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Eagle Bancorp, Inc. Announces Continued Growth and Record Earnings, With Assets of $5.9 Billion

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BETHESDA, Md., Oct. 21, 2015 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the "Company") (NASDAQ: EGBN), the parent company of EagleBank, today announced record quarterly net income of $21.5 million for the three months ended September 30, 2015, a 52% increase over the $14.1 million net income ($14.8 million on an operating basis) for the three months ended September 30, 2014. Net income available to common shareholders for the three months ended September 30, 2015 increased 53% to $21.3 million as compared to $13.9 million ($14.6 million on an operating basis) for the same period in 2014.

Net income per basic and diluted common share for the three months ended September 30, 2015 was $0.64 and $0.63, respectively as compared to $0.54 per basic common share and $0.52 per diluted common share ($0.57 per basic common share and $0.55 per diluted common share on an operating basis) for the same period in 2014, a 19% increase per basic common share and 21% per diluted common share (14% increase per basic common share and 15% per diluted common share on an operating basis).

For the nine months ended September 30, 2015, the Company's net income was $61.8 million, a 56% increase (52% on an operating basis) over the $39.5 million ($40.8 million on an operating basis) for the nine months ended September 30, 2014. Net income available to common shareholders was $61.3 million ($1.88 per basic common share and $1.84 per diluted common share), as compared to $39.1 million ($40.3 million on an operating basis) or $1.50 per basic common share and $1.47 per diluted common share ($1.55 per basic common share and $1.52 per diluted common share on an operating basis) for the same nine month period in 2014, a 25% increase per basic and diluted common share (21% increase per basic and diluted common share on an operating basis).

Operating earnings for the three months ended September 30, 2014, exclude merger related expenses of $674 thousand ($0.03 per basic and diluted common share) related to the merger (the "Merger") with Virginia Heritage Bank ("Virginia Heritage") completed October 31, 2014. The nine months ended September 30, 2014, exclude merger related expenses of $1.3 million ($0.05 per basic and diluted common share) related to the Merger. Reconciliations of GAAP earnings to operating earnings are contained in the footnotes to the financial highlights table.

"We are very pleased to report our twenty-seventh consecutive quarter of record earnings, continuing a long-term trend of consistent and balanced financial results," noted Ronald D. Paul, Chairman and Chief Executive Officer of Eagle Bancorp, Inc. The Company's quarterly earnings have increased for each quarter since the fourth quarter of 2008. The Company's performance in the third quarter of 2015 was highlighted by growth in total loans and total deposits; by 32% growth in total revenue as compared to the same quarter in 2014 and by 2% growth in total revenue as compared to the second quarter of 2015; by a continuation of a favorable net interest margin, which was 4.23% for the third quarter of 2015; and by continued solid asset quality measures. Additionally, operating leverage remained quite favorable with an efficiency ratio in the third quarter of 2015 of 42.04%. The strong third quarter earnings resulted in an annualized return on average assets ("ROAA") of 1.47%, an annualized return on average common equity ("ROACE") of 11.95% and a Common Equity Tier 1 ratio of 10.44% at September 30, 2015.

For the third quarter of 2015, total loans grew 5.0%, net of the indirect loans, to $4.77 billion and total deposits increased 2.1% to $4.93 billion as compared to June 30, 2015. Growth in loans and deposits over the last twelve months was in part due to the Merger, which added approximately $800 million in loans and $645 million in deposits. Excluding balances acquired in the Merger, and the sale of the indirect consumer loan portfolio discussed below, organic loan and deposit growth over the last twelve months was 18% for loans and 21% for deposits.

On July 24, 2015, the Company completed the sale of the indirect consumer loan portfolio amounting to approximately $80.3 million acquired in the Merger. The sale of this non-strategic loan class will allow the Company to deploy the funds into commercial and commercial real estate loans, its core competency, improve over time its yield on earning assets and reduce operating expenses. The fair value adjustment was included in the June 30, 2015 balance sheet as an adjustment to intangibles established in the Merger transaction.

The net interest margin was 4.23% for the third quarter of 2015, as compared to 4.45% for the third quarter of 2014 and 4.33% for the second quarter of 2015. Mr. Paul added, "The margin compression experienced in the third quarter of 2015 was due to an expected reduction in loan yields, and was due substantially to competitive pressure in the continuing low interest rate environment. Higher balance sheet liquidity continued in the third quarter of 2015 which will be deployed over time into higher yielding loans. The Company continues its emphasis on disciplined pricing for both new loans and funding sources. The yield on the loan portfolio was 5.19% in the third quarter 2015 versus 5.29% in the second quarter and the costs of funds was 0.35% in the third quarter of 2015 versus 0.37% in the second quarter.

Total revenue (net interest income plus noninterest income) for the third quarter of 2015 was $65.2 million, or 32% above the $49.4 million of total revenue earned for the third quarter of 2014 and was 2% higher than the $63.8 million of revenue earned in the second quarter of 2015.

The primary driver of the Company's revenue growth for the third quarter of 2015 as compared to the third quarter of 2014 continues to be its net interest income growth of 32% ($59.1 million versus $44.6 million). Noninterest income increased 28% in the third quarter 2015 over the same period in 2014 ($6.1 million versus $4.8 million) which contributed to total revenue growth and was due to increased gains on the sale of residential mortgage loans.

For the third quarter of 2015, revenue from residential mortgage banking represented 3.4% of total revenue as compared to 2.8% of total revenue for the third quarter of 2014. While the Company's primary focus continues to be on generating spread income, management also looks to residential mortgage banking as well as Small Business Administration ("SBA") loan activity as components of the Company's ongoing noninterest income growth opportunities. The mix of residential mortgage originations of $175 million was 59% purchase money and 41% refinance transactions for the third quarter of 2015. Sales of SBA guaranteed loans resulted in $107 thousand of gains on sales for the third quarter of 2015.

Asset quality measures remained solid at September 30, 2015. Net charge-offs (annualized) were 0.16% of average loans for the third quarter of 2015, as compared to 0.09% of average loans for the third quarter of 2014. At September 30, 2015, the Company's nonperforming loans amounted to $14.5 million (0.30% of total loans) as compared to $29.3 million (0.85% of total loans) at September 30, 2014 and $22.4 million (0.52% of total loans) at December 31, 2014. Nonperforming assets amounted to $24.4 million (0.41% of total assets) at September 30, 2015 compared to $38.0 million (0.91% of total assets) at September 30, 2014 and $35.7 million (0.68% of total assets) at December 31, 2014.

Management continues to remain attentive to any signs of deterioration in borrowers' financial conditions and is proactive in taking the appropriate steps to mitigate risk. Furthermore, the Company is diligent in placing loans on nonaccrual status and believes, based on its loan portfolio risk analysis, that its allowance for credit losses, at 1.05% of total loans (excluding loans held for sale) at September 30, 2015, is adequate to absorb potential credit losses within the loan portfolio at that date. The allowance for credit losses was 1.31% of total loans at September 30, 2014 and 1.07 at December 31, 2014. The decline in the ratio of the allowance to total loans since September 30, 2014 was due primarily to loans acquired in the Merger being accounted for at fair value in accordance with U.S. GAAP. The allowance for credit losses represented 348% of nonperforming loans, referred to as the Coverage Ratio, at September 30, 2015, as compared to 153% at September 30, 2014 and 205% at December 31, 2014 resulting primarily from a decrease in non-performing loans.

"The Company's operating cost management remained quite favorable for the third quarter of 2015," noted Mr. Paul. The efficiency ratio of 42.04% reflects management's ongoing efforts to maintain superior operating leverage. The level of noninterest expenses as a percentage of average assets declined to 1.90% in the third quarter of 2015 as compared to 2.47% in the third quarter of 2014. The Merger completed in the fourth quarter of 2014 accelerated a trend of improvement in the Company's operating leverage over the past several years. The in-market transaction allowed the Company to achieve significant cost savings beginning in the fourth quarter of 2014, which has carried into 2015. Mr. Paul further noted, "The Company's goal remains providing for an appropriate infrastructure to remain competitive, service our clients, manage risk, and achieve the Company's growth initiatives while also maintaining strict oversight of expenses."

Total assets at September 30, 2015 were $5.89 billion, a 41% increase as compared to $4.17 billion at September 30, 2014, and a 12% increase as compared to $5.25 billion at December 31, 2014. Total loans (excluding loans held for sale) were $4.78 billion at September 30, 2015, a 39% increase as compared to $3.43 billion at September 30, 2014, and an 11% increase as compared to $4.31 billion at December 31, 2014. Loans held for sale amounted to $35.7 million at September 30, 2015 as compared to $41.3 million at September 30, 2014, a 13% decrease, and $44.3 million at December 31, 2014, a 19% decrease. The investment portfolio totaled $524.3 million at September 30, 2015, a 37% increase from the $382.5 million balance at September 30, 2014. As compared to December 31, 2014, the investment portfolio at September 30, 2015 increased by $142.0 million or 37%.

Total deposits at September 30, 2015 were $4.93 billion compared to deposits of $3.53 billion at September 30, 2014, a 39% increase and $4.31 billion at December 31, 2014, a 14% increase. Total borrowed funds (excluding customer repurchase agreements) were $70 million at September 30, 2015 as compared to $109.3 million at September 30, 2014, a 36% decrease, and $219.3 million at December 31, 2014, a 68% decrease. The decline in borrowed funds in the first nine months of 2015 as compared to December 31, 2014 was the result of the payoff of all FHLB advances and the $9.3 million in subordinated notes at 8.50% dated August 30, 2010.

Total shareholders' equity at September 30, 2015 increased to $786.1 million, compared to shareholders' equity of $442.6 million at September 30, 2014, a 78% increase and $620.8 million at December 31, 2014, a 27% increase. The increases are primarily due to retained earnings, the public offering of common stock completed during the first quarter of 2015, which netted approximately $94.5 million, as well as the issuance of common stock to consummate the Merger. The ratio of common equity to total assets was 12.13% at September 30, 2015 as compared to 9.26% at September 30, 2014 and 10.46% at December 31, 2014. The Company's capital position remains substantially in excess of regulatory requirements for well capitalized status, with a total risk based capital ratio of 13.77% at September 30, 2015, as compared to 14.48% at September 30, 2014 and 12.97% at December 31, 2014. In addition, the tangible common equity ratio (tangible common equity to tangible assets) was 10.46% at September 30, 2015, compared to 9.19% at September 30, 2014 and 8.54% at December 31, 2014.

Analysis of the three months ended September 30, 2015 compared to September 30, 2014

For the three months ended September 30, 2015, the Company reported an annualized ROAA of 1.47% as compared to 1.37% (1.44% on an operating basis) for the three months ended September 30, 2014. The annualized ROACE for the three months ended September 30, 2015 was 11.95%, as compared to 14.52% (15.22% on an operating basis) for the three months ended September 30, 2014, the lower ROACE is due to a higher average capital position.

Net interest income increased 32% for the three months ended September 30, 2015 over the same period in 2014 ($59.1 million versus $44.6 million), resulting from growth in average earning assets of 39%. The net interest margin was 4.23% for the three months ended September 30, 2015, as compared to 4.45% for the three months ended September 30, 2014. The Company believes its net interest margin remains favorable compared to peer banking companies and that its disciplined approach to managing the loan portfolio yield to 5.19% for the third quarter in 2015 has been a significant factor in its overall profitability.

The provision for credit losses was $3.3 million for the three months ended September 30, 2015 as compared to $2.1 million for the three months ended September 30, 2014. The higher provisioning in the third quarter of 2015, as compared to the third quarter of 2014, is due to higher net charge-offs and growth in the loan portfolio. Net charge-offs of $1.9 million in the third quarter of 2015 represented an annualized 0.16% of average loans, excluding loans held for sale, as compared to $710 thousand or an annualized 0.09% of average loans, excluding loans held for sale, in the third quarter of 2014. Net charge-offs in the third quarter of 2015 were attributable primarily to commercial and industrial loans.

Noninterest income for the three months ended September 30, 2015 increased to $6.1 million from $4.8 million for the three months ended September 30, 2014, a 28% increase. This increase was primarily due to an increase of $1.1 million in gains on the sale of residential mortgage loans. Residential mortgage loans closed were $175 million for the third quarter of 2015 versus $163 million for the third quarter of 2014.

The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 42.04% for the third quarter of 2015, as compared to 50.90% (49.11% on an operating basis) for the third quarter of 2014. Noninterest expenses totaled $27.4 million for the three months ended September 30, 2015, as compared to $25.1 million ($24.3 million on an operating basis) for the three months ended September 30, 2014, a 9% increase (13% increase on an operating basis). Cost increases for salaries and benefits were $441 thousand, due primarily to increased staff from the Merger, merit increases and employee benefit expense increases. Premises and equipment expenses were $600 thousand higher, due to costs of additional branches and office space acquired in the Merger and to increases in leasing costs. Data processing expense increased $404 thousand primarily due to increased accounts and transaction volume primarily arising out of the Merger. Legal, accounting and professional fees increased by $323 thousand primarily due to professional fees. Higher FDIC expenses were due to both average asset growth and higher deposit levels. Other expenses increased $938 thousand primarily due to franchise tax and core deposit intangible amortization.

Analysis of the nine months ended September 30, 2015 compared to September 30, 2014

For the nine months ended September 30, 2015, the Company reported an annualized ROAA of 1.49% as compared to 1.36% (1.40% on an operating basis) for the nine months ended September 30, 2014. The annualized ROACE for the nine months ended September 30, 2015 was 12.41%, as compared to 14.33% (14.79% on an operating basis) for the nine months ended September 30, 2014, the lower ROACE due to the higher average capital position.

Net interest income increased 35.3% for the nine months ended September 30, 2015 over the same period in 2014 ($171.4 million versus $126.7 million), resulting from growth in average earning assets of 39.8%. The net interest margin was 4.32% as compared to 4.46% for the nine months ended September 30, 2014. The Company believes its net interest margin remains favorable compared to peer banking companies and that its disciplined approach to managing the loan portfolio yield to 5.25% for the first nine months in 2015 has been a significant factor in its overall profitability.

The provision for credit losses was $10.0 million for the nine months ended September 30, 2015 as compared to $7.2 million for the nine months ended September 30, 2014. The higher provisioning in the first nine months of 2015, as compared to the first nine months of 2014, is due to higher net charge-offs. Net charge-offs of $5.8 million in the first nine months of 2015 represented an annualized 0.17% of average loans, excluding loans held for sale, as compared to $3.1 million or an annualized 0.13% of average loans, excluding loans held for sale, in the first nine months of 2014. Net charge-offs in the first nine months of 2015 were attributable primarily to commercial and industrial loans ($4.6 million), home equity and other consumer ($736 thousand), income producing-commercial real estate loans ($625 thousand) offset by a recovery in construction commercial real estate loans ($114 thousand).

Noninterest income for the nine months ended September 30, 2015 increased to $20.1 million from $13.0 million for the nine months ended September 30, 2014, a 54.5% increase. This increase was primarily due to $5.1 million higher gains on the sale of residential mortgage loans and to gains realized on the sale of investment securities of $2.2 million offset by a $1.1 million loss on the early extinguishment of debt due to the early payoff of FHLB advances. Residential mortgage loans closed were $723 million for the first nine months of 2015 versus $389 million for the first nine months of 2014. Investment gains were realized in February 2015 to take advantage of market conditions. This decision to pay off the FHLB advances early was based upon the deposit growth in the quarter and expected benefits to the cost of funds going forward. Excluding investment securities gains and the loss on early extinguishment of debt, total noninterest income was $19.0 million for the nine months ended September 30, 2015, as compared to $13.0 million for the same period in 2014, a 46.2% increase.

Noninterest expenses totaled $82.1 million for the nine months ended September 30, 2015, as compared to $70.4 million ($68.9 million on an operating basis) for the nine months ended September 30, 2014, a 16.6% increase (19.1% on an operating basis). Cost increases for salaries and benefits were $4.2 million, due primarily to increased staff from the Merger, merit increases, employee benefit expense increases and higher incentive compensation. Premises and equipment expenses were $2.5 million higher, due to costs of additional branches and office space acquired in the Merger and to increases in leasing costs. Marketing and advertising expense increased by $761 thousand primarily due to costs associated with digital and print advertising and sponsorships. Data processing expense increased $1.0 million primarily due to increased accounts and transaction volume primarily arising out of the Merger and to higher network expenses. Higher FDIC expenses were due to both higher average assets and higher deposit levels. Other expenses increased $3.5 million primarily due to costs and valuations associated with other real estate owned, franchise tax, and higher core deposit intangible amortization. For the first nine months of 2015, the efficiency ratio was 42.86% as compared to 50.38% (49.33% on an operating basis) for the same period in 2014.

The financial information which follows provides more detail on the Company's financial performance for the nine and three months ended September 30, 2015 as compared to the nine and three months ended September 30, 2014 as well as providing eight quarters of trend data. Persons wishing additional information should refer to the Company's Form 10-K for the year ended December 31, 2014 and other reports filed with the Securities and Exchange Commission (the "SEC").

About Eagle Bancorp: The Company is the holding company for EagleBank, which commenced operations in 1998. The Bank is headquartered in Bethesda, Maryland, and operates through twenty-two branch offices, located in Montgomery County, Maryland, Washington, D.C. and Northern Virginia. The Company focuses on building relationships with businesses, professionals and individuals in its marketplace.

Conference Call: Eagle Bancorp will host a conference call to discuss its third quarter 2015 financial results on Thursday, October 22, 2015 at 10:00 a.m. eastern daylight time. The public is invited to listen to this conference call by dialing 1.877.303.6220, conference ID Code is 48715117, 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 6, 2015.

Forward-looking Statements: This press release contains forward-looking statements within the meaning of the Securities and 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," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company's market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. For details on factors that could affect these expectations, see the risk factors and other cautionary language included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 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.

Eagle Bancorp, Inc.        
Consolidated Financial Highlights (Unaudited)        
(dollars in thousands, except per share data)    
  Nine Months Ended September 30, Three Months Ended September 30,
  2015 2014 2015 2014
Income Statements:        
Total interest income  $ 185,869  $ 135,482  $ 63,981  $ 47,886
Total interest expense  14,503  8,820  4,896  3,251
Net interest income  171,366  126,662  59,085  44,635
Provision for credit losses  10,043  7,179  3,262  2,111
Net interest income after provision for credit losses  161,323  119,483  55,823  42,524
Noninterest income (before investment gains)  19,042  13,025  6,039  4,761
Gain on sale of investment securities  2,224  10  60  -- 
Loss on early extinguishment of debt  (1,130)  --   --   -- 
Total noninterest income  20,136  13,035  6,099  4,761
Total noninterest expense (1)  82,076  70,376  27,405  25,143
Income before income tax expense  99,383  62,142  34,517  22,142
Income tax expense  37,564  22,611  13,054  8,054
Net income (1)  61,819  39,531  21,463  14,088
Preferred stock dividends   539  434  180  151
Net income available to common shareholders (1)  $ 61,280  $ 39,097  $ 21,283  $ 13,937
         
Per Share Data:        
Earnings per weighted average common share, basic (1)  $ 1.88  $ 1.50  $ 0.64  $ 0.54
Earnings per weighted average common share, diluted (1)  $ 1.84  $ 1.47  $ 0.63  $ 0.52
Weighted average common shares outstanding, basic   32,625,379  25,978,083  33,400,973  26,023,670
Weighted average common shares outstanding, diluted   33,277,542  26,617,975  34,026,412  26,654,186
Actual shares outstanding at period end  33,405,510  26,022,307  33,405,510  26,022,307
Book value per common share at period end   $ 21.38  $ 14.83  $ 21.38  $ 14.83
Tangible book value per common share at period end (2)  $ 18.10  $ 14.71  $ 18.10  $ 14.71
         
Performance Ratios (annualized):        
Return on average assets (1) 1.49% 1.36% 1.47% 1.37%
Return on average common equity (1) 12.41% 14.33% 11.95% 14.52%
Net interest margin 4.32% 4.46% 4.23% 4.45%
Efficiency ratio (1)(3) 42.86% 50.38% 42.04% 50.90%
         
Other Ratios:        
Allowance for credit losses to total loans (4) 1.05% 1.31% 1.05% 1.31%
Allowance for credit losses to total nonperforming loans 347.82% 153.20% 347.82% 153.20%
Nonperforming loans to total loans (4) 0.30% 0.85% 0.30% 0.85%
Nonperforming assets to total assets 0.41% 0.91% 0.41% 0.91%
Net charge-offs (annualized) to average loans (4) 0.17% 0.13% 0.16% 0.09%
Common equity to total assets 12.13% 9.26% 12.13% 9.26%
Tier 1 leverage ratio 11.93% 10.70% 11.93% 10.70%
Total risk based capital ratio 13.77% 14.48% 13.77% 14.48%
Common Equity Tier 1 10.44% n/a 10.44% n/a
Tangible common equity to tangible assets (2) 10.46% 9.19% 10.46% 9.19%
         
Loan Balances - Period End (in thousands):        
Commercial and Industrial  $ 1,007,659  $ 798,489  $ 1,007,659  $ 798,489
Commercial real estate - owner occupied   $ 489,657  $ 337,422  $ 489,657  $ 337,422
Commercial real estate - income producing   $ 2,022,950  $ 1,382,839  $ 2,022,950  $ 1,382,839
1-4 Family mortgage  $ 147,720  $ 126,263  $ 147,720  $ 126,263
Construction - commercial and residential  $ 927,265  $ 634,736  $ 927,265  $ 634,736
Construction - C&I (owner occupied)  $ 60,487  $ 41,846  $ 60,487  $ 41,846
Home equity  $ 115,346  $ 107,291  $ 115,346  $ 107,291
Other consumer   $ 5,881  $ 3,662  $ 5,881  $ 3,662
         
Average Balances (in thousands):        
Total assets  $ 5,538,552  $ 3,889,909  $ 5,776,404  $ 4,070,914
Total earning assets  $ 5,307,404  $ 3,797,011  $ 5,544,835  $ 3,977,859
Total loans  $ 4,505,092  $ 3,148,943  $ 4,636,298  $ 3,317,731
Total deposits  $ 4,611,324  $ 3,340,271  $ 4,842,706  $ 3,470,231
Total borrowings  $ 169,077  $ 117,683  $ 129,136  $ 152,249
Total shareholders' equity  $ 732,156  $ 421,291  $ 778,279  $ 437,370

(1)   The reported figure includes the effect of $1.5 million and $885 thousand of merger related expenses ($1.3 million and $674 thousand net of tax) for the nine and three months ended September 30, 2014. As the magnitude of the merger expenses distorts the operational results of the Company, we present in the GAAP reconciliation below and in the accompanying text certain performance ratios excluding the effect of the merger expenses during the nine and three months periods ended September 30, 2014. We believe this information is important to enable shareholders and other interested parties to assess the core operational performance of the Company.

GAAP Reconciliation (Unaudited)    
(dollars in thousands except per share data)    
     
  Nine Months Ended
September 30, 2014
Three Months Ended
September 30, 2014
Net income   $ 39,531  $ 14,088
Adjustments to net income     
Merger-related expenses  1,250  674
Operating net income  $ 40,781  $ 14,762
     
Net income available to common shareholders  $ 39,097  $ 13,937
Adjustments to net income available to common shareholders    
Merger-related expenses  1,250  674
Operating earnings  $ 40,347  $ 14,611
     
Earnings per weighted average common share, basic  $ 1.50  $ 0.54
Adjustments to earnings per weighted average common share, basic    
Merger-related expenses  0.05  0.03
Operating earnings per weighted average common share, basic  $ 1.55  $ 0.57
     
Earnings per weighted average common share, diluted  $ 1.47  $ 0.52
Adjustments to earnings per weighted average common share, diluted    
Merger-related expenses  0.05  0.03
Operating earnings per weighted average common share, diluted  $ 1.52  $ 0.55
     
Summary Operating Results:    
Noninterest expense  $ 70,376  $ 25,143
Merger-related expenses  1,460  885
Adjusted noninterest expense  $ 68,916  $ 24,258
     
Adjusted efficiency ratio 49.33% 49.11%
     
Adjusted noninterest expense as a % of average assets 2.37% 2.36%
     
Return on average assets    
Net income  $ 39,531  $ 14,088
Adjustments to net income    
Merger-related expenses  1,250  674
Operating net income  $ 40,781  $ 14,762
     
Adjusted return on average assets 1.40% 1.44%
     
Return on average common equity    
Net income available to common shareholders  $ 39,097  $ 13,937
Adjustments to net income available to common shareholders    
Merger-related expenses  1,250  674
Operating earnings  $ 40,347  $ 14,611
     
Adjusted return on average common equity 14.79% 15.22%

(2)   Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per common share are non-GAAP financial measures derived from GAAP-based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders' equity by common shares outstanding. The Company considers this information important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios and as such is useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions. The table below provides a reconciliation of these non-GAAP financial measures with financial measures defined by GAAP.

GAAP Reconciliation (Unaudited)      
(dollars in thousands except per share data)      
  Nine Months Ended
September 30, 2015
Twelve Months Ended
December 31, 2014
Nine Months Ended
September 30, 2014
Common shareholders' equity  $ 714,169  $ 548,859  $ 386,014
Less: Intangible assets  (109,498)  (109,908)  (3,321)
Tangible common equity  $ 604,671  $ 438,951  $ 382,693
       
Book value per common share  $ 21.38  $ 18.21  $ 14.83
Less: Intangible book value per common share  (3.28)  (3.65)  (0.12)
Tangible book value per common share  $ 18.10  $ 14.56  $ 14.71
       
Total assets  $ 5,888,958  $ 5,247,880  $ 4,169,181
Less: Intangible assets  (109,498)  (109,908)  (3,321)
Tangible assets  $ 5,779,460  $ 5,137,972  $ 4,165,860
Tangible common equity ratio 10.46% 8.54% 9.19%

(3)   Computed by dividing noninterest expense by the sum of net interest income and noninterest income.

(4)   Excludes loans held for sale.

Eagle Bancorp, Inc.      
Consolidated Balance Sheets (Unaudited)      
(dollars in thousands, except per share data)      
       
Assets September 30, 2015 December 31, 2014 September 30, 2014
Cash and due from banks  $ 10,703  $ 9,097  $ 7,920
Federal funds sold  4,076  3,516  8,968
Interest bearing deposits with banks and other short-term investments  291,276  243,412  191,468
Investment securities available for sale, at fair value  524,326  382,343  382,468
Federal Reserve and Federal Home Loan Bank stock  16,865  22,560  10,657
Loans held for sale  35,713  44,317  41,254
Loans   4,776,965  4,312,399  3,432,548
Less allowance for credit losses  (50,320)  (46,075)  (44,954)
Loans, net  4,726,645  4,266,324  3,387,594
Premises and equipment, net  17,070  19,099  17,848
Deferred income taxes  35,426  32,511  25,803
Bank owned life insurance  58,284  56,594  40,432
Intangible assets, net  109,498  109,908  3,321
Other real estate owned  9,952  13,224  8,623
Other assets  49,124  44,975  42,825
 Total Assets  $ 5,888,958  $ 5,247,880  $ 4,169,181
       
Liabilities and Shareholders' Equity      
Deposits:      
Noninterest bearing demand  $ 1,402,447  $ 1,175,799  $ 1,056,559
Interest bearing transaction  207,716  143,628  161,886
Savings and money market  2,514,310  2,302,600  1,944,593
Time, $100,000 or more  439,248  393,132  190,137
Other time  362,867  295,609  180,675
Total deposits  4,926,588  4,310,768  3,533,850
Customer repurchase agreements  64,893  61,120  58,957
Other short-term borrowings  --   100,000  -- 
Long-term borrowings  70,000  119,300  109,300
Other liabilities  41,408  35,933  24,460
Total liabilities  5,102,889  4,627,121  3,726,567
       
Shareholders' Equity      
       
Preferred stock, par value $.01 per share, shares authorized 1,000,000, Series B, $1,000 per share liquidation preference, shares issued and outstanding 56,600 at September 30, 2015, December 31, 2014 and September 30, 2014; Series C, $1,000 per share liquidation preference, shares issued and outstanding 15,300 at September 30, 2015, and December 31, 2014, and -0- at September 30, 2014  71,900  71,900  56,600
Common stock, par value $.01 per share; shares authorized 100,000,000, shares issued and outstanding 33,405,510, 30,139,396 and 26,022,307 respectively   330  296  255
Warrant  946  946  946
Additional paid in capital  500,334  394,933  247,811
Retained earnings   211,318  150,037  135,490
Accumulated other comprehensive income  1,241  2,647  1,512
Total Shareholders' Equity  786,069  620,759  442,614
Total Liabilities and Shareholders' Equity  $ 5,888,958  $ 5,247,880  $ 4,169,181
         
Eagle Bancorp, Inc.        
Consolidated Statements of Operations (Unaudited)        
(dollars in thousands, except per share data)        
     
  Nine Months Ended September 30, Three Months Ended September 30,
Interest Income 2015 2014 2015 2014
Interest and fees on loans  $ 178,063  $ 128,181  $ 61,006  $ 45,502
Interest and dividends on investment securities  7,189  6,911  2,745  2,255
Interest on balances with other banks and short-term investments  604  379  228  125
Interest on federal funds sold   13  11  2  4
Total interest income  185,869  135,482  63,981  47,886
Interest Expense        
Interest on deposits  10,668  6,925  3,739  2,189
Interest on customer repurchase agreements   94  107  33  38
Interest on short-term borrowings  54  --   --   -- 
Interest on long-term borrowings  3,687  1,788  1,124  1,024
Total interest expense  14,503  8,820  4,896  3,251
Net Interest Income   171,366  126,662  59,085  44,635
Provision for Credit Losses  10,043  7,179  3,262  2,111
Net Interest Income After Provision For Credit Losses  161,323  119,483  55,823  42,524
         
Noninterest Income        
Service charges on deposits  3,990  3,638  1,374  1,227
Gain on sale of loans  9,364  4,686  2,483  1,822
Gain on sale of investment securities  2,224  10  60  -- 
Loss on early extinguishment of debt  (1,130)  --   --   -- 
Increase in the cash surrender value of bank owned life insurance   1,191  919  395  295
Other income  4,497  3,782  1,787  1,417
Total noninterest income  20,136  13,035  6,099  4,761
Noninterest Expense        
Salaries and employee benefits  45,772  41,565  15,383  14,942
Premises and equipment expenses  12,056  9,570  3,974  3,374
Marketing and advertising  2,182  1,421  762  544
Data processing  5,598  4,592  1,976  1,572
Legal, accounting and professional fees  2,915  2,513  1,063  740
FDIC insurance  2,348  1,680  794  573
Merger expenses  139  1,460  2  885
Other expenses  11,066  7,575  3,451  2,513
Total noninterest expense 82,076 70,376 27,405 25,143
Income Before Income Tax Expense  99,383  62,142  34,517  22,142
Income Tax Expense  37,564  22,611  13,054  8,054
Net Income   61,819  39,531  21,463  14,088
Preferred Stock Dividends   539  434  180  151
Net Income Available to Common Shareholders  $ 61,280  $ 39,097  $ 21,283  $ 13,937
         
Earnings Per Common Share        
Basic  $ 1.88  $ 1.50  $ 0.64  $ 0.54
Diluted  $ 1.84  $ 1.47  $ 0.63  $ 0.52
 
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates (Unaudited)
(dollars in thousands)
             
  Three Months Ended September 30,
  2015 2014
  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  $ 374,778  $ 228 0.24%  $ 209,997  $ 125 0.24%
Loans held for sale (1)  38,373  374 3.90%  45,069  457 4.06%
Loans (1) (2)   4,636,298  60,632 5.19%  3,317,731  45,045 5.39%
Investment securities available for sale (2)  491,800  2,745 2.21%  395,528  2,255 2.26%
Federal funds sold   3,586  2 0.22%  9,534  4 0.17%
 Total interest earning assets  5,544,835  63,981 4.58%  3,977,859  47,886 4.78%
             
Total noninterest earning assets  281,109      137,024    
Less: allowance for credit losses  49,540      43,969    
 Total noninterest earning assets  231,569      93,055    
 TOTAL ASSETS  $ 5,776,404      $ 4,070,914    
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Interest bearing liabilities:            
Interest bearing transaction  $ 202,885  $ 97 0.19%  $ 116,315  $ 35 0.12%
Savings and money market   2,453,141  2,092 0.34%  1,945,865  1,574 0.32%
Time deposits   797,472  1,550 0.77%  372,695  579 0.62%
 Total interest bearing deposits  3,453,498  3,739 0.43%  2,434,875  2,188 0.36%
Customer repurchase agreements  56,624  33 0.23%  69,579  37 0.21%
Other short-term borrowings  3  --  --  --  -- --
Long-term borrowings  72,509  1,124 6.07%  82,670  1,025 4.85%
 Total interest bearing liabilities  3,582,634  4,896 0.54%  2,587,124  3,250 0.50%
             
Noninterest bearing liabilities:            
Noninterest bearing demand   1,389,208      1,035,356    
Other liabilities  26,283      11,064    
 Total noninterest bearing liabilities  1,415,491      1,046,420    
             
Shareholders' equity  778,279      437,370    
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 5,776,404      $ 4,070,914    
             
Net interest income    $ 59,085      $ 44,636  
Net interest spread     4.04%     4.28%
Net interest margin     4.23%     4.45%
Cost of funds     0.35%     0.33%
             
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.2 million and $3.1 million for the three months ended September 30, 2015 and 2014, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.           
 
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields and Rates (Unaudited)
(dollars in thousands)
             
  Nine Months Ended September 30,
  2015 2014
  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  $ 336,545  $ 604 0.24%  $ 209,332  $ 379 0.24%
Loans held for sale (1)  45,863  1,288 3.74%  31,571  957 4.04%
Loans (1) (2)   4,505,092  176,775 5.25%  3,148,943  127,224 5.40%
Investment securities available for sale (2)  412,912  7,189 2.33%  398,298  6,911 2.32%
Federal funds sold   6,992  13 0.25%  8,867  11 0.17%
Total interest earning assets  5,307,404  185,869 4.68%  3,797,011  135,482 4.77%
             
Total noninterest earning assets  279,388      135,526    
Less: allowance for credit losses  48,240      42,628    
Total noninterest earning assets  231,148      92,898    
TOTAL ASSETS  $ 5,538,552      $ 3,889,909    
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Interest bearing liabilities:            
Interest bearing transaction  $ 178,256  $ 208 0.16%  $ 115,561  $ 135 0.16%
Savings and money market   2,379,643  6,066 0.34%  1,895,618  4,582 0.32%
Time deposits   778,375  4,394 0.75%  399,994  2,207 0.74%
Total interest bearing deposits  3,336,274  10,668 0.43%  2,411,173  6,924 0.38%
Customer repurchase agreements  54,945  94 0.23%  63,768  107 0.22%
Other short-term borrowings  27,492  54 0.26%  --  --  --
Long-term borrowings  86,640  3,687 5.61%  53,915  1,788 4.37%
Total interest bearing liabilities  3,505,351  14,503 0.55%  2,528,856  8,819 0.47%
             
Noninterest bearing liabilities:            
Noninterest bearing demand   1,275,050      929,098    
Other liabilities  25,995      10,664    
Total noninterest bearing liabilities  1,301,045      939,762    
             
Shareholders' equity  732,156      421,291    
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 5,538,552      $ 3,889,909    
             
Net interest income    $ 171,366      $ 126,663  
Net interest spread     4.13%     4.30%
Net interest margin     4.32%     4.46%
Cost of funds     0.36%     0.31%
             
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $8.9 million and $8.4 million for the nine months ended September 30, 2015 and 2014, respectively.
(2) Interest and fees on loans and investments exclude tax equivalent adjustments.           
                 
Eagle Bancorp, Inc.                
Statements of Income and Highlights Quarterly Trends (Unaudited)                
(dollars in thousands, except per share data)                
  Three Months Ended 
Income Statements: September 30,
2015
June 30,
2015
March 31,
2015
December 31,
2014
September 30,
2014
June 30,
2014
March 31,
2014
December 31,
2013
Total interest income  $ 63,981  $ 62,423  $ 59,465  $ 56,091  $ 47,886  $ 44,759  $ 42,837  $ 41,652
Total interest expense  4,896  4,873  4,734  4,275  3,251  2,739  2,830  2,938
Net interest income  59,085  57,550  54,731  51,816  44,635  42,020  40,007  38,714
Provision for credit losses  3,262  3,471  3,310  3,700  2,111  3,134  1,934  2,508
Net interest income after provision for credit losses  55,823  54,079  51,421  48,116  42,524  38,886  38,073  36,206
Noninterest income (before investment gains/losses & extinguishment of debt)  6,039  6,233  6,770  5,298  4,761  3,809  4,455  4,308
Gain/(loss) on sale of investment securities  60  --   2,164  12  --   2  8  (4)
Loss on early extinguishment of debt  --   --   (1,130)  --   --   --   --   -- 
Total noninterest income  6,099  6,233  7,804  5,310  4,761  3,811  4,463  4,304
Salaries and employee benefits  15,383  14,683  15,706  15,703  14,942  13,015  13,608  12,759
Premises and equipment   3,974  4,072  4,010  3,747  3,374  3,107  3,089  2,974
Marketing and advertising  762  735  685  578  544  415  462  519
Merger expenses  2  26  111  3,239  885  576  --   -- 
Other expenses  7,284  7,082  7,561  6,085  5,398  5,022  5,939  5,272
Total noninterest expense  27,405  26,598  28,073  29,352  25,143  22,135  23,098  21,524
Income before income tax expense  34,517  33,714  31,152  24,074  22,142  20,562  19,438  18,986
Income tax expense  13,054  12,776  11,734  9,347  8,054  7,618  6,939  6,983
Net income  21,463  20,938  19,418  14,727  14,088  12,944  12,499  12,003
Preferred stock dividends   180  179  180  180  151  142  141  141
Net income available to common shareholders  $ 21,283  $ 20,759  $ 19,238  $ 14,547  $ 13,937  $ 12,802  $ 12,358  $ 11,862
                 
                 
Per Share Data:                
Earnings per weighted average common share, basic  $ 0.64  $ 0.62  $ 0.62  $ 0.51  $ 0.54  $ 0.49  $ 0.48  $ 0.46
Earnings per weighted average common share, diluted   $ 0.63  $ 0.61  $ 0.61  $ 0.49  $ 0.52  $ 0.48  $ 0.47  $ 0.45
Weighted average common shares outstanding, basic   33,400,973  33,367,476  31,082,715  28,777,778  26,023,670  25,981,638  25,927,888  25,835,054
Weighted average common shares outstanding, diluted   34,026,412  33,997,989  31,776,323  29,632,685  26,654,186  26,623,784  26,575,155  26,495,545
Actual shares outstanding  33,405,510  33,394,563  33,303,467  30,139,396  26,022,307  25,985,659  25,975,186  25,885,863
Book value per common share at period end   $ 21.38  $ 20.76  $ 20.11  $ 18.21  $ 14.83  $ 14.25  $ 13.62  $ 13.03
Tangible book value per common share at period end (1)  $ 18.10  $ 17.46  $ 16.82  $ 14.56  $ 14.71  $ 14.12  $ 13.49  $ 12.89
                 
Performance Ratios (annualized):                
Return on average assets 1.47% 1.51% 1.49% 1.21% 1.37% 1.35% 1.36% 1.33%
Return on average common equity 11.95% 12.18% 13.24% 11.68% 14.52% 14.09% 14.38% 14.07%
Net interest margin 4.23% 4.33% 4.41% 4.42% 4.45% 4.48% 4.45% 4.40%
Efficiency ratio (2) 42.04% 41.70% 44.89% 51.38% 50.90% 48.30% 51.94% 50.03%
                 
Other Ratios:                
Allowance for credit losses to total loans (3) 1.05% 1.07% 1.07% 1.07% 1.31% 1.33% 1.37% 1.39%
Nonperforming loans to total loans (3) 0.30% 0.33% 0.44% 0.52% 0.86% 0.69% 1.19% 0.84%
Allowance for credit losses to total nonperforming loans 347.82% 328.98% 244.12% 205.30% 152.25% 193.50% 115.67% 165.66%
Nonperforming assets to total assets 0.41% 0.44% 0.58% 0.68% 0.92% 0.80% 1.19% 0.90%
Net charge-offs (annualized) to average loans (3) 0.16% 0.21% 0.15% 0.26% 0.09% 0.20% 0.11% 0.18%
Tier 1 leverage ratio 11.93% 12.03% 12.19% 10.69% 10.70% 10.89% 10.83% 10.93%
Total risk based capital ratio 13.77% 13.75% 13.90% 12.97% 14.48% 12.71% 13.04% 13.01%
Common Equity Tier 1 10.44% 10.37% 10.43% n/a n/a n/a n/a n/a
Tangible common equity to tangible assets (1) 10.46% 10.33% 10.39% 8.54% 9.19% 9.38% 9.22% 8.86%
                 
Average Balances (in thousands):                
Total assets  $ 5,776,404  $ 5,562,220  $ 5,271,483  $ 4,844,409  $ 4,070,914  $ 3,853,441  $ 3,740,225  $ 3,576,715
Total earning assets  $ 5,544,835  $ 5,332,397  $ 5,039,428  $ 4,654,423  $ 3,977,859  $ 3,760,720  $ 3,647,305  $ 3,485,546
Total loans  $ 4,636,298  $ 4,499,871  $ 4,376,248  $ 3,993,020  $ 3,317,731  $ 3,141,976  $ 2,981,917  $ 2,867,955
Total deposits  $ 4,842,706  $ 4,655,234  $ 4,330,403  $ 4,025,900  $ 3,470,231  $ 3,328,380  $ 3,217,916  $ 3,038,949
Total borrowings  $ 129,136  $ 128,733  $ 250,698  $ 237,401  $ 152,249  $ 98,105  $ 102,146  $ 126,409
Total stockholders' equity  $ 778,279  $ 755,541  $ 661,364  $ 561,467  $ 437,370  $ 421,029  $ 405,121  $ 391,036
                 
(1) Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per common share are non-GAAP financial measures derived from GAAP-based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders' equity and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders' equity by common shares outstanding. The Company considers this information important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios and as such is useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions.
(2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income.            
(3) Excludes loans held for sale.                
CONTACT: Michael T. Flynn 301.986.1800

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