Eagle grows book value per share by $1.86; Common Equity Tier 1 Capital and Tier 1 Capital leverage ratio to 14.5% and 10.9%, respectively
BETHESDA, Md., Oct. 23, 2024 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. ("Eagle", the "Company") (NASDAQ: EGBN), the Bethesda-based holding company for EagleBank, one of the largest community banks in the Washington D.C. area, reported its unaudited results for the third quarter ended September 30, 2024.
Eagle reported net income of $21.8 million or $0.72 per share for the third quarter 2024, compared to a net loss of $83.8 million during the second quarter in which the Company recorded a $104.2 million impairment in the value of goodwill. Operating net income1 in the second quarter, adjusted to exclude the impairment charge on goodwill, was $20.4 million or $0.67 per share per diluted share. Pre-provision net revenue ("PPNR")1 in the third quarter was $35.2 million compared to a pre-provision net loss of $69.8 million for the prior quarter, or $34.4 million of PPNR when adjusted to exclude the impairment charge on goodwill1.
The $1.4 million increase in operating net income1 over the prior quarter is attributed to a positive variance of $2.2 million related to the change in provision for unfunded commitments; $1.6 million increase in non-interest income; and a $490 thousand increase in net interest income, offset by a $1.3 million increase in operating non-interest expense, adjusted to exclude the impairment charge on goodwill, and a $1.1 million increase in provision for credit losses.
"We continue to strategically position the Company for future growth as evidenced by actions taken during the quarter with the refinancing of our maturing subordinated debt and the recalibration of our common dividend strategy," said Susan G. Riel, President and Chief Executive Officer of the Company. "We announced the addition of Evelyn Lee to our senior leadership as our Chief Lending Officer for our commercial lending team. As a 25 year banker in the Washington D.C. market, I am excited about accomplishing our strategic goal of continuing to build out our commercial banker group and pursuing diversification of the loan portfolio and growing our relationship deposits," added Ms. Riel.
Eric R. Newell, Chief Financial Officer of the Company said, "Raising senior debt in the third quarter demonstrates the confidence debt investors have in our vision and the future of the Company. Operating performance was stable from last quarter evidenced by operating net income1 increasing $1.4 million to $21.8 million in the third quarter. We continued to build our reserve for credit losses, with coverage as a percentage of total held for investment loans at 1.40% increasing 7 basis points from last quarter. Common equity tier one capital increased to 14.5% and our tangible common equity1 ratio exceeds 10%."
Ms. Riel added, "I thank all of our employees for their hard work and their commitment to a culture of respect, diversity and inclusion in both the workplace and the communities we serve."
Third Quarter 2024 Highlights
- The Company repaid $70 million of maturing subordinated debt and issued $77.7 million of 10% unsecured senior debt maturing September 30, 2029.
- During the quarter, the Company announced a recalibration of the common stock dividend to $0.165 per share from $0.45 per share in the second quarter an action estimated to retain an additional $32 million of capital annually to meet growth and investment objectives.
- The ACL as a percentage of total loans held for investment was 1.40% at quarter-end; up from 1.33% at the prior quarter-end. Performing office coverage2 was 4.55% at quarter-end; as compared to 4.05% at the prior quarter-end.
- Nonperforming assets increased $38.2 million to $137.1 million as of September 30, 2024 and were 1.22% of total assets compared to 0.88% as of June 30, 2024. Inflows to non-performing loans in the quarter totaled $45.5 million offset by $9 million of outflows, of which $5 million was the loan held for sale at June 30, 2024 and an increase of other real estate owned of $2.0 million. The inflows were predominantly associated with $27.3 million in mixed use land loans and $17.9 million in an assisted living facility loan.
- Substandard loans declined $17.0 million to $391.3 million and special mention loans increased $57.1 million to $365.0 million at September 30, 2024.
- Net charge-offs for the third quarter were 0.26% compared to 0.11% for the second quarter 2024. Of the total $5.3 million of net charge offs in the quarter, $3.8 million is associated with a senior living property that has not stabilized.
- The net interest margin ("NIM") decreased slightly to 2.37% for the third quarter 2024, compared to 2.40% for the prior quarter, primarily due to continued decline in average non-interest bearing deposits. Net interest income increased $490 thousand from the second quarter to $71.8 million in the third quarter.
- At quarter-end, the common equity ratio, tangible common equity ratio1, and common equity tier 1 capital (to risk-weighted assets) ratio were 10.86%, 10.86%, and 14.54%, respectively.
- Total estimated insured deposits at quarter-end were $6.4 billion, or 74.5% of deposits, stable from the second quarter total of 72.5% of deposits.
- Total on-balance sheet liquidity and available capacity was $4.6 billion at quarter-end compared to $4.0 billion at June 30, 2024.
- Net interest income was $71.8 million for the third quarter 2024, compared to $71.4 million for the prior quarter. The increase in net interest income was primarily driven by an increase in the average balances of deposits held with other banks and average loans partially offset by higher average interest-bearing deposits and higher rates paid on those deposits in the third quarter from the prior quarter.
- Provision for credit losses was $10.1 million for the third quarter 2024, compared to $9.0 million for the prior quarter. The increase in the provision quarter over quarter reflects higher net charge-offs in the third quarter from the prior quarter. Reserve for unfunded commitments was a reversal of $1.6 million due to lower unfunded commitments in our construction portfolio. This compared to a reserve for unfunded commitments in the prior quarter of $0.6 million.
- Noninterest income was $6.95 million for the third quarter 2024, compared to $5.33 million for the prior quarter. The primary driver for the increase was higher swap fee income.
- Noninterest expense was $43.6 million for the third quarter 2024, compared to $146.5 million for the prior quarter. The decrease over the comparative quarters was primarily due to a goodwill impairment charge of $104.2 million in the second quarter 2024. When excluding the goodwill impairment charge, the increase quarter over quarter was associated with increased FDIC insurance expense.
- Total loans were $8.0 billion at September 30, 2024, down 0.4% from the prior quarter-end. The decrease in total loans was driven by a reduction in commercial loans and income producing commercial real estate loans from the prior quarter-end, partially offset by increased fundings of ongoing construction projects for commercial and residential properties.
At September 30, 2024, income-producing commercial real estate loans secured by office properties other than owner-occupied properties were 10.8% of the total loan portfolio, down from 11.3% at the prior quarter-end.
- Total deposits at quarter-end were $8.5 billion, up $273.5 million, or 3.3%, from the prior quarter-end. The increase was primarily attributable to an increase in time deposits from the company's digital acquisition channel. Period end deposits have increased $165 million when compared to prior year comparable period end of September 30, 2023.
- Other short-term borrowings were $1.2 billion at September 30, 2024, down 25.3% from the prior quarter-end as maturing FHLB borrowings were paid down with increased cash from deposits.
- Allowance for credit losses was 1.40% of total loans held for investment at September 30, 2024, compared to 1.33% at the prior quarter-end. Performing office coverage was 4.55% at quarter-end; as compared to 4.05% at the prior quarter-end.
- Net charge-offs were $5.3 million for the quarter compared to $2.3 million in the second quarter of 2024.
- Nonperforming assets were $137.1 million at September 30, 2024.
- NPAs as a percentage of assets were 1.22% at September 30, 2024, compared to 0.88% at the prior quarter-end. At September 30, 2024, other real estate owned consisted of four properties with an aggregate carrying value of $2.7 million. The increase in NPAs was predominantly associated with $27.3 million in mixed use land loans and $17.9 million in an assisted living facility loan.
- Loans 30-89 days past due were $56.3 million at September 30, 2024, compared to $8.4 million at the prior quarter-end. Of the total increase, $25 million was brought current subsequent to quarter-end.
- Total shareholders' equity was $1.2 billion at September 30, 2024, up 4.8% from the prior quarter-end. The increase in shareholders' equity of $56.0 million was primarily due to increased valuations of available-for-sale securities and an increase in retained earnings.
- Book value per share and Tangible book value per share3 was $40.61, up $1.86 from the prior quarter-end.
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 third quarter 2024 financial results on Thursday, October 24, 2024 at 10:00 a.m. Eastern Time.
The listen-only webcast can be accessed at:
- https://edge.media-server.com/mmc/p/79xpxyi2
- For analysts who wish to participate in the conference call, please register at the following URL:
https://register.vevent.com/register/BI6cdce3c45a9f49219ea94a6f7c9fa083
- A replay of the conference call will be available on the Company's website through November 7, 2024: https://www.eaglebankcorp.com/
| Eagle Bancorp, Inc. | |||||||||||
| Consolidated Statements of Operations (Unaudited) | |||||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| Three Months Ended | |||||||||||
| September 30, | June 30, | September 30, | |||||||||
| 2024 | 2024 | 2023 | |||||||||
| Interest Income | |||||||||||
| Interest and fees on loans | $ | 139,836 | $ | 137,616 | $ | 132,273 | |||||
| Interest and dividends on investment securities | 12,578 | 12,405 | 13,732 | ||||||||
| Interest on balances with other banks and short-term investments | 21,296 | 19,568 | 15,067 | ||||||||
| Interest on federal funds sold | 103 | 142 | 77 | ||||||||
| Total interest income | 173,813 | 169,731 | 161,149 | ||||||||
| Interest Expense | |||||||||||
| Interest on deposits | 81,190 | 76,846 | 70,929 | ||||||||
| Interest on customer repurchase agreements | 332 | 330 | 311 | ||||||||
| Interest on other short-term borrowings | 20,448 | 21,202 | 18,152 | ||||||||
| Interest on long-term borrowings | $ | - | - | 1,038 | |||||||
| Total interest expense | 101,970 | 98,378 | 90,430 | ||||||||
| Net Interest Income | 71,843 | 71,353 | 70,719 | ||||||||
| Provision for Credit Losses | 10,094 | 8,959 | 5,644 | ||||||||
| Provision (Reversal) for Credit Losses for Unfunded Commitments | (1,593 | ) | 608 | (839 | ) | ||||||
| Net Interest Income After Provision for Credit Losses | 63,342 | 61,786 | 65,914 | ||||||||
| Noninterest Income | |||||||||||
| Service charges on deposits | 1,747 | 1,653 | 1,631 | ||||||||
| Gain on sale of loans | 20 | 37 | (5 | ) | |||||||
| Net gain on sale of investment securities | 3 | 3 | 5 | ||||||||
| Increase in cash surrender value of bank-owned life insurance | 731 | 709 | 669 | ||||||||
| Other income | 4,450 | 2,930 | 4,047 | ||||||||
| Total noninterest income | 6,951 | 5,332 | 6,347 | ||||||||
| Noninterest Expense | |||||||||||
| Salaries and employee benefits | 21,675 | 21,770 | 21,549 | ||||||||
| Premises and equipment expenses | 2,794 | 2,894 | 3,095 | ||||||||
| Marketing and advertising | 1,588 | 1,662 | 768 | ||||||||
| Data processing | 3,435 | 3,495 | 3,194 | ||||||||
| Legal, accounting and professional fees | 3,433 | 2,705 | 2,162 | ||||||||
| FDIC insurance | 7,399 | 5,917 | 3,342 | ||||||||
| Goodwill impairment | - | 104,168 | - | ||||||||
| Other expenses | 3,290 | 3,880 | 3,523 | ||||||||
| Total noninterest expense | 43,614 | 146,491 | 37,633 | ||||||||
| (Loss) Income Before Income Tax Expense | 26,679 | (79,373 | ) | 34,628 | |||||||
| Income Tax Expense | 4,864 | 4,429 | 7,245 | ||||||||
| Net (Loss) Income | $ | 21,815 |
| ||||||||