Eagle Bancorp, Inc. · NASDAQ:EGBN
Eagle Bancorp — Investor Presentation (April 2019)
50 slides from Eagle Bancorp's investor presentation, Apr 30, 2019
Slide 1: Investor Presentation April 2019
June rates - Effective June 18, 2018 April 2019 Ticker: EGBN www.EagleBankCorp.com Investor Presentation
Slide 2: Forward Looking Statements
Forward Looking Statements Forward Looking Statements This presentation 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
Slide 3: Company Overview
Company Overview ▪ Eagle Bancorp, Inc. is a growth - oriented community bank focused on the Washington, DC metropolitan area ▪ Commercially - oriented business model with deep relationships of loans, core deposits and related products ▪ S treamlined network of 20 branches located in Northern Virgini
Slide 4: Investment Highlights
Investment Highlights ▪ Focused on Profitability and Balanced Financial Performance ▪ Strong Net Interest Margin = 4.02% ▪ DDA’s as a percentage of Average Deposits = 32.38% ▪ Operating Leverage with streamlined branch system: Efficiency Ratio = 36.82%* ▪ Clean Asset Quality: NPAs/Assets = 0.50% ▪ L
Slide 5: Experienced Senior Management Team
Experienced Senior Management Team 5 Years Years in with Name Title/Function Banking EGBN Susan G. Riel Interim CEO & President, Eagle Bancorp & EagleBank 42 20 Charles D. Levingston EVP & Chief Financial Officer - Eagle Bancorp & EagleBank 18 7 Antonio F. Marquez EVP & Chief Real Estate Lending Off
Slide 6: Board Focused on Vision and Oversight
Board Focused on Vision and Oversight 6 Years with Name Title/Function EGBN Norman R. Pozez Chair - Board of Directors, Governance & Nominating Committee 11 Leland M. Weinstein Lead Director, Chair - Compensation Committee 20 Kathy A. Raffa Chair - Audit Committee 4 Leslie M. Alperstein, Ph.D. Board
Slide 7: Summary Statistics
Summary Statistics 7 NOTE: Data as - of March 31, 2019 unless otherwise noted. (1) Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 34 - 38. Total Assets: $8.4 billion Total Loans: $7.2 billion Total Deposits: $6.7 billion Tangible Common Equity: $1.0 billion (1
Slide 8: EagleBank Branch Locations
EagleBank Branch Locations 8 Loudoun County Fairfax County I - 66 I - 495 I - 95 Alexandria Arlington I - 495 N US 50 Washington, DC Prince George’s County I - 495 I - 95 Montgomery County I - 270 Branch System Virginia 9 Maryland 6 Washington, DC 5 Total 20 NOTE: Branch total as of March 31, 2019.
Slide 9: Deposit Market Share
Deposit Market Share 9 (Dollar values in thousands) Washington, DC Metropolitan Area Local June 30, June 30, 2018 Community 2017 2018 Annual Market Rank Banks Company Name Branches Balance Balance Growth Share 1 Bank of America Corp. 153 31,960,708 36,020,840 12.7% 17.3% 2 Capital One Financial Corp
Slide 10: Performance Statistics
Performance Statistics 10 NOTE: (1) Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 billion an d $10 billion. (2) Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 34 - 38. * Impact of July 2016 Sub - De
Slide 11: Consistent Balance Sheet Growth
Consistent Balance Sheet Growth 11 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 $7,500 $8,000 $8,500 Millions of Dollars 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 Total Assets $8,388
Slide 12: Consistent Net Income Growth
Consistent Net Income Growth 12 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Thousands of Dollars 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 Net Income Available to Common SBLF Dividend $38,499 NOTE: Virginia Heritage Ba
Slide 13: Earnings Per Share
$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 2014Y 2015Y 2016Y 2017Y 2018Y 2019Q1 EPS (Reported) EPS (Operating) Earnings Per Share 13 $1.95 $2.08 $2.50 $2.86 $3.35 NOTE: Virginia Heritage Bank acquisition closed on October 31, 2014. EPS (Operating) for 2014 is net of merger rel
Slide 14: Tangible Book Value per Share
$14.56 $18.83 $21.61 $24.67 $29.17 $30.20 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 2014Y 2015Y 2016Y 2017Y 2018Y 2019YTD Tangible Book Value per Share 14 NOTE: P lease refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 34 - 38. Virginia Heritage Bank acquisi
Slide 15: Net Interest Margin
4.44% 4.33% 4.16% 4.15% 4.10% 4.02% 3.58% 3.49% 3.48% 3.53% 3.58% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 2014Y 2015Y 2016Y 2017Y 2018Y 2019Q1 EGBN Peer Group Net Interest Margin 15 NOTE: Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 bi
Slide 16: Yields and Cost of Funds
0.33% 0.36% 0.44% 0.58% 0.99% 1.19% 0.45% 0.42% 0.44% 0.54% 0.81% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 2014Y 2015Y 2016Y 2017Y 2018Y 2019Q1 Cost of Funds EGBN Peer Group 4.77% 4.69% 4.60% 4.73% 5.09% 5.21% 4.06% 3.93% 3.93% 4.06% 4.38% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 2014Y 2015Y 2016Y
Slide 17: Moderate Interest Rate Risk Position
Moderate Interest Rate Risk Position 17 ▪ Both assets and liabilities remain short with repricing durations at 18 months on loans and 27 months on deposits ▪ A 100 bps shock increase would increase Net Interest Income by about $ 14.0 million or 4.4% on a static balance sheet over a 12 month period V
Slide 18: Consistent Increases in Operating Leverage
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 Revenue ($000s) Non-Int Expense ($000s) Consistent Increases in Operating Leverage 18 NOTE: P lease refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 34 - 38. Virginia Heritage Bank acquisition c
Slide 19: Consistently Improving Efficiency Ratio
Consistently Improving Efficiency Ratio 19 Note: Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 billion an d $ 10 billion. Virginia Heritage Bank acquisition closed on October 31, 2014 . * Q1 2019 is shown on an adjusted basis. P lease ref
Slide 20: Deposit Composition and Growth
Deposit Composition and Growth 20 Commercial focus drives growth of Noninterest Bearing Demand accounts Wholesale Deposits used to enhance cost of funds, not a strategy to replace growth in core deposits (1) Core deposits include CDAR’s and ICS reciprocal deposits. (Dollar Values in Thousands) D
Slide 21: Detail of Loan Portfolio
Detail of Loan Portfolio 21 34.9% 47.0% 15.4% Concentration in quality markets: Washington, DC, Montgomery County, Fairfax County Held for Sale residential mortgages not included NOTE: Data as of March 31, 2019 (Dollar Value in Thousands) County C&I Owner Occupied CRE Income Producing CRE CRE Br
Slide 22: Credit Quality Trends
Credit Quality Trends 22 NOTE: Virginia Heritage Bank acquisition closed on October 31, 2014. (Dollar Values in Thousands) 2014Y 2015Y 2016Y 2017Y 2018Y 2019Q1 Nonperforming Assets: Accruing Loans 90 or More Days Past Due -$ -$ -$ -$ -$ -$ Nonaccrual 22,443 13,239 17,875 13,238 16,277 40,261 Total N
Slide 23: Consistent Asset Quality
Consistent Asset Quality 23 Total Loans ($mms) Note: Virginia Heritage Bank acquisition closed on October 31, 2014. Net Charge-Off History for the periods ended December 31, 2018 EGBN EGBN Loan Type 2 Year Avg. 3 Year Avg. Income Producing CRE 0.03% 0.04% Owner Occupied CRE 0.01% 0.01% Construction
Slide 24: Strength in C&I Lending
Strength in C&I Lending 24 At 22% of the Loan Portfolio, EagleBank has a much larger presence in C&I Lending than other local peer banks C&I Loan Portfolio is predominantly variable rate loans 16% Annual growth rate of Owner Occupied Loans, which are key to small and mid - market relationships
Slide 25: CRE Risk Management
CRE Risk Management 25 Executive & Board Level Oversight of Approval Process Disciplined Underwriting Proactive Portfolio Management Quarterly Stress Testing of CRE Portfolio Quarterly Independent Credit Review Dedicated Special Assets Team
Slide 26: CRE Concentration
CRE Concentration 26 (1) All peer group and other data is from the FR Y - 9C and Bank Holding Company Performance Report. Peer group data is based on the Compa ny’s asset size at the time of reporting. (2) Represents CRE (excluding owner occupied) concentration as a percentage of EGBN consolidated r
Slide 27: ADC Concentration
ADC Concentration 27 (1) All peer group and other data is from the FR Y - 9C and Bank Holding Company Performance Report. Peer group data is based on t he Company’s asset size at the time of reporting . (2) Represents ADC concentration as a percentage of EGBN consolidated risk - based capital. (3) A
Slide 28: Capital Strength
Capital Strength 28 $150 million of 10 Year, 5 Year non - call, 5.00% Subordinated Notes sold in July 2016 $100 million of Common Equity raised through an underwritten offering in March 2015 $70 million of 10 Year non - call 5.75% Subordinated Notes sold in August 2014 $10 million of Common
Slide 29: Key Success Factors
Key Success Factors 29 ▪ Building and maintaining core relationships o Cross sales o Focus on key customers ▪ Maintenance of strong credit culture o Conservative underwriting criteria and loan policies o Disciplined committee approval and review process o Portfolio is balanced among C&I, CRE and Con
Slide 30: Key Success Factors (continued)
Key Success factors (continued) 30 Disciplined ALCO process Maintained focus on areas of strength o Concentration on core geographic markets and products P roper infrastructure to support the increased volume of business and regulation Comprehensive Management and Board level reporting Hum
Slide 31: EagleBank Growth Strategy
EagleBank Growth Strategy 31 Profitability • Pricing discipline to sustain Net Interest Margin • Prudent expense management with streamlined branch system to maintain Efficiency Ratio Sustain Credit Quality • Maintain balanced portfolio mix: C&I, CRE and Construction • Enhanced monitoring of ind
Slide 32: EGBN Stock Price Performance
EGBN Stock Price Performance 32 Total Return Performance 1 Year 3 Year 5 Year EGBN (16.1%) 4.2% 39.1% NASDAQ Bank Stock Index (13.0%) 32.3% 32.3% NASDAQ Stock Market Index 9.4% 59.5% 84.1% S & P 500 Index 7.3% 37.9% 51.4% SOURCE: SNL Financial, Chart and calculations as of close of trading on March
Slide 33: Appendices
Appendices 33
Slide 34: Non-GAAP Reconciliation
Non - GAAP Reconciliation 34 GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 Common shareholders' equity 1,023,137$ 1,061,651$ 1,108,941$ 1,148,488$ Less: Intangible assets (106,820) (106,481) (105,766) (1
Slide 35: Non-GAAP Reconciliation
Non - GAAP Reconciliation 35 * Data for 2017 is shown on an operating basis. GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017* December 31, 2018 Common shareholders' equity 548,859$ 738,601$ 842,799$
Slide 36: Non-GAAP Reconciliation
Non - GAAP Reconciliation 36 Eagle Bancorp, Inc. GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) GAAP Change Non-GAAP GAAP Change Non-GAAP Income Statements: Income tax expense 35,395 (14,588) 20,807 85,504 (14,588) 70,916 Net income 15,569$ 14,588 30,157$ 100,232$ 14,58
Slide 37: Non-GAAP Reconciliation
Non - GAAP Reconciliation 37 Eagle Bancorp, Inc. GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) GAAP Change Non-GAAP Noninterest Expense Salaries and employee benefits 23,644 (6,153) 17,491 Total noninterest expense 38,304 (6,153) 32,151 Income Before Income Tax Expense
Slide 38: Non-GAAP Reconciliation
Non - GAAP Reconciliation 38 (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 o
Slide 39: Market Information – Washington, DC MSA
Market Information – Washington, DC MSA 39 Population 6.2 Million □ 6 th largest market in the U.S. Employment 3.3 Million □ 5 7,000 new jobs created in 12 months ended November, 2018 □ Employment growth driven by private sector, over 220,000 net new private sector jobs created over last five ye
Slide 40: Greater Washington Economy
Greater Washington Economy 40 Total Federal Spending = 30.9% of GRP GRP Contribution by Sub - market Education & Health Care 5.8% Other 1.5% Non-Local Business 15.5% Associations 1.8% Hospitality 2.7% International 3.8% Other Federal 16.8% Federal Procurement 14.1% Local Business 38.0% Suburban Mary
Slide 41: Loan Portfolio and Growth
Loan Portfolio and Growth 41 (Dollar Values in Thousands) Annual Growth Rate Loan Type Balance % of Total Balance % of Total Balance % of Total % Commercial and Industrial 1,426,042$ 21.6% 1,553,111$ 22.2% 1,510,835$ 21.1% 5.9% Commercial Real Estate: Owner Occupied 800,748 12.1% 887,814 12.7% 990,3
Slide 42: Geographic Detail – Income Producing CRE
Geographic Detail – Income Producing CRE 42 Focus in core sub - markets: Washington, DC, Montgomery County, Fairfax County NOTE: Data as of March 31, 2019 (Dollar Value in Thousands) Single Office/ Redevel./ Mixed Multi- & 1-4 County Condo Hotel Retail Use Family Industrial Single & 1-4 Family Oth
Slide 43: Geographic Detail – Construction
Geographic Detail – Construction 43 Focus in core sub - markets: Washington, DC, Montgomery County, Fairfax County Recognized expertise in Single Family and Condo construction lending Portfolio is diversified among collateral types NOTE: Data as of March 31, 2019 (Dollar Value in Thousands) Si
Slide 44: Conservative Securities Portfolio
Conservative Securities Portfolio 44 Portfolio has $2.3 million of net unrealized losses at March 31, 2019 No holdings of GSE equities or bank Trust Preferred or bank Trust Preferred CDOs Average life of portfolio is 3.3 years Excludes Federal Reserve and Federal Home Loan Bank stock (Dollar
Slide 45: Nationally Recognized Financial Performance
Nationally Recognized Financial Performance 45 ▪ “Top Investment Idea” Recommendation 2012 ▪ “Sm - All Stars” Designation 2011, 2013, 2014, 2015, 2016 & 2017 ▪ Designated as a “Challenger” Bank 2015 & 2016 ▪ Member of KBW Bank Honor Roll 2010 - 2018 ▪ Ronald D. Paul named East Coast Region Community
Slide 46: Highly Regarded by Bank Rating Firms
Highly Regarded by Bank Rating Firms 46 FIRM BANK RATING B AUER F INANCIAL , I NC A - 300/300 Green - ***
Slide 47: Experienced Management Team
Experienced Management Team 47 Susan G. Riel, Interim Chief Executive Officer & President Eagle Bancorp & EagleBank Ms. Riel, Senior Executive Vice President - Chief Operating Officer of the Bank, and formerly Chief Administrative Officer. Ms . Riel has been with the bank for 20 years. She previousl
Slide 48: Experienced Management Team (continued)
Experienced Management Team (continued) 48 Janice L. Williams, EVP, Chief Credit Officer Ms. Williams, Executive Vice President and Chief Credit Officer of the Bank, has served the Bank as Credit Officer, Senior Cr edi t Officer and Chief Credit Officer for the past 15 years. Prior to employment wit
Slide 49: Historical Balance Sheet
Historical Balance Sheet 49 * Data for 2017 is shown on an operating basis. (Dollar Values in Thousands) 2014Y 2015Y 2016Y 2017Y* 2018Y 5 Year Compound Growth Rate 2019YTD Assets Cash and Equivalents $256,025 $298,363 $368,163 $190,473 $321,864 1.0% $122,090 Securities Available for Sale 404,903 504
Slide 50: Historical Income Statement
Historical Income Statement 50 Virginia Heritage Bank acquisition closed on October 31, 2014. * Data for 2014 is shown on an operating basis, net of merger related expenses; ** Data for 2017 & Q1 2019 is shown on an adjusted basis. P lease refer to the Non - GAAP reconciliation and footnotes in the