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CST: 20/11/2019 22:23:16   

Eagle Bancorp, Inc. Announces Net Earnings of $36.5 Million for the Third Quarter 2019 and Assets Exceeding $9.0 Billion

35 Days ago

BETHESDA, Md., Oct. 16, 2019 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the “Company”) (NASDAQ:EGBN), the parent company of EagleBank (the “Bank”), today announced quarterly net income of $36.5 million for the three months ended September 30, 2019, a 6% decrease from $38.9 million net income for the three months ended September 30, 2018. Net income per basic common share for the three months ended September 30, 2019 was $1.07 compared to $1.14 for the same period in 2018. Net income per diluted common share for the three months ended September 30, 2019 was $1.07 compared to $1.13 for the same period in 2018.

Earnings in the third quarter of 2019 were impacted by two significant non-recurring expense items. The Company recorded $2.0 million of accelerated shared based compensation expense due to the resignation of certain directors of the Company and Bank. Secondly, as a result of the FDIC Deposit Insurance Fund exceeding 1.38% of insured deposits at June 30, 2019, EagleBank recognized a $1.1 million credit to its FDIC assessment expense in the third quarter of 2019. Excluding these two non-recurring items, net income for the third quarter of 2019 would have been $37.1 million ($1.08 per diluted share).          

For the nine months ended September 30, 2019, the Company’s net income was $107.5 million, a 4% decrease from $112.0 million net income for the same period in 2018. Net income per basic common share for the nine months ended September 30, 2019 was $3.12 compared to $3.26 for the same period in 2018. Net income per diluted common share for the nine months ended September 30, 2019 was $3.12 compared to $3.25 for the same period in 2018.

“Notwithstanding the negative impact that very low interest rates and a flat yield curve are having on our revenues and net interest margin, we are pleased to report a continued quarterly trend of both loan and deposit growth, together with 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 “period end loan growth in the quarter was 2.3%, and average loans were 13% higher in the third quarter 2019 as compared to the third quarter of 2018. For the third quarter of 2019, period end deposit growth was a very strong 6.5% and average deposits were 13% higher as compared to the same period in 2018. Total revenue for the third quarter of 2019 was $87.3 million compared to $86.9 million for the third quarter of 2018 and was 4% higher for the first nine months of 2019 over the same period in 2018.”

The net interest margin (“NIM”) in the third quarter of 2019 was 3.72% as compared to 3.91% in the second quarter of 2019 and 4.14% for the third quarter of 2018. Ms. Riel added, “The net interest margin of banks is being challenged by a very flat yield curve and further declines of interest rates from already low levels. In this environment, the Company remains committed to maintaining efficiency and growing the loan portfolio while focusing attention on loan quality and pricing discipline. Further, an increase in the mix of average balance sheet liquidity in the third quarter of 2019 in addition to short-term rate declines contributed to the 19 basis point decline in the NIM over the second quarter of 2019. The average one month LIBOR rate was down 26 basis points in the third quarter of 2019 as compared to the second quarter of 2019. Ms. Riel added, “We continue to see good lending opportunities and have worked to attract more deposits to fund those loans and to bring down the loan to deposit ratio at third quarter-end 2019 compared to second quarter-end 2019. Furthermore, by sustaining favorable operating leverage, we maintain strong profitability while rates remain very low and we stay well positioned when interest rates begin moving back to more normalized levels, given the degree of variability in our asset pricing.” 

Third quarter earnings resulted in an annualized return on average assets (“ROAA”) of 1.62%, an annualized return on average common equity (“ROACE”) of 12.09%, and an annualized return on average tangible common equity (“ROATCE”) of 13.25%.

For the first nine months of 2019, total loans grew 8% over December 31, 2018, and average loans were 11% higher in the first nine months of 2019 as compared to the first nine months of 2018. At September 30, 2019, total deposits were 6% higher than deposits at December 31, 2018, while average deposits were 13% higher for the first nine months of 2019 compared with the first nine months of 2018.

Comparing asset yields and cost of funds in the third quarter of 2019 to the third quarter of 2018, loan yields were down 30 basis points (from 5.69% to 5.39%), yields on earning assets were down 21 basis points (from 5.21% to 4.98%) and the cost of funds was up 21 basis points (from 1.07% to 1.28%). Ms. Riel noted, “Given our balance sheet growth goals and the fact that average US Treasury rates beyond three year terms have declined over 100 basis points in the third quarter of 2019 versus the third quarter of 2018, we did expect our margin to compress but the extent has been more than we projected owing in part to higher fixed rate time deposit funding mix. Importantly, our funding costs, which were slightly lower in the third quarter 2019 relative to the second quarter 2019, continue to benefit from the substantial average mix of noninterest deposits of 30% for the third quarter, versus 31% for the second quarter of 2019.

Total revenue (net interest income plus noninterest income) for the third quarter of 2019 was $87.3 million, compared to the $86.9 million of total revenue earned for the third quarter of 2018 and 1% lower than the $87.7 million of revenue in the second quarter of 2019. For the nine month periods ended September 30, total revenue was $262.3 million for 2019, as compared to $251.8 million in 2018, a 4% increase.  

The Company continues to benefit from solid asset quality. For the third quarter of 2019, net charge-offs (annualized) were 0.08% of average loans, as compared to 0.05% for the third quarter of 2018. Nonperforming assets amounted to $59.1 million (0.66% of total assets) at September 30, 2019 compared to $16.5 million (0.20% of total assets) at September 30, 2018 and $17.7 million (0.21% of total assets) at December 31, 2018. Nonperforming assets of $59.1 million as of September 30, 2019 included one loan of $16.5 million which was brought current shortly after quarter end. Excluding this loan the ratio of nonperforming assets to total assets would have been 0.47% as of September 30, 2019. At September 30, 2019, the Company’s nonperforming loans amounted to $57.7 million (0.76% of total loans) as compared to $15.1 million (0.22% of total loans) at September 30, 2018 and $16.3 million (0.23% of total loans) at December 31, 2018.  Nonperforming loans of $57.7 million as of September 30, 2019 included one loan of $16.5 million which was brought current shortly after quarter end. Excluding this loan the ratio of nonperforming loans to total loans would have been 0.54% as of September 30, 2019.

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 when appropriate and believes, based on its loan portfolio risk analysis, that its allowance for credit losses, at 0.98% of total loans (excluding loans held for sale) at September 30, 2019, is adequate to absorb potential credit losses within the loan portfolio at that date. The allowance for credit losses was 1.00% at both September 30, 2018 and December 31, 2018. The allowance for credit losses at September 30, 2019 represented 128% of nonperforming loans, as compared to 452% at September 30, 2018 and 430% at December 31, 2018. Excluding the $16.5 million nonperforming loan that was brought current shortly after quarter end, the coverage ratio would have been 179% as of September 30, 2019.

“Productivity continued to be favorable in the third quarter,” noted Ms. Riel. The efficiency ratio of 38.34% reflects management’s ongoing efforts to maintain superior operating leverage. The annualized ratio of noninterest expenses as a percentage of average assets was 1.50% in the third quarter of 2019 as compared to 1.58% in the third quarter of 2018. A well trained and knowledgeable staff, strict attention to personnel increases, a focus on process improvement including strong third party vendor relationships, and a continuing modest level of problem assets, have been other major factors in maintaining favorable operating leverage. Additionally, the Company continues to invest in IT systems and resources, including its online client services. Ms. Riel further noted, “Our goal is to improve operating performance without inhibiting growth or negatively impacting our ability to service our customers. We will continue to maintain strict oversight of expenses, while focusing our spending on advancing infrastructure that keeps us competitive and supports growth initiatives while prudently managing risk.”

Total assets at September 30, 2019 were $9.00 billion, a 12% increase as compared to $8.06 billion at September 30, 2018, and a 7% increase as compared to $8.39 billion at December 31, 2018. Total loans (excluding loans held for sale) were $7.56 billion at September 30, 2019, a 10% increase as compared to $6.84 billion at September 30, 2018, and an 8% increase as compared to $6.99 billion at December 31, 2018. Loans held for sale amounted to $52.2 million at September 30, 2019 as compared to $18.7 million at September 30, 2018, a 179% increase, and $19.3 million at December 31, 2018, a 171% increase. The investment portfolio totaled $708.5 million at September 30, 2019, a 2% decrease from the $722.7 million balance at September 30, 2018. As compared to December 31, 2018, the investment portfolio at September 30, 2019 decreased by $75.6 million or 10%.

Total deposits at September 30, 2019 were $7.40 billion, compared to deposits of $6.37 billion at September 30, 2018, a 16% increase, and deposits of $6.97 billion at December 31, 2018, a 6% increase. Total borrowed funds (excluding customer repurchase agreements) were $317.6 million at September 30, 2019, $542.2 million at September 30, 2018, and $217.3 million at December 31, 2018. We continue to work on expanding the breadth and depth of our existing relationships while we pursue building new relationships.

Total shareholders’ equity at September 30, 2019 increased 12%, to $1.18 billion, compared to $1.06 billion at September 30, 2018, and increased 7% from $1.10 billion at December 31, 2018. The Company’s capital position remains substantially in excess of regulatory requirements for well capitalized status, with a total risk based capital ratio of 16.08% at September 30, 2019, as compared to 15.74% at September 30, 2018, and 16.08% at December 31, 2018. In addition, the tangible common equity ratio was 12.13% at September 30, 2019, compared to 12.01% at September 30, 2018 and 12.11% at December 31, 2018. Furthermore, Kroll Bond Rating Agency reaffirmed our BBB+ senior unsecured debt rating (A- at the Bank level) based on our strong capital position, above-peer earnings, low operating expense base relative to peer, and a history of strong asset quality metrics.

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 September 30, 2019, the Company has repurchased 822,200 shares at a weighted average price of $40.58 per share.

The Company announced a regular quarterly cash dividend on September 25, 2019 of $0.22 per share to shareholders of record on October 15, 2019 and payable October 31, 2019.

Under FDIC regulations, banks having consolidated assets below $10 billion paid a refundable assessment into the FDIC insurance fund over a nine quarter period beginning with the third quarter of 2016. That assessment was to be credited back to the institution if and when the deposit insurance fund (“DIF”) exceeded 1.38% of insured deposits, which occurred with the June 30, 2019 computation. The credit amount for EagleBank for the third quarter of 2019 is $1.1 million. Additionally, if the DIF remains above 1.38% of insured deposits at September 30, 2019, EagleBank will receive an additional credit of approximately $600 thousand to be recorded for the fourth quarter of 2019.  

Analysis of the three months ended September 30, 2019 compared to September 30, 2018

For the three months ended September 30, 2019, the Company reported an annualized ROAA of 1.62% as compared to 1.93% for the three months ended September 30, 2018. The annualized ROACE for the three months ended September 30, 2019 was 12.09% as compared to 14.85% for the three months ended September 30, 2018. The annualized ROATCE for the three months ended September 30, 2019 was 13.25% as compared to 16.54% for the three months ended September 30, 2018.

Net interest income decreased less than 1% for the three months ended September 30, 2019 from the same period in 2018 ($81.0 million versus $81.3 million), resulting from compressed margins associated with increased costs of funds and lower loan yields due in part to enhanced competitive pressure more than offsetting growth in average earning assets of 11%. The net interest margin was 3.72% for the three months ended September 30, 2019, as compared to 4.14% for the three months ended September 30, 2018. In spite of our margin compression over the past 12 months, the Company believes its current net interest margin remains favorable compared to peer banking companies and that its disciplined approach to managing the loan portfolio yield to 5.39% for the third quarter of 2019 (as compared to 5.69% for the same period in 2018) has been a significant factor in its overall profitability.

The provision for credit losses was $3.2 million for the three months ended September 30, 2019 as compared to $2.4 million for the three months ended September 30, 2018. Net charge-offs of $1.5 million in the third quarter of 2019 represented an annualized 0.08% of average loans, excluding loans held for sale, as compared to $862 thousand, or an annualized 0.05% of average loans, excluding loans held for sale, in the third quarter of 2018. Net charge-offs in the third quarter of 2019 were attributable primarily to commercial loans ($1.6 million).

Noninterest income for the three months ended September 30, 2019 increased to $6.3 million from $5.6 million for the three months ended September 30, 2018, a 12% increase, due substantially to $1.1 million higher gains on the sale of residential mortgage loans ($2.5 million versus $1.4 million) resulting from higher loan origination and sales volume as compared to 2018, partially offset by lower service charges on deposit accounts of $320 thousand. Residential mortgage loans closed were $224 million for the third quarter of 2019 versus $107 million for the third quarter of 2018.

The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 38.34% for the third quarter of 2019, as compared to 36.37% for the third quarter of 2018. Noninterest expenses totaled $33.5 million for the three months ended September 30, 2019, as compared to $31.6 million for the three months ended September 30, 2018, a 6% increase. Salaries and employee benefits expense increased by $1.9 million due primarily to the $2.0 million of non-recurring charges related to the acceleration of share based compensation expense. Legal, accounting and professional fees increased $1.5 million from $2.1 million to $3.6 million, as discussed below. Data processing expense increased by $199 thousand due primarily to the costs of software and infrastructure investments. FDIC insurance decreased $848 thousand from $933 thousand to $85 thousand as the increased premium cost of a higher assessment base was effectively offset by the $1.2 million FDIC assessment credit detailed above.

Analysis of the nine months ended September 30, 2019 compared to September 30, 2018

For the nine months ended September 30, 2019, the Company reported an annualized ROAA of 1.66% as compared to 1.92% for the nine months ended September 30, 2018. The annualized ROACE for the nine months ended September 30, 2019 was 12.34% as compared to 14.92% for the nine months ended September 30, 2018. The annualized ROATCE for the nine months ended September 30, 2019 was 13.57% as compared to 16.70% for the nine months ended September 30, 2018.

Net interest income increased 3% for the nine months ended September 30, 2019 over the same period in 2018 ($243.3 million versus $235.3 million), resulting from growth in average earning assets of 11%. The net interest margin was 3.88% for the nine months ended September 30, 2019 and 4.15% 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 5.54% for the first nine months of 2019 (as compared to 5.51% for the same period in 2018) has been a significant factor in its overall profitability.

The provision for credit losses was $10.1 million for the nine months ended September 30, 2019 as compared to $6.1 million for the nine months ended September 30, 2018. The higher provisioning for the nine months ended September 30, 2019, as compared to the same period in 2018, is due primarily to higher net charge-offs. Net charge-offs of $6.4 million for the nine months ended September 30, 2019 represented an annualized 0.12% of average loans, excluding loans held for sale, as compared to $2.6 million, or an annualized 0.05% of average loans, excluding loans held for sale, in the first nine months of 2018. Net charge-offs in the first nine months of 2019 were attributable to commercial real estate loans ($5.0 million) and commercial loans ($1.4 million).

Noninterest income for the nine months ended September 30, 2019 increased to $19.0 million from $16.5 million for the nine months ended September 30, 2018, a 15% increase, due substantially to $1.6 million higher gains on the sale of investment securities primarily due to $829 thousand of noninterest income recognized during March 2019 on interest rate swap terminations, and $1.4 million higher gains on the sale of residential mortgage loans ($5.7 million versus $4.3 million) resulting from higher volume as compared to 2018, offset by $394 thousand lower service charges on deposit accounts. Residential mortgage loans closed were $470 million for the nine months ended September 30, 2019 versus $334 million for the same period in 2018.

Noninterest expenses totaled $105.1 million for the nine months ended September 30, 2019, as compared to $95.0 million for the nine months ended September 30, 2018, an 11% increase. Cost increases for salaries and benefits for the nine months ended September 30, 2019 were $8.7 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. Legal, accounting, and professional fees increased by $792 thousand from $7.3 million to $8.1 million, the reasons of which are further discussed below. Other expenses increased $1.4 million, due primarily to real estate and utility costs on special assets ($441 thousand) and director compensation ($424 thousand).

Legal, accounting and professional fees and expenses for the three months ended September 30, 2019 increased to $3.6 million from $2.1 million for the same period in 2018, a 70% increase. Legal, accounting and professional fees and expenses for the nine months ended September 30, 2019 increased to $8.1 million from $7.3 million for the same period in 2018, an 11% 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 incur elevated levels of legal and professional fees and expenses for at least the remainder of 2019 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 third quarter of 2019 was 27.9% as compared to 26.3% for the third quarter of 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.

The financial information that follows provides more detail on the Company’s financial performance for the three and nine months ended September 30, 2019 as compared to the three and nine months ended September 30, 2018 as well as providing eight quarters of trend data. Persons wishing to obtain 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 third quarter 2019 financial results on Thursday, October 17, 2019 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 6989578, 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 October 31, 2019.

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 September 30,   Nine Months Ended September 30,
    2019       2018       2019       2018  
Income Statements:              
Total interest income $   109,034     $    102,360     $   322,447     $   287,705  
Total interest expense     28,045         21,069          79,112         52,424  
Net interest income      80,989         81,291         243,335         235,281  
Provision for credit losses     3,186         2,441          10,146         6,060  
Net interest income after provision for credit losses     77,803         78,850         233,189          229,221  
Noninterest income (before investment gains)     6,161         5,640         17,337         16,429  
Gain on sale of investment securities      153          -           1,628         68  
Total noninterest income     6,314         5,640         18,965         16,497  
Total noninterest expense      33,473         31,614         105,136         95,024  
Income before income tax expense     50,644         52,876          147,018         150,694  
Income tax expense     14,149         13,928         39,531         38,735  
Net income $   36,495     $   38,948     $   107,487     $   111,959  
               
Per Share Data:              
Earnings per weighted average common share, basic $   1.07     $    1.14     $    3.12     $    3.26  
Earnings per weighted average common share, diluted $   1.07     $   1.13     $   3.12     $    3.25  
Weighted average common shares outstanding, basic     34,232,890         34,308,684         34,418,154         34,291,929  
Weighted average common shares outstanding, diluted      34,255,889          34,460,794          34,450,876         34,444,389  
Actual shares outstanding at period end     33,720,522         34,308,473         33,720,522          34,308,473  
Book value per common share at period end $    35.13     $   30.94     $   35.13     $   30.94  
Tangible book value per common share at period end (1) $    32.02     $    27.84     $    32.02     $   27.84  
Dividend per common share $   0.22     $   -      $   0.44     $   -   
               
Performance Ratios (annualized):              
Return on average assets   1.62%       1.93%       1.66%       1.92%  
Return on average common equity   12.09%       14.85%       12.34%       14.92%  
Return on average tangible common equity   13.25%       16.54%       13.57%       16.70%  
Net interest margin   3.72%       4.14%       3.88%       4.15%  
Efficiency ratio (2)   38.34%       36.37%       40.08%       37.74%  
               
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   127.87%       452.28%       127.87%       452.28%  
Nonperforming loans to total loans (3)   0.76%       0.22%       0.76%       0.22%  
Nonperforming assets to total assets   0.66%       0.20%       0.66%       0.20%  
Net charge-offs (annualized) to average loans (3)   0.08%       0.05%       0.12%       0.05%  
Common equity to total assets   13.16%       13.18%       13.16%       13.18%  
Tier 1 capital (to average assets)   12.19%       12.13%       12.19%       12.13%  
Total capital (to risk weighted assets)   16.08%       15.74%       16.08%       15.74%  
Common equity tier 1 capital (to risk weighted assets)   12.76%       12.11%       12.76%       12.11%  
Tangible common equity ratio (1)   12.13%       12.01%       12.13%       12.01%  
               
Loan Balances - Period End (in thousands):              
Commercial and Industrial $   1,466,862     $   1,493,577     $   1,466,862     $   1,493,577  
Commercial real estate - owner occupied $   956,345     $   863,162     $    956,345     $   863,162  
Commercial real estate - income producing $   3,812,284     $   3,189,910     $   3,812,284     $   3,189,910  
1-4 Family mortgage $    104,563     $   104,864     $   104,563     $    104,864  
Construction - commercial and residential $   1,053,789     $   1,047,591     $   1,053,789     $   1,047,591  
Construction - C&I (owner occupied) $   81,916     $    56,572     $   81,916     $    56,572  
Home equity $   81,117     $   86,525     $    81,117     $   86,525  
Other consumer $    2,285     $   2,471     $    2,285     $   2,471  
               
Average Balances (in thousands):              
Total assets $   8,923,406     $   8,023,535     $    8,659,916     $   7,805,089  
Total earning assets $   8,655,196     $   7,793,422     $   8,391,463     $   7,576,570  
Total loans $   7,492,816     $   6,646,264     $   7,265,726     $   6,550,754  
Total deposits $   7,319,314     $    6,485,144     $   7,068,137     $   6,273,975  
Total borrowings $   345,464     $    464,460     $   360,920     $    490,970  
Total shareholders’ equity $    1,197,513     $   1,040,826     $   1,164,541     $   1,003,439  

(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 calculates return on average tangible common equity by dividing annualized year to date net income by tangible common 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 Ended   Nine Months Ended   Twelve Months Ended   Three Months Ended   Nine Months Ended
  September 30, 2019   September 30, 2019   December 31, 2018   September 30, 2018   September 30, 2018
Common shareholders' equity     $ 1,184,594     $ 1,108,941         $ 1,061,651  
Less: Intangible assets       (104,915 )     (105,766 )         (106,481 )
Tangible common equity     $ 1,079,679     $ 1,003,175         $ 955,170  
                   
Book value per common share     $ 35.13     $ 32.25         $ 30.94  
Less: Intangible book value per common share       (3.11 )     (3.08 )         (3.10 )
Tangible book value per common share     $ 32.02     $ 29.17         $ 27.84  
                   
Total assets     $ 9,003,467     $ 8,389,137         $ 8,057,855  
Less: Intangible assets       (104,915 )     (105,766 )         (106,481 )
Tangible assets     $ 8,898,552     $ 8,283,371         $ 7,951,374  
Tangible common equity ratio       12.13%       12.11%           12.01%  
                   
Average common shareholders' equity $ 1,197,513     $ 1,164,541     $ 1,022,642     $ 1,040,826     $ 1,003,439  
Less: Average intangible assets   (105,034 )     (105,297 )     (106,806 )     (106,629 )     (106,949 )
Average tangible common equity $ 1,092,479     $ 1,059,245     $ 915,836     $ 934,197     $ 896,490  
                   
Net Income Available to Common Shareholders $ 36,495     $ 107,487     $ 152,276     $ 38,949     $ 111,959  
Average tangible common equity $ 1,092,479     $ 1,059,245     $ 915,836     $ 934,197     $ 896,490  
Annualized Return on Average Tangible Common Equity (1)   13.25%       13.57%       16.63%       16.54%       16.70%  
                   
                   
                   
Eagle Bancorp, Inc.                  
GAAP Reconciliation (Unaudited)                  
(dollars in thousands except per share data)          
  Nine Months Ended September 30, 2019        
  GAAP   Change   Non-GAAP        
Noninterest Expense                  
Nonperforming assets $ 59,137     $ (16,528 )   $ 42,609          
Nonperforming loans $ 57,650     $ (16,528 )   $ 41,122          
                   
Other Ratios (annualized):                  
Nonperforming assets to total assets (4)   0.66%           0.47%          
Nonperforming loans to total loans (4)   0.76%           0.54%          
Allowance for credit losses to total nonperforming loans (4)   127.87%           179.27%          

(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.          
Consolidated Balance Sheets (Unaudited)          
(dollars in thousands, except per share data)          
           
Assets September 30, 2019   December 31, 2018   September 30, 2018
Cash and due from banks $ 6,657     $ 6,773     $ 4,459  
Federal funds sold   27,711       11,934       17,284  
Interest bearing deposits with banks and other short-term investments   361,154       303,157       162,734  
Investment securities available for sale, at fair value   708,545       784,139       722,674  
Federal Reserve and Federal Home Loan Bank stock   28,725       23,506       37,257  
Loans held for sale   52,199       19,254       18,728  
Loans   7,559,161       6,991,447       6,844,672  
Less allowance for credit losses   (73,720 )     (69,944 )     (68,189 )
Loans, net   7,485,441       6,921,503       6,776,483  
Premises and equipment, net   14,515       16,851       17,457  
Operating lease right-of-use assets   26,552       -       -  
Deferred income taxes   29,722       33,027       35,196  
Bank owned life insurance   74,726       73,441       73,007  
Intangible assets, net   104,915       105,766       106,481  
Other real estate owned   1,487       1,394       1,394  
Other assets   81,118       88,392       84,701  
Total Assets $ 9,003,467     $ 8,389,137     $ 8,057,855  
           
Liabilities and Shareholders' Equity          
Deposits:          
Noninterest bearing demand $ 2,051,106     $ 2,104,220     $ 2,057,886  
Interest bearing transaction   918,011       593,107       459,455  
Savings and money market   3,034,530       2,949,559       2,573,258  
Time, $100,000 or more   772,340       801,957       758,152  
Other time   626,526       525,442       523,554  
Total deposits   7,402,513       6,974,285       6,372,305  
Customer repurchase agreements   30,297       30,413       36,446  
Other short-term borrowings   100,000       -       325,000  
Long-term borrowings   217,589       217,296       217,198  
Operating lease liabilities   29,586       -       -  
Other liabilities   38,888       58,202       45,255  
Total liabilities   7,818,873       7,280,196       6,996,204  
           
Shareholders' Equity          
Common stock, par value $.01 per share; shares authorized 100,000,000, shares          
issued and outstanding 33,720,522, 34,387,919, and 34,308,473, respectively   336       342       341  
Additional paid in capital   502,566       528,380       526,423  
Retained earnings   677,055       584,494       544,177  
Accumulated other comprehensive income (loss)   4,637       (4,275 )     (9,290 )
Total Shareholders' Equity   1,184,594       1,108,941       1,061,651  
Total Liabilities and Shareholders' Equity $ 9,003,467     $ 8,389,137     $ 8,057,855  
          `


Eagle Bancorp, Inc.              
Consolidated Statements of Income (Unaudited)              
(dollars in thousands, except per share data)              
       
  Three Months Ended September 30,   Nine Months Ended September 30,
Interest Income   2019     2018     2019     2018
Interest and fees on loans $ 102,297   $ 95,570   $ 302,007   $ 270,924
Interest and dividends on investment securities   4,904     4,875     15,740     12,525
Interest on balances with other banks and short-term investments   1,762     1,897     4,533     4,152
Interest on federal funds sold   71     18     167     104
Total interest income   109,034     102,360     322,447     287,705
Interest Expense              
Interest on deposits   24,576     16,719     67,937     39,896
Interest on customer repurchase agreements   82     54     255     166
Interest on other short-term borrowings   408     1,317     1,983     3,425
Interest on long-term borrowings   2,979     2,979     8,937     8,937
Total interest expense   28,045     21,069     79,112     52,424
Net Interest Income   80,989     81,291     243,335     235,281
Provision for Credit Losses   3,186     2,441     10,146     6,060
Net Interest Income After Provision For Credit Losses   77,803     78,850     233,189     229,221
               
Noninterest Income              
Service charges on deposits   1,494     1,814     4,794     5,188
Gain on sale of loans   2,563     1,434     5,874     4,632
Gain on sale of investment securities   153     -     1,628     68
Increase in the cash surrender value of  bank owned life insurance   431     373     1,285     1,073
Other income   1,673     2,019     5,384     5,536
Total noninterest income   6,314     5,640     18,965     16,497
Noninterest Expense              
Salaries and employee benefits   19,095     17,157     60,482     51,827
Premises and equipment expenses   3,503     3,889     11,007     11,691
Marketing and advertising   1,210     1,191     3,626     3,419
Data processing   2,183     2,423     7,161     7,144
Legal, accounting and professional fees   3,625     2,130     8,074     7,282
FDIC insurance   85     933     2,327     2,559
Other expenses   3,772     3,891     12,459     11,102
Total noninterest expense   33,473     31,614     105,136     95,024
Income Before Income Tax Expense   50,644     52,876     147,018     150,694
Income Tax Expense   14,149     13,928     39,531     38,735
Net Income $ 36,495   $ 38,948   $ 107,487   $ 111,959
               
Earnings Per Common Share              
Basic $ 1.07   $ 1.14   $ 3.12   $ 3.26
Diluted $ 1.07   $ 1.13   $ 3.12   $ 3.25


Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates (Unaudited)
(dollars in thousands)
               
  Three Months Ended September 30,
    2019       2018  
  Average Balance Interest Average
Yield/Rate
  Average Balance Interest Average
Yield/Rate
ASSETS              
Interest earning assets:              
Interest bearing deposits with other banks and other short-term investments $ 344,853 $ 1,762 2.03 %   $ 377,324 $ 1,897 1.99 %
Loans held for sale (1)   49,765   492 3.95 %     23,511   274 4.66 %
Loans (1) (2)   7,492,816   101,805 5.39 %     6,646,264   95,296 5.69 %
Investment securities available for sale (2)   741,907   4,904 2.62 %     735,586   4,875 2.63 %
Federal funds sold   25,855   71 1.09 %     10,737   18 0.67 %
Total interest earning assets   8,655,196   109,034 5.00 %     7,793,422   102,360 5.21 %
               
Total noninterest earning assets   341,452         297,815    
Less: allowance for credit losses   73,242         67,702    
Total noninterest earning assets   268,210         230,113    
TOTAL ASSETS $ 8,923,406       $ 8,023,535    
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Interest bearing liabilities:              
Interest bearing transaction $ 791,785 $ 1,828 0.92 %   $ 482,820 $ 973 0.80 %
Savings and money market   2,922,751   13,606 1.85 %     2,596,010   9,636 1.47 %
Time deposits   1,444,328   9,142 2.51 %     1,220,755   6,110 1.99 %
Total interest bearing deposits   5,158,864   24,576 1.89 %     4,299,585   16,719 1.54 %
Customer repurchase agreements   27,809   82 1.17 %     30,445   54 0.70 %
Other short-term borrowings   100,100   408 1.59 %     216,851   1,317 2.38 %
Long-term borrowings   217,555   2,979 5.36 %     217,164   2,979 5.37 %
Total interest bearing liabilities   5,504,328   28,045 2.02 %     4,764,045   21,069 1.75 %
               
Noninterest bearing liabilities:              
Noninterest bearing demand   2,160,450         2,185,559    
Other liabilities   61,115         33,105    
Total noninterest bearing liabilities   2,221,565         2,218,664    
               
Shareholders’ Equity   1,197,513         1,040,826    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,923,406       $ 8,023,535    
               
Net interest income   $ 80,989       $ 81,291  
Net interest spread     2.98 %       3.46 %
Net interest margin     3.72 %       4.14 %
Cost of funds     1.28 %       1.07 %
               
(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 $5.0 million
for the three months ended September 30, 2019 and 2018, respectively.            
(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)
               
  Nine Months Ended September 30,
    2019       2018  
  Average Balance Interest Average
Yield/Rate
  Average Balance Interest Average
Yield/Rate
ASSETS              
Interest earning assets:              
Interest bearing deposits with other banks and other short-term investments $ 285,150 $ 4,533 2.13 %   $ 321,266 $ 4,152 1.73 %
Loans held for sale (1)   34,265   1,041 4.05 %     24,692   839 4.53 %
Loans (1) (2)   7,265,726   300,966 5.54 %     6,550,754   270,085 5.51 %
Investment securities available for sale (1)   784,970   15,740 2.68 %     664,798   12,525 2.52 %
Federal funds sold   21,352   167 1.05 %     15,060   104 0.92 %
Total interest earning assets   8,391,463   322,447 5.14 %     7,576,570   287,705 5.08 %
               
Total noninterest earning assets   339,355         294,948    
Less: allowance for credit losses   70,902         66,429    
Total noninterest earning assets   268,453         228,519    
TOTAL ASSETS $ 8,659,916       $ 7,805,089    
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Interest bearing liabilities:              
Interest bearing transaction $ 696,825 $ 4,206 0.81 %   $ 433,921 $ 2,252 0.69 %
Savings and money market   2,781,663   37,848 1.82 %     2,670,578   23,846 1.19 %
Time deposits   1,406,237   25,883 2.46 %     1,078,608   13,798 1.71 %
Total interest bearing deposits   4,884,725   67,937 1.86 %     4,183,107   39,896 1.28 %
Customer repurchase agreements   29,617   255 1.15 %     45,504   166 0.49 %
Other short-term borrowings   113,845   1,983 2.30 %     228,398   3,425 1.98 %
Long-term borrowings   217,458   8,937 5.42 %     217,068   8,937 5.43 %
Total interest bearing liabilities   5,245,645   79,112 2.02 %     4,674,077   52,424 1.50 %
               
Noninterest bearing liabilities:              
Noninterest bearing demand   2,183,412         2,090,868    
Other liabilities   66,318         36,705    
Total noninterest bearing liabilities   2,249,730         2,127,573    
               
Shareholders’ equity   1,164,541         1,003,439    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,659,916       $ 7,805,089    
               
Net interest income   $ 243,335       $ 235,281  
Net interest spread     3.12 %       3.58 %
Net interest margin     3.88 %       4.15 %
Cost of funds     1.26 %       0.93 %
               
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $13.1 million and $14.9 million
for the nine months ended September 30, 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
  September 30,   June 30,   March 31,   December 31,   September 30,   June 30,   March 31,   December 31,
Income Statements:   2019       2019       2019       2018       2018       2018       2018       2017  
Total interest income $ 109,034     $ 108,279     $ 105,134     $ 105,581     $ 102,360     $ 96,296     $ 89,049     $ 86,526  
Total interest expense   28,045       26,950       24,117       23,869       21,069       18,086       13,269       11,167  
Net interest income   80,989       81,329       81,017       81,712       81,291       78,210       75,780       75,359  
Provision for credit losses   3,186       3,600       3,360       2,600       2,441       1,650       1,969       4,087  
Net interest income after provision for credit losses   77,803       77,729       77,657       79,112       78,850       76,560       73,811       71,272  
Noninterest income (before investment gains)   6,161       5,797       5,379       6,060       5,640       5,527       5,262       9,496  
Gain on sale of investment securities   153       563       912       29       -       26       42       -  
Total noninterest income   6,314       6,360       6,291       6,089       5,640       5,553       5,304       9,496  
Salaries and employee benefits   19,095       17,743       23,644       15,907       17,157       17,812       16,858       16,678  
Premises and equipment   3,503       3,652       3,852       3,969       3,889       3,873       3,929       4,019  
Marketing and advertising   1,210       1,268       1,148       1,147       1,191       1,291       937       1,222  
Other expenses   9,665       10,696       9,660       10,664       9,377       9,313       9,397       7,884  
Total noninterest expense   33,473       33,359       38,304       31,687       31,614       32,289       31,121       29,803  
Income before income tax expense   50,644       50,730       45,644       53,514       52,876       49,824       47,994       50,965  
Income tax expense   14,149       13,487       11,895       13,197       13,928       12,528       12,279       35,396  
Net income   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 $ 1.07     $ 1.08     $ 0.98     $ 1.17     $ 1.14     $ 1.09     $ 1.04     $ 0.46  
Earnings per weighted average common share, diluted $ 1.07     $ 1.08     $ 0.98     $ 1.17     $ 1.13     $ 1.08     $ 1.04     $ 0.45  
Weighted average common shares outstanding, basic   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   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   33,720,522       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 $ 35.13     $ 34.30     $ 33.25     $ 32.25     $ 30.94     $ 29.82     $ 28.72     $ 27.80  
Tangible book value per common share at period end (1) $ 32.02     $ 31.25     $ 30.20     $ 29.17     $ 27.84     $ 26.71     $ 25.60     $ 24.67  
Dividend per common share $ 0.22     $ 0.22     $ -     $ -     $ -     $ -     $ -     $ -  
                               
Performance Ratios (annualized):                              
Return on average assets   1.62%       1.74%       1.62%       1.90%       1.93%       1.92%       1.91%       0.82%  
Return on average common equity   12.09%       12.81%       12.12%       14.82%       14.85%       14.93%       14.99%       6.49%  
Return on average tangible common equity   13.25%       14.08%       13.38%       16.43%       16.54%       16.71%       16.86%       7.31%  
Net interest margin   3.72%       3.91%       4.02%       3.97%       4.14%       4.15%       4.17%       4.13%  
Efficiency ratio (2)   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%       1.00%       1.00%       1.00%       1.00%       1.01%  
Allowance for credit losses to total nonperforming loans (4)   127.87%       192.70%       173.72%       429.72%       452.28%       612.42%       491.56%       489.20%  
Nonperforming loans to total loans (3) (4)   0.76%       0.51%       0.56%       0.23%       0.22%       0.16%       0.20%       0.21%  
Nonperforming assets to total assets  (4)   0.66%       0.45%       0.50%       0.21%       0.20%       0.16%       0.19%       0.20%  
Net charge-offs (annualized) to average loans (3)   0.08%       0.08%       0.19%       0.05%       0.05%       0.05%       0.06%       0.15%  
Tier 1 capital (to average assets)   12.19%       12.66%       12.49%       12.08%       12.13%       11.97%       11.76%       11.45%  
Total capital (to risk weighted assets)   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)   12.76%       12.87%       12.69%       12.47%       12.11%       11.89%       11.57%       11.23%  
Tangible common equity ratio (1)   12.13%       12.60%       12.59%       12.11%       12.01%       11.79%       11.57%       11.44%  
                               
Average Balances (in thousands):                              
Total assets $ 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 $ 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 $ 7,492,816     $ 7,260,899     $ 7,038,472     $ 6,897,434     $ 6,646,264     $ 6,569,931     $ 6,433,730     $ 6,207,505  
Total deposits $ 7,319,314     $ 6,893,981     $ 6,987,468     $ 6,950,714     $ 6,485,144     $ 6,269,126     $ 6,063,017     $ 6,101,727  
Total borrowings $ 345,464     $ 470,214     $ 266,209     $ 342,637     $ 464,460     $ 485,729     $ 523,369     $ 382,687  
Total shareholders’ equity $ 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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