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Eagle Bancorp, Inc. Announces a 46% Increase in Operating Earnings for Year End 2015 and Surges to $6.0 Billion in Assets

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BETHESDA, Md., Jan. 20, 2016 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the "Company") (NASDAQ: EGBN), the parent company of EagleBank, today announced record quarterly net income of $22.3 million for the three months ended December 31, 2015, a 52% increase (32% on an operating basis) over the $14.7 million net income ($16.9 million on an operating basis) for the three months ended December 31, 2014. Net income available to common shareholders for the three months ended December 31, 2015 increased 53% to $22.3 million as compared to $14.5 million ($16.7 million on an operating basis) for the same period in 2014.

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Net income per basic and diluted common share for the three months ended December 31, 2015 was $0.67 and $0.65, respectively as compared to $0.51 per basic common share and $0.49 per diluted common share ($0.59 per basic common share and $0.56 per diluted common share on an operating basis) for the same period in 2014, a 31% increase per basic common share and 33% per diluted common share (14% increase per basic common share and 16% per diluted common share on an operating basis).

"We are very pleased to report the Company's twenty-eighth consecutive quarter of record earnings, continuing a long-term history 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. Financial performance in the fourth quarter of 2015 was highlighted by 21% growth in total revenue as compared to the same quarter in 2014 and by 6% growth in total revenue as compared to the third quarter of 2015; by a favorable net interest margin, which was 4.38% for the fourth quarter of 2015; by continuing growth in total loans and total deposits; and by continued solid asset quality measures. Additionally, operating leverage remained quite favorable with an efficiency ratio in the fourth quarter of 2015 of 41.47%. The strong fourth quarter earnings resulted in an annualized return on average assets ("ROAA") of 1.50%, an annualized return on average common equity ("ROACE") of 12.08% and a Common Equity Tier 1 ratio of 10.68% at December 31, 2015.

For the year ended December 31, 2015, the Company's net income was $84.2 million, a 55% increase (46% on an operating basis) over the $54.3 million ($57.7 million on an operating basis) for the year ended December 31, 2014. Net income available to common shareholders for the year ended December 31, 2015 was $83.6 million, as compared to $53.6 million ($57.1 million on an operating basis) for the same period in 2014, a 56% increase (46% on an operating basis).  Net income available to common shareholders in 2015 was $2.54 per basic common share and $2.50 per diluted common share, as compared to $2.01 per basic common share and $1.95 per diluted common share ($2.14 per basic common share and $2.08 per diluted common share on an operating basis) for 2014, a 26% increase per basic and 28% per diluted common share (19% increase per basic and 21% per diluted common share on an operating basis).

Operating earnings exclude expenses related to the October 31, 2014 merger with Virginia Heritage Bank (the "Merger") amounting to $3.2 million, or $2.2 million net of tax ($0.08 per basic common share and $0.07 per diluted common share) for the three months ended December 31, 2014, and $4.7 million, or $3.5 million net of tax ($0.13 per basic and diluted share) for the year ended December 31, 2014. Reconciliations of GAAP earnings to operating earnings are contained in the footnotes to the financial highlights table.

For the fourth quarter of 2015, total loans grew 5%, to $5.00 billion and total deposits increased 5% to $5.16 billion as compared to September 30, 2015. For the twelve months ended December 31, 2015 growth in total loans was $686 million or 16% and growth in total deposits was $848 million or 20%.

The net interest margin was 4.38% for the fourth quarter of 2015, as compared to 4.42% for the fourth quarter of 2014 and 4.23% for the third quarter of 2015. Mr. Paul added, "The margin expanded slightly in the fourth quarter of 2015 due substantially to a higher average loan percentage and a lower level of average liquidity as compared to the third quarter in 2015." The yield on average loans for the fourth quarter of 2015 was 5.22%, as compared to 5.19% for the third quarter of 2015 and 5.29% for the fourth quarter of 2014. Mr. Paul noted that, "While competitive pressures continue regarding new loan pricing, the Company remains focused on its disciplined approach to pricing both loans and funding sources." The cost of funds was 0.33% in the fourth quarter of 2015 versus 0.35% in the third quarter of 2015 and 0.36% in the fourth quarter of 2014.

Total revenue (net interest income plus noninterest income) for the fourth quarter of 2015 was $69.1 million, or 21% above the $57.1 million of total revenue earned for the fourth quarter of 2014 and was 6% higher than the $65.2 million of revenue earned in the third quarter of 2015. Total revenue for the full year of 2015 was $260.6 million, or 32% above the $196.8 million of total revenue earned for the full year of 2014.

The primary driver of the Company's revenue growth for the fourth quarter of 2015 as compared to the fourth quarter of 2014 continues to be net interest income, which increased 21% ($62.6 million versus $51.8 million). Noninterest income increased 22% in the fourth quarter of 2015 over the same period in 2014 ($6.5 million versus $5.3 million).   

Asset quality measures remained solid at December 31, 2015. Net charge-offs (annualized) were 0.18% of average loans for the fourth quarter of 2015, as compared to 0.26% (annualized) of average loans for the fourth quarter of 2014. At December 31, 2015, the Company's nonperforming loans amounted to $13.2 million (0.26% of total loans) as compared to $14.5 million (0.30% of total loans) at September 30, 2015 and $22.4 million (0.52% of total loans) at December 31, 2014. Nonperforming assets amounted to $19.1 million (0.31% of total assets) at December 31, 2015 compared to $24.4 million (0.41% of total assets) at September 30, 2015 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 December 31, 2015, is adequate to absorb potential credit losses within the loan portfolio at that date. The allowance for credit losses was 1.05% of total loans at September 30, 2015 and 1.07% at December 31, 2014. The allowance for credit losses represented 398% of nonperforming loans, referred to as the Coverage Ratio, at December 31, 2015, as compared to 348% at September 30, 2015 and 205% at December 31, 2014 resulting primarily from a decrease in nonperforming loans.

The efficiency ratio of 41.47% reflects management's ongoing efforts to maintain superior operating leverage. "The Company's operating cost management remained quite favorable for the fourth quarter of 2015," noted Mr. Paul. The level of annualized noninterest expenses as a percentage of average assets declined to 1.94% in the fourth quarter of 2015 as compared to 2.42% (2.16% on an operating basis) in the fourth 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 throughout 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 December 31, 2015 were $6.08 billion, a 3% increase as compared to $5.89 billion at September 30, 2015, and a 16% increase as compared to $5.25 billion at December 31, 2014. Total loans (excluding loans held for sale) were $5.00 billion at December 31, 2015, a 5% increase as compared to $4.78 billion at September 30, 2015, and a 16% increase as compared to $4.31 billion at December 31, 2014. Loans held for sale amounted to $47.5 million at December 31, 2015 as compared to $35.7 million at September 30, 2015, a 33% increase, and $44.3 million at December 31, 2014, a 7% increase. The investment portfolio totaled $487.9 million at December 31, 2015, a 7% decrease from the $524.3 million balance at September 30, 2015. As compared to December 31, 2014, the investment portfolio at December 31, 2015 increased by $105.5 million or 28%.

Total deposits at December 31, 2015 were $5.16 billion compared to deposits of $4.93 billion at September 30, 2015, a 5% increase and $4.31 billion at December 31, 2014, a 20% increase. Total borrowed funds (excluding customer repurchase agreements) were $70.0 million at December 31, 2015 and September 30, 2015. As compared to December 31, 2014, borrowed funds (excluding customer repurchase agreements) at December 31, 2015 decreased by $149.3 million or 68%. The decline in borrowed funds for the year ended December 31, 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 due 2021.

Total shareholders' equity at December 31, 2015 decreased 6%, to $738.6 million, compared to $786.1 million at September 30, 2015, and increased 19%, from $620.8 million, at December 31, 2014. The decline of shareholders' equity from September 30, 2015 reflects the redemption during the fourth quarter of 2015 of all $71.9 million of the preferred stock issued under the Small Business Lending Fund ("SBLF"), offset by earnings during the fourth quarter. The change in shareholders' equity in 2015 was due to increased retained earnings, the public offering of common stock completed during the first quarter of 2015 (which netted approximately $94.5 million) and the redemption of the SBLF preferred stock. The ratio of common equity to total assets was 12.15% at December 31, 2015 as compared to 12.13% at September 30, 2015 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 12.75% at December 31, 2015, as compared to 13.80% at September 30, 2015, and 12.97% at December 31, 2014. In addition, the tangible common equity ratio was 10.56% at December 31, 2015, compared to 10.46% at September 30, 2015 and 8.54% at December 31, 2014.

Analysis of the three months ended December 31, 2015 compared to December 31, 2014

For the three months ended December 31, 2015, the Company reported an annualized ROAA of 1.50% as compared to 1.21% (1.38% on an operating basis) for the three months ended December 31, 2014. The annualized ROACE for the three months ended December 31, 2015 was 12.08%, as compared to 11.67% (13.43% on an operating basis) for the three months ended December 31, 2014. The lower ROACE on an operating basis during the three months ended December 31, 2015 is due to a higher average capital position.

Net interest income increased 21% for the three months ended December 31, 2015 over the same period in 2014 ($62.6 million versus $51.8 million), resulting from growth in average earning assets of 22%. The net interest margin was 4.38% for the three months ended December 31, 2015, as compared to 4.42% for the three months ended December 31, 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 5.22% for the fourth quarter in 2015 has been a significant factor in its overall profitability.   

The provision for credit losses was $4.6 million for the three months ended December 31, 2015 as compared to $3.7 million for the three months ended December 31, 2014. The higher provisioning in the fourth quarter of 2015, as compared to the fourth quarter of 2014, is due to growth in the loan portfolio. Net charge-offs of $2.2 million in the fourth quarter of 2015 represented an annualized 0.18% of average loans, excluding loans held for sale, as compared to $2.6 million, or an annualized 0.26% of average loans, excluding loans held for sale, in the fourth quarter of 2014. Net charge-offs in the fourth quarter of 2015 were attributable primarily to land development and construction loans ($1.9 million), and home equity and other consumer loans ($499 thousand).

Noninterest income for the three months ended December 31, 2015 increased to $6.5 million from $5.3 million for the three months ended December 31, 2014, a 22% increase. This increase was primarily due to an increase of $650 thousand in gains on the sale of SBA loans and a $580 thousand increase in other income. Other income increased primarily from noninterest loan fees and noninterest fee income.

The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 41.47% for the fourth quarter of 2015, as compared to 51.38% (45.71% on an operating basis) for the fourth quarter of 2014. Noninterest expenses totaled $28.6 million for the three months ended December 31, 2015, as compared to $29.4 million ($26.1 million on an operating basis) for the three months ended December 31, 2014, a 2% decrease (10% increase on an operating basis). Cost increases for salaries and benefits were $275 thousand, due primarily to maintaining stable staffing levels and to increases in employee benefit expenses. Premises and equipment expenses were $223 thousand higher, due substantially to increases in leasing costs and accelerated amortization. Data processing expense increased $364 thousand primarily due to increased accounts and transaction volume. Legal, accounting and professional fees decreased by $112 thousand. Higher FDIC expenses were due to higher average asset growth. Other expenses increased $1.6 million primarily due to costs and valuation adjustments associated with OREO property.

Analysis of the year ended December 31, 2015 compared to December 31, 2014

For the year ended December 31, 2015, the Company reported an annualized ROAA of 1.49% as compared to 1.31% (1.40% on an operating basis) for the year ended December 31, 2014. The annualized ROACE for the year ended December 31, 2015 was 12.32%, as compared to 13.50% (14.38% on an operating basis) for the year ended December 31, 2014. The lower ROACE was due to the higher average capital position.

Net interest income increased 31% for the year ended December 31, 2015 over the same period in 2014 ($233.9 million versus $178.5 million), resulting from growth in average earning assets of 35%. The net interest margin was 4.33% as compared to 4.44% for the year ended December 31, 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 5.24% for the year ended December 31, 2015 has been a significant factor in its overall profitability.   

The provision for credit losses was $14.6 million for the year ended December 31, 2015 as compared to $10.9 million for the year ended December 31, 2014. The higher provisioning in the year ended December 31, 2015, as compared to the December 31, 2014, is due to both higher loan growth and higher net charge-offs. Net charge-offs of $8.0 million for the year ended December 31, 2015 represented 0.17% of average loans, excluding loans held for sale, as compared to $5.7 million or 0.17% of average loans, excluding loans held for sale, for the year ended December 31, 2014. Net charge-offs for the year ended December 31, 2015 were attributable primarily to land development and construction loans ($1.9 million), commercial and industrial loans ($4.5 million), home equity and other consumer ($1.2 million), and income producing-commercial real estate loans ($625 thousand), offset by a recovery in construction commercial real estate loans ($175 thousand).

Noninterest income for the year ended December 31, 2015 increased to $26.6 million from $18.3 million for the year ended December 31, 2014, a 45% increase. This increase was primarily due to $4.9 million higher gains on the sale of residential mortgage loans and to gains realized on the sale of investment securities of $2.3 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 $904 million for the year ended December 31, 2015 versus $579 million for the year ended December 31, 2014. Approximately 38% of loans closed were purchase money mortgages, with approximately 62% being for refinance purposes. Other income increased $1.3 million, primarily due to noninterest loan fees and ATM fees. Excluding investment securities gains and the loss on early extinguishment of debt, total noninterest income was $25.5 million for the year ended December 31, 2015, as compared to $18.3 million for the same period in 2014, a 39% increase.

Noninterest expenses totaled $110.7 million for the year ended December 31, 2015, as compared to $99.7 million ($95.0 million on an operating basis) for the year ended December 31, 2014, an 11% increase (17% on an operating basis). Cost increases for salaries and benefits were $4.5 million, due primarily to increased staff from the Merger, merit increases, employee benefit expense increases and higher incentive compensation. Premises and equipment expenses were $2.7 million higher, due to costs of additional branches and office space acquired in the Merger, to increases in leasing costs, and to accelerated amortization. Marketing and advertising expense increased by $749 thousand primarily due to costs associated with digital and print advertising and sponsorships. Data processing expense increased $1.4 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 higher average assets. Other expenses increased $5.1 million primarily due to costs and valuation adjustments associated with other real estate owned, franchise tax, and higher core deposit intangible amortization. For the year ended December 31, 2015, the efficiency ratio was 42.49% as compared to 50.67% (48.28% on an operating basis) for the same period in 2014. Operating efficiency was enhanced in the year of 2015 in large part from leverage achieved in the Merger and to ongoing attention to noninterest expense management.

The financial information which follows provides more detail on the Company's financial performance for the twelve and three months ended December 31, 2015 as compared to the twelve and three months ended December 31, 2014 as well as providing eight quarters of trend data. Persons wishing for 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-one 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 fourth quarter 2015 financial results on Thursday, January 21, 2016 at 10:00 a.m. eastern standard time. The public is invited to listen to this conference call by dialing 1.877.303.6220, conference ID Code is 19041311, 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 February 4, 2016.

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)   
 Twelve Months Ended December 31, Three Months Ended December 31,
  2015   2014   2015   2014 
Income Statements:       
Total interest income$  253,180  $  191,573  $  67,311  $  56,091 
Total interest expense   19,238     13,095     4,735     4,275 
Net interest income   233,942     178,478     62,576     51,816 
Provision for credit losses   14,638     10,879     4,595     3,700 
Net interest income after provision for credit losses   219,304     167,599     57,981     48,116 
Noninterest income (before investment gains)   25,504     18,323     6,462     5,298 
Gain on sale of investment securities   2,254     22     30     12 
Loss on early extinguishment of debt   (1,130)    -      -      -  
Total noninterest income   26,628     18,345     6,492     5,310 
Total noninterest expense (1)   110,716     99,728     28,640     29,352 
Income before income tax expense   135,216     86,216     35,833     24,074 
Income tax expense   51,049     31,958     13,485     9,347 
Net income (1)   84,167     54,258     22,348     14,727 
Preferred stock dividends    601     614     62     180 
Net income available to common shareholders (1)$  83,566  $  53,644  $  22,286  $  14,547 
        
Per Share Data:       
Earnings per weighted average common share, basic (1)$  2.54  $  2.01  $  0.67  $  0.51 
Earnings per weighted average common share, diluted (1)$  2.50  $  1.95  $  0.65  $  0.49 
Weighted average common shares outstanding, basic    32,836,449     26,683,759     33,462,937     28,777,778 
Weighted average common shares outstanding, diluted    33,479,592     27,550,978     34,069,786     29,632,685 
Actual shares outstanding at period end   33,467,893     30,139,396     33,467,893     30,139,396 
Book value per common share at period end $  22.07  $  18.21  $  22.07  $  18.21 
Tangible book value per common share at period end (2)$  18.83  $  14.56  $  18.83  $  14.56 
        
Performance Ratios (annualized):       
Return on average assets (1) 1.49%  1.31%  1.50%  1.21%
Return on average common equity (1) 12.32%  13.50%  12.08%  11.67%
Net interest margin 4.33%  4.44%  4.38%  4.42%
Efficiency ratio (1)(3) 42.49%  50.67%  41.47%  51.38%
        
Other Ratios:       
Allowance for credit losses to total loans (4) 1.05%  1.07%  1.05%  1.07%
Allowance for credit losses to total nonperforming loans 397.95%  205.30%  397.95%  205.30%
Nonperforming loans to total loans (4) 0.26%  0.52%  0.26%  0.52%
Nonperforming assets to total assets 0.31%  0.68%  0.31%  0.68%
Net charge-offs (annualized) to average loans (4) 0.17%  0.17%  0.18%  0.26%
Common equity to total assets 12.15%  10.46%  12.15%  10.46%
Tier 1 leverage ratio 10.90%  10.69%  10.90%  10.69%
Total risk based capital ratio 12.75%  12.97%  12.75%  12.97%
Common Equity Tier 1 10.68% n/a  10.68% n/a
Tangible common equity to tangible assets (2) 10.56%  8.54%  10.56%  8.54%
        
Loan Balances - Period End (in thousands):       
Commercial and Industrial$  1,052,257  $  916,226  $  1,052,257  $  916,226 
Commercial real estate - owner occupied $  498,103  $  461,581  $  498,103  $  461,581 
Commercial real estate - income producing $  2,115,477  $  1,703,172  $  2,115,477  $  1,703,172 
1-4 Family mortgage$  147,365  $  148,018  $  147,365  $  148,018 
Construction - commercial and residential$  985,607  $  793,432  $  985,607  $  793,432 
Construction - C&I (owner occupied)$  79,769  $  58,032  $  79,769  $  58,032 
Home equity$  112,885  $  122,536  $  112,885  $  122,536 
Other consumer $  6,904  $  109,402  $  6,904  $  109,402 
        
Average Balances (in thousands):       
Total assets$  5,631,703  $  4,130,495  $  5,908,115  $  4,844,409 
Total earning assets$  5,400,071  $  4,013,125  $  5,675,048  $  4,654,423 
Total loans$  4,594,395  $  3,361,696  $  4,859,391  $  3,993,020 
Total deposits$  4,697,263  $  3,513,088  $  4,952,282  $  4,025,900 
Total borrowings$  169,246  $  147,859  $  169,745  $  237,401 
Total shareholders' equity$  738,468  $  456,623  $  757,199  $  561,467 
                

(1) The reported figure includes the effect of $4.7 million and $3.2 million of merger related expenses ($3.5 million and $2.2 million net of tax) for the twelve and three months ended December 31, 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 twelve and three months periods ended December 31, 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)   
 Twelve Months Ended Three Months Ended
 December 31, 2014 December 31, 2014
Net income $  54,258  $  14,727 
Adjustments to net income    
Merger-related expenses   3,472     2,173 
Operating net income$  57,730  $  16,900 
    
Net income available to common shareholders$  53,644  $  14,547 
Adjustments to net income available to common shareholders   
Merger-related expenses   3,472     2,173 
Operating earnings$  57,116  $  16,720 
    
Earnings per weighted average common share, basic$  2.01  $  0.51 
Adjustments to earnings per weighted average common share, basic   
Merger-related expenses   0.13     0.08 
Operating earnings per weighted average common share, basic$  2.14  $  0.59 
    
Earnings per weighted average common share, diluted$  1.95  $  0.49 
Adjustments to earnings per weighted average common share, diluted   
Merger-related expenses   0.13     0.07 
Operating earnings per weighted average common share, diluted$  2.08  $  0.56 
    
Summary Operating Results:   
Noninterest expense$  99,728  $  29,352 
Merger-related expenses   4,699     3,239 
Adjusted noninterest expense$  95,029  $  26,113 
    
Adjusted efficiency ratio 48.28%  45.71%
    
Adjusted noninterest expense as a % of average assets 2.30%  2.14%
    
Return on average assets   
Net income$  54,258  $  14,727 
Adjustments to net income   
Merger-related expenses   3,472     2,173 
Operating net income$  57,730  $  16,900 
    
Adjusted return on average assets 1.40%  1.38%
    
Return on average common equity   
Net income available to common shareholders$  53,644  $  14,547 
Adjustments to net income available to common shareholders   
Merger-related expenses   3,472     2,173 
Operating earnings$  57,116  $  16,720 
    
Adjusted return on average common equity 14.38%  13.43%
    

(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)   
 Twelve Months Ended Twelve Months Ended
 December 31, 2015 December 31, 2014
Common shareholders' equity$  738,601  $  548,859 
Less: Intangible assets   (108,542)    (109,908)
Tangible common equity$  630,059  $  438,951 
    
Book value per common share$  22.07  $  18.21 
Less: Intangible book value per common share   (3.24)    (3.65)
Tangible book value per common share$  18.83  $  14.56 
    
Total assets$  6,076,649  $  5,247,880 
Less: Intangible assets   (108,542)    (109,908)
Tangible assets$  5,968,107  $  5,137,972 
Tangible common equity ratio 10.56%  8.54%
    

(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)     
      
AssetsDecember 31, 2015 September 30, 2015 December 31, 2014
Cash and due from banks$  11,009  $  10,703  $  9,097 
Federal funds sold   3,791     4,076     3,516 
Interest bearing deposits with banks and other short-term investments   283,563     291,276     243,412 
Investment securities available for sale, at fair value   487,869     524,326     382,343 
Federal Reserve and Federal Home Loan Bank stock   16,903     16,865     22,560 
Loans held for sale   47,492     35,713     44,317 
Loans    4,998,368     4,776,965     4,312,399 
Less allowance for credit losses   (52,687)    (50,320)    (46,075)
Loans, net   4,945,681     4,726,645     4,266,324 
Premises and equipment, net   18,254     17,070     19,099 
Deferred income taxes   40,311     35,426     32,511 
Bank owned life insurance   58,682     58,284     56,594 
Intangible assets, net   108,542     109,498     109,908 
Other real estate owned   5,852     9,952     13,224 
Other assets   48,700     49,124     44,975 
  Total Assets$  6,076,649  $  5,888,958  $  5,247,880 
      
Liabilities and Shareholders' Equity     
Deposits:     
Noninterest bearing demand$  1,405,067  $  1,402,447  $  1,175,799 
Interest bearing transaction   178,797     207,716     143,628 
Savings and money market   2,835,325     2,514,310     2,302,600 
Time, $100,000 or more   406,570     439,248     393,132 
Other time   332,685     362,867     295,609 
Total deposits   5,158,444     4,926,588     4,310,768 
Customer repurchase agreements   72,356     64,893     61,120 
Other short-term borrowings   -      -      100,000 
Long-term borrowings   70,000     70,000     119,300 
Other liabilities   37,248     41,408     35,933 
Total liabilities   5,338,048     5,102,889     4,627,121 
      
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 -0- at December 31, 2015, 56,600 at September 30, 2015 and     
December 31, 2014; Series C, $1,000 per share liquidation preference,     
shares issued and outstanding -0- at December 31, 2015, 15,300 at      
September 30, 2015 and December 31, 2014   -      71,900     71,900 
Common stock, par value $.01 per share; shares authorized 100,000,000, shares     
issued and outstanding 33,467,893, 33,405,510 and 30,139,396, respectively    331     330     296 
Warrant   946     946     946 
Additional paid in capital   503,529     500,334     394,933 
Retained earnings    233,604     211,318     150,037 
Accumulated other comprehensive income   191     1,241     2,647 
Total Shareholders' Equity   738,601     786,069     620,759 
Total Liabilities and Shareholders' Equity$  6,076,649  $  5,888,958  $  5,247,880 
      

 

        
Eagle Bancorp, Inc.       
Consolidated Statements of Operations (Unaudited)       
(dollars in thousands, except per share data)       
    
 Twelve Months Ended December 31, Three Months Ended December 31,
Interest Income 2015   2014   2015   2014 
Interest and fees on loans$  242,340  $  181,775  $  64,277  $  53,594 
Interest and dividends on investment securities   10,092     9,286     2,903     2,375 
Interest on balances with other banks and short-term investments   732     496     128     117 
Interest on federal funds sold    16     16     3     5 
Total interest income   253,180     191,573     67,311     56,091 
Interest Expense       
Interest on deposits   14,343     9,638     3,675     2,713 
Interest on customer repurchase agreements    132     143     38     36 
Interest on short-term borrowings   86     31     32     31 
Interest on long-term borrowings   4,677     3,283     990     1,495 
Total interest expense   19,238     13,095     4,735     4,275 
Net Interest Income    233,942     178,478     62,576     51,816 
Provision for Credit Losses   14,638     10,879     4,595     3,700 
Net Interest Income After Provision For Credit Losses   219,304     167,599     57,981     48,116 
        
Noninterest Income       
Service charges on deposits   5,397     4,906     1,407     1,268 
Gain on sale of loans   11,973     6,886     2,609     2,200 
Gain on sale of investment securities   2,254     22     30     12 
Loss on early extinguishment of debt   (1,130)    -      -      -  
Increase in the cash surrender value of  bank owned life insurance    1,589     1,283     398     364 
Other income   6,545     5,248     2,048     1,466 
Total noninterest income   26,628     18,345     6,492     5,310 
Noninterest Expense       
Salaries and employee benefits   61,749     57,268     15,977     15,703 
Premises and equipment expenses   16,026     13,317     3,970     3,747 
Marketing and advertising   2,748     1,999     566     578 
Data processing   7,533     6,163     1,935     1,571 
Legal, accounting and professional fees   3,729     3,439     814     926 
FDIC insurance   3,154     2,333     806     653 
Merger expenses   141     4,699     2     3,239 
Other expenses   15,636     10,510     4,570     2,935 
Total noninterest expense 110,716   99,728   28,640   29,352 
Income Before Income Tax Expense   135,216     86,216     35,833     24,074 
Income Tax Expense   51,049     31,958     13,485     9,347 
Net Income    84,167     54,258     22,348     14,727 
Preferred Stock Dividends    601     614     62     180 
Net Income Available to Common Shareholders$  83,566  $  53,644  $  22,286  $  14,547 
        
Earnings Per Common Share       
Basic$  2.54  $  2.01  $  0.67  $  0.51 
Diluted$  2.50  $  1.95  $  0.65  $  0.49 
        

 

 
Eagle Bancorp, Inc.
Consolidated Average Balances, Interest Yields And Rates (Unaudited)
(dollars in thousands)
        
 Three Months Ended December 31,
  2015   2014 
 Average BalanceInterestAverage Yield/Rate Average BalanceInterestAverage Yield/Rate
ASSETS       
Interest earning assets:       
Interest bearing deposits with other banks and other short-term investments$  224,664 $  128  0.23% $  202,182 $  117  0.23%
Loans held for sale (1)   40,587    383  3.77%    39,387    381  3.87%
Loans (1) (2)    4,859,391    63,894  5.22%    3,993,020    53,213  5.29%
Investment securities available for sale (2)   544,129    2,903  2.12%    409,627    2,375  2.30%
Federal funds sold    6,277    3  0.19%    10,207    5  0.19%
Total interest earning assets   5,675,048    67,311  4.71%    4,654,423    56,091  4.78%
        
Total noninterest earning assets   283,575       234,775   
Less: allowance for credit losses   50,508       44,789   
Total noninterest earning assets   233,067       189,986   
TOTAL ASSETS$  5,908,115    $  4,844,409   
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest bearing liabilities:       
Interest bearing transaction$  195,167 $  83  0.17% $  132,516 $  43  0.13%
Savings and money market    2,560,727    2,119  0.33%    2,111,968    1,682  0.32%
Time deposits    764,761    1,473  0.76%    594,850    988  0.66%
Total interest bearing deposits   3,520,655    3,675  0.41%    2,839,334    2,713  0.38%
Customer repurchase agreements   71,591    38  0.21%    62,663    36  0.22%
Other short-term borrowings   28,154    32  0.44%    28,916    31  0.42%
Long-term borrowings   70,000    990  5.53%    145,822    1,495  4.01%
Total interest bearing liabilities   3,690,400    4,735  0.51%    3,076,735    4,275  0.55%
        
Noninterest bearing liabilities:       
Noninterest bearing demand    1,431,627       1,186,566   
Other liabilities   28,889       19,641   
Total noninterest bearing liabilities   1,460,516       1,206,207   
        
Shareholders' equity   757,199       561,467   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$  5,908,115    $  4,844,409   
        
Net interest income $  62,576    $  51,816  
Net interest spread   4.20%    4.23%
Net interest margin   4.38%    4.42%
Cost of funds   0.33%    0.36%
        
(1) Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.8 million and $3.1 million for the three months ended December 31, 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)
        
 Twelve Months Ended December 31,
  2015   2014 
 Average BalanceInterestAverage Yield/Rate Average BalanceInterestAverage Yield/Rate
ASSETS       
Interest earning assets:       
Interest bearing deposits with other banks and other short-term investments$  308,345 $  732  0.24% $  207,530 $  496  0.24%
Loans held for sale (1)   44,533    1,671  3.75%    33,541    1,337  3.99%
Loans (1) (2)    4,594,395    240,669  5.24%    3,361,696    180,438  5.37%
Investment securities available for sale (2)   445,986    10,092  2.26%    401,153    9,286  2.31%
Federal funds sold    6,812    16  0.23%    9,205    16  0.17%
Total interest earning assets   5,400,071    253,180  4.69%    4,013,125    191,573  4.77%
        
Total noninterest earning assets   280,443       160,543   
Less: allowance for credit losses   48,811       43,173   
Total noninterest earning assets   231,632       117,370   
TOTAL ASSETS$  5,631,703    $  4,130,495   
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest bearing liabilities:       
Interest bearing transaction$  182,518 $  291  0.16% $  119,835 $  178  0.15%
Savings and money market    2,425,286    8,185  0.34%    1,950,138    6,265  0.32%
Time deposits    774,943    5,867  0.76%    449,108    3,195  0.71%
Total interest bearing deposits   3,382,747    14,343  0.42%    2,519,081    9,638  0.38%
Customer repurchase agreements   59,141    132  0.22%    63,490    143  0.23%
Other short-term borrowings   27,659    86  0.31%    7,288    31  0.42%
Long-term borrowings   82,446    4,677  5.60%    77,081    3,283  4.20%
Total interest bearing liabilities   3,551,993    19,238  0.54%    2,666,940    13,095  0.49%
        
Noninterest bearing liabilities:       
Noninterest bearing demand    1,314,516       994,007   
Other liabilities   26,726       12,925   
Total noninterest bearing liabilities   1,341,242       1,006,932   
        
Shareholders' equity   738,468       456,623   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$  5,631,703    $  4,130,495   
        
Net interest income $  233,942    $  178,478  
Net interest spread   4.15%    4.28%
Net interest margin   4.33%    4.44%
Cost of funds   0.36%    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 $12.6 million and $11.5 million for the year ended December 31, 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 

 December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31,
Income Statements: 2015   2015   2015   2015   2014   2014   2014   2014 
Total interest income$  67,311  $  63,981  $  62,423  $  59,465  $  56,091  $  47,886  $  44,759  $  42,837 
Total interest expense   4,735     4,896     4,873     4,734     4,275     3,251     2,739     2,830 
Net interest income   62,576     59,085     57,550     54,731     51,816     44,635     42,020     40,007 
Provision for credit losses   4,595     3,262     3,471     3,310     3,700     2,111     3,134     1,934 
Net interest income after provision for credit losses   57,981     55,823     54,079     51,421     48,116     42,524     38,886     38,073 
Noninterest income (before investment gains/losses                
& extinguishment of debt)   6,462     6,039     6,233     6,770     5,298     4,761     3,809     4,455 
Gain/(loss) on sale of investment securities   30     60     -      2,164     12     -      2     8 
Loss on early extinguishment of debt   -      -      -      (1,130)    -      -      -      -  
Total noninterest income   6,492     6,099     6,233     7,804     5,310     4,761     3,811     4,463 
Salaries and employee benefits   15,977     15,383     14,683     15,706     15,703     14,942     13,015     13,608 
Premises and equipment    3,970     3,974     4,072     4,010     3,747     3,374     3,107     3,089 
Marketing and advertising   566     762     735     685     578     544     415     462 
Merger expenses   2     2     26     111     3,239     885     576     -  
Other expenses   8,125     7,284     7,082     7,561     6,085     5,398     5,022     5,939 
Total noninterest expense   28,640     27,405     26,598     28,073     29,352     25,143     22,135     23,098 
Income before income tax expense   35,833     34,517     33,714     31,152     24,074     22,142     20,562     19,438 
Income tax expense   13,485     13,054     12,776     11,734     9,347     8,054     7,618     6,939 
Net income   22,348     21,463     20,938     19,418     14,727     14,088     12,944     12,499 
Preferred stock dividends    62     180     179     180     180     151     142     141 
Net income available to common shareholders$  22,286  $  21,283  $  20,759  $  19,238  $  14,547  $  13,937  $  12,802  $  12,358 
                
                
Per Share Data:               
Earnings per weighted average common share, basic$  0.67  $  0.64  $  0.62  $  0.62  $  0.51  $  0.54  $  0.49  $  0.48 
Earnings per weighted average common share, diluted $  0.65  $  0.63  $  0.61  $  0.61  $  0.49  $  0.52  $  0.48  $  0.47 
Weighted average common shares outstanding, basic    33,462,937     33,400,973     33,367,476     31,082,715     28,777,778     26,023,670     25,981,638     25,927,888 
Weighted average common shares outstanding, diluted    34,069,786     34,026,412     33,997,989     31,776,323     29,632,685     26,654,186     26,623,784     26,575,155 
Actual shares outstanding   33,467,893     33,405,510     33,394,563     33,303,467     30,139,396     26,022,307     25,985,659     25,975,186 
Book value per common share at period end $  22.07  $  21.38  $  20.76  $  20.11  $  18.21  $  14.83  $  14.25  $  13.62 
Tangible book value per common share at period end (1)$  18.83  $  18.10  $  17.46  $  16.82  $  14.56  $  14.71  $  14.12  $  13.49 
                
Performance Ratios (annualized):               
Return on average assets 1.50%  1.47%  1.51%  1.49%  1.21%  1.37%  1.35%  1.36%
Return on average common equity 12.08%  11.95%  12.18%  13.24%  11.67%  14.52%  14.09%  14.38%
Net interest margin 4.38%  4.23%  4.33%  4.41%  4.42%  4.45%  4.48%  4.45%
Efficiency ratio (2) 41.47%  42.04%  41.70%  44.89%  51.38%  50.90%  48.30%  51.94%
                
Other Ratios:               
Allowance for credit losses to total loans (3) 1.05%  1.05%  1.07%  1.07%  1.07%  1.31%  1.33%  1.37%
Nonperforming loans to total loans (3) 0.26%  0.30%  0.33%  0.44%  0.52%  0.86%  0.69%  1.19%
Allowance for credit losses to total nonperforming loans 397.95%  347.82%  328.98%  244.12%  205.30%  152.25%  193.50%  115.67%
Nonperforming assets to total assets 0.31%  0.41%  0.44%  0.58%  0.68%  0.92%  0.80%  1.19%
Net charge-offs (annualized) to average loans (3) 0.18%  0.16%  0.21%  0.15%  0.26%  0.09%  0.20%  0.11%
Tier 1 leverage ratio 10.90%  11.93%  12.03%  12.19%  10.69%  10.70%  10.89%  10.83%
Total risk based capital ratio 12.75%  13.80%  13.75%  13.90%  12.97%  14.48%  12.71%  13.04%
Common Equity Tier 1 10.68%  10.44%  10.37%  10.43% n/a n/a n/a n/a
Tangible common equity to tangible assets (1) 10.56%  10.46%  10.33%  10.39%  8.54%  9.19%  9.38%  9.22%
                
Average Balances (in thousands):               
Total assets$  5,908,115  $  5,776,404  $  5,562,220  $  5,271,483  $  4,844,409  $  4,070,914  $  3,853,441  $  3,740,225 
Total earning assets$  5,675,048  $  5,544,835  $  5,332,397  $  5,039,428  $  4,654,423  $  3,977,859  $  3,760,720  $  3,647,305 
Total loans$  4,859,391  $  4,636,298  $  4,499,871  $  4,376,248  $  3,993,020  $  3,317,731  $  3,141,976  $  2,981,917 
Total deposits$  4,952,282  $  4,842,706  $  4,655,234  $  4,330,403  $  4,025,900  $  3,470,231  $  3,328,380  $  3,217,916 
Total borrowings$  169,745  $  129,136  $  128,733  $  250,698  $  237,401  $  152,249  $  98,105  $  102,146 
Total stockholders' equity$  757,199  $  778,279  $  755,541  $  661,364  $  561,467  $  437,370  $  421,029  $  405,121 
                
(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. 
                
EAGLE BANCORP, INC. CONTACT: Michael T. Flynn 301.986.1800
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