THIRD QUARTER 2022 OF $37.3 MILLION OR $1.16 PER DILUTED SHARE
BETHESDA, MD, Eagle Bancorp, Inc. (the "Company") (NASDAQ: EGBN), the parent company of EagleBank (the "Bank"), today announced net income of $37.3 million for the third quarter 2022, compared to net income of $15.7 million for the prior quarter and $43.6 million for the year-ago quarter. Net income (basic and diluted) was $1.16 per share for the third quarter 2022, compared to $0.49 per share for the prior quarter and $1.36 per share for the year-ago quarter.
The increase in earnings of $21.6 million from the second quarter of 2022 (the "prior quarter") was primarily attributable to the prior quarter having one-time noninterest expense accruals of $22.9 million related to the previously disclosed settlement agreements with the Securities and Exchange Commission ("SEC") and the Board of Governors of the Federal Reserve System ("FRB"). Partially offsetting this increase in earnings from the second quarter of 2022 was the increase in the provision for credit losses by $2.5 million in the third quarter.
Earnings per share (diluted) of $1.16 for the third quarter of 2022 reflects a decrease of $0.04 per share as compared to adjusted earnings per share (diluted) for the prior quarter of $1.20,1 which is adjusted to remove the one-time noninterest expense accruals described above.
Year-to-date earnings per share (diluted)2 of $3.07, reflects a decrease of $1.15 per share compared to prior year-to-date earnings per share (diluted) of $4.22. If adjusted to remove the one-time noninterest expense accruals described above, year-to-date adjusted earnings per share (diluted) of $3.781, reflects a decrease of $0.44 per share, compared to prior year-to-date earnings per share (diluted) of $4.22.
Third Quarter 2022 Highlights
•Loans increased by $149.8 million from the prior quarter-end. This was the fourth consecutive quarterly increase. Loans were up 2.1% from the prior quarter and 6.6% from the year-ago quarter.
•The provision for credit losses was $3.0 million for the quarter, up from $0.5 million the prior quarter. This increased the allowance for credit losses on loans to 1.04%, up from 1.02% a quarter ago and down from 1.21% a year ago.
•Deposits decreased by $408.3 million from the prior quarter end, and average deposits for the quarter decreased by $277.4 million. This decrease, coupled with the increase in loans, raised the quarter-end loans-to-deposits ratio to 83%, up from 78% a quarter ago and 71% a year ago.
1 A reconciliation between this non-GAAP financial measure and the nearest GAAP measure is provided in the tables that accompany this document.
2 Year-to-date is for the nine months ended September 30, 2022. Prior year-to-date is for the nine months ended September 30, 2021.
1
•The increase in the overall interest rate environment continued to create unrealized losses in securities available-for-sale ("AFS"), which are recorded in accumulated other comprehensive income (loss). As a result, shareholders' equity, book value per share and tangible book value per share all declined from the prior quarter end.
•During the quarter, the Company declared a quarterly dividend of $0.45 per share.
•At quarter end, the Company closed its Merrifield, Virginia branch as the lease was expiring.
(Dollars in thousands, except per share)
As Of or For the Three Months Ended
Percent Change
Sept. 30,
June 30,
Sept. 30,
Q3-22
Q3-22
2022
2022
2021
vs. Q2-22
vs. Q3-21
Income Statement
Net income
$
37,297
$
15,696
$
43,609
137.6
%
(14.5)
%
Net income per diluted share
$
1.16
$
0.49
$
1.36
136.7
%
(14.7)
%
Dividend per common share
$
0.45
$
0.45
$
0.40
—
%
12.5
%
Selected Ratios
Return on Average Assets
1.29
%
0.54
%
1.46
%
Return on Average Common Equity
11.64
%
4.91
%
13.00
%
Return on Average Tangible Common Equity3
12.67
%
5.35
%
14.11
%
Net interest margin
3.02
%
2.94
%
2.73
%
Efficiency Ratio3
40.6
%
66.6
%
41.7
%
Balance Sheet
Assets
$
10,713,044
$
10,941,655
$
11,585,317
(2.1)
%
(7.5)
%
Loans
$
7,304,498
$
7,154,686
$
6,850,863
2.1
%
6.6
%
Loans (excluding PPP loans)4
$
7,297,257
$
7,145,709
$
6,783,552
2.1
%
7.6
%
Deposits
$
8,763,350
$
9,171,618
$
9,668,488
(4.5)
%
(9.4)
%
Total Capital (to risk weighted assets)
16.10
%
15.70
%
16.59
%
Per Share
Book value per share
$
38.02
$
39.05
$
41.68
(2.6)
%
(8.8)
%
Tangible book value per share
$
34.77
$
35.80
$
38.39
(2.9)
%
(9.4)
%
Asset quality
Allowance for credit losses to total loans
1.04
%
1.02
%
1.21
%
Nonperforming assets ("NPAs") to total assets
0.09
%
0.19
%
0.31
%
Net (recovery) charge-off ratio to avg. loans (annualized)
0.00
%
(0.04)
%
0.08
%
CEO Commentary
Susan G. Riel, President and Chief Executive Officer of Eagle Bancorp, Inc. commented, "The results for the third quarter are encouraging as loan balances increased for a fourth consecutive quarter and asset quality metrics remained strong."
3 A reconciliation between this non-GAAP financial measure and the nearest GAAP measure is provided in the tables that accompany this document.
4 A reconciliation between this non-GAAP financial measure and the nearest GAAP measure is provided in the table under the subsection, "Total Loans."
2
"Additionally, both our CRE and C&I teams had their best quarter of the year so far, and pipelines remain strong. As we close out 2022, our lending teams continue to be active and successful in their calling efforts. And on construction lending, even with the successful completion of projects, our unfunded commitments were up slightly to $2.4 billion at quarter-end. As more opportunities arise, even with a more difficult economy, our total risk-based capital of 16.10% gives us ample room to continue to grow the loan portfolio, and with equity of more than $1.2 billion, the ability to close on credits of substantial size."
"For our shareholders, we remain focused on returning cash through dividends. At the end of the quarter, our board declared a dividend of $0.45 per share."
"We once again thank all of our employees for their commitment in serving the needs of our clients and communities. Additionally, we remain committed to a culture of respect, diversity and inclusion in both the workplace and the communities we serve."
Income Statement
•Net interest income was $83.9 million for the third quarter 2022, compared to $82.9 million for the prior quarter and $79.0 million for the year-ago quarter. The increase in net interest income from the prior quarter was driven by higher average loans for the quarter, higher yield on loans as the overall rate environment increased, and higher rates on short-term investments and investment securities; offset by the impact of fewer earning assets. The combination of these factors outpaced the increase in interest expense on a smaller deposit base. Deposits declined during the third quarter as a result of disintermediation in the current ongoing higher interest rate environment.
•Net interest margin was 3.02% for the third quarter 2022, compared to 2.94% for the prior quarter and 2.73% for the year-ago quarter. The increase in margin from the prior quarter was limited to 8 basis points. The relatively slow rate of NIM growth was primarily due to an increase in the cost of funds resulting from ongoing market volatility and the high interest rate environment, which substantially offset the increase in yield on interest earning assets. For the third quarter, our increased yield on interest earning assets was only slightly more than the increase in the cost of funds.
◦The yield on interest earning assets, which is inclusive of the yields on loans and securities, was 4.01% for the third quarter 2022 compared to 3.39% for the prior quarter and 3.08% for the year-ago quarter. The increase of 62 basis points from the prior quarter was from variable rate loans adjusting upward, higher rates on newly originated loans and higher rates on short-term investments.
◦The yield on the loan portfolio was 5.10% for the third quarter 2022, compared to 4.51% for the prior quarter and 4.59% for the year-ago quarter. The increase of 59 basis points from the prior quarter was from variable rate loans adjusting upward and from higher rates on newly originated loans.
◦The cost of funds was 0.99% for third quarter 2022, compared to 0.45% for the prior quarter and 0.35% for the year-ago quarter. The increase of 54 basis points from the prior quarter was primarily due to higher deposit rates paid on savings and money market accounts during the third quarter and utilizing short-term investments and short-term borrowings to satisfy deposit outflows resulting from the reduction of interest-bearing deposits with the Bank during the third quarter.
3
•Pre-provision net revenue ("PPNR"),5 a non-GAAP measure, was $53.0 million for the third quarter 2022, compared to $29.5 million for the prior quarter and $51.0 million for the year-ago quarter. As a percent of average assets, PPNR for the third quarter 2022 was 1.85%, compared to 1.01% for the prior quarter and 1.72% for the year-ago quarter. This increase in both PPNR and PPNR as a percent of average assets from the prior quarter was primarily attributable to the prior quarter having a one-time accrual of $22.9 million in noninterest expense in connection with the settlement agreements with the SEC and FRB.
(Dollars in thousands)
Three Months Ended
Percent Change
Sept 30,
June 30,
Sept 30,
Q3-22
Q3-22
2022
2022
2021
vs. Q2-22
vs. Q3-21
Net interest income
$
83,897
$
82,918
$
79,045
1.2
%
6.1
%
Noninterest income
5,308
5,564
8,299
(4.6)
%
(36.0)
%
Less: Noninterest expense
(36,206)
(58,962)
(36,375)
(38.6)
%
(0.5)
%
PPNR
$
52,999
$
29,520
$
50,969
79.5
%
4.0
%
Average Assets
$
11,431,110
$
11,701,679
$
11,826,326
(2.3)
%
(3.3)
%
PPNR to Avg. Assets (non-GAAP)
1.85
%
1.01
%
1.72
%
•Provision for credit losses on loans was $3.0 million for the third quarter 2022, compared to a provision of $0.5 million for the prior quarter and a reversal of $8.2 million for the year-ago quarter. The increase in the third quarter 2022 provision over the prior quarter was primarily driven by higher period-end loan balances, higher reserves on one individually evaluated loan, and a modest weakening in the unemployment forecast coupled with an increase in the localization factor based on the national unemployment forecast. These factors were partially mitigated by improvements observed in a number of Q&E factors, including improved risk ratings on hotel loans which were greater than the increased management overlay on office property loans in the Washington DC area.
•Noninterest income was $5.3 million for the third quarter 2022, as compared to $5.6 million for the prior quarter and $8.3 million for the year-ago quarter. The primary driver for the decrease from the prior quarter and the year ago quarter is higher rates on mortgage loans leading to fewer mortgage originations.
Residential mortgage loan locked commitments were $57.5 million, down from $92.0 million the prior quarter and down from $279.8 million for the year-ago quarter. As interest rates continued to rise in the second quarter, refinance activity continued to slow resulting in fewer locked loans.
•Noninterest expense was $36.2 million for the third quarter 2022 compared to $59.0 million for the prior quarter and $36.4 million for the year-ago quarter. The notable changes from the prior quarter were as follows:
◦Other expenses in the prior quarter included one-time accruals of $22.9 million in non-tax deductible expenses related to the settlement agreements with the SEC and FRB.
◦Salaries and employee benefits were $21.5 million, down $267 thousand from the prior quarter. The decrease was primarily due to lower incentive bonus accruals.
5 A reconciliation between this non-GAAP financial measure and the nearest GAAP measure is provided in the table below. An explanation of the reconciliations and the reasons why the Company believes this non-GAAP financial measure to be important for investors is included with the reconciliation tables accompanying this document.
4
◦Data processing expenses were $3.4 million, up $716 thousand from the prior quarter. The increase was primarily attributable to expenses associated with network upgrades.
◦Legal, accounting and professional fees were $2.3 million, up $195 thousand from the prior quarter.
At the end of the quarter, the Merrifield, Virginia branch was closed, reducing the number of banking locations to sixteen. Estimated annual cost savings on rent, common area maintenance and taxes are $275 thousand. All branch employees were repositioned to fill open positions at other locations, and deposits were transferred to our Fairfax, Virginia branch. There were no notable unamortized expenses as the lease is set to expire on October 31, 2022.
•Efficiency ratio6 was 40.6% for the third quarter 2022 compared to 66.6% for the prior quarter and 41.7% for the year-ago quarter. The improvement in the efficiency ratio this quarter was primarily driven by the inclusion of one-time expenses related to the settlement agreements with the SEC and FRB in the prior quarter.
•Effective income tax rate for the third quarter 2022 was 24.2%, compared to 44.9% for the prior quarter and 25.4% for the year-ago quarter. The decrease in the effective tax rate this quarter was primarily driven by the inclusion of one-time non-deductible expenses related to the settlement agreements with the SEC and FRB in the prior quarter.
Balance Sheet
•Total assets at September 30, 2022 were $10.7 billion, down 2.1% from a quarter ago and down 7.5% from a year ago. The decrease from the prior quarter-end was primarily driven by the utilization of interest-bearing deposits with banks and other short-term investments along with short-term borrowings to satisfy deposit outflows; and decreases in the value of our investment securities AFS as interest rates rose during the quarter.
•Investment securities AFS and Held-to-Maturity ("HTM") had an aggregate balance of $2.8 billion at September 30, 2022, down 4.7% from a quarter ago and up 54.7% from a year ago. The decrease from the prior quarter-end was primarily from lower carrying values on AFS securities and principal paydowns. If the overall interest rate environment continues to rise, carrying values will continue to decrease for securities in the AFS portfolio. Investments purchased during the third quarter of 2022 were primarily agency mortgage backed securities and agency bonds.
•Total loans (excluding loans held for sale) were $7.304 billion as of September 30, 2022, up 2.1% from a quarter ago and up 6.6% from a year ago. Excluding PPP loans, loan balances were $7.297 billion as of September 30, 2022, up 2.1% from a quarter ago and up 7.6% from a year ago.7 The increase in loans, excluding PPP loans, from the prior quarter-end was driven by growth in commercial real estate ("CRE") loans and commercial & industrial loans ("C&I").
6 A reconciliation between this non-GAAP financial measure and the nearest GAAP measure is provided in the tables that accompany this document.
7 A reconciliation between this non-GAAP financial measure and the nearest GAAP measure is provided in the following table. An explanation of the reconciliations and the reasons why the Company believes this non-GAAP financial measure to be important for investors is included with the reconciliation tables accompanying this document.
5
Percent Change
(Dollars in thousands)
September 30,
June 30,
September 30,
Q3-22
Q3-22
2022
2022
2021
vs. Q2-22
vs. Q3-21
Total loans, excluding loans held for sale (GAAP)
$
7,304,498
$
7,154,686
$
6,850,863
2.1
%
6.6
%
Less: PPP loans (non-GAAP)
(7,241)
(8,977)
(67,311)
Total loans, excluding loans held for sale and PPP loans (non-GAAP)
$
7,297,257
$
7,145,709
$
6,783,552
2.1
%
7.6
%
•Allowance for credit losses was 1.04% of total loans at September 30, 2022, compared to 1.02% a quarter ago, and 1.21% a year ago. See commentary above in section "Provision for Credit Losses on Loans".
Net charge-off as a percent of average loans (excluding loans held for sale) was a net recovery of $57 thousand, which was less than 0.01%8 for the third quarter 2022, as compared to a recovery of 0.04%8 a quarter ago, and a net charge-off of 0.08%8 for the year-ago quarter.
•Nonperforming loans and assets: Nonperforming loans decreased compared to the prior quarter and the year-ago quarter. The decrease was driven primarily by loans being paid in full or returning to accrual status due to ongoing payment performance. One note was moved from nonperforming loans to nonperforming assets. At quarter end, other real estate owned ("OREO") consisted of four properties with a value of $2.0 million.
◦Nonperforming loans as a percent of loans were 0.10% at September 30, 2022, compared to 0.26% a quarter ago and 0.46% a year ago.
◦Nonperforming assets as a percent of assets were 0.09% at September 30, 2022, compared to 0.19% a quarter ago and 0.31% a year ago.
•Total deposits were $8.8 billion at September 30, 2022, down 4.5% from a quarter ago and down 9.4% from a year ago. The outflow of deposits increased the ratio of loans-to-deposits to 83% from 78% the prior quarter. This decrease is primarily attributable to current market conditions and a loss of deposits through disintermediation as a result of the continued increase in the overall interest rate environment. Most of the outflows were from interest bearing accounts (savings and money market accounts) as average noninterest bearing deposits to average total deposits was 38.4% for the third quarter 2022, up from 37.9% a quarter ago and 33.9% for the year-ago quarter.
•Total shareholders’ equity was $1.2 billion at September 30, 2022, down 2.6% from a quarter ago, and down 8.4% from a year ago. The decrease in shareholders' equity from the prior quarter-end was primarily due to the continued increase in the overall interest rate environment, which created increased unrealized losses in investment securities AFS, that are recorded in accumulated other comprehensive income (loss). These reductions to equity were partially offset by earnings of $1.16 per share, less dividends declared of $0.45 per share (retained earnings of $0.71).
◦Book value per share was $38.02, down $1.03 from a quarter ago, and down $3.66 from a year ago.
◦Tangible book value per share9 was $34.77, down $1.03 from a quarter ago, and down $3.62 from a year ago.
8 On an annualized basis.
9 A reconciliation of non-GAAP financial measures to the nearest GAAP measure is provided in the tables that accompany this document.
6
•Dividends: On September 20, 2022, the Board of Directors declared a quarterly cash dividend of $0.45 per share payable on October 31, 2022 to shareholders of record on October 10, 2022.
•Capital ratios for the Company are in the table below.
For the Company
September 30,
June 30,
September 30,
202210
2022
2021
Regulatory Ratios
Total Capital (to risk weighted assets)
16.10
%
15.70
%
16.59
%
Tier 1 Capital (to risk weighted assets)
15.11
%
14.58
%
15.33
%
Common Equity Tier 1 (to risk weighted assets)
15.11
%
14.58
%
15.33
%
Tier 1 Capital (to average assets)
11.55
%
10.68
%
10.58
%
Common Capital Ratios
Common Equity Ratio
11.39
%
11.45
%
11.49
%
Tangible Common Equity Ratio
10.52
%
10.60
%
10.68
%
Additional financial information: The financial information that follows provides more detail on the Company’s financial performance for the three months ended September 30, 2022 as compared to the three months ended June 30, 2022 and September 30, 2021 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, 2021, quarterly report on Form 10-Q for the quarter ended June 30, 2022 and other reports filed with 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 sixteen banking offices and five lending 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, and is committed to a culture of respect, diversity, equity and inclusion in both its workplace and the communities in which it operates.
Conference call: Eagle Bancorp will host a conference call to discuss its third quarter 2022 financial results on Thursday, October 20, 2022 at 10:00 a.m. eastern time. The public is invited to listen to this registering at the link https://register.vevent.com/register/BIb2a1705d60bc42988a46b4c716f15944 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 November 3, 2022.
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 ongoing challenges and uncertainties relating to the evolution and continuation of the COVID-19 pandemic, including on our credit quality, asset and loan growth and broader business operations), volatility in interest rates and interest rate policy, the current high inflationary environment competitive
10Capital ratios for September 30, 2022 are subject to final filings with the Federal Reserve.
7
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, 2021 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
September 30,
June 30,
September 30,
2022
2022
2021
Income Statements:
Total interest income
$
111,527
$
95,635
$
89,152
Total interest expense
27,630
12,717
10,107
Net interest income
83,897
82,918
79,045
Provision for (reversal of) credit losses
3,022
495
(8,203)
Provision for unfunded commitments
774
553
716
Net interest income after provision for credit losses
80,101
81,870
86,532
Noninterest income (before investment gain)
5,304
5,715
6,780
Net gain (loss) on sale of investment securities
4
(151)
1,519
Total noninterest income
5,308
5,564
8,299
Total noninterest expense
36,206
58,962
36,375
Income before income tax expense
49,203
28,472
58,456
Income tax expense
11,906
12,776
14,847
Net income
$
37,297
$
15,696
$
43,609
Per Share Data:
Earnings per weighted average common share, basic
$
1.16
$
0.49
$
1.36
Earnings per weighted average common share, diluted
$
1.16
$
0.49
$
1.36
Weighted average common shares outstanding, basic
32,084,464
32,080,657
31,959,357
Weighted average common shares outstanding, diluted
32,155,678
32,142,427
32,030,527
Actual shares outstanding at period end
32,082,321
32,081,241
31,947,458
Book value per common share at period end
$
38.02
$
39.05
$
41.68
Tangible book value per common share at period end (1)
$
34.77
$
35.80
$
38.39
Dividend per common share
$
0.45
$
0.45
$
0.40
Performance Ratios (annualized):
Return on average assets
1.29
%
0.54
%
1.46
%
Return on average common equity
11.64
%
4.91
%
13.00
%
Return on average tangible common equity (1)
12.67
%
5.35
%
14.11
%
Net interest margin
3.02
%
2.94
%
2.73
%
Efficiency ratio (2)
40.6
%
66.6
%
41.7
%
Other Ratios:
Allowance for credit losses to total loans (3)
1.04
%
1.02
%
1.21
%
Allowance for credit losses to total nonperforming loans
997
%
386
%
265
%
Nonperforming loans to total loans (3)
0.10
%
0.26
%
0.46
%
Nonperforming assets to total assets
0.09
%
0.19
%
0.31
%
Net (recovery) charge-off (annualized) to average total loans (3)
0.00
%
(0.04)
%
0.08
%
Average noninterest bearing deposits to average deposits
Common equity tier 1 capital (to risk weighted assets)
15.11
%
14.58
%
15.33
%
Common equity to total assets
11.39
%
11.45
%
11.49
%
Tangible common equity ratio (1)
10.52
%
10.60
%
10.68
%
Loan Balances - Period End:
Commercial and Industrial
$
1,415,998
$
1,394,835
$
1,289,215
PPP loans
7,241
8,977
67,311
Commercial real estate - income producing
3,668,720
3,606,506
3,337,303
Commercial real estate - owner occupied
1,091,283
1,080,249
977,617
1-4 Family mortgage
71,731
72,793
76,259
Construction - commercial and residential
858,100
804,170
824,133
Construction - C&I (owner occupied)
139,238
129,717
222,366
Home equity
51,396
53,193
55,527
Other consumer
791
4,246
1,132
Total loans
$
7,304,498
$
7,154,686
$
6,850,863
Average Balances:
Total assets
$
11,431,110
$
11,701,679
$
11,826,326
Total earning assets
$
11,030,670
$
11,300,267
$
11,486,280
Total loans(3)
$
7,282,589
$
7,104,727
$
7,055,621
Total deposits
$
9,907,497
$
10,184,886
$
9,948,114
Total borrowings
$
158,001
$
152,583
$
448,697
Total shareholders’ equity
$
1,271,753
$
1,281,742
$
1,331,022
Asset Quality:
Net (recovery) charge-off
$
(57)
$
(674)
$
1,328
Nonperforming loans
$
7,602
$
18,842
$
31,247
Other real estate owned
$
1,962
$
1,487
$
5,135
Nonperforming assets
$
9,564
$
20,329
$
36,382
(1) A reconciliation of non-GAAP financial measures to the nearest non-GAAP measure is provided in the tables that accompany this document.
(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.
Weighted average common shares outstanding, diluted
32,138,586
32,142,427
12
GAAP Reconciliation (unaudited) - Continued
Tangible common equity to tangible assets (the "tangible common equity ratio"), tangible book value per common share, and the 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 above table provides reconciliation of these financial measures defined by GAAP with non-GAAP financial measures.
Pre-provision net revenue is a non-GAAP financial measure derived from GAAP based amounts. The Company calculates PPNR by subtracting noninterest expenses from the sum of net interest income and noninterest income. PPNR to Average Assets is calculated by dividing the PPNR amount by average assets to obtain a percentage. The Company considers this information important to shareholders because it illustrates revenue excluding the impact of provisions and reversals to the allowance for credit losses on loans. The table in the "Income Statement" section of this earnings release provides a reconciliation of PPNR and PPNR to Average Assets to the nearest GAAP measure.
Total loans excluding PPP loans is a non-GAAP financial measure derived from GAAP based amounts. The Company calculates Total loans excluding PPP loans by subtracting the total amount of outstanding PPP loans from the amount of total loans, excluding loans held for sale. The Company considers this information important to shareholders because it allows investors to see changes in the Company's loan growth without the impact of the PPP loans, which were loan products specific to relief efforts in response to the COVID-19 pandemic. Excluding the impact of PPP loans also allows investors to better compare the Company's loan growth to historical periods prior to the pandemic. The table in the "Balance Sheet" section of this earnings release and the table above provides a reconciliation of total loans excluding PPP loans to the nearest GAAP measure.
Efficiency ratio is a non-GAAP measure calculated by dividing GAAP non-interest expense by the sum of GAAP net interest income and GAAP non-interest (loss) income. Management believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling operational activities. The table above shows the calculation of the efficiency ratio from these GAAP measures.
Adjusted net income and adjusted earnings per share (diluted) are non-GAAP financial measures derived from GAAP based amounts. The Company calculates adjusted net income for the second quarter of 2022 by excluding from net income the $22.9 million accrual of non-tax deductible expenses in connection with the Company's agreements in principle with the SEC and FRB to resolve the previously disclosed investigations with respect to the Company. The Company calculates adjusted earnings per share (diluted) by dividing the same $22.9 million accrual by the weighted average shares outstanding (diluted) in the second quarter of 2022. The Company considers this information important to shareholders because adjusted net income and adjusted earnings per share (diluted) provides investors insight into how Company earnings changed exclusive of the costs related to the agreement in principle with the SEC and FRB, and allow investors to better compare the Company's performance against historical periods. The table above provides a reconciliation of adjusted net income and adjusted earnings per share (diluted) to the nearest GAAP measure.
13
Eagle Bancorp, Inc.
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share data)
September 30,
June 30,
September 30,
Assets
2022
2022
2021
Cash and due from banks
$
27,235
$
13,132
$
8,806
Federal funds sold
69,809
42,697
38,934
Interest-bearing deposits with banks and other short-term investments
47,131
369,337
2,452,744
Investment securities available-for-sale at fair value (amortized cost of $1,873,872 , $1,897,985, and $1,789,416, net of allowance for credit losses of $18, $18 and $256 as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively)
1,649,753
1,755,254
1,786,659
Investment securities held-to-maturity (fair value of $988,199, $1,084,706 and $0, net of allowance for credit losses of $802, $826 and $0, as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively)
1,114,084
1,143,632
—
Federal Reserve and Federal Home Loan Bank stock
42,311
33,990
34,093
Loans held for sale
9,387
13,814
53,413
Loans
7,304,498
7,154,686
6,850,863
Less allowance for credit losses
(75,767)
(72,665)
(82,906)
Loans, net
7,228,731
7,082,021
6,767,957
Premises and equipment, net
13,684
13,643
15,293
Operating lease right-of-use assets
26,022
27,548
30,080
Deferred income taxes
112,904
92,167
44,733
Bank-owned life insurance
110,678
110,047
108,158
Goodwill and other intangible assets, net
104,240
104,257
105,103
Other real estate owned
1,962
1,487
5,135
Other assets
155,113
138,629
134,209
Total assets
$
10,713,044
$
10,941,655
$
11,585,317
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing demand
$
2,928,774
$
2,831,934
$
2,836,418
Interest-bearing transaction
964,567
985,431
812,410
Savings and money market
4,220,768
4,741,180
5,268,157
Time
649,241
613,073
751,503
Total deposits
8,763,350
9,171,618
9,668,488
Customer repurchase agreements
21,465
26,539
29,401
Other short-term borrowings
515,000
280,000
300,000
Long-term borrowings
69,763
69,732
69,639
Operating lease liabilities
30,837
32,414
34,345
Reserve for unfunded commitments
5,696
4,921
5,011
Other liabilities
87,162
103,711
146,736
Total liabilities
9,493,273
9,688,935
10,253,620
Shareholders' Equity
Common stock, par value $.01 per share; shares authorized 100,000,000, shares issued and outstanding 32,082,321, 32,081,241, and 31,947,458 respectively
318
318
316
Additional paid-in capital
442,880
440,418
432,479
Retained earnings
987,212
964,353
901,218
Accumulated other comprehensive loss
(210,639)
(152,369)
(2,316)
Total Shareholders' Equity
1,219,771
1,252,720
1,331,697
Total Liabilities and Shareholders' Equity
$
10,713,044
$
10,941,655
$
11,585,317
14
Eagle Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
Nine Months Ended
Sept 30,
June 30,
Sept 30,
Sept 30,
Sept 30,
2022
2022
2021
2022
2021
Interest Income
Interest and fees on loans
$
93,744
$
80,142
$
82,182
$
249,716
$
260,124
Interest and dividends on investment securities
13,463
12,997
5,877
37,890
15,878
Interest on balances with other banks and short-term invest.
4,100
2,451
1,083
7,608
2,239
Interest on federal funds sold
220
45
10
269
25
Total interest income
111,527
95,635
89,152
295,483
278,266
Interest Expense
Interest on deposits
26,125
11,538
6,590
44,022
21,288
Interest on customer repurchase agreements
55
22
14
90
34
Interest on other short-term borrowings
412
120
506
992
1,502
Interest on long-term borrowings
1,038
1,037
2,997
3,112
9,114
Total interest expense
27,630
12,717
10,107
48,216
31,938
Net Interest Income
83,897
82,918
79,045
247,267
246,328
Provision for (Reversal of) Credit Losses
3,022
495
(8,203)
730
(14,409)
Provision for (Reversal of) Unfunded Commitments
774
553
716
1,316
(487)
Net Interest Income After Provision For Credit Losses
80,101
81,870
86,532
245,221
261,224
Noninterest Income
Service charges on deposits
1,339
1,345
1,204
3,970
3,303
Gain on sale of loans
821
855
3,332
3,168
11,988
Net gain (loss) on sale of investment securities
4
(151)
1,519
(172)
2,058
Incr. in the cash surrender value of bank-owned life insurance
631
632
642
1,889
1,429
Other income
2,513
2,883
1,602
9,470
11,033
Total noninterest income
5,308
5,564
8,299
18,325
29,811
Noninterest Expense
Salaries and employee benefits
21,538
21,805
22,145
60,362
63,790
Premises and equipment expenses
3,275
3,523
3,859
9,926
11,121
Marketing and advertising
1,181
1,186
1,013
3,431
2,879
Data processing
3,445
2,729
2,886
9,054
8,451
Legal, accounting and professional fees
2,332
2,137
2,021
6,030
8,523
FDIC insurance
1,287
906
1,549
3,251
5,586
Other expenses
3,148
26,676
2,902
34,126
9,506
Total noninterest expense
36,206
58,962
36,375
126,180
109,856
Income Before Income Tax Expense
49,203
28,472
58,456
137,366
181,179
Income Tax Expense
11,906
12,776
14,847
38,629
46,108
Net Income
$
37,297
$
15,696
$
43,609
$
98,737
$
135,071
Earnings Per Common Share
Basic
$
1.16
$
0.49
$
1.36
$
3.08
$
4.23
Diluted
$
1.16
$
0.49
$
1.36
$
3.07
$
4.22
15
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates vs. Prior Quarter (Unaudited)
(Dollars in thousands)
Three Months Ended
September 30, 2022
June 30, 2022
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
$
771,063
$
4,100
2.11
%
$
1,193,253
$
2,451
0.82
%
Loans held for sale (1)
11,586
150
5.18
%
16,342
179
4.38
%
Loans (1) (2)
7,282,589
93,594
5.10
%
7,104,727
79,963
4.51
%
Investment securities available-for-sale (2)
1,782,859
7,587
1.69
%
1,793,047
7,022
1.57
%
Investment securities held-to-maturity (2)
1,128,943
5,876
2.06
%
1,157,308
5,975
2.07
%
Federal funds sold
53,630
220
1.63
%
35,590
45
0.51
%
Total interest earning assets
11,030,670
$
111,527
4.01
%
11,300,267
$
95,635
3.39
%
Total noninterest earning assets
475,581
474,336
Less: allowance for credit losses
75,141
72,924
Total noninterest earning assets
400,440
401,412
TOTAL ASSETS
$
11,431,110
$
11,701,679
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing transaction
$
960,970
$
1,891
0.78
%
$
856,388
$
630
0.30
%
Savings and money market
4,504,216
21,711
1.91
%
4,810,047
8,772
0.73
%
Time deposits
633,241
2,523
1.58
%
657,220
2,136
1.30
%
Total interest bearing deposits
6,098,427
26,125
1.70
%
6,323,655
11,538
0.73
%
Customer repurchase agreements
26,546
55
0.82
%
25,112
22
0.35
%
Other short-term borrowings
61,703
412
2.67
%
57,750
120
0.83
%
Long-term borrowings
69,752
1,038
5.95
%
69,721
1,037
5.95
%
Total interest bearing liabilities
6,256,428
$
27,630
1.75
%
6,476,238
$
12,717
0.79
%
Noninterest bearing liabilities:
Noninterest bearing demand
3,809,070
3,861,231
Other liabilities
93,859
82,468
Total noninterest bearing liabilities
3,902,929
3,943,699
Shareholders’ equity
1,271,753
1,281,742
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
11,431,110
$
11,701,679
Net interest income
$
83,897
$
82,918
Net interest spread
2.26
%
2.60
%
Net interest margin
3.02
%
2.94
%
Cost of funds
0.99
%
0.45
%
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.4 million and $4.3 million for the three months ended September 30, 2022 and June 30, 2022, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.
16
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates vs. Year Ago Quarter (Unaudited)
(Dollars in thousands)
Three Months Ended September 30,
2022
2021
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
$
771,063
$
4,100
2.11
%
$
2,668,265
$
1,083
0.16
%
Loans held for sale (1)
11,586
150
5.18
%
56,866
642
4.52
%
Loans (1) (2)
7,282,589
93,594
5.10
%
7,055,621
81,540
4.59
%
Investment securities available-for-sale (2)
1,782,859
7,587
1.69
%
1,670,723
5,877
1.40
%
Investment securities held-to-maturity (2)
1,128,943
5,876
2.06
%
—
—
—
%
Federal funds sold
53,630
220
1.63
%
34,805
10
0.11
%
Total interest earning assets
11,030,670
$
111,527
4.01
%
11,486,280
$
89,152
3.08
%
Total noninterest earning assets
475,581
432,215
Less: allowance for credit losses
75,141
92,169
Total noninterest earning assets
400,440
340,046
TOTAL ASSETS
$
11,431,110
$
11,826,326
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing transaction
$
960,970
$
1,891
0.78
%
$
842,086
$
402
0.19
%
Savings and money market
4,504,216
21,711
1.91
%
4,971,866
3,645
0.29
%
Time deposits
633,241
2,523
1.58
%
763,513
2,543
1.32
%
Total interest bearing deposits
6,098,427
26,125
1.70
%
6,577,465
6,590
0.40
%
Customer repurchase agreements
26,546
55
0.82
%
27,348
14
0.20
%
Other short-term borrowings
61,703
412
2.67
%
300,003
506
0.67
%
Long-term borrowings
69,752
1,038
5.95
%
121,346
2,997
9.88
%
Total interest bearing liabilities
6,256,428
$
27,630
1.75
%
7,026,162
$
10,107
0.57
%
Noninterest bearing liabilities:
Noninterest bearing demand
3,809,070
3,370,649
Other liabilities
93,859
98,493
Total noninterest bearing liabilities
3,902,929
3,469,142
Shareholders’ equity
1,271,753
1,331,022
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
11,431,110
$
11,826,326
Net interest income
$
83,897
$
79,045
Net interest spread
2.26
%
2.51
%
Net interest margin
3.02
%
2.73
%
Cost of funds
0.99
%
0.35
%
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.4 million and $6.3 million for the three months ended September 30, 2022 and September 30, 2021, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.
17
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:
2022
2022
2022
2021
2021
2021
2021
2020
Total interest income
$
111,527
$
95,635
$
88,321
$
86,230
$
89,152
$
94,920
$
94,194
$
94,680
Total interest expense
27,630
12,717
7,869
8,044
10,107
10,288
11,543
13,262
Net interest income
83,897
82,918
80,452
78,186
79,045
84,632
82,651
81,418
Provision for (reversal of) credit losses
3,022
495
(2,787)
(6,412)
(8,203)
(3,856)
(2,350)
4,917
Provision for (reversal of) unfunded commitments
774
553
(11)
(632)
716
(761)
(442)
406
Net interest income after provision for credit losses
80,101
81,870
83,250
85,230
86,532
89,249
85,443
76,095
Noninterest income before investment gain (loss)
5,304
5,715
7,478
9,668
6,780
10,607
10,366
9,722
Net gain (loss) on sale of investment securities
4
(151)
(25)
906
1,519
318
221
165
Total noninterest income
5,308
5,564
7,453
10,574
8,299
10,925
10,587
9,887
Salaries and employee benefits
21,538
21,805
17,019
24,608
22,145
19,876
21,769
20,151
Premises and equipment
3,275
3,523
3,128
3,755
3,859
3,644
3,618
3,301
Marketing and advertising
1,181
1,186
1,064
1,286
1,013
980
886
1,161
Other expenses
10,212
32,448
9,801
9,660
9,358
10,994
11,714
10,396
Total noninterest expense
36,206
58,962
31,012
39,309
36,375
35,494
37,987
35,009
Income before income tax expense
49,203
28,472
59,691
56,495
58,456
64,680
58,043
50,973
Income tax expense
11,906
12,776
13,947
14,875
14,847
16,687
14,574
12,081
Net income
$
37,297
$
15,696
$
45,744
$
41,620
$
43,609
$
47,993
$
43,469
$
38,892
Per Share Data:
Earnings per weighted average common share, basic
$
1.16
$
0.49
$
1.43
$
1.30
$
1.36
$
1.50
$
1.36
$
1.21
Earnings per weighted average common share, diluted
$
1.16
$
0.49
$
1.42
$
1.30
$
1.36
$
1.50
$
1.36
$
1.21
Weighted average common shares outstanding, basic
32,084,464
32,080,657
32,033,280
31,950,320
31,959,357
31,962,819
31,869,655
32,037,099
Weighted average common shares outstanding, diluted
32,155,678
32,142,427
32,110,099
32,030,998
32,030,527
32,025,110
31,922,940
32,075,175
Actual shares outstanding at period end
32,082,321
32,081,241
32,079,474
31,950,092
31,947,458
31,961,573
31,960,379
31,779,663
Book value per common share at period end
$
38.02
$
39.05
$
39.89
$
42.28
$
41.68
$
40.87
$
39.45
$
39.05
Tangible book value per common share at period end (1)
$
34.77
$
35.80
$
36.64
$
38.97
$
38.39
$
37.58
$
36.16
$
35.74
Dividend per common share
$
0.45
$
0.45
$
0.40
$
0.40
$
0.40
$
0.35
$
0.25
$
0.22
Performance Ratios (annualized):
Return on average assets
1.29
%
0.54
%
1.46
%
1.32
%
1.46
%
1.68
%
1.53
%
1.39
%
Return on average common equity
11.64
%
4.91
%
13.83
%
12.30
%
13.00
%
14.92
%
14.05
%
12.53
%
Return on average tangible common equity(1)
12.67
%
5.35
%
14.99
%
13.35
%
14.11
%
16.25
%
15.33
%
13.69
%
Net interest margin
3.02
%
2.94
%
2.65
%
2.55
%
2.73
%
3.04
%
2.98
%
2.98
%
Efficiency ratio (2)
40.59
%
66.6
%
35.3
%
44.3
%
41.7
%
37.1
%
40.7
%
38.3
%
Other Ratios:
Allowance for credit losses to total loans (3)
1.04
%
1.02
%
1.01
%
1.06
%
1.21
%
1.28
%
1.36
%
1.41
%
Allowance for credit losses to total nonperforming loans
997
%
386
%
301
%
257
%
265
%
187
%
195
%
180
%
Nonperforming loans to total loans (3)
0.10
%
0.26
%
0.33
%
0.41
%
0.46
%
0.68
%
0.69
%
0.79
%
Nonperforming assets to total assets
0.09
%
0.19
%
0.23
%
0.26
%
0.31
%
0.50
%
0.51
%
0.59
%
Net (recovery) charge-off (annualized) to average total loans (3)
0.00
%
(0.04)
%
0.03
%
0.07
%
0.08
%
0.30
%
0.27
%
0.28
%
Tier 1 capital (to average assets)
11.55
%
10.68
%
9.93
%
10.19
%
10.58
%
10.65
%
10.28
%
10.31
%
Total capital (to risk weighted assets)
16.10
%
15.70
%
15.86
%
16.15
%
16.59
%
17.98
%
17.86
%
17.04
%
Common equity tier 1 capital (to risk weighted assets)
15.11
%
14.58
%
14.74
%
15.02
%
15.33
%
14.67
%
14.42
%
13.49
%
Tangible common equity ratio (1)
10.52
%
10.60
%
10.57
%
10.60
%
10.68
%
11.07
%
10.48
%
10.31
%
Average Balances (in thousands):
Total assets
$
11,431,110
$
11,701,679
$
12,701,152
$
12,538,596
$
11,826,326
$
11,453,080
$
11,517,836
$
11,141,826
Total earning assets
$
11,030,670
$
11,300,267
$
12,326,473
$
12,180,872
$
11,486,280
$
11,152,933
$
11,236,440
$
10,872,259
Total loans(3)
$
7,282,589
$
7,104,727
$
7,053,701
$
6,890,414
$
7,055,621
$
7,382,238
$
7,726,716
$
7,896,324
Total deposits
$
9,907,497
$
10,184,886
$
10,874,976
$
10,670,206
$
9,948,114
$
9,530,909
$
9,601,249
$
9,227,733
Total borrowings
$
158,001
$
152,583
$
371,987
$
402,393
$
448,697
$
536,926
$
573,750
$
596,307
Total shareholders’ equity
$
1,271,753
$
1,281,742
$
1,341,785
$
1,342,525
$
1,331,022
$
1,290,029
$
1,254,780
$
1,235,174
(1) See footnote (1) for Consolidated Financial Highlights.
(2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income.
