Eagle Bancorp, Inc. Announces Results of Operations for First Quarter 2024

BETHESDA, Md., April 24, 2024 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the "Company") (NASDAQ: EGBN), the parent company of EagleBank (the "Bank"), today announced a net loss of $338 thousand for the first quarter 2024, compared to net income of $20.2 million for the fourth quarter 2023 (the "prior quarter"). Net loss was $(0.01) per share (diluted) for the first quarter 2024, compared to net income of $0.67 per share (diluted) for the prior quarter. Pre-provision net revenue ("PPNR")1, a non-GAAP financial measure, was $38.3 million for the first quarter 2024, compared to $38.8 million for the prior quarter.

The $20.6 million decrease from earnings in the prior quarter was attributable to a $20.7 million increase in provision for credit losses, due primarily to an updated valuation for a commercial real estate ("CRE") office property collateralizing a lending relationship that was partially charged-off in the first quarter 2024. The provision for credit losses was $35.2 million for the first quarter 2024, comprising the impact of the updated valuation and an increase in the office allowance for credit losses ("ACL") coverage ratio.

Susan G. Riel, President and Chief Executive Officer of the Company, commented, "Our results for the quarter showcased the strong fundamentals of our business, evidenced by the stability in our pre-provision net revenue, our growing reserve for credit losses, and our strong capital levels. The quarter showcased the progress we are making towards achieving our strategic objectives of enhancing the diversification of our deposits, growing the commercial lending team, and proactively managing our office portfolio."

Ms. Riel continued, "I am pleased that we are being proactive in addressing our challenges while always maintaining a trusted brand and franchise in our community. I am excited about the prospects of EagleBank and its ability to serve our communities and customers for years to come."

Eric R. Newell, Chief Financial Officer of the Company said, "Our operational performance remained stable over the last twelve months, and we are proud to have increased our deposits by over $1.0 billion and our loans by over $245.0 million over the last year. With these solid operating results, and our strong capital position evidenced by our common equity and tangible common equity1 ratios exceeding 10%, we are well positioned to continue executing on our strategic priorities."

Ms. Riel added, "The EagleBank team continues to serve our customers and communities, showing tenacity and commitment through a challenging operating environment. I thank all of our employees for their hard work and dedication. Additionally, we remain committed to a Relationship First culture of respect, diversity and inclusion in both the workplace and the communities we serve."

First Quarter 2024 Highlights

• Net loss was $338 thousand for the first quarter 2024, compared to net income of $20.2 million in the prior quarter, with PPNR of $38.3 million for the first quarter 2024, compared to $38.8 million for the prior quarter.
• The ACL as a percentage of total loans was 1.25% at quarter-end; up from 1.08% at the prior quarter-end. Performing office coverage2 was 3.67% at quarter-end; as compared to 1.91% at the prior quarter-end.
• The net interest margin ("NIM") remained steady at 2.43% for the first quarter 2024, compared to 2.45% for the prior 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 10.85%, 10.03%, and 13.80%, respectively.
• Loans at quarter-end were $8.0 billion, up $14.0 million, or 0.2%, from the prior quarter-end.
• Deposits at quarter-end were $8.5 billion, down $306.6 million, or 3.5%, from the prior quarter-end. The decrease was primarily attributable to anticipated seasonality in deposits from tax payments. Deposits have increased over $1.0 billion as compared to March 31, 2023.
• Total estimated insured deposits at quarter-end were $6.2 billion, or 72.4% of deposits. Total on-balance sheet liquidity and available capacity was $2.9 billion at quarter-end.

Income Statement

• Net interest income was $74.7 million for the first quarter 2024, compared to $73.0 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 yields on the loan portfolio.
• Provision for credit losses was $35.2 million for the first quarter 2024, compared to $14.5 million for the prior quarter. The increase in the provision was primarily driven by an updated valuation for a CRE office property collateralizing a lending relationship that was partially charged off in the first quarter 2024 due to an updated appraisal. In addition, there was an increase in the provision primarily attributable to the increase in the office ACL coverage ratio.
• Noninterest income was $3.6 million for the first quarter 2024, compared to $2.9 million for the prior quarter. The primary driver for the increase was market value adjustments on our derivative book.
• Noninterest expense was $40.0 million for the first quarter 2024, compared to $37.1 million for the prior quarter. The increase over the comparative quarters was primarily due to increased salaries and employee benefits expenses in connection with first quarter seasonality and related payroll tax increases in the first quarter 2024, along with higher Federal Deposit Insurance Corporation ("FDIC") fees.

Loans and Funding

• Total loans were $8.0 billion at March 31, 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 CRE loans from quarter-end to the prior quarter-end.
  
  At March 31, 2024, income-producing commercial real estate loans secured by office properties other than owner-occupied properties were 11.2% of the total loan portfolio at principal, down from 11.9% at the prior quarter-end.
  

• Total deposits were $8.5 billion at March 31, 2024, down 3.5% from the prior quarter-end. The decrease was primarily attributable to seasonality in deposits from tax payments.
• Borrowings were $1.7 billion at March 31, 2024, up 21.9% from the prior quarter-end due primarily to net fundings on the Company's secured borrowing lines.

Asset Quality

• Allowance for credit losses was 1.25% of total loans at March 31, 2024, compared to 1.08% at the prior quarter-end. Performing office coverage was 3.67% at quarter-end; as compared to 1.91% at the prior quarter-end.
  
  Net charge-offs were $21.4 million for the quarter.

• Nonperforming assets were $92.3 million at March 31, 2024.
  • NPAs as a percentage of assets were 0.79% at March 31, 2024, compared to 0.57% at the prior quarter-end. At March 31, 2024, other real estate owned consisted of four properties with an aggregate carrying value of $773 thousand.
  • Loans 30-89 days past due were $31.1 million at March 31, 2024, up from $13.6 million at the prior quarter-end attributed to two relationships; one has since been brought current and the other as posing a limited risk of loss.
    

Capital

• Total shareholders' equity was $1.3 billion at March 31, 2024, down 1.2% from the prior quarter-end. The decrease in shareholders' equity of $14.9 million was primarily from reduced valuations of available-for-sale securities and a decline in retained earnings.
• Book value per share was $41.72, down $0.86 from the prior quarter-end.
• Tangible book value per share1 was $38.26, down $0.82 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 March 31, 2024 as compared to the three months ended December 31, 2023 and March 31, 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 first quarter 2024 financial results on Thursday, April 25, 2024 at 10:00 a.m. Eastern Time.

The listen-only webcast can be accessed at:

• https://edge.media-server.com/mmc/p/ubgqftw2/
• For analysts who wish to participate in the conference call, please register at the following URL:
  
  https://register.vevent.com/register/BI92527acbd31b4c4fbe973b59797f475f

• A replay of the conference call will be available on the Company's website through May 9, 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 high 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.

(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $5.1 million and $4.7 million for the three months ended March 31, 2024 and December 31, 2023, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.

(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $5.1 million and $3.7 million for the three months ended March 31, 2024 and 2023, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.
(3) Beginning in the second quarter of 2023, the Company revised its cost of funds methodology to use a daily average calculation where interest expense on interest bearing liabilities is divided by average interest bearing liabilities and average noninterest bearing deposits. Previously, the Company calculated the cost of funds as the difference between yield on earning assets and net interest margin. Prior period has been conformed to the current presentation.

(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.

Tangible common equity, tangible common equity to tangible assets (the "tangible common equity ratio"), tangible book value per common share, average tangible common equity, and the annualized return on average tangible common equity are non-GAAP financial measures derived from GAAP based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity, 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 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 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.

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.

1 A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measures that accompany this document.
2 Calculated as the ACL attributable to loans collateralized by performing office properties as a percentage of total loans.

EAGLE BANCORP, INC.
CONTACT:
Eric R. Newell
240.497.1796

For the March 31, 2024 Earnings Presentation, please click here.