EAGLE BANCORP, INC. ANNOUNCES RECORD NET INCOME FOR
FIRST QUARTER 2021 OF $43.5 MILLION OR $1.36 PER SHARE
TOTAL ASSETS CONTINUED TO EXCEED $11 BILLION
BETHESDA, MD, Eagle Bancorp, Inc. (the “Company”) (NASDAQ: EGBN), the parent company of EagleBank (the “Bank”), today announced record net income of $43.5 million for the first quarter of 2021, as compared to $23.1 million net income for the first quarter of 2020, an 88% increase. Net income per basic and diluted common share for the first quarter of 2021 was $1.36 compared to $0.70 for the first quarter of 2020, a 94% increase. The increase in earnings is largely due to the first quarter of 2021 including a reversal of the provision for credit losses and significant gain on sale of residential mortgages, whereas the first quarter of 2020 included provisions for credit losses at the beginning of the COVID-19 pandemic, as well as, mark-to-market losses related to a hedge position on mortgage operations.
First Quarter 2021 Highlights
•Income Statement
◦Net income of $43.5 million
◦Total revenue of $93.2 million (up 9.4% from a year ago)
◦Reversal of allowance for credit losses of $2.4 million
◦Net interest margin of 2.98%
◦Return on average assets ("ROAA") of 1.53%
◦Return on average common equity ("ROACE") of 14.05%
◦Return on average tangible common equity ("ROATCE") of 15.33%1
◦Efficiency ratio of 40.7%
•Balance Sheet
◦Assets of $11.1 billion
◦Book value per share of $39.45 (up 9.2% from a year ago)
◦Tangible book value per share of $36.16 (up 10.0% from a year ago)1
◦Total risk based capital ratio of 17.86%
◦Annualized net charge-off ratio to average loans of 0.27%
◦Nonperforming assets to total assets of 0.51%
◦Allowance for credit losses to total loans of 1.36%
1 A reconciliation of non-GAAP financial measures to the nearest non-GAAP measure is provided in the tables that accompany this document.
1
Susan G. Riel, President and Chief Executive Officer of Eagle Bancorp, Inc. commented, "We ended the first quarter of 2021 with record net income, continued strengthening in asset quality and a high level of capital. Earnings included a reversal to the allowance for credit losses as our outlook on the economy has improved, and another large gain on sale of residential mortgages from our residential mortgage division, which continues to generate strong results. For the quarter, we generated net income of $43.5 million with an ROAA of 1.53%, ROACE of 14.05% and a ROATCE2 of 15.33%."
"These earnings continue to demonstrate balanced financial performance including our ability to manage an efficient bank and we remain a leader among our peers with an efficiency ratio for the quarter of 40.7%. As an example of our expense management, during the quarter we relocated two branches with expiring leases to better locations nearby and consolidated two back-office locations, also with expiring leases, into a single new location, saving about $460,000 annually in rental expenses."
"While loan demand remains challenged during the pandemic, our earnings continue to generate capital that we expect will enable us to hit the ground running when economic activity and business openings expand. We believe the Washington, D.C. area is one of the most resilient and strongest economies in the nation and we remain optimistic about the reopening of businesses, and the positive impact the government stimulus will have on the regional economy. At quarter end, our shareholders equity reached $1.26 billion and our total risk-based capital was 17.86%. This gives us the ability to originate loans for large commercial projects, as well as a lot of runway to grow the loan portfolio when economic conditions improve and more opportunities arise."
"For our shareholders, at the end of the quarter our board increased the dividend to $0.25 per share, our first increase since the dividend was re-instituted in the second quarter of 2019. We also authorized a new stock repurchase plan in December 2020."
"We once again thank all of our employees for their commitment and diligence in serving the needs of our clients and communities and following safe health practices. As we look toward summer with optimism, we remain focused on strong and balanced operating performance. We will continue to proactively manage any asset quality concerns while delivering best-in-class service to our customers. We will continue to exercise prudent oversight of expenses, while retaining an infrastructure that is competitive, supports our growth initiatives, and proactively enhances our risk management systems as we position ourselves for future growth.”
Income Statement
•Net interest income was $82.7 million in the first quarter of 2021, up from $79.7 million in the first quarter of 2020. The increase of $3.0 million was primarily from a 22% increase in average earning assets partially offset by a reduction in net interest margin.
•Net interest margin was 2.98% for the first quarter of 2021, as compared to 3.49% for the first quarter of 2020. The decrease in margin primarily reflects a lower rate environment, significantly higher cash balances from strong deposit inflows and lower rates on Paycheck Protection Program ("PPP") loans.
2 A reconciliation of non-GAAP financial measures to the nearest non-GAAP measure is provided in the tables that accompany this document.
2
•Pre-provision net revenue ("PPNR")3 was $55.3 million in the first quarter of 2021, up from $47.9 million in the first quarter of 2020. As a percent of average assets, PPNR in the first quarter of 2021 was 1.95%, down from 2.04% in the first quarter of 2020. This decline was a result of a 15.4% increase in PPNR being outpaced by a 21.9% increase in average assets.
($ in thousands)
Three Months Ended
March 31, 2021
March 31, 2020
Net interest income (GAAP)
$
82,651
$
79,744
Non-interest income (GAAP)
10,587
5,470
Non-interest expense (GAAP)
(37,987)
(37,347)
Pre-provision net revenue (non-GAAP)
$
55,251
$
47,867
Average Assets (GAAP)
$
11,517,836
$
9,447,663
PPNR to Average Assets (non-GAAP)
1.95
%
2.04
%
•Provision for credit losses resulted in a reversal of $2.4 million in the first quarter of 2021, as compared to a provision of $14.3 million for the first quarter 2020. The reversal was driven by the improved macroeconomic outlook, improvement of credits in the loan portfolio and a reduction in total loans.
•Net charge-offs were $5.2 million in the first quarter of 2021 as compared to $2.2 million in the first quarter of 2020. On an annualized basis, this was 0.27% of average loans (excluding loans held for sale) in the first quarter of 2021, as compared 0.12% in the first quarter of 2020. Charge-offs in the first quarter of 2021 were mostly a variety of commercial C&I credits, which included two restaurants, one commercial real estate credit for a hotel and two Small Business Administration ("SBA") credits.
•Noninterest income was $10.6 million in the first quarter of 2021, as compared to $5.5 million for the first quarter 2020, a 94% increase. The increase was primarily due to a substantially higher gain on the sale of loans of $5.2 million and a $911 thousand gain from the cancellation of an FHLB borrowing for the first quarter of 2021 as compared to $0.9 million for the first quarter of 2020 (which included $2.6 million in hedge and mark-to-market losses). Residential mortgage loan locked commitments were $303.3 million for the first quarter of 2021 as compared to $422.2 million for the first quarter of 2020.
•Noninterest expenses were $38.0 million for the first quarter of 2021 as compared to $37.3 million for the first quarter 2020, a 2% increase. The major changes between the two quarters were as follows:
•Salaries and employee benefits were up $4.0 million as the number of employees increased, the incentive bonus accruals based on economic outlook were higher in the first quarter of 2021 (due to the gradual reopening of the economy) than in the first quarter of 2020 (due to the onset of the COVID-19 pandemic) and an increase in share based compensation awards and vesting in 2021.
•Legal, accounting and professional fees were down $4.0 million in the first quarter of 2021, as the first quarter of 2020 included elevated expenses from previously disclosed litigation.
•FDIC expenses were up $1.0 million off a higher deposit base.
3 A reconciliation of non-GAAP financial measures to the nearest non-GAAP measure is provided in the table below.
3
•Efficiency ratio was 40.7% for the first quarter of 2021, an improvement from 43.8% for the first quarter of 2020. The improvement in the first quarter of 2021 over the first quarter of 2020 was from increases in noninterest income and net interest income, while non-interest expenses remained relatively flat.
•Effective income tax rate for the first quarter of 2021 was 25.1% as compared to 26.5% for the first quarter of 2020. The decrease was due primarily to an increase in Low Income Housing Tax Credits in the first quarter of 2021.
Balance Sheet
•Total assets at March 31, 2021 were $11.1 billion, up less than 1% from the prior quarter-end and up 11.4% from a year ago. The increase in assets over assets from a year ago was primarily driven by deposit inflows in the second and third quarters of 2020.
•Total loans (excluding loans held for sale) were $7.5 billion as of March 31, 2021, a decrease of 3.0% from the prior quarter end and a decrease of 4.0% from a year ago. If PPP loans were excluded, the balance was $7.0 billion4 at March 31, 2021, a decrease of 4.7% from the prior quarter end and a decrease of 11.2% from a year ago. We have continued to focus on serving our current loan clients and maintaining credit quality, over expanding the loan portfolio at lower rates and less favorable terms.
($ in thousands)
March 31, 2021
December 31, 2020
March 31, 2020
Total loans, excluding loans held for sale (GAAP)
$
7,526,689
7,760,212
7,840,873
Less: PPP loans
(565,018)
(454,771)
$
—
Total loans, excluding loans held for sale and PPP loans (Non-GAAP)
$
6,961,671
$
7,305,441
$
7,840,873
•Allowance for credit losses was 1.36% of gross loans, compared to 1.41% the prior quarter-end and 1.23% a year ago. Adjusted to exclude PPP loans, which are fully government guaranteed, the allowance for credit losses was 1.47%5, compared to 1.50% the prior quarter end and 1.23% a year ago. The reduction in the allowance for credit losses in the first quarter of 2021, is due to a provision reversal of $2.4 million and net charge-offs of $5.2 million.
($ in thousands)
March 31, 2021
December 31, 2020
March 31, 2020
Allowance for credit losses, adjusted
Allowance for credit losses
$
102,070
$
109,579
$
96,336
Total loans (GAAP)
$
7,526,689
$
7,760,212
$
7,840,873
Less: PPP loans
(565,018)
(454,771)
—
Total loans excluding PPP loans (non-GAAP)
$
6,961,671
$
7,305,441
$
7,840,873
Allowance for credit losses to total loans (GAAP)
1.36
%
1.41
%
1.23
%
Allowance for credit losses to total loans excluding PPP loans (non-GAAP)
1.47
%
1.50
%
1.23
%
4 A reconciliation of GAAP to non-GAAP financial measures is provided below.
5 A reconciliation of GAAP to non-GAAP financial measures is provided below.
4
•Investment portfolio had a balance of $1.4 billion at March 31, 2021, up $218 million or 18.9% from the prior quarter end and up $510 million or 59.4% from a year ago. Investments made during the quarter were primarily 20 year, 2% agency mortgage backed securities and callable agency bonds. We continue to judiciously deploy excess liquidity in to the investment portfolio to achieve higher yields over cash alternatives.
•Total deposits were $9.2 billion at March 31, 2021, up $9.6 million or 0.1% from the prior quarter end, and up $1.1 billion or 13.0% from a year ago. Deposit growth slowed in the first quarter of 2021 which allowed the Bank to reduce its excess liquidity as it deployed funds into the investment portfolio.
•Total shareholders’ equity was $1.26 billion at March 31, 2021, up $19.9 million or 1.6% from the prior quarter end, and up $98.1 million or 8.4% from a year ago. In the first quarter of 2021, the increases in stockholders equity were partially offset by common dividends declared of $7.9 million and stock repurchases of $62 thousand.
◦Book value per share was $39.45, up 1.0% from the prior quarter end and up 9.2% from a year ago.
◦Tangible book value per share was $36.166, up 1.2% from the prior quarter end and up 10.0% from a year ago.
•Capital ratios for the Company remain strong and substantially in excess of regulatory minimum requirements. Regulatory ratios based on risk based capital ratios continue to trend up, driven by strong earnings and declines in risk weighted assets, including relatively little change in outstanding loans. Tier 1 Capital which was adversely impacted by the increase in average assets, trended down.
For the Company
March 31, 2021
December 31, 2020
March 31, 2020
Well Capitalized Minimum
Regulatory Ratios
Total Capital (to risk weighted assets)
17.86
%
17.04
%
15.44
%
10.00
%
Tier 1 Capital (to risk weighted assets)
14.42
%
13.49
%
12.14
%
8.00
%
Common Equity Tier 1 (to risk weighted assets)
14.42
%
13.49
%
12.14
%
6.50
%
Tier 1 Capital (to average assets)
10.28
%
10.31
%
11.33
%
5.00
%
Common Capital Ratios
Common Equity Ratio
11.33
%
11.16
%
11.64
%
—
%
Tangible Common Equity Ratio
10.48
%
10.31
%
10.70
%
—
%
Additional Commentary
•Stock repurchase plan: In December 2020, the Board of Directors approved a new stock repurchase plan of up to 1,588,848 shares, or approximately 5% of shares outstanding, which commenced January 1, 2021. In the first quarter of 2021, the Company completed repurchases of 1,466 shares for $62,000 at an average cost of $42.46 per share under the Stock Repurchase Plan.
6 A reconciliation of non-GAAP financial measures to the nearest non-GAAP measure is provided in the tables that accompany this document.
5
•Increase in the dividend: On March 31, 2021, the Board of Directors declared a quarterly cash dividend of $0.25 per common share payable on May 3, 2021 to shareholders of record on April 21, 2021. This was an increase over the prior quarterly dividend of $0.22 per share that had been in place since the second quarter of 2019.
•Deposit mix: The Company continues to emphasize achieving core deposit growth. The mix of average noninterest deposits to average total deposits remained favorable at 32% in the first quarter of 2021, as compared to 29% in the first quarter of 2020. In the first quarter of 2021, CDs with a total balance of $230.9 million with a weighted average rate of 1.69% matured. These CDs had weighted average term of 18 months at issuance.
•Loans closed/payoffs: We continue to seek well structured new loan opportunities. Loan payoffs in the first quarter of 2021 continued at a level similar to the fourth quarter of 2020. With new loan closings down, total loan balances (excluding loans held for sale and PPP loans) fell $344 million from the prior quarter end. Unfunded commitments declined to $1.9 billion as of March 31, 2021 as compared to $2.1 billion a year ago.
•Loan yields: In addition to the current sharply lower interest rate environment which continued from 2020, we have focused less on higher risk and higher yielding construction lending and more on strong commercial real estate credits secured by stabilized income producing properties.
◦The yield on the loan portfolio was 4.65% for the first quarter of 2021 as compared to 5.07% for the first quarter of 2020.
◦Loan yields, excluding lower yielding PPP loans, was 4.73%7 in the first quarter of 2021, as compared to 5.07% in the first quarter of 2020.
($ in thousands)
Three Months Ended
March 31, 2021
March 31, 2020
Average Balance
Interest
Average Yield/Rate
Average Balance
Interest
Average Yield/Rate
Loan Yields, Adjusted
Loan yield (GAAP)
$
7,726,716
88,499
4.65
%
7,650,993
96,401
5.07
%
PPP Loan yield (non-GAAP)
516,317
$
4,452
3.50
%
$
—
$
—
—
%
Loans yield, excluding PPP loans (non-GAAP)
7,210,399
84,047
4.73
%
7,650,993
96,401
5.07
%
•Paycheck protection program: As a SBA preferred lender, the Bank actively participated in the PPP, and at March 31, 2021 had an outstanding balance of PPP loans of $565.0 million. During the first quarter of 2021, PPP originations were $192.7 million and the PPP loans balances forgiven were $82.9 million.
•COVID-19 loan deferrals: At March 31, 2021, 58 notes were deferred with outstanding balances of $143.4 million, which was 1.9% of total loans.
•Industry segments impacted by COVID-19: Industry segments which we believe may have heightened risk from the COVID-19 pandemic are as follows:
7 A reconciliation of non-GAAP financial measures to the nearest non-GAAP measure is provided below.
6
($ in thousands)
March 31, 2021
Principal Balance
% of Total Loans
Industry
Accommodation and Food Service
$
807,237
10.7
%
Retail Trade
85,878
1.1
%
Commercial Real Estate exposure (not included above)
Restaurant
42,386
0.6
%
Hotel
26,255
0.3
%
Retail
374,863
5.0
%
Total
$
1,336,619
17.8
%
•Nonperforming loans and assets: On a linked quarter basis, both non-performing loans and assets decreased.
◦Nonperforming loans were $52.3 million or 0.69% of total loans at March 31, 2021, down from $60.9 million or 0.79% at the prior quarter end, and up from $47.7 million or 0.61% of total loans a year ago.
◦Nonperforming assets were $57.3 million or 0.51% of total assets at March 31, 2021, down from $65.9 million or 0.59% at the prior quarter end, and up from $56.0 million or 0.56% of total assets a year ago. At March 31, 2021, other real estate owned was $5.0 million, unchanged from the prior quarter end.
•Legal update: As previously disclosed by the Company, on December 24, 2020, by stipulation of the parties, the United States District Court for the Southern District of New York stayed the putative class action lawsuit filed against the Company and certain of its officers, its current and former President and Chief Executive Officer, its current and former Chief Financial Officer and its former General Counsel on behalf of persons who purchased or otherwise acquired Company securities between March 2, 2015 and July 17, 2019 (the “class”), pending a non-binding mediation that had been scheduled for April 13, 2021.
Immediately following the non-binding mediation, the lead plaintiff, on behalf of the class, the Company and each of the other defendants continued a settlement dialogue and reached an agreement to settle the putative class action lawsuit, involving a total payment by the Company of $7.5 million in exchange for the release of all of the defendants from all alleged claims in the class action suit, without any admission or concession of wrongdoing by the Company or the other defendants. The agreement remains subject to final documentation, court approval and other customary conditions. The Company expects that the full amount of a final settlement will be paid by the Company’s insurance carriers under applicable insurance policies. There can be no assurance, however, that the agreement will be fully documented, receive court approval and/or meet all other conditions.
On January 25, 2021, the Company entered into a settlement agreement with respect to a previously disclosed shareholder demand letter, covering substantially the same subject matters as the disclosed civil securities class action litigation pending in the United States District Court for the Southern District of New York (SDNY). As required by DC Superior Court administrative procedures, shareholder's counsel first filed a derivative action complaint against the individual directors and officers named in the demand letter, and the Company as nominal Defendant before filing the executed stipulation of settlement accompanied by the shareholder's brief in support of
7
their unopposed motion to approve the settlement. Court approval of the stipulation of settlement remains pending a hearing currently scheduled for May 12, 2021.
Although the Company believes the stipulation of settlement is in the best interests of the Company’s shareholders, there can be no assurance that the stipulation of settlement will be approved by the court.
Additional financial information: The financial information that follows provides more detail on the Company’s financial performance for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, as well as eight quarters of trend data. Persons wishing additional information should refer to the Company’s annual report on Form 10-K for the year ended December 31, 2020, and other reports filed with the Securities and Exchange Commission (the “SEC”).
About Eagle Bancorp: The Company is the holding company for EagleBank, which commenced operations in 1998. The Bank is headquartered in Bethesda, Maryland, and operates through twenty branch offices, located in Suburban Maryland, Washington, D.C. and Northern Virginia. The Company focuses on building relationships with businesses, professionals and individuals in its marketplace.
Conference call: Eagle Bancorp will host a conference call to discuss its first quarter 2021 financial results on Thursday, April 22, 2021 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 1139926, or by accessing the call on the Company’s website, www.EagleBankCorp.com. A replay of the conference call will be available on the Company’s website through May 6, 2021.
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,” “can,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” “could,” “strive,” “feel” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market (including the macroeconomic and other challenges and uncertainties resulting from the COVID-19 pandemic, including on our credit quality, asset and loan growth and broader business operations), interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. For details on factors that could affect these expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and in other periodic and current reports filed with the SEC. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company’s past results are not necessarily indicative of future performance, and nothing contained herein is meant to or should be considered and treated as earnings guidance of future quarters’ performance projections. All information is as of the date of this press release. Any forward-looking statements made by or on behalf of the Company speak only as to the date they are made. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.
8
Eagle Bancorp, Inc.
Consolidated Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended
March 31, 2021
March 31, 2020
Income Statements:
Total interest income
$
94,194
$
103,801
Total interest expense
11,543
24,057
Net interest income
82,651
79,744
Provision for credit losses
(2,350)
14,310
Provision for Unfunded Commitments
(442)
2,112
Net interest income after provision for credit losses
85,443
63,322
Noninterest income (before investment gain)
10,366
4,648
Gain (loss) on sale of investment securities
221
822
Total noninterest income
10,587
5,470
Total noninterest expense
37,987
37,347
Income before income tax expense
58,043
31,445
Income tax expense
14,574
8,322
Net income
$
43,469
$
23,123
Per Share Data:
Earnings per weighted average common share, basic
$
1.36
$
0.70
Earnings per weighted average common share, diluted
$
1.36
$
0.70
Weighted average common shares outstanding, basic
31,869,655
32,850,112
Weighted average common shares outstanding, diluted
31,922,940
32,875,508
Actual shares outstanding at period end
31,960,379
32,197,258
Book value per common share at period end
$
39.45
$
36.11
Tangible book value per common share at period end (1)
$
36.16
$
32.86
Dividend per common share
$
0.25
$
0.22
Performance Ratios (annualized):
Return on average assets
1.53
%
0.98
%
Return on average common equity
14.05
%
7.81
%
Return on average tangible common equity
15.33
%
8.56
%
Net interest margin
2.98
%
3.49
%
Efficiency ratio (2)
40.74
%
43.83
%
Other Ratios:
Allowance for credit losses to total loans (3)
1.36
%
1.23
%
Allowance for credit losses to total nonperforming loans
195.25
%
201.80
%
Nonperforming loans to total loans (3)
0.69
%
0.61
%
Nonperforming assets to total assets
0.51
%
0.56
%
Net charge-offs (annualized) to average loans (3)
0.27
%
0.12
%
Common equity to total assets
11.33
%
11.64
%
Tier 1 capital (to average assets)
10.28
%
11.33
%
Total capital (to risk weighted assets)
17.86
%
15.44
%
Common equity tier 1 capital (to risk weighted assets)
14.42
%
12.14
%
Tangible common equity ratio (1)
10.48
%
10.70
%
Loan Balances - Period End (in thousands):
Commercial and Industrial
$
1,398,155
$
1,773,478
PPP loans
$
565,018
$
—
(continued)
9
Three Months Ended
March 31, 2021
March 31, 2020
Commercial real estate - income producing
$
3,430,077
$
3,827,024
Commercial real estate - owner occupied
$
1,012,457
$
971,634
1-4 Family mortgage
$
71,209
$
104,558
Construction - commercial and residential
$
829,481
$
969,166
Construction - C&I (owner occupied)
$
152,240
$
114,138
Home equity
$
67,167
$
78,228
Other consumer
$
885
$
2,647
Average Balances (in thousands):
Total assets
$
11,517,837
$
9,447,663
Total earning assets
$
11,236,440
$
9,176,174
Total loans
$
7,726,716
$
7,650,993
Total deposits
$
9,601,249
$
7,696,764
Total borrowings
$
573,750
$
485,948
Total shareholders’ equity
$
1,254,780
$
1,191,180
(1) Tangible common equity to tangible assets (the "tangible common equity ratio"), tangible book value per common share, and the annualized return on average tangible common equity are non-GAAP financial measures derived from GAAP based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders' equity by common shares outstanding. The Company calculates the annualized return on average tangible common equity ratio by dividing net income available to common shareholders by average tangible common equity which is calculated by excluding the average balance of intangible assets from the average common shareholders’ equity. The Company considers this information important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios and as such is useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions. The table below provides reconciliation of financial measures defined by GAAP with non-GAAP financial measures.
(2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income. The efficiency ratio measures a bank’s overhead as a percentage of its revenue.
(3) Excludes loans held for sale.
GAAP Reconciliation (Unaudited)
(dollars in thousands except per share data)
Three Months Ended
March 31, 2021
March 31, 2020
Common shareholders' equity
$
1,260,833
$
1,162,777
Less: Intangible assets
(105,179)
(104,695)
Tangible common equity
$
1,155,654
$
1,058,082
Book value per common share
$
39.45
$
36.11
Less: Intangible book value per common share
(3.29)
(3.25)
Tangible book value per common share
$
36.16
$
32.86
Total assets
$
11,127,864
$
9,992,219
Less: Intangible assets
(105,179)
(104,695)
Tangible assets
$
11,022,685
$
9,887,524
Tangible common equity ratio
10.48
%
10.70
%
Average common shareholders' equity
$
1,254,780
$
1,191,180
Less: Average intangible assets
(105,164)
(104,697)
Average tangible common equity
$
1,149,616
$
1,086,483
Net Income Available to Common Shareholders
$
43,469
$
23,123
Annualized Return on Average Tangible Common Equity
15.33
%
8.56
%
10
Eagle Bancorp, Inc.
Consolidated Balance Sheets (Unaudited)
(dollars in thousands, except per share data)
Assets
March 31, 2021
December 31, 2020
March 31, 2020
Cash and due from banks
$
9,112
$
8,435
$
7,177
Federal funds sold
25,785
28,200
28,277
Interest bearing deposits with banks and other short-term investments
1,708,374
1,752,420
904,160
Investment securities available for sale (amortized cost of $1,365,139, $1,129,057, and $838,831, and allowance for credit losses of $78, $167, and $0, as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively).
1,369,107
1,151,083
858,916
Federal Reserve and Federal Home Loan Bank stock
33,978
40,104
39,988
Loans held for sale
142,196
88,205
60,036
Loans
7,526,689
7,760,212
7,840,873
Less allowance for credit losses
(102,070)
(109,579)
(96,336)
Loans, net
7,424,619
7,650,633
7,744,537
Premises and equipment, net
15,045
13,553
13,687
Operating lease right-of-use assets
30,707
25,237
25,655
Deferred income taxes
44,623
38,571
30,366
Bank owned life insurance
77,119
76,729
76,139
Intangible assets, net
105,179
105,114
104,695
Other real estate owned
4,987
4,987
8,237
Other assets
137,033
134,531
90,349
Total Assets
$
11,127,864
$
11,117,802
$
9,992,219
Liabilities and Shareholders' Equity
Deposits:
Noninterest bearing demand
$
2,594,334
$
2,809,334
$
1,994,209
Interest bearing transaction
862,709
756,923
931,597
Savings and money market
4,875,840
4,645,186
3,950,495
Time, $100,000 or more
513,998
546,173
608,355
Other time
351,963
431,587
656,912
Total deposits
9,198,844
9,189,203
8,141,568
Customer repurchase agreements
20,061
26,726
31,377
Other short-term borrowings
300,000
300,000
300,000
Long-term borrowings
218,175
268,077
267,784
Operating lease liabilities
33,338
28,022
28,242
Reserve for unfunded commitments
5,056
5,498
6,230
Other liabilities
91,557
59,384
54,240
Total liabilities
9,867,031
9,876,910
8,829,441
Shareholders' Equity
Common stock, par value $.01 per share; shares authorized 100,000,000, shares issued and outstanding 31,960,379, 31,779,663, and 32,197,258, respectively
316
315
320
Additional paid in capital
428,917
427,016
439,321
Retained earnings
833,598
798,061
710,072
Accumulated other comprehensive income (loss)
(1,998)
15,500
13,065
Total Shareholders' Equity
1,260,833
1,240,892
1,162,778
Total Liabilities and Shareholders' Equity
$
11,127,864
$
11,117,802
$
9,992,219
11
Eagle Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended
Interest Income
March 31, 2021
March 31, 2020
Interest and fees on loans
$
89,238
$
96,755
Interest and dividends on investment securities
4,395
5,427
Interest on balances with other banks and short-term investments
553
1,559
Interest on federal funds sold
8
60
Total interest income
94,194
103,801
Interest Expense
Interest on deposits
7,899
20,546
Interest on customer repurchase agreements
11
87
Interest on other short-term borrowings
495
357
Interest on long-term borrowings
3,138
3,067
Total interest expense
11,543
24,057
Net Interest Income
82,651
79,744
Provision for Credit Losses
(2,350)
14,310
Provision for Unfunded Commitments
(442)
2,112
Net Interest Income After Provision For Credit Losses
85,443
63,322
Noninterest Income
Service charges on deposits
977
1,425
Gain on sale of loans
5,178
944
Gain (loss) on sale of investment securities
221
822
Increase in the cash surrender value of bank owned life insurance
389
414
Other income
3,822
1,865
Total noninterest income
10,587
5,470
Noninterest Expense
Salaries and employee benefits
21,769
17,797
Premises and equipment expenses
3,618
3,821
Marketing and advertising
886
1,078
Data processing
2,814
2,496
Legal, accounting and professional fees
2,999
6,988
FDIC insurance
2,428
1,424
Other expenses
3,473
3,743
Total noninterest expense
37,987
37,347
Income Before Income Tax Expense
58,043
31,445
Income Tax Expense
14,574
8,322
Net Income
$
43,469
$
23,123
Earnings Per Common Share
Basic
$
1.36
$
0.70
Diluted
$
1.36
$
0.70
12
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates (Unaudited)
(dollars in thousands)
Three Months Ended
March 31, 2021
March 31, 2020
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
$
2,103,679
$
553
0.11
%
$
588,148
$
1,559
1.07
%
Loans held for sale (1)
104,784
739
2.82
%
38,749
354
3.65
%
Loans (1) (2)
7,726,716
88,499
4.65
%
7,650,993
96,401
5.07
%
Investment securities available for sale (2)
1,268,952
4,395
1.40
%
867,666
5,427
2.52
%
Federal funds sold
32,309
8
0.10
%
30,618
60
0.79
%
Total interest earning assets
11,236,440
94,194
3.40
%
9,176,174
103,801
4.55
%
Total noninterest earning assets
390,775
356,317
Less: allowance for credit losses
109,379
84,828
Total noninterest earning assets
281,396
271,489
TOTAL ASSETS
$
11,517,836
$
9,447,663
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing transaction
$
771,321
$
427
0.22
%
$
805,134
$
1,666
0.83
%
Savings and money market
4,839,348
3,970
0.33
%
3,337,958
11,082
1.34
%
Time deposits
921,208
3,503
1.54
%
1,287,310
7,798
2.44
%
Total interest bearing deposits
6,531,877
7,900
0.49
%
5,430,402
20,546
1.52
%
Customer repurchase agreements
20,615
11
0.22
%
30,008
87
1.17
%
Other short-term borrowings
300,003
495
0.66
%
220,058
357
0.64
%
Long-term borrowings
253,132
3,137
4.96
%
235,882
3,067
5.14
%
Total interest bearing liabilities
7,105,627
11,543
0.66
%
5,916,350
24,057
1.64
%
Noninterest bearing liabilities:
Noninterest bearing demand
3,069,372
2,266,362
Other liabilities
88,057
73,771
Total noninterest bearing liabilities
3,157,429
2,340,133
Shareholders’ Equity
1,254,780
1,191,180
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
11,517,836
$
9,447,663
Net interest income
$
82,651
$
79,744
Net interest spread
2.74
%
2.91
%
Net interest margin
2.98
%
3.49
%
Cost of funds
0.42
%
1.06
%
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $7.8 million and $4.3 million for the three months ended March 31, 2021 and March 31, 2020, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.
13
Statements of Income and Highlights Quarterly Trends (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended
March 31,
December 31,
September 30,
June 30,
March 31,
December 31,
September 30,
June 30,
Income Statements:
2021
2020
2020
2020
2020
2019
2019
2019
Total interest income
$
94,194
$
94,680
$
93,833
$
97,672
$
103,801
$
107,183
$
109,034
$
108,279
Total interest expense
11,543
13,262
14,795
16,309
24,057
26,473
28,045
26,950
Net interest income
82,651
81,418
79,038
81,363
79,744
80,710
80,989
81,329
Provision for credit losses
(2,350)
4,917
6,607
19,737
14,310
2,945
3,186
3,600
Provision for unfunded commitments
(442)
406
(2,078)
940
2,112
—
—
—
Net interest income after provision for credit losses
85,443
76,095
74,509
60,686
63,322
77,765
77,803
77,729
Noninterest income (before investment gain (loss))
10,366
9,722
17,729
11,782
4,648
6,845
6,161
5,797
Gain (loss) on sale of investment securities
221
165
115
713
822
(111)
153
563
Total noninterest income
10,587
9,887
17,844
12,495
5,470
6,734
6,314
6,360
Salaries and employee benefits
21,769
20,151
19,388
17,104
17,797
19,360
19,095
17,743
Premises and equipment
3,618
3,301
5,125
3,468
3,821
3,380
3,503
3,652
Marketing and advertising
886
1,161
928
1,111
1,078
1,200
1,210
1,268
Other expenses
11,714
10,396
11,474
13,209
14,651
10,786
9,665
10,696
Total noninterest expense
37,987
35,009
36,915
34,892
37,347
34,726
33,473
33,359
Income before income tax expense
58,043
50,973
55,438
38,289
31,445
49,773
50,644
50,730
Income tax expense
14,574
12,081
14,092
9,433
8,322
14,317
14,149
13,487
Net income
43,469
38,892
41,346
28,856
23,123
35,456
36,495
37,243
Per Share Data:
Earnings per weighted average common share, basic
$
1.36
$
1.21
$
1.28
$
0.90
$
0.70
$
1.06
$
1.07
$
1.08
Earnings per weighted average common share, diluted
$
1.36
$
1.21
$
1.28
$
0.90
$
0.70
$
1.06
$
1.07
$
1.08
Weighted average common shares outstanding, basic
31,869,655
32,037,099
32,229,322
32,224,695
32,850,112
33,468,572
34,232,890
34,540,152
Weighted average common shares outstanding, diluted
31,922,940
32,075,175
32,250,885
32,240,825
32,875,508
33,498,681
34,255,889
34,565,253
Actual shares outstanding at period end
31,960,379
31,779,663
32,228,636
32,224,756
32,197,258
33,241,496
33,720,522
34,539,853
Book value per common share at period end
$
39.45
$
39.05
$
37.96
$
36.86
$
36.11
$
35.82
$
35.13
$
34.30
Tangible book value per common share at period end (1)
$
36.16
$
35.74
$
34.70
$
33.62
$
32.86
$
32.67
$
32.02
$
31.25
Dividend per common share
$
0.25
$
0.22
$
0.22
$
0.22
$
0.22
$
0.22
$
0.22
$
0.22
Performance Ratios (annualized):
Return on average assets
1.53
%
1.39
%
1.57
%
1.12
%
0.98
%
1.49
%
1.62
%
1.74
%
Return on average common equity
14.05
%
12.53
%
14.46
%
9.84
%
7.81
%
11.78
%
12.09
%
12.81
%
Return on average tangible common equity
15.33
%
13.69
%
15.93
%
10.80
%
8.56
%
12.91
%
13.25
%
14.08
%
Net interest margin
2.98
%
2.98
%
3.08
%
3.26
%
3.49
%
3.49
%
3.72
%
3.91
%
Efficiency ratio (2)
40.74
%
38.34
%
38.10
%
37.18
%
43.83
%
39.71
%
38.34
%
38.04
%
Other Ratios:
Allowance for credit losses to total loans (3)
1.36
%
1.41
%
1.40
%
1.36
%
1.23
%
0.98
%
0.98
%
0.98
%
Allowance for credit losses to total nonperforming loans
195.25
%
179.80
%
189.83
%
184.52
%
201.80
%
151.16
%
127.87
%
192.70
%
Nonperforming loans to total loans (3)
0.69
%
0.79
%
0.74
%
0.74
%
0.61
%
0.65
%
0.76
%
0.51
%
Nonperforming assets to total assets
0.51
%
0.59
%
0.62
%
0.69
%
0.56
%
0.56
%
0.66
%
0.45
%
Net charge-offs (annualized) to average loans (3)
0.27
%
0.28
%
0.26
%
0.36
%
0.12
%
0.16
%
0.08
%
0.08
%
Tier 1 capital (to average assets)
10.28
%
10.31
%
10.82
%
10.63
%
11.33
%
11.62
%
12.19
%
12.66
%
Total capital (to risk weighted assets)
17.86
%
17.04
%
16.72
%
16.33
%
15.44
%
16.20
%
16.08
%
16.36
%
Common equity tier 1 capital (to risk weighted assets)
14.42
%
13.49
%
13.19
%
12.79
%
12.14
%
12.87
%
12.76
%
12.87
%
Tangible common equity ratio (1)
10.48
%
10.31
%
11.18
%
11.17
%
10.70
%
12.22
%
12.13
%
12.60
%
Average Balances (in thousands):
Total assets
$
11,517,836
$
11,141,826
$
10,473,595
$
10,326,709
$
9,447,663
$
9,426,220
$
8,923,406
$
8,595,523
Total earning assets
$
11,236,440
$
10,872,259
$
10,205,939
$
10,056,500
$
9,176,174
$
9,160,034
$
8,655,196
$
8,328,323
Total loans
$
7,726,716
$
7,896,324
$
7,910,260
$
8,015,751
$
7,650,993
$
7,532,179
$
7,492,816
$
7,260,899
Total deposits
$
9,601,249
$
9,227,733
$
8,591,912
$
8,482,718
$
7,696,764
$
7,716,973
$
7,319,314
$
6,893,981
Total borrowings
$
573,750
$
596,307
$
596,472
$
598,463
$
485,948
$
449,432
$
345,464
$
470,214
Total shareholders’ equity
$
1,254,780
$
1,235,174
$
1,211,145
$
1,179,452
$
1,191,180
$
1,194,337
$
1,197,513
$
1,166,487
(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.
