Eagle Bancorp, Inc. · NASDAQ:EGBN
Eagle Bancorp — KBW Investor Field Trip (March 2019)
48 slides from Eagle Bancorp's conference presentation, Mar 27, 2019
Slide 1: KBW Investor Field Trip March 27, 2019
June rates - Effective June 18, 2018 KBW Investor Field Trip March 27, 2019 Ticker: EGBN ww w . E agleBankCorp .c o m
Slide 2: Forward Looking Statements
Forward Looking Statements 2 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 Compa
Slide 3: Company Overview
Company Overview 3 ▪ 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 ▪ Streamlined network of 20 branches located in Northern Virgin
Slide 4: Investment Highlights
Investment Highlights 4 ▪ Focused on Profitability and Balanced Financial Performance ▪ Strong Net Interest Margin = 3.97% ▪ DDA’s as a percentage of Average Deposits = 33.48% ▪ Operating Leverage with streamlined branch system: Efficiency Ratio = 36.09% ▪ Clean Asset Quality: NPAs/Assets = 0.21% ▪
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: Summary Statistics
Summary Statistics 6 NOTE: Data as - of December 31, 2018 unless otherwise noted. (1) Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 33 - 36. Total Assets: $8.4 billion Total Loans: $7.0 billion Total Deposits: $7.0 billion Tangible Common Equity: $1.0 billion
Slide 7: EagleBank Branch Locations
EagleBank Branch Locations L o u do u n County Fairfax County I - 66 I - 495 I - 95 A l e x a ndria Arlington I - 495 N US 50 Washington, DC Prince Geor g e ’ 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 Dece
Slide 8: Deposit Market Share
Deposit Market Share (Dollar values in thousands) Washington, DC Metropolitan Area June 30, 2017 June 30, 201 8 A nnu a l Rank Local C o mm un i t y Banks Company Name Branches Balance Balance Growth 2018 Market Share 1 Bank of America Corp. 153 31 , 960 , 70 8 36 , 020 , 84 0 12 . 7 % 17 . 3 % 2 Ca
Slide 9: Performance Statistics
Performance Statistics reconciliation and footnotes in the appendices on pages 33 - 36. * Impact of July 2016 Sub - Debt raise in 2016Y was (9bps) . ** Data for 2017Y is shown on an operating basis. 9 NOTE: (1) Bank Holding Company Performance Report Peer Group represents companies with consolidated
Slide 10: Consistent Balance Sheet Growth
Consistent Balance Sheet Growth $8,000 $7,500 $7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 $8,500 Millions of Dollars 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 Total Assets $8,389 NOTE: Virginia Heritage Bank acquisition closed on Oc
Slide 11: Consistent Net Income Growth
Consistent Net Income Growth $5 , 00 0 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Thousands of Dollars 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 Net Income Available to Common SBLF Dividend $40,317 NOTE: Virginia Heritage Bank acquisition closed on October 31
Slide 12: Earnings Per Share
$5 . 0 0 $4 . 5 0 $4 . 0 0 $3 . 5 0 $3 . 0 0 $2 . 5 0 $2 . 0 0 $1 . 5 0 $1 . 0 0 $0 . 5 0 $0 . 0 0 2013Y 20 1 4 Y 2015Y 2016Y 20 1 7 Y 2018Y EPS (Reported) EPS (Operating) Earnings Per Share $1.95 $ 1 .76 pages 33 - 36. 12 $ 2 .08 $ 2 .50 $2 .86 $ 3 .35 NOTE: There was a 10% stock dividend paid on t
Slide 13: Tangible Book Value per Share
$14.56 $18.83 $21.61 $24 . 6 7 $29 . 1 7 $12 . 8 9 $ 1 0 . 0 0 $5.00 $0.00 $ 1 5 . 0 0 $ 2 0 . 0 0 $ 2 5 . 0 0 $30.00 2 0 13 Y 2 0 14 Y 2 0 15 Y 2 0 16 Y 2 0 17 Y 2 0 18 Y Tangible Book Value per Share NOTE: Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 32 -
Slide 14: Net Interest Margin
4 . 44 % 4 . 33 % 4 . 15 % 4 . 17 % 4 . 15 % 4 . 14 % 3 . 97 % 3 . 58 % 3 . 49 % 3 . 48 % 3 . 53 % 3 . 54 % 3 . 55 % 3 . 58 % 3 . 58 % 2 . 0 0 % 2 . 5 0 % 3 . 0 0 % 3 . 5 0 % 4 . 0 0 % 4 . 5 0 % 5 . 0 0 % 2 0 14 Y 2 0 15 Y 2 0 16 Y 2 0 17 Y 2 0 18 Q 1 2 0 18 Q 2 2 0 18 Q 3 2 0 18 Q 4 E G B N Peer Gr
Slide 15: Yields and Cost of Funds
0 . 33 % 0 . 36 % 0 . 73 % 0 . 96 % 1 . 07 % 1 . 16 % 0 . 45 % 0.58% 0.54% 0 . 65 % 0 . 70 % 0 . 75 % 0 . 81 % 0 . 2 5 % 0 . 0 0 % 0 . 5 0 % 0 . 7 5 % 1 . 0 0 % 1 . 2 5 % 2 0 14 Y 2 0 15 Y 2 0 16 Y 2017Y 2018Q1 2018Q2 2018Q3 2018Q4 Cost of Funds EGBN Peer Group 4 . 77 % 4 . 69 % 4 . 60 % 4 . 73 % 4
Slide 16: Moderate Interest Rate Risk Position
Moderate Interest Rate Risk Position ▪ Both assets and liabilities remain short with repricing durations at 17 months on loans and 26 months on deposits ▪ A 100 bps shock increase would increase Net Interest Income by about $15.0 million or 4.8% on a static balance sheet over a 12 month period Book
Slide 17: Consistent Increases in Operating Leverage
$ 9 0, 0 0 0 $80,000 $70,000 $60,000 $50,000 $ 4 0, 0 0 0 $30,000 $20,000 $10,000 $0 Revenue ($000s) Non - Int Expense ($000s) Data for Q2, Q3, Q4 2014 are shown on an operating basis, net of merger related expenses. Q4 2017 is shown on an operating basis. 17 Consistent Increases in Operating Levera
Slide 18: Consistently Improving Efficiency Ratio
Consistently Improving Efficiency Ratio Note: Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 billion and $10 billion. Virginia Heritage Bank acquisition closed on October 31, 2014. 42% 40% 40% 38% 39% 36% 36% 68% 65% 64% 62% 62% 62% 61% 61
Slide 19: Deposit Composition and Growth
Deposit Composition and Growth 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 (Dollar Values in Thousands) As of December 31, 2017 As of September 30, 2018 As of December 31
Slide 20: Detail of Loan Portfolio
Detail of Loan Portfolio Concentration in quality markets: Washington, DC, Montgomery County, Fairfax County Held for Sale residential mortgages not included (Dollar Value in Thousands) C oun t y C& I Owner O cc up i e d CRE Income Producing CRE CRE Bridge Financing Owner O cc up i e d Const. CR
Slide 21: Credit Quality Trends
Credit Quality Trends 21 NOTE: Virginia Heritage Bank acquisition closed on October 31, 2014. (Dollar Values in Thousands) 2014Y 2015Y 2016Y 2017Y 2018Q1 2018Q2 2018Q3 2018Q4 Nonperforming Assets: Accruing Loans 90 or More Days Past Due $ - $ - $ - $ - $ - $ - $ - $ - Nonaccrual 22,443 13,239 17,875
Slide 22: Consistent Asset Quality
Consistent Asset Quality Total Loans ($mms) Note: Virginia Heritage Bank acquisition closed on October 31, 2014. 0 . 0 % 2 . 0 % 4 . 0 % 6 . 0 % 8 . 0 % 1 0 . 0 % 1 2 . 0 % 1 4 . 0 % 1 6 . 0 % 1 8 . 0 % 2 0 . 0 % $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Dec - Mar - Jun - Sep - Dec - Mar -
Slide 23: Strength in C&I Lending
Strength in C&I Lending 23 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 24: CRE Risk Management
CRE Risk Management 24 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 25: CRE Concentration
CRE Concentration (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 Company’s asset size at the time of reporting. (2) Represents CRE (excluding owner occupied) concentration as a percentage of EGBN consolidated risk
Slide 26: ADC Concentration
ADC Concentration (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 Company’s asset size at the time of reporting. (2) Represents ADC concentration as a percentage of EGBN consolidated risk - based capital. (3) Adjust
Slide 27: Capital Strength
Capital Strength 27 $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 28: Key Success Factors
Key Success Factors 28 ▪ 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 29: Key Success Factors (continued)
Key Success factors (continued) 29 Disciplined ALCO process Maintained focus on areas of strength o Concentration on core geographic markets and products Proper infrastructure to support the increased volume of business and regulation Comprehensive Management and Board level reporting Huma
Slide 30: EagleBank Growth Strategy
EagleBank Growth Strategy 30 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 31: EGBN Stock Price Performance
EGBN Stock Price Performance Total Return Performance 1 Year 3 Year 5 Year EGBN (3.0%) 29.1% 72.8% NASDAQ Bank Stock Index (5.3%) 53.4% 49 .0% NASDAQ Stock Market Index 0.1% 59.8% 74 .8% S & P 500 Index 2.6% 44.1% 49 .8% SOURCE: SNL Financial, Chart and calculations as of close of trading on Februar
Slide 32: Appendices
Appendices 32
Slide 33: Non-GAAP Reconciliation
Non - GAAP Reconciliation GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Common shareholders' equity Less: Intangible assets Tangible common equity $ 985,180 $ 1,023,137 $ 1,061,651 $ 1,108,941 (107,097)
Slide 34: Non-GAAP Reconciliation
Non - GAAP Reconciliation * 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 $ 548,859 $ 738,601 $ 842,799 $ 965,026 $ 1,108,941 Common
Slide 35: Non-GAAP Reconciliation
Non - GAAP Reconciliation GAAP Change Non - GAAP GAAP Change Non - GAAP 35,395 (14,588) 20,807 85,504 Income Statements: Income tax expense Net income $ 15,569 14,588 $ 30,157 $ 100,232 (14,588) 70,916 14,588 $ 114,820 Performance Ratios (annualized): Return on average assets Return on average commo
Slide 36: Non-GAAP Reconciliation
Non - GAAP Reconciliation 36 ( 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 ba
Slide 37: Market Information – Washington, DC MSA
Market Information – Washington, DC MSA 37 6.2 Million Population □ 6th largest market in the U.S. 3.3 Million Employment □ 57,000 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 year
Slide 38: Greater Washington Economy
Greater Washington Economy Total Federal Spending = 30.9% of GRP GRP Contribution by Sub - market Education & Health Care 5.8% O t h e r 1.5% Non - Local Business 15.5% 2.7% A ss o c i a t i o n s 1.8% International Hospitality 3 . 8 % Other Federal 16 . 8 % Federal Procurement 14.1% Local Business
Slide 39: Loan Portfolio and Growth
Loan Portfolio and Growth (Dollar Values in Thousands) Annual Growth Rate Loan Type Balance % of Total Balance % of Total Balance % of Total % As of December 31, 2017 As of September 30, 2018 As of December 31, 2018 Commercial and Industrial $ 1,375,939 21 . 5 % $ 1,493,577 21 . 8 % $ 1,553,111 22 .
Slide 40: Geographic Detail – Income Producing CRE
Geographic Detail – Income Producing CRE Focus in core sub - markets: Washington, DC, Montgomery County, Fairfax County (Dollar Value in Thousands County ) Hotel O ff i c e / C ondo M i x e d Use R e d e v e l . / Retail M u l t i - F a m il y Si n gl e & 1 - 4 Family Industrial Other TOTAL % of T
Slide 41: Geographic Detail – Construction
Geographic Detail – Construction 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 (Dollar Value in Thousands County ) R e si d e n t i a l Condo M
Slide 42: Conservative Securities Portfolio
Conservative Securities Portfolio Portfolio has $9.5 million of net unrealized losses at December 31, 2018 No holdings of GSE equities or bank Trust Preferred or bank Trust Preferred CDOs Average life of portfolio is 3.6 years Excludes Federal Reserve and Federal Home Loan Bank stock (Dollar
Slide 43: Nationally Recognized Financial Performance
Nationally Recognized Financial Performance ▪ “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 Ba
Slide 44: Highly Regarded by Bank Rating Firms
Highly Regarded by Bank Rating Firms FIRM BANK RATING A - 3 0 0 / 3 0 0 B AUER F INANCIAL , I NC Green - *** 44
Slide 45: Experienced Management Team
Experienced Management Team 45 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 previously
Slide 46: Experienced Management Team (continued)
Experienced Management Team (continued) 46 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 Credit Officer and Chief Credit Officer for the past 15 years. Prior to employment with
Slide 47: Historical Balance Sheet
Historical Balance Sheet 47 * Data for 2017 is shown on an operating basis. 5 Year C o m p o un d Growth (Dollar Values in Thousands) 2014 Y 2015 Y 2016 Y 2017 Y * 2018 Y Rate Assets Ca s h a nd Equi va l e nts $256,025 $298 , 36 3 $368,163 $190 , 47 3 $321 , 86 4 1.0% Se curi ti e s Ava i l a bl e
Slide 48: Historical Income Statement
Historical Income Statement 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 is shown on an operating basis. Please refer to the Non - GAAP reconciliation and (Dollar Values in Thousands, e