Eagle Bancorp, Inc. · NASDAQ:EGBN
Eagle Bancorp — Sandler O'Neill + Partners East Coast Financial Services Conference 2016
47 slides from Eagle Bancorp's conference presentation, Nov 17, 2016
Slide 1: Sandler O'Neill East Coast Financial Services Conference
Ticker: EGBN www.eaglebankcorp.com Sandler O’Neill +Partners East Coast Financial Services Conference November 16 & 17,2016
Slide 2: Forward Looking Statements
1 ForwardLookingStatements ThispresentationcontainsforwardlookingstatementswithinthemeaningoftheSecuritiesand ExchangeActof1934,asamended,includingstatementsofgoals,intentions,andexpectationsas tofuturetrends,plans,eventsorresultsofCompanyoperationsandpoliciesandregardinggeneral economicconditions.I
Slide 3: Company Overview
2 Company Overview ▪ Eagle Bancorp, Inc. is a growth-oriented community bank headquartered in Bethesda, Maryland ▪ Focused on the Washington, DC metropolitan area, with 21 branches ▪ Commercially-oriented business model with deep relationships of loans, core deposits and related products ▪ #1 in dep
Slide 4: Investment Highlights
3 Investment Highlights ▪ Focused on Profitability and Balanced Financial Performance ▪ Strong Net Interest Margin = 4.11% ▪ Clean Asset Quality: NPAs/Assets = 0.41% ▪ Low Charge-Off History: NCOs/Average Loans = 0.14% ▪ Driven by Long-Term, Deep Customer Relationships ▪ Demonstrated Consistent Orga
Slide 5: Experienced Senior Management Team
Experienced Senior Management Team 4 Years Years in with Name Title/Function Banking EGBN Ronald D. Paul Chairman, President & CEO 29 18 Susan G. Riel Sr. EVP & COO - EagleBank 40 18 James H. Langmead* EVP & Chief Financial Officer - Eagle Bancorp & EagleBank 45 11 Laurence E. Bensignor EVP & Genera
Slide 6: Summary Statistics
5 Summary Statistics NOTE: Data at September 30, 2016 unless otherwise noted. (1) Please refer to the Non-GAAP reconciliation and footnotes in the appendices on pages 32 -34. Total Assets: $6.8 billion Total Loans: $5.5 billion Total Deposits: $5.6 billion Tangible Common Equity: $707.9 million (1)
Slide 7: EagleBank Branch Locations
EagleBank Branch Locations Montgomery County Prince George’s County Fairfax County Loudoun County Washington, DC N I-270 I-95 I-495 US 50 I-95 I-495 I-66 I-495 Branch System Virginia 9 Maryland 7 Washington, DC 5 Total 21 NOTE: Branch total as of October 31, 2016. Arlington Alexandria 6
Slide 8: Deposit Market Share
7 Deposit Market Share NOTE: Washington, D.C. Metro Area as defined in FDIC Summary of Deposits Report. Data excludes: E*Trade whose deposits are substantially from outside of the defined market area. SOURCE: FDIC, as of June 30, 2015 and June 30, 2016. 74.1% Washington, DC Metropolitan Area Local J
Slide 9: Performance Statistics
Performance Statistics NOTE: (1) Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 billionand $10 billion. (2) Please refer to the Non-GAAP reconciliation and footnotes in the appendices on pages 32 -34. * Impact of Q3 2016 Sub-Debt raise was
Slide 10: Consistent Balance Sheet Growth
$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 Millions of Dollars 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 Total Assets Consistent Balance Sheet Growth NOTE: Virginia Heritage Bank ac
Slide 11: Consistent Net Income Growth
$5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 $14,000 $15,000 $16,000 $17,000 $18,000 $19,000 $20,000 $21,000 $22,000 $23,000 $24,000 $25,000 Thousands of Dollars 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 Net Income
Slide 12: Net Interest Margin
Net Interest Margin 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. * Impact of Q3 2016 Sub-Debt raise was (0.15%). 11 3.99% 4.32% 4.30% 4.44% 4.3
Slide 13: Yields and Cost of Funds
Yields and Cost of Funds 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. * Impact of Q3 2016 Sub-Debt Raise was (0.6bps) to Yield on Average Earni
Slide 14: Earnings per Share
$1.95 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2011Y 2012Y 2013Y 2014Y 2015Y 2016YTD EPS (Reported) EPS (Operating) Earnings per Share $2.50 13 $2.08 $1.76 $1.46 $1.04 NOTE: There was a 10% stock dividend paid on the common stock on June 14, 2013. Virginia Heritage Bank acquisition closed on Octobe
Slide 15: Tangible Book Value per Share
$9.38 $11.47 $12.89 $14.56 $18.83 $21.08 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 2011Y 2012Y 2013Y 2014Y 2015Y 2016YTD Tangible Book Value per Share NOTE: Please refer to the Non-GAAP reconciliation and footnotes in the appendices on pages 32-34. Virginia Heritage Bank acquisition closed on October
Slide 16: Consistent Increases in Operating Leverage
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 Revenue ($000s) Non-Int Expense ($000s) Consistent Increases in Operating Leverage NOTE: Please refer to the Non-GAAP reconciliation and footnotes in the appendices on pages 32 -34. Virginia Heritage Bank acquisition closed on Octobe
Slide 17: 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. Please refer to the Non-GAAP reconciliation and footnotes
Slide 18: Moderate Interest Rate Risk Position
17 Moderate Interest Rate Risk Position Source: FTN Quarterly IRR Report. Virginia Heritage Bank acquisition closed on October 31, 2014. ▪ Both assets and liabilities remain short with repricing durations at 23 months on loans and 28 months on deposits ▪ A100 bps shock increase would increase Net In
Slide 19: Deposit Composition and Growth
(1) Core deposits include CDAR’s and ICS reciprocal deposits. Commercial focus drives growth of Noninterest Bearing Demand accounts Wholesale Deposits used to enhance favorable cost of funds, not a strategy to replace growth in core deposits Deposit Composition and Growth 18 (Dollar Values in Th
Slide 20: Balanced Loan and Deposit Growth
Balanced Loan and Deposit Growth 19 NOTE: Virginia Heritage Bank acquisition closed on October 31, 2014. $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $ i n B i l l i o n s Total Loans Total Deposits
Slide 21: Detail of Loan Portfolio
Detail of Loan Portfolio NOTE: Data as of September 30, 2016 Concentration in quality markets: Washington, DC, Montgomery County, Fairfax County Held for Sale residential mortgages not included 20 (Dollar Value in Thousands) County C&I Owner Occupied CRE Owner Occupied Const. Income Producing CR
Slide 22: Credit Quality Trends
Credit Quality Trends 21 NOTE: Virginia Heritage Bank acquisition closed on October 31, 2014. (Dollar Values in Thousands) 2011Y 2012Y 2013Y 2014Y 2015Y 2016Q1 2016Q2 2016Q3 Nonperforming Assets: Accruing Loans 90 or More Days Past Due -$ -$ -$ -$ -$ -$ -$ -$ Nonaccrual 32,794 30,684 24,702 22,443 1
Slide 23: Consistent Asset Quality
Consistent Asset Quality Total Loans ($mms) 22 Note: 2016 YTD data through September 30, 2016. Virginia HeritageBankacquisition closed on October 31, 2014. 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Sep- 12 Dec- 12 Mar- 13 Jun- 13 Sep- 1
Slide 24: CRE Risk Management
CRE Risk Management 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 23
Slide 25: CRE Concentration
CRE Concentration 24 (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 25 (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. * F&T Bank
Slide 27: Capital Strength
Capital Strength $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 $10 million of Common Equity
Slide 28: Key Success Factors
Key Success Factors Building and maintaining core relationships o Cross sales o Focus on key customers Maintenance of strong credit culture o Conservative underwriting criteria and loan policies o Disciplined committee approval and review process o Periodic loan and portfolio stress testing o Pr
Slide 29: Key Success Factors (continued)
Key Success Factors (continued) Disciplined ALCO process Maintained focus on areas of strength o Concentration on core geographic markets and products Built the proper infrastructure to support the increased volume of business and regulation Comprehensive Management and Board level reporting
Slide 30: EagleBank Growth Strategy
EagleBank Growth Strategy Profitability • Pricing discipline to sustain Net Interest Margin • Diligent expense control to maintain Efficiency Ratio Maintain Credit Quality • Enhanced monitoring of portfolio • Expanded stress testing Emphasis on Organic Growth • Only 3.14% deposit market share
Slide 31: Stock Price Performance
Stock Price Performance 1 Year 3 Year 5 Year EGBN 3.3% 85.8% 289.8% NASDAQ Bank Stock Index 6.5% 25.7% 92.3% NASDAQ Stock Market Index 2.7% 32.4% 93.3% S & P 500 Index 2.3% 21.0% 69.6% EGBN Stock Price Performance SOURCE: SNL Financial, Chart and calculations as of close of trading on October 31, 20
Slide 32: Appendices
Appendices 31
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation 32 GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) December 31, 2015 March 31, 2016 June 30, 2016 September 30, 2016 Common shareholders' equity 738,601$ 762,496$ 788,628$ 815,639$ Less: Intangible assets (108,542) (108,268) (108,021) (107,694) Ta
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation 33 GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 Common shareholders' equity 210,111$ 293,376$ 337,263$ 548,859$ 738,601$ Less: Intangible assets (4,145) (
Slide 35: Non-GAAP Reconciliation Footnotes
Non-GAAP Reconciliation Footnotes 34 (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 b
Slide 36: Market Information - Washington, DC MSA
35 Market Information –Washington, DC MSA Population 6.2 Million □ 5th largest market in the U.S. Employment 3.2 Million □ 76,000 new jobs created from August 2015 to August 2016 □ Employment growth driven by private sector, over 320,000 net new private sector jobs created over last five years □
Slide 37: Greater Washington Economy
36 Other 8.9% Non-Local Business 10.6% Associations 2.2% Hospitality 3.6% International 4.9% Other Federal 13.7% Federal Procurement 16.3% Local Business 39.9% Greater Washington Economy NOTE: Other includes Health Care/Education and Media SOURCE: The Wall Street Journal, George Mason University -Ce
Slide 38: Loan Portfolio and Growth
Loan Portfolio and Growth 37 (Dollar Values in Thousands) Annual Growth Rate Year-to-Date (Annualized) Loan Type Balance % of Total Balance % of Total Balance % of Total % % Commercial and Industrial1,007,659$ 21.1% 1,052,257$ 21.1% 1,130,042$ 20.6% 12.1% 9.8% Owner Occupied 489,657 10.3% 498,102 10
Slide 39: Geographic Detail - Income Producing CRE
Geographic Detail -Income Producing CRE NOTE: Data as of September 30, 2016 Focus in core sub-markets: Washington, DC, Montgomery County, Fairfax County 38 (Dollar Value in Thousands) Single Redevel./ Office/ Multi- Mixed & 1-4 County Retail Condo Hotel Family Use Single & 1-4 Family Industrial Ot
Slide 40: Geographic Detail - Construction
Geographic Detail –Construction NOTE: Data as of September 30, 2016 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 39 (Dollar Value in Thousands) S
Slide 41: Conservative Securities Portfolio
Portfolio has $7.5 million of net unrealized gains at September 30, 2016 No holdings of GSE equities or bank Trust Preferred or bank Trust Preferred CDOs Average life of portfolio is 3.4 years Excludes Federal Reserve and Federal Home Loan Bank stock Conservative Securities Portfolio 40 (Dol
Slide 42: Nationally Recognized Financial Performance
▪Designated as a “Challenger” Bank 2015 ▪Honor Roll of Community Banks 2010-2015 Nationally Recognized Financial Performance ▪Community Bankers Cup Award 2012-2015 ▪Ronald D. Paul named East Coast Region Community Banker of the Year 2014 Independent Community Bankers of America 41 ▪“Top Investment I
Slide 43: Highly Regarded by Bank Rating Firms
Highly Regarded by Bank Rating Firms FIRM BANK RATING 300/300 Green -*** BAUERFINANCIAL, INC A- 42
Slide 44: Experienced Management Team
Experienced Management Team 43 Ronald D. Paul, Chairman, President and CEO Mr. Paul, a founder of EagleBank, has served as Chairman since May 2008, and prior to that time was Vice Chairman and Chief Executive Officer since the organization of the Company.Since June 2006, he has served as Chief Execu
Slide 45: Experienced Management Team
Experienced Management Team 44 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 11 years.Prior to employment with the Bank, Ms.
Slide 46: Historical Balance Sheet
45 Historical Balance Sheet (Dollar Values in Thousands) 2011Y 2012Y 2013Y 2014Y 2015Y 5 Year Compound Growth Rate 2016YTD Assets Cash and Equivalents $232,411 $339,334 $306,960 $256,025 $298,363 38.7% $519,027 Securities Available for Sale 324,053 310,514 389,405 404,903 504,772 16.3% 450,588 Total
Slide 47: Historical Income Statement
46 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; Please refer to the Non-GAAP reconciliation and footnotes in the appendices on pages 32 -34. (Dollar Values in Thousands, except
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