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Section 1: 8-K (FORM 8-K)

Form 8-K
0001050441 False 0001050441 2020-01-15 2020-01-15 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  January 15, 2020

_______________________________

EAGLE BANCORP INC

(Exact name of registrant as specified in its charter)

_______________________________

Maryland0-2592352-2061461
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

7830 Old Georgetown Road, Third Floor

Bethesda, Maryland 20814

(Address of Principal Executive Offices) (Zip Code)

(301) 986-1800

(Registrant's telephone number, including area code)

 

(Former name or former address, if changed since last report)

_______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueEGBNThe Nasdaq Capital Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 

The information contained in this Current Report on Form 8-K that is furnished under this Item 2.02, including the accompanying Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. The information contained in this Current Report on Form 8-K that is furnished under this Item 2.02, including the accompanying Exhibit 99.1, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing.

Item 2.02. Results of Operations and Financial Condition.

On January 15, 2020, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.  

Exhibit Number    Description
    
99.1  Press Release dated January 15, 2020
104  Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 EAGLE BANCORP INC
   
  
Date: January 15, 2020By: /s/ Charles D. Levingston        
  Charles D. Levingston
  Executive Vice President, Chief Financial Officer
  

 

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Section 2: EX-99.1 (PRESS RELEASE)

EdgarFiling

EXHIBIT 99.1

Eagle Bancorp, Inc. Announces Net Income of $35.5 Million for the Fourth Quarter and $142.9 Million for the Full Year of 2019

BETHESDA, Md., Jan. 15, 2020 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the “Company”) (NASDAQ:EGBN), the parent company of EagleBank, today announced quarterly net income of $35.5 million for the three months ended December 31, 2019, a 12% decrease as compared to $40.3 million net income for the three months ended December 31, 2018.

For the year ended December 31, 2019, the Company’s net income was $142.9 million, a 6% decrease  as compared to $152.3 million for the year ended December 31, 2018.

Net income for the three months ended December 31, 2019 was $1.06 per basic and diluted common share as compared to $1.17 per basic and diluted common share for the same period in 2018, a 9% decrease in earnings per share for the fourth quarter of 2019 versus 2018.

For the full year 2019, net income was $4.18 per basic and diluted common share as compared to $4.44 per basic common share and $4.42 per diluted common share for 2018, a 6% decrease in basic and 5% decrease in diluted earnings per share for the full year of 2019 as compared to 2018.

“Notwithstanding the negative impact that declining interest rates in the second half of 2019 and a flat yield curve are having on our revenues and net interest margin, we are pleased to report a continued trend of both average loan and deposit growth, together with continuing solid asset quality and favorable operating leverage. Additionally, our capital base remains very strong, with ratios well in excess of the requirements for well capitalized status,” noted Susan G. Riel, President and Chief Executive Officer of Eagle Bancorp, Inc. Ms. Riel added that “While period end loan balances in the fourth quarter 2019 were flat as compared to September 30, 2019, average loans increased 0.5% over the third quarter of 2019 and were 9% higher in the fourth quarter of 2019 as compared to the fourth quarter of 2018. In the fourth quarter of 2019 the funding of construction loans tapered off as expected and we experienced higher loan payoffs. These payoffs (which accounted for about 40% of the full year of 2019 payoffs) were expected and reflected in part the successful completion of projects. Funding of C&I loans improved during the quarter and the loan pipeline remained strong. For the full year of 2019, loan balances increased 8% while average loans increased 10% over 2018, close to planned levels.”

Ms. Riel added, “Deposit activity in the fourth quarter 2019 was very fluid as period end balances declined by about 2% as compared to September 30, 2019, however, average deposit balances increased a strong 5% in the fourth quarter 2019 over the third quarter in 2019. We have many large depositor clients whose balances fluctuate regularly and can impact overall deposit levels at a point in time. We focus more on growing average balances, which more directly relate to revenue. For the fourth quarter of 2019, average deposits were 11% higher as compared to the fourth quarter in 2018. For the full year 2019, deposit balances increased by 4%, while average deposit balances increased a strong 12%.”

Total revenue (net interest income plus noninterest income) for the fourth quarter of 2019 was $87.4 million, as compared to $87.8 million for the fourth quarter of 2018 and $87.3 for the third quarter in 2019. For the year 2019, total revenue was $349.7 million, as compared to $339.6 million for the year of 2018, a 3% increase.

Ms. Riel further commented, “For the fourth quarter of 2019, as noted, we experienced very strong growth of average deposits as compared to minimal loan growth, resulting in significantly higher average liquidity. This higher average liquidity ($739 million for the fourth quarter of 2019 vs. $306 million normalized average for the first three quarters of 2019) contributed to a decline in the net interest margin to 3.49% for the fourth quarter from 3.72% in the third quarter of 2019. The higher liquidity position in the fourth quarter resulted in an average loan to deposit ratio of 98% as compared to 102% for the third quarter of 2019. Also contributing to the decreased net interest margin for the fourth quarter was a 21 basis point decline in the yield on the loan portfolio to 5.18% versus 5.39% for the third quarter 2019, largely due to the sharp decline in the one month average LIBOR interest rate in the fourth quarter (down 39 basis points to 1.79%). Approximately 40% of the Bank’s loan balances are on notes indexed to this LIBOR rate.” Ms. Riel added, “While we were able to realize declines in our cost of funds as market rates declined in the fourth quarter of 2019 (13 basis points from 1.28% to 1.15%), the variable rate nature of our loan portfolio has resulted in a sharper decline in asset yields than in the cost of funds. Importantly, our credit quality remained very strong in the fourth quarter as the level of nonperforming assets was 0.56% of total assets at December 31, 2019 and the annualized level of net charge offs to average loans was 0.13%.” Ms. Riel added, “The Company’s operating efficiency, another key driver of our financial performance, remained favorable.” For the fourth quarter in 2019, the efficiency ratio was 39.7%, as compared to 36.1% in the fourth quarter of 2018, and was 40.0% for the full year 2019, which is inclusive of elevated legal costs as discussed below.

Combining all operating factors for the fourth quarter 2019, the Company achieved a return on average assets of 1.49%, a return on average common equity of 11.78%, and a return on average tangible common equity ratio of 12.91%, while sustaining strong capital levels.

For the full year 2019 over 2018, average deposit growth was 12%, average loan growth was 10%, revenue growth was 3% and noninterest expense growth was 10%. The net interest margin for 2019 was 3.77% as compared to 4.10% for the year 2018.  While lower, we believe our net interest margin for 2019 remains above peer banking companies. Period end to period end, loan growth in 2019 was 8% and deposit growth was 4%.

Comparing asset yields and cost of funds for the full year of 2019 to the full year 2018, loan yields were down 9 basis points (from 5.54% to 5.45%), yields on earning assets were also down 9 basis points (from 5.09% to 5.00%) and the cost of funds was up 24 basis points (from 0.99% to 1.23%). Importantly, our funding costs, while up in 2019 over 2018, continue to benefit from the substantial level of average noninterest deposits as a percentage of average total deposits of 30.6% in 2019. Having a significant portion of the loan portfolio with variable and adjustable rates in a declining rate environment (specifically the latter half of 2019) has been the major factor in compressing the net interest margin and negatively impacting revenue growth in the third and fourth quarters. Ms. Riel  added, “We expect that further lowering of deposit interest rates in 2020 together with more stable short term market rates will take some pressure off of further margin declines.”  

The return on average assets (“ROAA”) was 1.61% for the year 2019 as compared to 1.91% for the year ended December 31, 2018. The annualized return on average common equity (“ROACE”) was  12.20% for the full year 2019 as compared to 14.89% for the year ended December 31, 2018. The annualized return on average tangible common equity (“ROATCE”) was 13.40% for the full year 2019 as compared to 16.63% for the year ended December 31, 2018.

Asset quality measures remained solid in the fourth quarter of 2019. At December 31, 2019, the Company’s nonperforming loans amounted to $48.7 million (0.65% of total loans) as compared to $57.7 million (0.76% of total loans) at September 30, 2019 and $16.3 million (0.23% of total loans) at December 31, 2018. Nonperforming assets amounted to $50.2 million (0.56% of total assets) at December 31, 2019 compared to $59.1 million (0.66% of total assets) at September 30, 2019 and $17.7 million (0.21% of total assets) at December 31, 2018. For 2019, the Company recorded net charge-offs of $9.4 million (0.13% of average loans), as compared to net charge-offs of $3.5 million (0.05% of average loans) for 2018.

Management continues to remain attentive to any signs of deterioration in borrowers’ financial conditions and is proactive in taking the appropriate steps to mitigate risk. Furthermore, the Company is diligent in placing loans on nonaccrual status and believes, based on its loan portfolio risk analysis, that its December 31, 2019 allowance for credit losses, at 0.98% of total loans (excluding loans held for sale), is adequate to absorb probable credit losses within the loan portfolio as of the end of the year. The allowance for credit losses was 0.98% of total loans at September 30, 2019 and 1.00% at December 31, 2018. The allowance for credit losses represented 151% of nonperforming loans at December 31, 2019.

Total assets at December 31, 2019 were $8.99 billion, relatively flat as compared to $9.00 billion at September 30, 2019, and increased 7% as compared to $8.39 billion at December 31, 2018. Total loans (excluding loans held for sale) were $7.54 billion at December 31, 2019, relatively flat as compared to $7.56 billion at September 30, 2019, and an 8% increase as compared to $6.99 billion at December 31, 2018. Loans held for sale amounted to $56.7 million at December 31, 2019 as compared to $52.2 million at September 30, 2019, a 9% increase, and $19.3 million at December 31, 2018, a 195% increase. The investment portfolio totaled $843.4 million at December 31, 2019, a 19% increase from $708.5 million at September 30, 2019. As compared to December 31, 2018, the investment portfolio at December 31, 2019 increased by $59.2 million or 8%.

Total deposits at December 31, 2019 were $7.22 billion, as compared to deposits of $7.40 billion at September 30, 2019, a 2% decline, and deposits of $6.97 billion at December 31, 2018, a 4% increase. Total borrowed funds (excluding customer repurchase agreements) were $467.7 million at December 31, 2019, $317.6 million at September 30, 2019 and $217.3 million at December 31, 2018.

Total shareholders’ equity at December 31, 2019 increased 0.5%, to $1.19 billion, compared to $1.18 billion at September 30, 2019, and increased 7%, from $1.11 billion at December 31, 2018. Growth in retained earnings has enhanced the Company’s capital position well in excess of regulatory requirements for well capitalized status. The total risk based capital ratio was 16.20% at December 31, 2019, as compared to 16.08% at both September 30, 2019, and  December 31, 2018. In addition, the tangible common equity ratio was 12.22% at December 31, 2019, compared to 12.13% at September 30, 2019 and 12.11% at December 31, 2018.

On August 9, 2019, the Company announced a Share Repurchase Plan which authorized share repurchases up to 5% of outstanding shares (1,715,547) until expiration on December 31, 2019. Through December 31, 2019, the Company has repurchased 1,304,500 shares at a weighted average price of $42.06 per share. On December 18, 2019, the Company announced a new Share Repurchase Plan which authorized share repurchases up to approximately 5% of outstanding shares (1,641,000) until expiration on December 31, 2020.

The Company announced a regular quarterly cash dividend on December 16, 2019 of $0.22 per share to shareholders of record on January 15, 2020 and payable January 31, 2020.

Analysis of the three months ended December 31, 2019 compared to December 31, 2018

Net interest income decreased 1% for the three months ended December 31, 2019 over the same period in 2018 ($80.7 million versus $81.7 million), resulting from a 48 basis point reduction of the net interest margin offset by growth in average earning assets of 12%. The net interest margin was 3.49% for the three months ended December 31, 2019, as compared to 3.97% for the three months ended December 31, 2018. The Company believes its net interest margin remains favorable compared to peer banking companies and that its disciplined approach to managing the loan portfolio to a 5.18% yield for the fourth quarter of 2019 has been a significant factor in its overall profitability.

The provision for credit losses was $2.9 million for the three months ended December 31, 2019 as compared to $2.6 million for the three months ended December 31, 2018. The higher provisioning in the fourth quarter of 2019, as compared to the fourth quarter of 2018, is primarily due to higher net charge-offs. Net charge-offs of $3.0 million in the fourth quarter of 2019 represented an annualized 0.16% of average loans, excluding loans held for sale, as compared to net charge-offs of $844 thousand, or an annualized 0.05% of average loans, excluding loans held for sale, in the fourth quarter of 2018. Net charge-offs in the fourth quarter of 2019 were attributable to Commercial & Industrial loans ($3.0 million).

Noninterest income for the three months ended December 31, 2019 increased to $6.7 million from $6.1 million for the three months ended December 31, 2018, due substantially to $1.3 million higher gains on sale of residential mortgage loans offset by $373 thousand lower service charges on deposits. The residential mortgage unit had higher sales and resulting gains on the sale of these loans in the fourth quarter of 2019 (gains of $2.5 million for the fourth quarter of 2019 versus $1.2 million for the same period in 2018). Residential mortgage loans closed were $228 million for the fourth quarter in 2019 versus $91 million for the fourth quarter of 2018. The FHA business unit generated income of $395 thousand on the origination, securitization, servicing and sale of FHA Multifamily-Backed GNMA securities in the fourth quarter of 2019 compared to $507 thousand for the same period in 2018. The SBA business unit generated $138 thousand in revenue during the fourth quarter of 2019 from sales of the guaranteed portion on SBA loans compared to $167 thousand for the same period in 2018.  

The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 39.71% for the fourth quarter of 2019, as compared to 36.09% for the fourth quarter of 2018. Noninterest expenses totaled $34.7 million for the three months ended December 31, 2019, as compared to $31.7 million for the three months ended December 31, 2018. Salaries and employee benefits expenses increased $3.5 million in the fourth quarter of 2019 as compared to the fourth quarter of 2018. This was attributable to a $3.2 million increase resulting from additional staffing, merit increases, and incentives. Legal, accounting, and professional fees increased by $1.7 million as discussed below. Other expenses decreased $1.1 million due primarily to lower broker fees.

The effective income tax rate was higher (28.8%) for the fourth quarter 2019 as compared to 24.7% for the same period in 2018 due primarily to a decrease in federal tax credits, an increase in nondeductible expenses, and adjustments related to the completion of the 2018 tax returns.

Analysis of the year ended December 31, 2019 compared to December 31, 2018

Net interest income increased 2% for the year ended December 31, 2019 over the same period in 2018 ($324.0 million versus $317.0 million), resulting from growth in average earning assets of 11%. The net interest margin was 3.77% for the year ended December 31, 2019 as compared to 4.10% for the same period in 2018. The Company believes its net interest margin remains favorable compared to peer banking companies and that its disciplined approach to managing the loan portfolio yield to 5.45% for the full year of 2019 has been a significant factor in its overall profitability. Additionally, the percentage of average noninterest bearing deposits to total deposits was 30.6% for the full year of 2019 versus 33.4% for the same period in 2018.

The provision for credit losses was $13.1 million for the year ended December 31, 2019 as compared to $8.7 million for the year ended December 31, 2018. The higher provisioning during 2019, as compared to 2018, is due to higher net charge-offs. Net charge-offs of $9.4 million during 2019 represented an annualized 0.13% of average loans, excluding loans held for sale, as compared to $3.5 million or an annualized 0.05% of average loans, excluding loans held for sale, in 2018. Net charge-offs during 2019 were attributable primarily to commercial real estate ($5.0 million) and commercial loans ($4.5 million).

Noninterest income for the year ended December 31, 2019 was $25.7 million as compared to $22.6 million for the year ended December 31, 2018, a 14% increase due to $2.7 million higher gains on sale of residential mortgage loans, $1.4 million higher gain on sale of investment securities, offset by $767 thousand lower service charges on deposits. The residential mortgage unit had $8.2 million of gains on the sale of loans for the full year of 2019 versus $5.4 million for the same period in 2018 resulting from higher loan originations and subsequent loan sales. Residential mortgage loans closed were $698 million for the full year 2019 versus $424 million for the full year 2018. The FHA business unit generated income of $501 thousand on the origination, securitization, servicing and sale of FHA Multifamily-Backed GNMA securities for the full year 2019 compared to $357 thousand for the same period in 2018. The SBA business unit generated $309 thousand in revenue from sales of the guaranteed portion on SBA loans for the full year 2019 compared to $540 thousand for the same period in 2018.

Noninterest expenses totaled $139.9 million for the year ended December 31, 2019, as compared to $126.7 million for the year ended December 31, 2018, a 10% increase. Salaries and employee benefits increased by $12.1 million due primarily to $8.2 million of nonrecurring charges related to acceleration of share based compensation expenses associated with the retirement of our former Chairman and Chief Executive Officer and the resignation of certain directors. In addition, $4.0 million of the increase resulted from additional staffing, merit increases, and incentives. Legal, accounting and professional fees increased by $2.5 million as discussed below. For 2019, the efficiency ratio was 39.99% as compared to 37.31% for the same period in 2018.

Legal, accounting and professional fees and expenses for the three months ended December 31, 2019 increased to $4.1 million from $2.5 million for the same period in 2018, a 68% increase. Legal, accounting and professional fees and expenses for the year ended December 31, 2019 increased to $12.2 million from $9.7 million in 2018, a 25% increase. The increased expenses for both the quarter-to-date and year-to-date 2019 periods were primarily associated with government agencies investigations previously disclosed in the second quarter 2019 earnings press release. The Company expects to continue to incur elevated levels of legal and professional fees and expenses in 2020 as it continues to cooperate with these investigations. Other than these increased costs, we do not believe at this time that the resolution of these investigations will be materially adverse to the Company. As a result of these ongoing investigations, there have been no regulatory restrictions placed on the Company’s ability to fully engage in its banking business as presently conducted. We are, however, unable to predict the duration, scope or outcome of these investigations.

The effective income tax rate for the year ended 2019 was higher at 27.4% as compared to 25.4% due primarily to a decrease in federal tax credits, an increase in nondeductible expenses, and adjustments related to the completion of the 2018 tax returns.

The financial information which follows provides more detail on the Company’s financial performance for the three and twelve months ended December 31, 2019 as compared to the three and twelve months ended December 31, 2018 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, 2018 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 fourth quarter and year end 2019 financial results on Thursday, January 16, 2020 at 10:00 a.m. eastern time. The public is invited to listen to this conference call by dialing 1.877.303.6220, conference ID Code is 2188459, 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 January 30, 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,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, 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, 2018 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.

        
Eagle Bancorp, Inc.       
Consolidated Financial Highlights (Unaudited)       
(dollars in thousands, except per share data)   
 Three Months Ended December 31, Years Ended December 31,
 2019 2018 2019 2018
Income Statements:       
Total interest income$107,183  $105,581  $429,630  $393,286 
Total interest expense 26,473   23,869   105,585   76,293 
Net interest income 80,710   81,712   324,045   316,993 
Provision for credit losses 2,945   2,600   13,091   8,660 
Net interest income after provision for credit losses 77,765   79,112   310,954   308,333 
Noninterest income (before investment (loss) gain) 6,845   6,060   24,182   22,489 
(Loss) Gain on sale of investment securities (111)  29   1,517   97 
Total noninterest income 6,734   6,089   25,699   22,586 
Total noninterest expense 34,726   31,687   139,862   126,711 
Income before income tax expense 49,773   53,514   196,791   204,208 
Income tax expense 14,317   13,197   53,848   51,932 
Net income$35,456  $40,317  $142,943  $152,276 
        
Per Share Data:       
Earnings per weighted average common share, basic$1.06  $1.17  $4.18  $4.44 
Earnings per weighted average common share, diluted$1.06  $1.17  $4.18  $4.42 
Weighted average common shares outstanding, basic 33,468,572   34,349,089   34,178,804   34,306,336 
Weighted average common shares outstanding, diluted 33,498,681   34,460,985   34,210,646   34,443,040 
Actual shares outstanding at period end 33,241,496   34,387,919   33,241,496   34,387,919 
Book value per common share at period end$35.82  $32.25  $35.82  $32.25 
Tangible book value per common share at period end (1)$32.67  $29.17  $32.67  $29.17 
Dividend per common share$0.22  $-  $0.66  $- 
        
Performance Ratios (annualized):       
Return on average assets 1.49%  1.90%  1.61%  1.91%
Return on average common equity 11.78%  14.82%  12.20%  14.89%
Return on average tangible common equity 12.91%  16.43%  13.40%  16.63%
Net interest margin 3.49%  3.97%  3.77%  4.10%
Efficiency ratio (2) 39.71%  36.09%  39.99%  37.31%
        
Other Ratios:       
Allowance for credit losses to total loans (3) 0.98%  1.00%  0.98%  1.00%
Allowance for credit losses to total nonperforming loans 151.16%  429.72%  151.16%  429.72%
Nonperforming loans to total loans (3) 0.65%  0.23%  0.65%  0.23%
Nonperforming assets to total assets 0.56%  0.21%  0.56%  0.21%
Net charge-offs (annualized) to average loans (3) 0.16%  0.05%  0.13%  0.05%
Common equity to total assets 13.25%  13.22%  13.25%  13.22%
Tier 1 capital (to average assets) 11.62%  12.10%  11.62%  12.10%
Total capital (to risk weighted assets) 16.20%  16.08%  16.20%  16.08%
Common equity tier 1 capital (to risk weighted assets) 12.87%  12.49%  12.87%  12.49%
Tangible common equity ratio (1) 12.22%  12.11%  12.22%  12.11%
        
Loan Balances - Period End (in thousands):       
Commercial and Industrial$1,545,906  $1,553,112  $1,545,906  $1,553,112 
Commercial real estate - owner occupied$985,409  $887,814  $985,409  $887,814 
Commercial real estate - income producing$3,702,747  $3,256,900  $3,702,747  $3,256,900 
1-4 Family mortgage$104,221  $106,418  $104,221  $106,418 
Construction - commercial and residential$1,035,754  $1,039,815  $1,035,754  $1,039,815 
Construction - C&I (owner occupied)$89,490  $57,797  $89,490  $57,797 
Home equity$80,061  $86,603  $80,061  $86,603 
Other consumer$2,160  $2,988  $2,160  $2,988 
        
Average Balances (in thousands):       
Total assets$9,426,220  $8,415,480  $8,853,066  $7,958,941 
Total earning assets$9,160,034  $8,171,010  $8,585,184  $7,726,401 
Total loans$7,532,179  $6,897,434  $7,332,886  $6,638,136 
Total deposits$7,716,973  $6,950,714  $7,231,679  $6,444,551 
Total borrowings$449,432  $342,637  $383,230  $453,581 
Total shareholders’ equity$1,194,337  $1,079,622  $1,172,051  $1,022,642 
        

(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. The table below provides a reconciliation of these non-GAAP financial measures with financial measures defined by GAAP.

(2)  Computed by dividing noninterest expense by the sum of net interest income and noninterest income.

(3)  Excludes loans held for sale.

        
GAAP Reconciliation (Unaudited)       
(dollars in thousands except per share data)       
 Three Months Ended
 Three Months Ended
 Year Ended Year Ended
 December 31, 2019 December 31, 2018 December 31, 2019
 December 31, 2018
Common shareholders' equity$1,190,681  $1,108,941  $1,190,681  $1,108,941 
Less: Intangible assets (104,739)  (105,766)  (104,739)  (105,766)
Tangible common equity$1,085,942  $1,003,175  $1,085,942  $1,003,175 
        
Book value per common share$35.82  $32.25  $35.82  $32.25 
Less: Intangible book value per common share (3.15)  (3.08)  (3.15)  (3.08)
Tangible book value per common share$32.67  $29.17  $32.67  $29.17 
        
Total assets$8,988,719  $8,389,137  $8,988,719  $8,389,137 
Less: Intangible assets (104,739)  (105,766)  (104,739)  (105,766)
Tangible assets$8,883,980  $8,283,371  $8,883,980  $8,283,371 
Tangible common equity ratio 12.22%  12.11%  12.22%  12.11%
        
Average common shareholders' equity$1,194,337  $1,079,622  $1,172,051  $1,022,642 
Less: Average intangible assets (104,784)  (106,379)  (105,167)  (106,806)
Average tangible common equity$1,089,553  $973,243  $1,066,884  $915,836 
        
Net Income Available to Common Shareholders$35,456  $40,317  $142,943  $152,276 
Average tangible common equity$1,089,553  $973,243  $1,066,884  $915,836 
Return on Average Tangible Common Equity 12.91%  16.43%  13.40%  16.63%
        


      
Eagle Bancorp, Inc.     
Consolidated Balance Sheets (Unaudited)     
(dollars in thousands, except per share data)     
      
AssetsDecember 31, 2019 September 30, 2019 December 31, 2018
Cash and due from banks$7,539  $6,657  $6,773 
Federal funds sold 38,987   27,711   11,934 
Interest bearing deposits with banks and other short-term investments 195,447   361,154   303,157 
Investment securities available for sale, at fair value 843,363   708,545   784,139 
Federal Reserve and Federal Home Loan Bank stock 35,194   28,725   23,506 
Loans held for sale 56,707   52,199   19,254 
Loans 7,545,748   7,559,161   6,991,447 
Less allowance for credit losses (73,658)  (73,720)  (69,944)
Loans, net 7,472,090   7,485,441   6,921,503 
Premises and equipment, net 14,622   14,515   16,851 
Operating lease right-of-use assets 27,372   26,552   - 
Deferred income taxes 29,804   29,722   33,027 
Bank owned life insurance 75,724   74,726   73,441 
Intangible assets, net 104,739   104,915   105,766 
Other real estate owned 1,487   1,487   1,394 
Other assets 85,644   81,118   88,392 
Total Assets$8,988,719  $9,003,467  $8,389,137 
      
Liabilities and Shareholders' Equity     
Deposits:     
Noninterest bearing demand$2,064,367  $2,051,106  $2,104,220 
Interest bearing transaction 863,856   918,011   593,107 
Savings and money market 3,013,129   3,034,530   2,949,559 
Time, $100,000 or more 663,987   772,340   801,957 
Other time 619,052   626,526   525,442 
Total deposits 7,224,391   7,402,513   6,974,285 
Customer repurchase agreements 30,980   30,297   30,413 
Other short-term borrowings 250,000   100,000   - 
Long-term borrowings 217,687   217,589   217,296 
Operating lease liabilities 29,959   29,586   - 
Other liabilities 45,021   38,888   58,202 
Total liabilities 7,798,038   7,818,873   7,280,196 
      
Shareholders' Equity     
Common stock, par value $.01 per share; shares authorized 100,000,000, shares     
issued and outstanding 33,241,496, 33,720,522, and 34,387,919, respectively 331   336   342 
Additional paid in capital 482,286   502,566   528,380 
Retained earnings 705,105   677,055   584,494 
Accumulated other comprehensive income (loss) 2,959   4,637   (4,275)
Total Shareholders' Equity 1,190,681   1,184,594   1,108,941 
Total Liabilities and Shareholders' Equity$8,988,719  $9,003,467  $8,389,137 
     `
      


        
Eagle Bancorp, Inc.       
Consolidated Statements of Income (Unaudited)       
(dollars in thousands, except per share data)       
    
 Three Months Ended December 31, Years Ended December 31,
Interest Income2019 2018
 2019
 2018
Interest and fees on loans$98,916  $97,682  $400,923  $368,606 
Interest and dividends on investment securities 5,297   5,382   21,037   17,907 
Interest on balances with other banks and short-term investments 2,905   2,464   7,438   6,616 
Interest on federal funds sold 65   53   232   157 
Total interest income 107,183   105,581   429,630   393,286 
Interest Expense       
Interest on deposits 23,089   20,314   91,026   60,210 
Interest on customer repurchase agreements 90   59   345   225 
Interest on other short-term borrowings 315   517   2,298   3,942 
Interest on long-term borrowings 2,979   2,979   11,916   11,916 
Total interest expense 26,473   23,869   105,585   76,293 
Net Interest Income  80,710   81,712   324,045   316,993 
Provision for Credit Losses 2,945   2,600   13,091   8,660 
Net Interest Income After Provision For Credit Losses 77,765   79,112   310,954   308,333 
        
Noninterest Income       
Service charges on deposits 1,453   1,826   6,247   7,014 
(Loss) Gain on sale of loans 2,600   1,331   8,474   5,963 
Gain on sale of investment securities (111)  29   1,517   97 
Increase in the cash surrender value of bank owned life insurance 418   434   1,703   1,507 
Other income 2,374   2,469   7,758   8,005 
Total noninterest income 6,734   6,089   25,699   22,586 
Noninterest Expense       
Salaries and employee benefits 19,360   15,907   79,842   67,734 
Premises and equipment expenses 3,380   3,969   14,387   15,660 
Marketing and advertising 1,200   1,147   4,826   4,566 
Data processing 2,251   2,570   9,412   9,714 
Legal, accounting and professional fees 4,121   2,460   12,195   9,742 
FDIC insurance 879   953   3,206   3,512 
Other expenses 3,535   4,681   15,994   15,783 
Total noninterest expense 34,726   31,687   139,862   126,711 
Income Before Income Tax Expense 49,773   53,514   196,791   204,208 
Income Tax Expense 14,317   13,197   53,848   51,932 
Net Income $35,456  $40,317  $142,943  $152,276 
        
Earnings Per Common Share       
Basic$1.06  $1.17  $4.18  $4.44 
Diluted$1.06  $1.17  $4.18  $4.42 
        


 
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates (Unaudited)
(dollars in thousands)
        
 Three Months Ended December 31,
 2019
 2018
 Average BalanceInterestAverage
Yield/Rate
 Average BalanceInterestAverage
Yield/Rate
ASSETS       
Interest earning assets:       
Interest bearing deposits with other banks and other short-term investments$710,038 $2,905 1.62% $459,139 $2,464 2.13%
Loans held for sale (1) 57,779  524 3.63%  21,457  256 4.77%
Loans (1) (2)  7,532,179  98,392 5.18%  6,897,434  97,426 5.60%
Investment securities available for sale (2) 831,143  5,297 2.53%  775,706  5,382 2.75%
Federal funds sold 28,895  65 0.89%  17,274  53 1.22%
Total interest earning assets 9,160,034  107,183 4.64%  8,171,010  105,581 5.13%
        
Total noninterest earning assets 340,186     313,614   
Less: allowance for credit losses 74,000     69,144   
Total noninterest earning assets 266,186     244,470   
TOTAL ASSETS$9,426,220    $8,415,480   
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest bearing liabilities:       
Interest bearing transaction$881,453 $2,284 1.03% $539,764 $1,096 0.81%
Savings and money market 3,144,249  12,195 1.54%  2,754,480  11,688 1.68%
Time deposits 1,400,330  8,610 2.44%  1,329,294  7,530 2.25%
Total interest bearing deposits 5,426,032  23,089 1.69%  4,623,538  20,314 1.74%
Customer repurchase agreements 31,231  90 1.14%  40,859  59 0.57%
Other short-term borrowings 200,547  315 0.61%  84,515  517 2.39%
Long-term borrowings 217,654  2,979 5.36%  217,263  2,979 5.37%
Total interest bearing liabilities 5,875,464  26,473 1.79%  4,966,175  23,869 1.91%
        
Noninterest bearing liabilities:       
Noninterest bearing demand 2,290,941     2,327,176   
Other liabilities 65,478     42,507   
Total noninterest bearing liabilities 2,356,419     2,369,683   
        
Shareholders’ Equity 1,194,337     1,079,622   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$9,426,220    $8,415,480   
        
Net interest income $80,710    $81,712  
Net interest spread  2.85%   3.22%
Net interest margin  3.49%   3.97%
Cost of funds  1.15%   1.16%
        
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $4.7 million for each of the three months ended December 31, 2019 and 2018.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.
        


 
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields and Rates (Unaudited)
(dollars in thousands)
        
 Years Ended December 31,
 2019
 2018
 Average BalanceInterestAverage
Yield/Rate
 Average BalanceInterestAverage
Yield/Rate
ASSETS       
Interest earning assets:       
Interest bearing deposits with other banks and other short-term investments$392,245 $7,438 1.90% $356,017 $6,616 1.86%
Loans held for sale (1) 40,192  1,565 3.89%  23,877  1,095 4.59%
Loans (1) (2)  7,332,886  399,358 5.45%  6,638,136  367,511 5.54%
Investment securities available for sale (1) 796,608  21,037 2.64%  692,753  17,907 2.58%
Federal funds sold 23,253  232 1.00%  15,618  157 1.01%
Total interest earning assets 8,585,184  429,630 5.00%  7,726,401  393,286 5.09%
        
Total noninterest earning assets 339,565     299,653   
Less: allowance for credit losses 71,683     67,113   
Total noninterest earning assets 267,882     232,540   
TOTAL ASSETS$8,853,066    $7,958,941   
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest bearing liabilities:       
Interest bearing transaction$743,361 $6,491 0.87% $460,599 $3,348 0.73%
Savings and money market 2,873,054  50,042 1.74%  2,691,726  35,534 1.32%
Time deposits 1,404,748  34,493 2.46%  1,141,795  21,328 1.87%
Total interest bearing deposits 5,021,163  91,026 1.81%  4,294,120  60,210 1.40%
Customer repurchase agreements 30,024  345 1.15%  44,333  225 0.51%
Other short-term borrowings 135,699  2,298 1.67%  192,131  3,942 2.02%
Long-term borrowings 217,507  11,916 5.40%  217,117  11,916 5.41%
Total interest bearing liabilities 5,404,393  105,585 1.95%  4,747,701  76,293 1.61%
        
Noninterest bearing liabilities:       
Noninterest bearing demand 2,210,516     2,150,431   
Other liabilities 66,106     38,167   
Total noninterest bearing liabilities 2,276,622     2,188,598   
        
Shareholders’ equity 1,172,051     1,022,642   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$8,853,066    $7,958,941   
        
Net interest income $324,045    $316,993  
Net interest spread  3.05%   3.48%
Net interest margin  3.77%   4.10%
Cost of funds  1.23%   0.99%
        
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $17.8 million and $19.6 million for the years ended December 31, 2019 and 2018, 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
 December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31,
Income Statements:2019 2019 2019 2019 2018 2018 2018 2018 2017
Total interest income$107,183  $109,034  $108,279  $105,134  $105,581  $102,360  $96,296  $89,049  $86,526 
Total interest expense 26,473   28,045   26,950   24,117   23,869   21,069   18,086   13,269   11,167 
Net interest income 80,710   80,989   81,329   81,017   81,712   81,291   78,210   75,780   75,359 
Provision for credit losses 2,945   3,186   3,600   3,360   2,600   2,441   1,650   1,969   4,087 
Net interest income after provision for credit losses 77,765   77,803   77,729   77,657   79,112   78,850   76,560   73,811   71,272 
Noninterest income (before investment (loss) gain) 6,845   6,161   5,797   5,379   6,060   5,640   5,527   5,262   9,496 
(Loss) Gain on sale of investment securities (111)  153   563   912   29   -   26   42   - 
Total noninterest income 6,734   6,314   6,360   6,291   6,089   5,640   5,553   5,304   9,496 
Salaries and employee benefits 19,360   19,095   17,743   23,644   15,907   17,157   17,812   16,858   16,678 
Premises and equipment 3,380   3,503   3,652   3,852   3,969   3,889   3,873   3,929   4,019 
Marketing and advertising 1,200   1,210   1,268   1,148   1,147   1,191   1,291   937   1,222 
Other expenses 10,786   9,665   10,696   9,660   10,664   9,377   9,313   9,397   7,884 
Total noninterest expense 34,726   33,473   33,359   38,304   31,687   31,614   32,289   31,121   29,803 
Income before income tax expense 49,773   50,644   50,730   45,644   53,514   52,876   49,824   47,994   50,965 
Income tax expense 14,317   14,149   13,487   11,895   13,197   13,928   12,528   12,279   35,396 
Net income 35,456   36,495   37,243   33,749   40,317   38,948   37,296   35,715   15,569 
                  
                  
Per Share Data:                 
Earnings per weighted average common share, basic$1.06  $1.07  $1.08  $0.98  $1.17  $1.14  $1.09  $1.04  $0.46 
Earnings per weighted average common share, diluted$1.06  $1.07  $1.08  $0.98  $1.17  $1.13  $1.08  $1.04  $0.45 
Weighted average common shares outstanding, basic 33,468,572   34,232,890   34,540,152   34,480,772   34,349,089   34,308,684   34,305,693   34,260,882   34,179,793 
Weighted average common shares outstanding, diluted 33,498,681   34,255,889   34,565,253   34,536,236   34,460,985   34,460,794   34,448,354   34,406,310   34,334,873 
Actual shares outstanding at period end 33,241,496   33,720,522   34,539,853   34,537,193   34,387,919   34,308,473   34,305,071   34,303,056   34,185,163 
Book value per common share at period end$35.82  $35.13  $34.30  $33.25  $32.25  $30.94  $29.82  $28.72  $27.80 
Tangible book value per common share at period end (1)$32.67  $32.02  $31.25  $30.20  $29.17  $27.84  $26.71  $25.60  $24.67 
Dividend per common share$0.22  $0.22  $0.22  $-  $-  $-  $-  $-  $- 
                  
Performance Ratios (annualized):                 
Return on average assets 1.49%  1.62%  1.74%  1.62%  1.90%  1.93%  1.92%  1.91%  0.82%
Return on average common equity 11.78%  12.09%  12.81%  12.12%  14.82%  14.85%  14.93%  14.99%  6.49%
Return on average tangible common equity 12.91%  13.25%  14.08%  13.38%  16.43%  16.54%  16.71%  16.86%  7.31%
Net interest margin 3.49%  3.72%  3.91%  4.02%  3.97%  4.14%  4.15%  4.17%  4.13%
Efficiency ratio (2) 39.71%  38.34%  38.04%  43.87%  36.09%  36.37%  38.55%  38.38%  35.12%
                  
Other Ratios:                 
Allowance for credit losses to total loans (3) 0.98%  0.98%  0.98%  0.98%  1.00%  1.00%  1.00%  1.00%  1.01%
Allowance for credit losses to total nonperforming loans (4) 151.16%  127.87%  192.70%  173.72%  429.72%  452.28%  612.42%  491.56%  489.20%
Nonperforming loans to total loans (3) (4) 0.65%  0.76%  0.51%  0.56%  0.23%  0.22%  0.16%  0.20%  0.21%
Nonperforming assets to total assets (4) 0.56%  0.66%  0.45%  0.50%  0.21%  0.20%  0.16%  0.19%  0.20%
Net charge-offs (annualized) to average loans (3) 0.16%  0.08%  0.08%  0.19%  0.05%  0.05%  0.05%  0.06%  0.15%
Tier 1 capital (to average assets) 11.62%  12.19%  12.66%  12.49%  12.08%  12.13%  11.97%  11.76%  11.45%
Total capital (to risk weighted assets) 16.20%  16.08%  16.36%  16.22%  16.08%  15.74%  15.59%  15.32%  15.02%
Common equity tier 1 capital (to risk weighted assets) 12.87%  12.76%  12.87%  12.69%  12.47%  12.11%  11.89%  11.57%  11.23%
Tangible common equity ratio (1) 12.22%  12.13%  12.60%  12.59%  12.11%  12.01%  11.79%  11.57%  11.44%
                  
Average Balances (in thousands):                 
Total assets$9,426,220  $8,923,406  $8,595,523  $8,455,680  $8,415,480  $8,023,535  $7,789,564  $7,597,485  $7,487,624 
Total earning assets$9,160,034  $8,655,196  $8,328,323  $8,185,711  $8,171,010  $7,793,422  $7,558,138  $7,373,535  $7,242,994 
Total loans$7,532,179  $7,492,816  $7,260,899  $7,038,472  $6,897,434  $6,646,264  $6,569,931  $6,433,730  $6,207,505 
Total deposits$7,716,973  $7,319,314  $6,893,981  $6,987,468  $6,950,714  $6,485,144  $6,269,126  $6,063,017  $6,101,727 
Total borrowings$449,432  $345,464  $470,214  $266,209  $342,637  $464,460  $485,729  $523,369  $382,687 
Total shareholders’ equity$1,194,337  $1,197,513  $1,166,487  $1,128,869  $1,079,622  $1,040,826  $1,002,091  $966,585  $951,727 
                  
(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.
                  

EAGLE BANCORP, INC.
CONTACT:
Michael T. Flynn
301.986.1800

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