Eagle Bancorp, Inc. · NASDAQ:EGBN
Eagle Bancorp — Sandler O'Neill Investor Trip (September 2014)
59 slides from Eagle Bancorp's conference presentation, Sep 10, 2014
Slide 1: Sandler O'Neill Investor Trip
” @EAGLE BANCORP INC. Sandler O’Neill Investor Trip September 10, 2014 Ticker: EGBN www.eaglebankcorp.com
Slide 2: 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 operations and policies and
Slide 3: Company Overview
Company Overview = Eagle Bancorp, Inc. is a growth oriented community bank headquartered in Bethesda, Maryland = Focused on the Washington, DC metropolitan area, with 18 branches = Commercially oriented business model with deep relationships of loans, core deposits and related products = #1 in depos
Slide 4: Investment Highlights
Investment Highlights Focused on Profitability and Balanced Financial Performance Superior Net Interest Margin — 4.48% for Q2 2014 Strong Asset Quality — NPA’s 0.80% at 6/30/14 Leading Local Community Bank Driven by Long-Term, Deep Customer Relationships Demonstrated Organic Growth Strategic Geograp
Slide 5: Experienced Senior Management Team
| Experienced Senior Management Team Years in Name Title/Function Banki Ronald D. Paul Chairman, President & CEO 27 16 Robert P. Pincus Vice Chairman 41 5 Susan G. Riel Sr. EVP & COO - EaghkBank 38 16 James H. Langmead EVP & Chief Financial Officer - Eagle Bancorp & EagkBank B 9 Michael T. Flynn EVP
Slide 6: Planned Acquisition of VGBK - Transaction Summary
Planned Acquisition of VGBK - transaction Summary * Virginia Heritage Bank will be acquired and merged into EagleBank * Transaction value of $182.9 million or $29.00 per share + Fixed price within range of EGBN price of $29.00 to $35.50 = Above range exchange ratio and shares issued is fixed * Below
Slide 7: Planned Acquisition of VGBK - Transaction Perspective
Planned Acquisition of VGBK.. transaction Perspective * VGBK is a high performing bank with strong credit quality * Solidifies Eagle as the largest community bank in the Washington D.C. metro area, with opportunity for continued growth in strong Northen Virginia market * Seasoned management with exp
Slide 8: Summary Statistics - June 30, 2014
Summary Statistics — tune 30, 2014 Total Assets: ‘Total Loans: ‘Total Deposits: ‘Tangible Common Equit ‘Tangible Book Value per Common Share: SBLF Preferred: (1% Dividend Rate, until December, 2015) Market Capitalization (at close August 31, 2014) Insider Ownership: Institutional Ownership: Member o
Slide 9: EGBN Financial Indicators - Regional Peer Analysis
| EGBN - Financial Indicators — Regional Peer Analysis Regional EGBN Peers (1) Key Ratios (at or for the quarter ended June 30) 2Q2012___2Q2013 _2Q2014 2Q2014 Net Interest Margin 439% 4.27% 4.48% 3.46% Efficiency Ratio 52.28% 49.33% 48.30% 68.00% Non-Interest Income’Total Revenue 12.53% 16.85% 8.32%
Slide 10: Financial Indicators - Local Peer Analysis
Financial Indicators — Local Peer Analysis Loan Growth (June 30, 2013 - June 30, 2014) = Commercial & Industrial = Commercial Real Estate = Construction & Development = Total Loans Deposit Growth (June 30, 2013 - June 30, 2014) =» Demand Deposits Money Market Accounts = Certificates of Deposit Total
Slide 11: EagleBank / Virginia Heritage Bank Locations
EagleBank / Virginia Heritage Bank Locations Loudoun County Reston Tyson's Comer Fairfax County Arlington » =a 10
Slide 12: Enhanced Deposit Market Share in Region
| Enhanced Deposit Market Share in Region 2013 Local 2013 eisor2012 ers0r2013 Annual Market Rank Rank Company Name Branches Balance Balance Growth ‘Share 1 Wells Fargo & Co 160 $21,962.31 $23,769,182 82% 15.29% 2 Capital One 194 28,788910 22,128,708 23.1%) 14.23% 3 Bank of America 170 20233988 21,40
Slide 13: Washington Metropolitan Area Primary Sub-Markets
| Washington Metropolitan Area Primary Sub-Markets Populatio (Actual) _Employme Anne Arundel, Maryland 548,625 259,394 20,430} Prince George's, Maryland 871,533 379,628 28,057| Howard, Maryland 297,571 156,997 11,530 Frederick, Maryland 238,502 114,734 9,478| Charles, Maryland 152,144 55,053 5,078 S
Slide 14: Consistent Balance Sheet Growth
Millions of Dollars Consistent Balance Sheet Growth ‘$4,000 Total Assets $3,504 83,0004 32,5004 $2,004 s1,s004 1,000 ss004 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11QI 11Q2 11Q3 1IQs 12QI 12Q? 1293 12QH_13QI 13Q2 1393 13Q4 QI 14Q2 @ (0) Regional pers includes publ traded commercial banks with asets betwe
Slide 15: Contribution from Non-Interest Income
Cont $45,005 $10,0005 $35,000 $30,000 $25,0004 '$20,0004 $15,004 $10,004 $5,000-4 ribution from Non-Interest Income Sale of Loans © Ox 09Q209Q309Q410Q110Q210Q310Q411Q1 11Q211Q311Q412Q112Q2 12Q312Q413Q113Q213Q313Q4 14Q114Q2
Slide 16: Consistent Net Income Growth
Consistent Net Income Growth BINet Income Available to Common Il TARP Dividend © SBLF Dividend $13,009 12,0004 11,0004 10,0004 39,0004 38,0004 7.0004 36,0004 “Thousands of Dollars 35,0004 s4,0004 33,0004 32,0004 s1,0004 so+ 09Q2 0993 O9Qt 10QI 10Q2 10Q3 IQ HQ 11Q2 113 1H 1291 1292 1293 1R@I 13QI_ 13
Slide 17: Geographic Detail of Loan Portfolio
Geographic Detail of Loan Portfolio a eee ieee ee EO Tae Fea inten 8- 2A STE 8 A SIG SmI SH SIE Sa 8 SHE S Mou 68.984 34,664 164301 21,267 2030-2837 1 27TH 9.1% Other MD 47554 179844384 234136 42249-32600 881085 300 394888 12.0% 25,714 5,765 11,369 16,205 71,954 1422 61,890 ee ‘Vian 1,226 12,789 515
Slide 18: Geographic Detail of CRE - Construction
Geographic Detail of CRE — Construction Megs Prince George's r 1,367 : 6,955 : 2M45 21,267 4.2% Other MD 2, E 5,518 6421 15,110 10,713 42,249 8.3% Virginia Loudoun 3,184 Prince Wiliam Other VA, - : - - : 5,209 «11,505 2.3% Other USA S$ + $2059 $ 46 8 - S + S$ += S$ = 8 1457 $ 4,002 08% Total S$ 105,
Slide 19: Geographic Detail of CRE - Income Producing
Geographic Detail of CRE- Income Producing “ent Prince George's 40,404 22,080 18,285 9,979 7,977 17,196 26,653 21,727 164,301 12.6% Other MD 61,004 45529-25161 :17,249 14082 39,381,789 24,941 234,136 18.0% Loudoun 3,360 4,653 255 3, iol 11,369 0.9% Prince Wiliam 12,360 10,167 9,139 14 - 3,132 57,335
Slide 20: EGBN - CRE Risk Management
EGBN — CRE Risk Management Executive Level & Board Oversight Disciplined Underwriting & Approval Process Robust Portfolio Management Stress Testing of Portfolio Quarterly Independent Credit Review Dedicated Special Assets Team
Slide 21: EGBN - Credit Quality Trends
EGBN - Credit Quality Trends (Dollars Values in Thousands) 30-89 Days Past Due Nonperforming Assets: 90 or More Days Past Due Nonacerual Total Nonperforming Loans (NPLs) Other Real Estate Owned (OREO) Total Nonperforming Assets Performing Restructured Loans (IDRs) NPAs/Assets NPAsTDRs/Assets Reserve
Slide 22: EGBN - Consistent Asset Quality
| EGBN- Consistent Asset Quality (Dollar Values in Thousands) Total Loans ($000s) so 4 201002 201102 201202 201302 201402 MMMEITotal Loans —=NPAs/Assets_ —=Charge Offs 200% 180% 2009 16.0% 14.0% 2010 120% 20 10.0% oH 8.0% 2012 6.0% 4.0% 2013 2.0% tox 6/30/14 YTD Income Producing CRE Owner Ocoupiedl
Slide 23: Balanced Loan and Deposit Growth
Balanced Loan and Deposit Growth '$3,500,000,000 '$3,000,000,000 $2,500,000,000 + '$2,000,000,000 + $1,500,000,000 $1,000,000,000 $50,000,000 ‘= Total Loans Total Deposits (1) QB 2011 Deposits exclude the “settlement deposit”. (2) Ql 2013 “TAG” related deposit loss was $130 million.
Slide 24: Deposit Composition
| Deposit Composition (Dollars Values in Thousands) Noninterest Bearing Interest Bearing Transaction Core Savings & Money Market! Core CD’s* Wholesale Money Market Wholesale CD's Total Deposits %of %of %of Balance __ Total Balance Total Balance __Total % S 767,808 26.6% S $49,408 S 945,485 28.1% 23.
Slide 25: Superior Relationships/Net Interest Margin
Superior Relationships/Net Interest Margin 5.25% 4.75 € : a8 S 4.25% 7 if . H ~ aa ae 3.468
Slide 26: Conservative Securities Portfolio
| Conservative Securities Portfolio Datos Vala te Thar US Government Agency Securities ns » 44388 Mortgage Backed Secustes - OSE ais 301 2200908, ‘Municipal Bonds «347 ‘30s 113.312 Other Equity Investments : ° S87 “Total Secuities = =a Sas So US Government Agency Securities 148 4733s 12% Mortgage Ba
Slide 27: Capital Strength
| Capital Strength (Dollars Values in Thousands) Total Assets ‘Total Stockholders Equity ‘Total Common Stockholders Equity Tier 1 Leverage Ratio ‘Tier 1 Risk Based Capital Ratio ‘Total Risk Based Capital Ratio ‘Common Eq fier 1 (CETD Ratio ‘Tangible Common Equity Ratio @) S 3,324,865 S 361,882 S 305
Slide 28: Nationally Recognized Financial Performance
| Nationally Recognized Financial Performance SANDLER O'NEILL + PARTNERS " -/0p Investment Idea” Recommendation 2012 = “Sm-All Stars” Designation 2011 & 2013 F = Designated as a “Grower” Bank 2012 aia = Honor Roll of Community Banks 2010-2013 = Ranked among Top 50 Best Performing Community Banks in
Slide 29: Highly Regarded by Bank Rating Firms
| Highly Regarded by Bank Rating Firms FIRM IDC Analyze the Future BAUERFINANCIAL, INC VERIBANC BANK RATING BBB+ 275/300 todo Green - ***
Slide 30: Market Information - Washington, DC MSA
Market Information —Washington, DC MSA = Population 6.2 Million a Sth largest market in the U.S. = Employment 3.1 Million a 19,800 new jobs created in last year a Average annual job creation is 28,900 over last decade a Highest in net new job growth in the U.S. over last decade a Unemployment rate o
Slide 31: Unemployment Rate - Largest US Markets
Unemployment Rate- Largest US Markets June, 2014 30 Source: BLS, Not Seasonally Adjusted
Slide 32: Average Sales Price Percent Change Washington MSA
Average Sales Price Percent Change Washington MSA All Housing Types Annual Change Annual Change by Month 2000 -2009 2010 2011 2012 2013 2014 % 30 22 20 - in ‘a tho 10 -; | MTT oe ‘I aaca,e9 18 Sa 3 343 4 o MMe: Wiibilleesssi 2 : ite: . TT 4 -20 16 0 SESSE FEE SES FEE SES ESE SES EEE SES EELS ‘Source
Slide 33: Greater Washington Economy
Greater Washington Economy [Gir Contin Subarket] Other Federal ——_Tnternatfonat 13.7% 49% Distfct of Columbia Hospitalty e 24.0% Federal Procurement Suburban Maryland omer 89% Local Business Northern Virginia Gross Regional Product $449 Billion Note: Other includes Health Ca Source: The Wall Street
Slide 34: Key Success Factors
Key Success Factors = Building and maintaining core relationships ° ° Cross sales Focus on key customers = Maintenance of strong credit culture ° ° ° ° Conservative underwriting criteria and loan policies Disciplined Committee Approval and Review Process Periodic Loan and Portfolio Stress Testing Pr
Slide 35: Key Success Factors (continued)
Key Success Factors (continued) = Disciplined ALCO process = Maintained focus on areas of strength » Concentration on core geographic markets and products = Built the proper infrastructure to support the increased volume of business and regulation = Significant Management and Board level reporting =
Slide 36: EGBN Growth Strategy
EGBN Growth Strategy = Close and Integrate Virginia Heritage Bank Acquisition * Targeting close in 4Q2014 = Profitability * Pricing discipline to sustain Net Interest Margin * Diligent expense control to maintain Efficiency Ratio = Maintain Credit Quality = Emphasis on Organic Growth * Only 2.34% de
Slide 37: EGBN Stock Price Performance
| EGBN Stock Price Performance Price Change (%) 7 _ _ - Awl A i { VI . soo AA Ni 7 a | Yat hy 1 Year EGBN 31.6% NASDAQ Bank Stock Index 12.3% S&P 500 Index 22.7% Stock Price Performance 3 Year 5 Year 197.8% 303.0% 65.8% 51.2% 64.4% 96.3% Souree: SNL Financial, Bloomberg, Chast and calculations as of
Slide 38: EGBN Relative Valuation
| EGBN Relative Valuation Trailing P/E Ratio 4s azo 199 181 163 160 187 15 10 5 0 EGBN —SNLNat'lAvg KBW Regional SNLMid-Atl NASDAQ Russell 3000 S&P 500 Bank Avg Avg 181 Source: SNL & KBW. Chart and calculations as of close July 31, 2014
Slide 39: Appendices
Appendices 38
Slide 40: Loan Portfolio Trends
Loan Portfolio Trends (2 Vest Thossds) Loan Type Babnee_ _% of Total Bakneo Babee _% of Total % Commercial and Industral $ 636,623 237% © $694,350 S 726611 22.2% 9.3% Owner Ocewpied 311,335, 11.6% 317,491 330073, 10.1% 6.0% 7.9% Owner Ocoupied-Const 28,807 11% 34,659 38,368 1.2% 332% 21.4% Income Pr
Slide 41: Loan Portfolio Composition
| Loan Portfolio Composition Total Gross Loans: $3.3 Billion ‘Note: At June 30, 2014 40
Slide 42: Diversified Commercial Real Estate Portfolio
| Diversified Commercial Real Estate Portfolio Total : $509.0 Million Total : $1.3 Billion ‘Note: At June 30, 2014 4
Slide 43: Loan Portfolio by Risk Rating
Loan Portfolio by Risk Rating 2000 -Esvellent 3000 - Good 380% 1395341 4000 - Acceptable 937,473 Mm 113950 5000- Acceptable with Risk 34,498 125% 397855 6000- Watch 47202 1% 98a 7000 - Special Mention, 58201 20% 16257 3000- Substandard 19.998 19% 35991 9000 - Doubtfial : 0.0% é 9999-Loss : 0.0% ; =
Slide 44: Geographic Detail of NPA's
Geographic Detail of NPA’s (Dollar Vabues in Thousands) Maryland ‘Montgomery sims. $8 - $ - $ OS - $ = S$ MBS = $1000 $ 8 S$ 1085 Prine George's : 213 . 73 3 49 Mo 6 12 550 IML Other MD m : : - 2 8 © © : 810 181 991 Washington DC 4.813 © 7 10s) 3388 : . ' 9.216 1304 10,610 Virginia Alexandria “4 211
Slide 45: Virginia Heritage Bank Overview - Through June 30, 2014
| Virginia Heritage Bank Overview - Through June 30, 2014 = Growing community bank in Eagle’s target market [ota Assets Gommy] Loans. Net mnt] sn * Six branches in Northern Virginia 1,200 boy . 006 * Attractive demographic trends sien eee al 3579 * Growing market of small and na see medium sized bus
Slide 46: EGBN/VGBK - Combined Loan & Deposit Composition
EGBN/VGBK - Combined Loan & Deposit Composition Virginia Hevtage Banke Fagle Bancorp, Ine. Combined Consumer 18 [fotal Loans Smiliong':_S [Fotaitoans Smiling}: S379] [Fotalcoans (Smiliong)s S435) Virginia evtage Banke Fale Bancorp, Inc. Combined Tine < 100K Time> $1005, iy Tne Now ster Now sone ROW
Slide 47: Moderate Interest Rate Risk Position
| Moderate Interest Rate Risk Position ‘Source: FIN Quarterly IRR Report
Slide 48: Acquisition Strategy & History
Acquisition Strategy & History Significant Due Diligence precedes any Offer to Acquire Accretive Transactions are always the Goal Acquisition #1 (F&T completed on August 31, 2008) a System conversion successfully completed one week after close a Targeted expense savings achieved in methodical and th
Slide 49: Experienced Management Team
| Experienced Management Team 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. He also has served as Chairman of the Board o
Slide 50: Experienced Management Team
| Experienced Management Team Susan G. Riel, Senior EVP, Chief Operating Officer of 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 13 years. She previously served as Executive
Slide 51: Experienced Management Team
Experienced Management Team AntonioF. Marquez, EVP, Chief Commercial Real Estate Lending Officer Mr. Marquez, Executive Vice President, recently joined EagleBank as the Chief Real Estate Lender. Prior to joining EagleBank, Mr. eal estate lending franchise for HSBC for the Washington, DC market Earli
Slide 52: Experienced Management Team
| Experienced Management Team James H. L EVP, Chief Financial Officer, Eagle rp, Inc. and Ee Mr. Langmead, Executive Vice President and Chief Financial Officer of the Company since January 2007, and Executive Vice President and Chief Financial Officer of the Bank since January 2005, previously serve
Slide 53: Historical Balance Sheet
Historical Balance Sheet 52
Slide 54: Historical Quarterly Balance Sheet
Historical Quarterly Balance Sheet HES3 359333 [ADE f om (1) Please refer to the GAAP reconciliation and footnotes in the appendices on pages 56-57. 33
Slide 55: Historical Income Statement
| Historical Income Statement (Dollar Values in Thousands, except per share data) 1 Year Growth 2009 2010 2011 2012 2013 __Rate Total Interest Income S$ 84338 $ 96,658 $119,124 8157294 108% Total Interest Expense 24309 19.832 20,077 12304 _ 03.3%) [Net Interest Income 39,529 765826 99,087 144,790 13
Slide 56: Historical Quarterly Income Statement
| Historical Quarterly Income Statement (otras Dowsndy,exappr share dts “Total ate ncome “otal ners Expense [Ne latrest come Lae Los Provision Sari Chanson Deposits Gai. 0 Se of Ls Gaines o Se of Sette Other Noni Income “Total Noir Income Salis nd pyc Bens Promises nd Equipment Bpenses Marketing nd
Slide 57: GAAP Reconciliation
GAAP Reconciliation GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) Commn shareholders equity Less: Intangible assets, Tangible common equity Book value per common share Less: Intangible book value per common share Tangible book value per common share Totalassets Less: I
Slide 58: GAAP Reconciliation Footnotes
GAAP Reconciliation Footnotes (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
Slide 59: Notice to Virginia Heritage Shareholders
| Notice to Virginia Heritage Shareholders Notice to Virginia Heritage Shareholders This press release does not c solici nstitute an offer to sell or the solicitation of an offer to buy any securities or a ‘on of any vote or approval. In connection with the proposed acquisition of Virginia Heritage
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