,695   104,739   105,466 
Other real estate owned 8,237   1,487   1,394 
Other assets 112,211   85,644   78,495 
  Total Assets$10,014,081  $8,988,719  $8,388,406 
      
Liabilities and Shareholders' Equity     
Deposits:     
Noninterest bearing demand$1,994,209  $2,064,367  $2,216,270 
Interest bearing transaction 931,597   863,856   588,326 
Savings and money market 3,950,495   3,013,129   2,515,269 
Time, $100,000 or more 608,355   663,987   791,956 
Other time 656,912   619,052   571,098 
Total deposits 8,141,568   7,224,391   6,682,919 
Customer repurchase agreements 31,377   30,980   26,418 
Other short-term borrowings 300,000   250,000   250,000 
Long-term borrowings 267,784   217,687   217,394 
Operating lease liabilities 28,242   29,959   32,752 
Reserve for unfunded commitments 6,230   -   - 
Other liabilities 54,240   45,021   30,435 
Total liabilities 8,829,441   7,798,038   7,239,918 
      
Shareholders' Equity     
Common stock, par value $.01 per share; shares authorized 100,000,000, shares     
issued and outstanding 32,197,258, 33,241,496, and 34,537,193, respectively 320   331   343 
Additional paid in capital 439,321   482,286   530,894 
Retained earnings 731,343   705,105   618,243 
Accumulated other comprehensive income (loss) 13,656   2,959   (992)
Total Shareholders' Equity 1,184,640   1,190,681   1,148,488 
Total Liabilities and Shareholders' Equity$10,014,081  $8,988,719  $8,388,406 
     `
      



Eagle Bancorp, Inc.   
Consolidated Statements of Income (Unaudited)   
(dollars in thousands, except per share data)   
  
 Three Months Ended March 31,
Interest Income 2020  2019
Interest and fees on loans$96,755 $97,821
Interest and dividends on investment securities 5,427  5,598
Interest on balances with other banks and short-term investments 1,559  1,666
Interest on federal funds sold 60  49
Total interest income 103,801  105,134
Interest Expense   
Interest on deposits 20,546  20,900
Interest on customer repurchase agreements 87  98
Interest on other short-term borrowings 357  140
Interest on long-term borrowings 3,067  2,979
Total interest expense 24,057  24,117
Net Interest Income  79,744  81,017
Provision for Credit Losses 16,422  3,360
Net Interest Income After Provision For Credit Losses 63,322  77,657
    
Noninterest Income   
Service charges on deposits 1,425  1,694
Gain on sale of loans 944  1,388
Gain on sale of investment securities 822  912
Increase in the cash surrender value of bank owned life insurance 414  425
Other income 1,865  1,872
Total noninterest income 5,470  6,291
Noninterest Expense   
Salaries and employee benefits 17,797  23,644
Premises and equipment expenses 3,821  3,852
Marketing and advertising 1,078  1,148
Data processing 2,496  2,375
Legal, accounting and professional fees 6,988  1,709
FDIC insurance 1,424  1,116
Other expenses 3,743  4,460
Total noninterest expense 37,347  38,304
Income Before Income Tax Expense 31,445  45,644
Income Tax Expense 8,322  11,895
Net Income $23,123 $33,749
    
Earnings Per Common Share   
Basic$0.70 $0.98
Diluted$0.70 $0.98



Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates (Unaudited)
(dollars in thousands)
        
 Three Months Ended March 31,
  2020   2019 
 Average BalanceInterestAverage
Yield/Rate
 Average BalanceInterestAverage
Yield/Rate
ASSETS       
Interest earning assets:       
Interest bearing deposits with other banks and other short-term investments$588,148$1,5591.07% $301,020$1,6662.24%
Loans held for sale (1) 38,749 3543.65%  17,919 2004.46%
Loans (1) (2)  7,650,993 96,4015.07%  7,038,472 97,6215.62%
Investment securities available for sale (2) 867,666 5,4272.52%  810,550 5,5982.80%
Federal funds sold 30,618 600.79%  17,750 491.12%
  Total interest earning assets 9,176,174 103,8014.55%  8,185,711 105,1345.21%
        
Total noninterest earning assets 377,939    339,420  
Less: allowance for credit losses 84,828    69,451  
  Total noninterest earning assets 293,111    269,969  
  TOTAL ASSETS$9,469,285   $8,455,680  
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest bearing liabilities:       
Interest bearing transaction$805,134$1,6660.83% $590,853$1,1810.81%
Savings and money market 3,337,958 11,0821.34%  2,792,552 11,9631.74%
Time deposits 1,287,310 7,7982.44%  1,330,939 7,7562.36%
  Total interest bearing deposits 5,430,402 20,5461.52%  4,714,344 20,9001.80%
Customer repurchase agreements 30,008 871.17%  27,793 981.43%
Other short-term borrowings 220,058 3570.64%  21,059 1402.66%
Long-term borrowings 235,882 3,0675.14%  217,357 2,9795.48%
  Total interest bearing liabilities 5,916,350 24,0571.64%  4,980,553 24,1171.96%
        
Noninterest bearing liabilities:       
Noninterest bearing demand 2,266,362    2,273,124  
Other liabilities 73,771    73,134  
  Total noninterest bearing liabilities 2,340,133    2,346,258  
        
Shareholders’ Equity 1,212,802    1,128,869  
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$9,469,285   $8,455,680  
        
Net interest income $79,744   $81,017 
Net interest spread  2.91%   3.25%
Net interest margin  3.49%   4.02%
Cost of funds  1.06%   1.19%
        
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $4.3 million and $4.1 million for the three months ended March 31, 2020 and 2019, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments. 
        



Eagle Bancorp, Inc.         
Statements of Income and Highlights Quarterly Trends (Unaudited)      
(dollars in thousands, except per share data)               
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30,
Income Statements: 2020   2019   2019   2019   2019   2018   2018   2018 
Total interest income$103,801  $107,183  $109,034  $108,279  $105,134  $105,581  $102,360  $96,296 
Total interest expense 24,057   26,473   28,045   26,950   24,117   23,869   21,069   18,086 
Net interest income 79,744   80,710   80,989   81,329   81,017   81,712   81,291   78,210 
Provision for credit losses 16,422   2,945   3,186   3,600   3,360   2,600   2,441   1,650 
Net interest income after provision for credit losses 63,322   77,765   77,803   77,729   77,657   79,112   78,850   76,560 
  Noninterest income (before investment gain (loss)) 4,648   6,845   6,161   5,797   5,379   6,060   5,640   5,527 
Gain (Loss) on sale of investment securities 822   (111)  153   563   912   29   -   26 
Total noninterest income 5,470   6,734   6,314   6,360   6,291   6,089   5,640   5,553 
  Salaries and employee benefits 17,797   19,360   19,095   17,743   23,644   15,907   17,157   17,812 
  Premises and equipment 3,821   3,380   3,503   3,652   3,852   3,969   3,889   3,873 
  Marketing and advertising 1,078   1,200   1,210   1,268   1,148   1,147   1,191   1,291 
  Other expenses 14,651   10,786   9,665   10,696   9,660   10,664   9,377   9,313 
Total noninterest expense 37,347   34,726   33,473   33,359   38,304   31,687   31,614   32,289 
Income before income tax expense 31,445   49,773   50,644   50,730   45,644   53,514   52,876   49,824 
Income tax expense 8,322   14,317   14,149   13,487   11,895   13,197   13,928   12,528 
Net income$23,123  $35,456  $36,495  $37,243  $33,749  $40,317  $38,948  $37,296 
                
Per Share Data:               
Earnings per weighted average common share, basic$0.70  $1.06  $1.07  $1.08  $0.98  $1.17  $1.14  $1.09 
Earnings per weighted average common share, diluted$0.70  $1.06  $1.07  $1.08  $0.98  $1.17  $1.13  $1.08 
Weighted average common shares outstanding, basic 32,850,112   33,468,572   34,232,890   34,540,152   34,480,772   34,349,089   34,308,684   34,305,693 
Weighted average common shares outstanding, diluted 32,871,831   33,498,681   34,255,889   34,565,253   34,536,236   34,460,985   34,460,794   34,448,354 
Actual shares outstanding at period end 32,197,258   33,241,496   33,720,522   34,539,853   34,537,193   34,387,919   34,308,473   34,305,071 
Book value per common share at period end$36.79  $35.82  $35.13  $34.30  $33.25  $32.25  $30.94  $29.82 
Tangible book value per common share at period end (1)$33.54  $32.67  $32.02  $31.25  $30.20  $29.17  $27.84  $26.71 
Dividend per common share$0.22  $0.22  $0.22  $0.22  $-  $-  $-  $- 
                
Performance Ratios (annualized):               
Return on average assets 0.98%  1.49%  1.62%  1.74%  1.62%  1.90%  1.93%  1.92%
Return on average common equity 7.67%  11.78%  12.09%  12.81%  12.12%  14.82%  14.85%  14.93%
Return on average tangible common equity 8.39%  12.91%  13.25%  14.08%  13.38%  16.43%  16.54%  16.71%
Net interest margin 3.49%  3.49%  3.72%  3.91%  4.02%  3.97%  4.14%  4.15%
Efficiency ratio (2) 43.83%  39.71%  38.34%  38.04%  43.87%  36.09%  36.37%  38.55%
                
Other Ratios:               
Allowance for credit losses to total loans (3) 1.23%  0.98%  0.98%  0.98%  0.98%  1.00%  1.00%  1.00%
Allowance for credit losses to total nonperforming loans (4) 204.83%  151.16%  127.87%  192.70%  173.72%  429.72%  452.28%  612.42%
Nonperforming loans to total loans (3) (4) 0.60%  0.65%  0.76%  0.51%  0.56%  0.23%  0.22%  0.16%
Nonperforming assets to total assets (4) 0.55%  0.56%  0.66%  0.45%  0.50%  0.21%  0.20%  0.16%
Net charge-offs (annualized) to average loans (3) 0.12%  0.16%  0.08%  0.08%  0.19%  0.05%  0.05%  0.05%
Tier 1 capital (to average assets) 11.58%  11.62%  12.19%  12.66%  12.49%  12.08%  12.13%  11.97%
Total capital (to risk weighted assets) 15.69%  16.20%  16.08%  16.36%  16.22%  16.08%  15.74%  15.59%
Common equity tier 1 capital (to risk weighted assets) 12.40%  12.87%  12.76%  12.87%  12.69%  12.47%  12.11%  11.89%
Tangible common equity ratio (1) 10.90%  12.22%  12.13%  12.60%  12.59%  12.11%  12.01%  11.79%
                
Average Balances (in thousands):               
Total assets$9,469,285  $9,426,220  $8,923,406  $8,595,523  $8,455,680  $8,415,480  $8,023,535  $7,789,564 
Total earning assets$9,176,174  $9,160,034  $8,655,196  $8,328,323  $8,185,711  $8,171,010  $7,793,422  $7,558,138 
Total loans$7,650,993  $7,532,179  $7,492,816  $7,260,899  $7,038,472  $6,897,434  $6,646,264  $6,569,931 
Total deposits$7,696,764  $7,716,973  $7,319,314  $6,893,981  $6,987,468  $6,950,714  $6,485,144  $6,269,126 
Total borrowings$485,948  $449,432  $345,464  $470,214  $266,209  $342,637  $464,460  $485,729 
Total shareholders’ equity$1,212,802  $1,194,337  $1,197,513  $1,166,487  $1,128,869  $1,079,622  $1,040,826  $1,002,091 
                
(1) Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per common share are non-GAAP financial measures derived from GAAP based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders' equity by common shares outstanding. The Company considers this information important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios and as such is useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions.
(2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income. 
(3) Excludes loans held for sale. 
(4) Nonperforming loans at September 30, 2019, includes a $16.5 million loan that was brought current shortly after quarter end. 
                

Source: Eagle Bancorp, Inc.