Eagle Bancorp, Inc. Announces Second Quarter 2024 Results

Rhea-AI Summary

Eagle Bancorp, Inc. (NASDAQ: EGBN) reported a net loss of $83.8 million or $2.78 per share for Q2 2024, primarily due to a $104.2 million goodwill impairment. However, operating net income, adjusted for the impairment, was $20.4 million or $0.67 per diluted share. The company improved its Tier 1 capital leverage ratio to 10.6% and Common Equity Tier 1 Capital to 13.9%. Key highlights include:

- Allowance for Credit Losses (ACL) increased to 1.33% of total loans
- Net interest margin slightly declined to 2.40%
- Loans grew 0.2% to $8.0 billion
- Deposits decreased 2.8% to $8.3 billion
- Net charge-offs reduced to 0.11% from 1.07% in Q1 2024

The company continues to focus on strategic initiatives, including the addition of Expatriate Banking Services and digital banking channel growth to diversify deposits and reduce wholesale funding reliance.

Positive

• Operating net income increased to $20.4 million, up from the previous quarter
• Common Equity Tier 1 Capital ratio improved to 13.9%
• Tier 1 capital leverage ratio increased to 10.6%
• Net charge-offs decreased significantly to 0.11% from 1.07% in Q1 2024
• Loans grew by 0.2% to $8.0 billion
• Total estimated insured deposits were 72.5% of total deposits

Negative

• Reported a net loss of $83.8 million due to a $104.2 million goodwill impairment
• Net interest margin declined slightly to 2.40% from 2.43% in the previous quarter
• Deposits decreased by 2.8% to $8.3 billion
• Non-performing assets increased to 0.88% of total assets from 0.79% in the previous quarter

Insights

Financial Analyst

Eagle Bancorp's Q2 2024 results present a mixed picture, with some concerning elements but also signs of resilience. The $104.2 million goodwill impairment resulting in a net loss of $83.8 million ($2.78 per share) is a significant hit. However, it's important to note that this non-cash charge doesn't affect the bank's liquidity, core operations, or regulatory capital ratios.

On a positive note, the bank's operating net income, adjusted for the impairment, was $20.4 million ($0.67 per diluted share), showing a substantial improvement from Q1. The increase in Tier 1 capital leverage ratio to 10.6% and Common Equity Tier 1 Capital to 13.9% demonstrates a strengthening capital position, which is important for investor confidence in the current banking environment.

The bank's asset quality metrics warrant attention. While net charge-offs decreased significantly from 1.07% in Q1 to 0.11% in Q2, non-performing assets increased to 0.88% of total assets, up from 0.79% in Q1. The increase in allowance for credit losses to 1.33% of total loans suggests management's cautious approach to potential credit risks.

Eagle's focus on core deposit relationships and digital banking initiatives to diversify funding sources is strategically sound, especially given the 2.8% quarter-over-quarter decrease in deposits. The 72.5% of deposits being insured is a positive factor for stability.

Overall, while the goodwill impairment is a significant one-time hit, Eagle Bancorp's underlying operational improvements and strong capital ratios provide a foundation for potential recovery and growth.

Market Research Analyst

Eagle Bancorp's Q2 2024 results reflect broader trends in the banking sector, particularly the challenges faced by regional banks. The goodwill impairment, while substantial, is not unique in the current environment where many banks are reassessing their valuations.

The bank's focus on expanding its Expatriate Banking Services Division and digital banking channel aligns with industry trends towards specialized services and digital transformation. This strategy could potentially differentiate Eagle in a competitive market and help attract a diverse deposit base.

The slight decline in net interest margin to 2.40% from 2.43% in Q1 is relatively modest compared to some peers, indicating decent management of interest rate pressures. However, the increase in interest-bearing liability costs due to the shift from BTFP to FHLB borrowings is worth monitoring.

The 11.3% exposure to office commercial real estate loans is a potential concern given the ongoing challenges in this sector. The increase in performing office coverage to 4.05% suggests management is proactively addressing this risk.

Eagle's liquidity position, with $4.0 billion in on-balance sheet liquidity and available capacity, appears robust. This, combined with the high percentage of insured deposits, should provide some reassurance to investors concerned about liquidity risks in the banking sector.

In the context of the regional banking market, Eagle's performance, while mixed, shows resilience in key areas such as capital ratios and core deposit growth. The bank's strategic initiatives and risk management approach position it to navigate the challenging environment facing mid-sized banks.

Eagle grows Common Equity Tier 1 Capital and Tier 1 Capital leverage ratio to 13.9% and 10.6%, respectively

BETHESDA, Md., July 24, 2024 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (NASDAQ: EGBN), ("Eagle", "the Company", "we", "us", "our"), the Bethesda-based parent company of EagleBank (the "Bank"), reported its unaudited results for the second quarter ended June 30, 2024.

Eagle recorded a $104.2 million impairment in the value of goodwill and a resulting net loss of $83.8 million or $2.78 per share for the second quarter 2024. The goodwill impairment does not impact our cash, liquidity ratios, core operating performance, or regulatory capital ratios.   Operating net income¹, adjusted to exclude the impairment charge on goodwill, was $20.4 million or $0.67 per diluted share. We increased the Tier 1 capital leverage ratio to 10.6% and continue to grow the number of core deposit relationships.

"The Company's operating results materially improved from the first quarter due to a normalization of charge-offs from our loan portfolio. We continue to execute on our strategic plan as evidenced by initiatives such as the addition of the Expatriate Banking Services Division and the continued success of our digital banking channel driving our objective of further diversification of deposits and reducing the use of wholesale funding sources" said Susan G. Riel, President and Chief Executive Officer of the Company.

Ms. Riel continued, "I'm encouraged by our team's continued resilience, consistently upholding our brand and community role while serving as trusted partners to our customers. I am excited about EagleBank’s future prospects and its capacity to support our communities and customers for years ahead."

Eric R. Newell, Chief Financial Officer of the Company said, "While the Company experienced a net loss on a GAAP basis due to the impairment charge on goodwill, operating performance significantly improved from last quarter evidenced by operating net income¹ increasing $20.7 million to $20.4 million in the second quarter. We continued to build our reserve for credit losses, with coverage to total held for investment loans at 1.33% increasing 8 basis points from last quarter. Common equity tier one capital increased to 13.9% and our tangible common equity¹ ratio exceeds 10%. Our efforts remain laser focused on the continued implementation of our strategic objectives²."

Ms. Riel added, "I thank all of our employees for their hard work and dedication. Additionally, we remain committed to a culture of respect, diversity and inclusion in both the workplace and the communities we serve."

Second Quarter 2024 Highlights

• The ACL as a percentage of total held for investment loans was 1.33% at quarter-end; up from 1.25% at the prior quarter-end. Performing office coverage³ was 4.05% at quarter-end; as compared to 3.67% at the prior quarter-end.
• Non-performing assets increased $6.7 million as of June 30, 2024 and were 0.88% of total assets compared to 0.79% as of March 31, 2024 largely due to increases from construction and income producing commercial real estate loans.
• Net charge-offs for the second quarter were 0.11% compared to 1.07% for the first quarter 2024. The decline in charge-offs reflects a charge-off in the first quarter that did not repeat in the second quarter.
• The net interest margin ("NIM") declined slightly to 2.40% for the second quarter 2024, compared to 2.43% for the prior quarter. While interest rates on earning assets remained stable, we saw costs on interest bearing liabilities increase 8 basis points driven by refinancing of maturing Bank Term Funding Program (“BTFP”) borrowings with Federal Home Loan Bank of Atlanta (“FHLB”) borrowings toward the end of the first quarter.
• The Company declared a quarterly dividend of $0.45 per share.
• At quarter-end, the common equity ratio, tangible common equity ratio, and common equity tier 1 capital (to risk-weighted assets) ratio were 10.35%, 10.35%, and 13.92%, respectively.
• Loans at quarter-end were $8.0 billion, up $19.0 million, or 0.2%, from the prior quarter-end.
• Deposits at quarter-end were $8.3 billion, down $234.1 million, or 2.8%, from the prior quarter-end. The decrease was primarily attributable to a decline in deposits from a third party payment processor related to the fluctuations in deposit levels resulting from its business, as well as a decline in public and brokered funding. Period end deposits have increased $549 million when compared to June 30, 2023.
• Total estimated insured deposits at quarter-end were $6.0 billion, or 72.5% of deposits.
• Total on-balance sheet liquidity and available capacity was $4.0 billion at quarter-end. Capacity was increased from the prior quarter as a result of pledging additional collateral to the FRB Discount window.

Income Statement

• Net interest income was $71.4 million for the second quarter 2024, compared to $74.7 million for the prior quarter. The decrease in net interest income was primarily driven by a decrease in the average balances of deposits held with other banks offset by lower average interest bearing liabilities with a higher rate during the second quarter as compared to the first quarter.
• Provision for credit losses was $9.0 million for the second quarter 2024, compared to $35.2 million for the prior quarter. The provision for the second quarter was driven by updates to the qualitative components of the CECL model. The decrease in the provision quarter over quarter reflects a higher provision in the first quarter due to a significant charge-off that did not repeat in the second quarter.
• Noninterest income was $5.3 million for the second quarter 2024, compared to $3.6 million for the prior quarter. The primary driver for the increase related to other income associated with the sale of a small mortgage servicing rights portfolio related to the FHA Multifamily business.
• Noninterest expense was $146.5 million for the second quarter 2024, compared to $40.0 million for the prior quarter. The increase over the comparative quarters was primarily due to a goodwill impairment charge of $104.2 million in the second quarter 2024. Excluding the goodwill impairment charge, our operating noninterest expense⁴ was $42.3 million for the second quarter 2024. Aside from the goodwill impairment charge, the increase was associated with other expenses lead by real estate taxes.

Loans and Funding

• Total loans were $8.0 billion at June 30, 2024, up 0.2% from the prior quarter-end. The increase in total loans was driven by increased fundings of ongoing construction projects for commercial and residential properties, partially offset by a reduction in commercial loans from the prior quarter-end.
  
  At June 30, 2024, income-producing commercial real estate loans secured by office properties other than owner-occupied properties were 11.3% of the total loan portfolio at principal, up from 11.2% at the prior quarter-end.

• Total deposits were $8.3 billion at June 30, 2024, down 2.8% from the prior quarter-end. The decrease was primarily attributable to a decline in deposits from a third party payment processor related to the fluctuations in deposit levels resulting from its business, as well as declines in some public and brokered funding.
• Borrowings were $1.7 billion at June 30, 2024, down 0.6% from the prior quarter-end.

Asset Quality

• Allowance for credit losses was 1.33% of total loans at June 30, 2024, compared to 1.25% at the prior quarter-end. Performing office coverage was 4.05% at quarter-end; as compared to 3.67% at the prior quarter-end.
• Net charge-offs were $2.3 million for the quarter compared to $21.4 million in the first quarter of 2024.
• Nonperforming assets were $98.9 million at June 30, 2024. 
  
  
  • NPAs as a percentage of assets were 0.88% at June 30, 2024, compared to 0.79% at the prior quarter-end. At June 30, 2024, other real estate owned consisted of four properties with an aggregate carrying value of $773 thousand.
  • Loans 30-89 days past due were $8.4 million at June 30, 2024, down from $31.1 million at the prior.

Capital

• Total shareholders' equity was $1.2 billion at June 30, 2024, down 7.1% from the prior quarter-end. The decrease in shareholders' equity of $90.0 million was primarily due to a goodwill impairment charge of $104.2 million.
• Book value per share was $38.75, down $2.97 from the prior quarter-end.
• Tangible book value per share⁵ was $38.74, up $0.48 from the prior quarter-end.

Additional financial information: The financial information that follows provides more detail on the Company's financial performance for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024 and June 30, 2023, 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, 2023, 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 twelve banking offices and four 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 second quarter 2024 financial results on Thursday, July 25, 2024 at 10:00 a.m. Eastern Time.

The listen-only webcast can be accessed at:

• https://edge.media-server.com/mmc/p/psn698x6/
• For analysts who wish to participate in the conference call, please register at the following URL:
  https://register.vevent.com/register/BId373c2f4d3af4a28a271e79bee6e0bca

• A replay of the conference call will be available on the Company's website through 8/8/2024: https://www.eaglebankcorp.com/ 

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 volatility in interest rates and interest rate policy; the current inflationary environment; competitive factors) and other conditions (such as the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks), 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, 2023 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.

Eagle Bancorp, Inc.
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share data)
	Three Months Ended
	June 30,				March 31,				June 30,
		2024				2024				2023
Interest Income
Interest and fees on loans	$	137,616			$	137,994			$	128,993
Interest and dividends on investment securities		12,405				12,680				14,241
Interest on balances with other banks and short-term investments		19,568				24,862				13,229
Interest on federal funds sold		142				66				47
Total interest income		169,731				175,602				156,510
Interest Expense
Interest on deposits		76,846				79,383				59,422
Interest on customer repurchase agreements		330				315				333
Interest on borrowings		21,202				21,206				24,944
Total interest expense		98,378				100,904				84,699
Net Interest Income		71,353				74,698				71,811
Provision for Credit Losses		8,959				35,175				5,238
Provision for Credit Losses for Unfunded Commitments		608				456				318
Net Interest Income After Provision for Credit Losses		61,786				39,067				66,255
Noninterest Income
Service charges on deposits		1,653				1,699				1,626
Gain on sale of loans		37				—				95
Net gain on sale of investment securities		3				4				2
Increase in cash surrender value of bank-owned life insurance		709				703				648
Other income		2,930				1,183				6,224
Total noninterest income		5,332				3,589				8,595
Noninterest Expense
Salaries and employee benefits		21,770				21,726				21,957
Premises and equipment expenses		2,894				3,059				3,227
Marketing and advertising		1,662				859				884
Data processing		3,495				3,293				3,354
Legal, accounting and professional fees		2,705				2,507				2,649
FDIC insurance		5,917				6,412				2,581
Goodwill impairment		104,168				—				—
Other expenses		3,880				2,141				3,326
Total noninterest expense		146,491				39,997				37,978
(Loss) Income Before Income Tax Expense		(79,373	)			2,659				36,872
Income Tax Expense		4,429				2,997				8,180
Net (Loss) Income	$	(83,802	)		$	(338	)		$	28,692
(Loss) Earnings Per Common Share
Basic	$	(2.78	)		$	(0.01	)		$	0.94
Diluted	$	(2.78	)		$	(0.01	)		$	0.94

 

Eagle Bancorp, Inc.
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share data)
	June 30,				March 31,				June 30,
		2024				2024				2023
Assets
Cash and due from banks	$	10,803			$	10,076			$	9,865
Federal funds sold		5,802				11,343				3,981
Interest-bearing deposits with banks and other short-term investments		526,228				696,453				174,072
Investment securities available-for-sale at fair value (amortized cost of $1,584,435, $1,613,659, and $1,732,722, respectively, and allowance for credit losses of $17, $17 and $17, respectively)		1,420,618				1,445,034				1,535,589
Investment securities held-to-maturity at amortized cost, net of allowance for credit losses of $2,012, $1,957 and $2,010, respectively (fair value of $856,275, $878,159 and $923,313, respectively)		982,955				1,000,732				1,055,181
Federal Reserve and Federal Home Loan Bank stock		54,274				54,678				46,199
Loans held for sale		5,000				—				—
Loans		8,001,739				7,982,702				7,766,719
Less: allowance for credit losses		(106,301	)			(99,684	)			(78,029	)
Loans, net		7,895,438				7,883,018				7,688,690
Premises and equipment, net		8,788				9,504				11,979
Operating lease right-of-use assets		16,250				17,679				21,580
Deferred income taxes		86,236				87,813				92,574
Bank-owned life insurance		114,333				113,624				111,565
Goodwill and intangible assets, net		129				104,611				104,220
Other real estate owned		773				773				1,487
Other assets		174,396				177,310				177,759
Total Assets	$	11,302,023			$	11,612,648			$	11,034,741
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Noninterest-bearing demand	$	1,693,955			$	1,835,524			$	2,010,353
Interest-bearing transaction		1,123,980				1,207,566				930,308
Savings and money market		3,165,314				3,235,391				2,791,040
Time deposits		2,284,099				2,222,958				1,986,426
Total deposits		8,267,348				8,501,439				7,718,127
Customer repurchase agreements		39,220				37,059				37,017
Borrowings		1,659,979				1,669,948				1,906,615
Operating lease liabilities		20,016				21,611				26,007
Reserve for unfunded commitments		6,653				6,045				7,023
Other liabilities		139,348				117,133				120,186
Total Liabilities		10,132,564				10,353,235				9,814,975
Shareholders' Equity
Common stock, par value $0.01 per share; shares authorized 100,000,000, shares issued and outstanding 30,180,482, 30,185,732, and 29,912,082, respectively		297				297				296
Additional paid-in capital		380,142				377,334				370,278
Retained earnings		949,863				1,047,550				1,040,779
Accumulated other comprehensive loss		(160,843	)			(165,768	)			(191,587	)
Total Shareholders' Equity		1,169,459				1,259,413				1,219,766
Total Liabilities and Shareholders' Equity	$	11,302,023			$	11,612,648			$	11,034,741

 

Loan Mix and Asset Quality (Dollars in thousands)
	June 30,					March 31,					June 30,
		2024					2024					2023
	Amount		%			Amount		%			Amount		%
Loan Balances - Period End:
Commercial	$	1,238,261	15	%		$	1,473,766	18	%		$	1,431,284	18	%
PPP loans		407	—	%			528	—	%			649	—	%
Income producing - commercial real estate		4,217,525	53	%			4,094,614	51	%			4,086,049	53	%
Owner occupied - commercial real estate		1,263,714	16	%			1,172,239	15	%			1,122,334	14	%
Real estate mortgage - residential		61,338	1	%			73,396	1	%			76,596	1	%
Construction - commercial and residential		1,063,764	13	%			969,766	12	%			862,869	11	%
Construction - C&I (owner occupied)		99,526	1	%			132,021	2	%			132,843	2	%
Home equity		52,773	1	%			51,964	1	%			53,934	1	%
Other consumer		4,431	—	%			401	—	%			161	—	%
Total loans	$	8,001,739	100	%		$	7,968,695	100	%		$	7,766,719	100	%

 

	Three Months Ended or As Of
	June 30,			March 31,			June 30,
		2024			2024			2023
Asset Quality:
Net charge-offs	$	2,285		$	21,430		$	5,598
Nonperforming loans	$	98,169		$	91,491		$	29,098
Other real estate owned	$	773		$	773		$	1,487
Nonperforming assets	$	98,942		$	92,264		$	30,585
Special mention	$	307,906		$	265,348		$	155,810
Substandard	$	408,311		$	361,776		$	219,045

 

Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates vs. Prior Quarter (Unaudited)
(Dollars in thousands)
	Three Months Ended
	June 30, 2024										March 31, 2024
	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	$	1,455,007			$	19,568		5.41	%		$	1,841,771			$	24,862		5.43	%
Loans held for sale (1)		8,045				100		5.00	%			—				—		—	%
Loans (1) (2)	$	8,003,206				137,516		6.91	%			7,988,941				137,994		6.95	%
Investment securities available-for-sale (2)		1,478,856				7,048		1.92	%			1,516,503				7,247		1.92	%
Investment securities held-to-maturity (2)		995,274				5,357		2.16	%			1,011,231				5,433		2.16	%
Federal funds sold		13,058				142		4.37	%			7,051				66		3.76	%
Total interest earning assets		11,953,446			$	169,731		5.71	%			12,365,497			$	175,602		5.71	%
Total noninterest earning assets		510,725										508,987
Less: allowance for credit losses		(102,671	)									(90,014	)
Total noninterest earning assets		408,054										418,973
TOTAL ASSETS	$	12,361,500									$	12,784,470
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Interest-bearing transaction	$	1,636,795			$	16,100		3.96	%		$	1,833,493			$	16,830		3.69	%
Savings and money market		3,321,001				33,451		4.05	%			3,423,388				35,930		4.22	%
Time deposits		2,215,693				27,295		4.95	%			2,187,320				26,623		4.90	%
Total interest bearing deposits		7,173,489				76,846		4.31	%			7,444,201				79,383		4.29	%
Customer repurchase agreements		38,599				330		3.44	%			36,084				315		3.51	%
Borrowings		1,682,684				21,202		5.07	%			1,796,863				21,206		4.75	%
Total interest bearing liabilities		8,894,772			$	98,378		4.45	%			9,277,148			$	100,904		4.37	%
Noninterest bearing liabilities:
Noninterest bearing demand		2,051,777										2,057,460
Other liabilities		151,324										160,206
Total noninterest bearing liabilities		2,203,101										2,217,666
Shareholders' equity		1,263,627										1,289,656
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	12,361,500									$	12,784,470
Net interest income					$	71,353									$	74,698
Net interest spread								1.26	%									1.34	%
Net interest margin								2.40	%									2.43	%
Cost of funds								3.61	%									3.58	%

(1)   Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $4.8 million and $5.1 million for the three months ended June 30, 2024 and March 31, 2024, respectively.
(2)   Interest and fees on loans and investments exclude tax equivalent adjustments. 

Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates vs. Year Ago Quarter (Unaudited)
(Dollars in thousands)
	Three Months Ended June 30,
		2024										2023
	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	$	1,455,007			$	19,568		5.41	%		$	1,053,961			$	13,229		5.03	%
Loans held for sale (1)		8,045				100		5.00	%			813				13		6.40	%
Loans (1) (2)		8,003,206				137,516		6.91	%			7,790,555				128,980		6.64	%
Investment securities available-for-sale (2)		1,478,856				7,048		1.92	%			1,626,330				8,526		2.10	%
Investment securities held-to-maturity (2)		995,274				5,357		2.16	%			1,068,755				5,715		2.14	%
Federal funds sold		13,058				142		4.37	%			5,636				47		3.34	%
Total interest earning assets		11,953,446			$	169,731		5.71	%			11,546,050			$	156,510		5.44	%
Total noninterest earning assets		510,725										492,426
Less: allowance for credit losses		(102,671	)									(78,365	)
Total noninterest earning assets		408,054										414,061
TOTAL ASSETS	$	12,361,500									$	11,960,111
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing transaction	$	1,636,795			$	16,100		3.96	%		$	1,312,710			$	10,640		3.25	%
Savings and money market		3,321,001				33,451		4.05	%			2,967,678				30,861		4.17	%
Time deposits		2,215,693				27,295		4.95	%			1,675,690				17,921		4.29	%
Total interest bearing deposits		7,173,489				76,846		4.31	%			5,956,078				59,422		4.00	%
Customer repurchase agreements		38,599				330		3.44	%			41,105				333		3.25	%
Borrowings		1,682,684				21,202		5.07	%			2,061,402				24,944		4.85	%
Total interest bearing liabilities		8,894,772			$	98,378		4.45	%			8,058,585			$	84,699		4.22	%
Noninterest bearing liabilities:
Noninterest bearing demand		2,051,777										2,558,860
Other liabilities		151,324										97,019
Total noninterest bearing liabilities		2,203,101										2,655,879
Shareholders' equity		1,263,627										1,245,647
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	12,361,500									$	11,960,111
Net interest income					$	71,353									$	71,811
Net interest spread								1.26	%									1.22	%
Net interest margin								2.40	%									2.49	%
Cost of funds								3.61	%									3.20	%

(1)   Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $4.8 million and $7.9 million for the three months ended June 30, 2024 and 2023, respectively.
(2)   Interest and fees on loans and investments exclude tax equivalent adjustments.

Eagle Bancorp, Inc.
Statements of Operations and Highlights Quarterly Trends (Unaudited)
(Dollars in thousands, except per share data)
	Three Months Ended
Income Statements:	June 30,				March 31,				December 31,				September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2023				2023				2023				2023				2022				2022
Total interest income	$	169,731			$	175,602			$	167,421			$	161,149			$	156,510			$	140,247			$	129,130			$	111,527
Total interest expense		98,378				100,904				94,429				90,430				84,699				65,223				43,530				27,630
Net interest income		71,353				74,698				72,992				70,719				71,811				75,024				85,600				83,897
Provision for (reversal of) credit losses		8,959				35,175				14,490				5,644				5,238				6,164				(464	)			3,022
Provision for (reversal of) credit losses for unfunded commitments		608				456				(594	)			(839	)			318				848				161				774
Net interest income after provision for (reversal of) credit losses		61,786				39,067				59,096				65,914				66,255				68,012				85,903				80,101
Noninterest income before investment gain (loss)		5,329				3,585				2,891				6,342				8,593				3,721				5,326				5,304
Net gain (loss) on sale of investment securities		3				4				3				5				2				(21	)			3				4
Total noninterest income		5,332				3,589				2,894				6,347				8,595				3,700				5,329				5,308
Salaries and employee benefits		21,770				21,726				18,416				21,549				21,957				24,174				23,691				21,538
Premises and equipment expenses		2,894				3,059				2,967				3,095				3,227				3,317				3,292				3,275
Marketing and advertising		1,662				859				1,071				768				884				636				1,290				1,181
Goodwill impairment		104,168				—				—				—				—				—				—				—
Other expenses		15,997				14,353				14,644				12,221				11,910				12,457				10,645				10,212
Total noninterest expense		146,491				39,997				37,098				37,633				37,978				40,584				38,918				36,206
(Loss) income before income tax expense		(79,373	)			2,659				24,892				34,628				36,872				31,128				52,314				49,203
Income tax expense		4,429				2,997				4,667				7,245				8,180				6,894				10,121				11,906
Net (loss) income	$	(83,802	)		$	(338	)		$	20,225			$	27,383			$	28,692			$	24,234			$	42,193			$	37,297
Per Share Data:
(Loss) earnings per weighted average common share, basic	$	(2.78	)		$	(0.01	)		$	0.68			$	0.91			$	0.94			$	0.78			$	1.32			$	1.16
(Loss) earnings per weighted average common share, diluted	$	(2.78	)		$	(0.01	)		$	0.67			$	0.91			$	0.94			$	0.78			$	1.32			$	1.16
Weighted average common shares outstanding, basic		30,185,609				30,068,173				29,925,557				29,910,218				30,454,766				31,109,267				31,819,631				32,084,464
Weighted average common shares outstanding, diluted		30,185,609				30,068,173				29,966,962				29,944,692				30,505,468				31,180,346				31,898,619				32,155,678
Actual shares outstanding at period end		30,180,482				30,185,732				29,925,612				29,917,982				29,912,082				31,111,647				31,346,903				32,082,321
Book value per common share at period end	$	38.75			$	41.72			$	42.58			$	40.64			$	40.78			$	39.92			$	39.18			$	38.02
Tangible book value per common share at period end (1)	$	38.74			$	38.26			$	39.08			$	37.12			$	37.29			$	36.57			$	35.86			$	34.77
Dividend per common share	$	0.45			$	0.45			$	0.45			$	0.45			$	0.45			$	0.45			$	0.45			$	0.45
Performance Ratios (annualized):
Return on average assets	(2.73)%				(0.01)%					0.65	%			0.91	%			0.96	%			0.86	%			1.49	%			1.29	%
Return on average common equity	(26.67)%				(0.11)%					6.48	%			8.80	%			9.24	%			7.92	%			13.57	%			11.64	%
Return on average tangible common equity (1)	(28.96)%				(0.11)%					7.08	%			9.61	%			10.08	%			8.65	%			14.82	%			12.67	%
Net interest margin		2.40	%			2.43	%			2.45	%			2.43	%			2.49	%			2.77	%			3.14	%			3.02	%
Efficiency ratio (2)		191.0	%			51.1	%			48.9	%			48.8	%			47.2	%			51.6	%			42.8	%			40.6	%
Other Ratios:
Allowance for credit losses to total loans (3)		1.33	%			1.25	%			1.08	%			1.05	%			1.00	%			1.01	%			0.97	%			1.04	%
Allowance for credit losses to total nonperforming loans		110	%			109	%			131	%			119	%			268	%			1,160	%			1,151	%			997	%
Nonperforming assets to total assets		0.88	%			0.79	%			0.57	%			0.64	%			0.28	%			0.08	%			0.08	%			0.09	%
Net charge-offs (recoveries) (annualized) to average total loans (3)		0.11	%			1.07	%			0.60	%			0.02	%			0.29	%			0.05	%			0.05	%			—	%
Tier 1 capital (to average assets)		10.58	%			10.26	%			10.73	%			10.96	%			10.84	%			11.42	%			11.63	%			11.55	%
Total capital (to risk weighted assets)		15.07	%			14.87	%			14.79	%			14.54	%			14.51	%			14.74	%			14.94	%			15.60	%
Common equity tier 1 capital (to risk weighted assets)		13.92	%			13.80	%			13.90	%			13.68	%			13.55	%			13.75	%			14.03	%			14.64	%
Tangible common equity ratio (1)		10.35	%			10.03	%			10.12	%			10.04	%			10.21	%			10.36	%			10.18	%			10.52	%
Average Balances (in thousands):
Total assets	$	12,361,500			$	12,784,470			$	12,283,303			$	11,942,905			$	11,960,111			$	11,426,056			$	11,255,956			$	11,431,110
Total earning assets	$	11,953,446			$	12,365,497			$	11,837,722			$	11,532,186			$	11,546,050			$	11,004,817			$	10,829,703			$	11,030,670
Total loans (3)	$	8,003,206			$	7,988,941			$	7,963,074			$	7,795,144			$	7,790,555			$	7,712,023			$	7,379,198			$	7,282,589
Total deposits	$	9,225,266			$	9,501,661			$	9,471,369			$	8,946,641			$	8,514,938			$	8,734,125			$	9,524,139			$	9,907,497
Total borrowings	$	1,721,283			$	1,832,947			$	1,401,917			$	1,646,179			$	2,102,507			$	1,359,463			$	411,060			$	158,001
Total shareholders' equity	$	1,263,627			$	1,289,656			$	1,238,763			$	1,235,162			$	1,245,647			$	1,240,978			$	1,233,705			$	1,271,753

(1)   A reconciliation of non-GAAP financial measures to the nearest 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.
(3)   Excludes loans held for sale.

GAAP Reconciliation to Non-GAAP Financial Measures (unaudited)
(dollars in thousands, except per share data)
	June 30,				March 31,				June 30,
		2024				2024				2023
Tangible common equity
Common shareholders' equity	$	1,169,459			$	1,259,413			$	1,219,766
Less: Intangible assets		(129	)			(104,611	)			(104,220	)
Tangible common equity	$	1,169,330			$	1,154,802			$	1,115,546
Tangible common equity ratio
Total assets	$	11,302,023			$	11,612,648			$	11,034,741
Less: Intangible assets		(129	)			(104,611	)			(104,220	)
Tangible assets	$	11,301,894			$	11,508,037			$	10,930,521
Tangible common equity ratio		10.35	%			10.03	%			10.21	%
Per share calculations
Book value per common share	$	38.75			$	41.72			$	40.78
Less: Intangible book value per common share		(0.01	)			(3.46	)			(3.49	)
Tangible book value per common share	$	38.74			$	38.26			$	37.29
Shares outstanding at period end		30,180,482				30,185,732				29,912,082

 

		Three Months Ended
		June 30,				March 31,				June 30,
			2024				2024				2023
Average tangible common equity
Average common shareholders' equity		$	1,263,627			$	1,289,656			$	1,245,647
Less: Average intangible assets			(99,827	)			(104,718	)			(104,224	)
Average tangible common equity		$	1,163,800			$	1,184,938			$	1,141,423
Return on average tangible common equity
Net (loss) income		$	(83,802	)		$	(338	)		$	28,692
Return on average tangible common equity		(28.96)%				(0.11)%					10.08	%
Net (loss) income		$	(83,802	)		$	(338	)		$	28,692
Add back of goodwill impairment			104,168				—				—
Operating net (loss) income (Non-GAAP)		$	20,366			$	(338	)		$	28,692
Operating Return on average tangible common equity (Non-GAAP)			7.04	%		(0.11)%					10.08	%
Efficiency ratio
Net interest income		$	71,353			$	74,698			$	71,811
Noninterest income			5,332				3,589				8,595
Operating revenue		$	76,685			$	78,287			$	80,406
Noninterest expense		$	146,491			$	39,997			$	37,978
Add back of goodwill impairment			(104,168	)			—				—
Operating Noninterest expense (Non-GAAP)			42,323				39,997				37,978
Efficiency ratio			191.03	%			51.09	%			47.23	%
Operating Efficiency ratio (Non-GAAP)			55.19	%			51.09	%			47.23	%
Pre-provision net revenue
Net interest income		$	71,353			$	74,698			$	71,811
Noninterest income			5,332				3,589				8,595
Less: Noninterest expense			(146,491	)			(39,997	)			(37,978	)
Pre-provision net revenue		$	(69,806	)		$	38,290			$	42,428
Pre-provision net revenue		$	(69,806	)		$	38,290			$	42,428
Add back of goodwill impairment		$	104,168			$	—			$	—
Operating Pre-provision net revenue (Non-GAAP)		$	34,362			$	38,290			$	42,428

Tangible common equity, tangible common equity to tangible assets (the "tangible common equity ratio"), tangible book value per common share, average tangible common equity, annualized return on average tangible common equity, and the operating 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, or tangible common 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 calculates the operating annualized return on average tangible common equity ratio by dividing operating net income available to common shareholders, which adds back the goodwill impairment, 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 the significant impact of the goodwill impairment is a one-time event that obscures the operating performance of the company. Further related to other measures, 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 efficiency ratio is a non-GAAP measure calculated by dividing GAAP noninterest expense by the sum of GAAP net interest income and GAAP noninterest income. The efficiency ratio measures a bank's overhead as a percentage of its revenue. The Company believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling operational activities. Further, the operating efficiency ratio is measured by dividing non-GAAP noninterest expense, which excludes the goodwill impairment, by the sum of GAAP net interest income and GAAP noninterest income. The Company considers this information important to shareholders as the significant impact of the goodwill impairment is a one-time event that obscures the operating performance of the company.

Pre-provision net revenue is a non-GAAP financial measure calculated by subtracting noninterest expenses from the sum of net interest income and noninterest income. 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. Operating pre-provision net revenue is a non-GAAP financial measure calculated by subtracting noninterest expenses with the impact of the goodwill impairment added back from the sum of net interest income and noninterest income. The Company considers this information important to shareholders as the significant impact of the goodwill impairment is a one-time event that obscures the operating performance of the company.

		June 30,				March 31,				June 30,
			2024				2024				2023
Net (loss) income		$	(83,802	)		$	(338	)		$	28,692
Add back of goodwill impairment			104,168				—				—
Operating Net (loss) income (Non-GAAP)		$	20,366			$	(338	)		$	28,692
(Loss) earnings per share (diluted)6		$	(2.78	)		$	(0.01	)		$	0.94
Add back of goodwill impairment per share (diluted)			3.45				—				—
Operating earnings (loss) per share (diluted) (Non-GAAP)		$	0.67			$	(0.01	)		$	0.94

Operating net (loss) income and operating (loss) earnings per share (diluted) are non-GAAP financial measures derived from GAAP based amounts. The Company calculates operating net (loss) income by excluding from net (loss) income the one-time goodwill impairment of $104.2 million. During the second quarter of 2024, the Company performed an annual impairment test as a result of management's evaluation of current economic conditions, and concluded that goodwill had become impaired, which resulted in an impairment charge of $104.2 million to reduce the carrying value of the Company's goodwill to zero. The Company calculates operating earnings (loss) per share (diluted) by dividing the one-time goodwill impairment of $104.2 million by the weighted average shares outstanding (diluted) for the three and six months ended June 30, 2024. The Company considers this information important to shareholders because operating net (loss) income and operating (loss) earnings per share (diluted) provides investors insight into how Company earnings changed exclusive of the impairment charge to allow investors to better compare the Company's performance against historical periods. The table above provides a reconciliation of operating net income (loss) and operating earnings (loss) per share (diluted) to the nearest GAAP measure.

---

¹ A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measure that accompany this document.
² Refer to the 2nd Quarter 2024 Earnings Presentation that accompanies this release for further detail on the strategic objectives of the Company.
³ Calculated as the ACL attributable to loans collateralized by performing office properties as a percentage of total loans.
⁴ A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measure that accompany this document.
⁵ A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measure that accompany this document.
⁶ For periods ended with a net loss, anti-dilutive financial instruments have been excluded from the calculation of GAAP diluted EPS. Operating diluted EPS calculations include the impact of outstanding equity-based awards for all periods.

EAGLE BANCORP, INC.

CONTACT:

Eric R. Newell

240.497.1796

For the June 30, 2024 Earnings Presentation, click http://ml.globenewswire.com/Resource/Download/a6293d92-1ba7-47b2-b4e3-71943e91aa8d.

FAQ

What was Eagle Bancorp's (EGBN) net income for Q2 2024?

Eagle Bancorp (EGBN) reported a net loss of $83.8 million or $2.78 per share for Q2 2024, primarily due to a $104.2 million goodwill impairment charge.

How did Eagle Bancorp's (EGBN) operating net income perform in Q2 2024?

Eagle Bancorp's (EGBN) operating net income, adjusted to exclude the goodwill impairment charge, was $20.4 million or $0.67 per diluted share in Q2 2024.

What was Eagle Bancorp's (EGBN) Common Equity Tier 1 Capital ratio in Q2 2024?

Eagle Bancorp's (EGBN) Common Equity Tier 1 Capital ratio improved to 13.92% in Q2 2024.

How did Eagle Bancorp's (EGBN) loan portfolio change in Q2 2024?

Eagle Bancorp's (EGBN) loans grew by $19.0 million, or 0.2%, to $8.0 billion at the end of Q2 2024 compared to the previous quarter.

What was Eagle Bancorp's (EGBN) deposit balance at the end of Q2 2024?

Eagle Bancorp's (EGBN) deposits were $8.3 billion at the end of Q2 2024, down $234.1 million or 2.8% from the previous quarter.