Eagle Bancorp, Inc. · NASDAQ:EGBN
Eagle Bancorp — Investor Presentation (September 2020)
51 slides from Eagle Bancorp's investor presentation, Sep 15, 2020
Slide 1: Investor Presentation
Investor Presentation Ticker: EGBN EagleBankCorp.com September 2020
Slide 2: Forward Looking Statements
Forward Looking Statements 2 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
Slide 3: Investment Rationale
Investment Rationale 3 Highly profitable, with balanced financial performance Strategically positioned in the 5th largest regional economy in the U.S. Strong capital ratios Consistent organic growth of loans and deposits Dedicated, diverse and experienced Board focused on vision and governance NOTE:
Slide 4: Company Overview
Company Overview 4 • Eagle Bancorp, Inc. is a highly profitable community bank focused on the Washington, DC metropolitan area • Commercially - oriented business model with deep relationships of loans, core deposits and related products • Recognized expertise in CRE, C&I and residential mortgage len
Slide 5: Summary Statistics
Summary Statistics 5 Total Assets $ 9 .8 billion Total Loans $ 8 . 0 billion Total Deposits $ 7 . 9 billion Tangible Common Equity $ 1 . 1 billion Shares Outstanding (at close August 31, 2020) 32,228,636 Market Capitalization (at close August 31, 2020) $ 928 million Tangible Book Value per Common Sh
Slide 6: Key Financial Metrics
Key Financial Metrics 6 • Above Peer Returns: ROAA | 1.12% ; ROAE | 9.84% • Strong Capital Ratios: Tier 1 Leverage Ratio | 10.63% ; Total Risk Based Capital Ratio | 16.26% • Well - Managed Asset Quality: NPAs/Assets | 0.69% ; NCOs/Average Loans | 0.36% • Operating Leverage with streamlined branch sy
Slide 7: EagleBank Growth Strategy
EagleBank Growth Strategy 7 • Profitability – Pricing discipline to preserve Net Interest Margin – Prudent expense management with streamlined branch system to maintain Efficiency Ratio • Vigilant Management of Credit Quality – COVID task force established to manage impacted credits – Maintain a pru
Slide 8: Key Success Factors
Key Success Factors 8 • 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 – Portfolio is balanced among C&I, CRE and Cons
Slide 9: Market Information – Washington, DC MSA
Market Information – Washington, DC MSA 9 • Population 6.2 Million – 6th largest market in the U.S. • Employment 3.1 Million – Recovery jobs began in June, 2020. After losing over 350,000 jobs in March, April and May, the Region had net job growth of 90,000 new jobs in June and July – Largest job lo
Slide 10: Greater Washington Economy
Greater Washington Economy 10 SOURCE: Stephen S. Fuller Institute - George Mason University 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
Slide 11: EagleBank Locations
295 495 95 495 495 270 395 66 66 Bethesda Lanham Chevy Chase Twinbrook Rockville Shady Grove Rosslyn Ballston Silver Spring Park Potomac Merrifield Alexandria Fairfax Tysons Corner Reston Dulles Town Center Chantilly HQ RHQ RHQ MONTGOMERY COUNTY PRINCE GEORGE’S COUNTY FAIRFAX COUNTY ARLINGTON COUNTY
Slide 12: Leading Deposit Share Among DC Community Banks
Leading Deposit Share Among DC Community Banks 12 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, 2018 and June 30, 2019. 76.4% (Dollar value
Slide 13: Consistent Balance Sheet Growth
Total Assets $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 $9,000 $9,500 $10,000 $10,500 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 Consistent Balance Sheet Growth
Slide 14: Net Income
$5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 Net Income Available to Common SBLF Dividend Net Income 14 NOTE: *Q4 2017 & Q1 2019 is shown on an adjusted basis. $28,856 *
Slide 15: 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 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1 2020Q2 EPS (Reported) EPS (Operating) Earnings Per Share 15 NOTE: EPS for 2017 are shown on an adjusted basis.; Please refer to the Non - GAAP reconciliation and footnotes in the appendices on page
Slide 16: Strong, Consistent Growth of Tangible Book Value per Share
$18.83 $21.61 $24.67 $29.17 $32.67 $33.62 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 2015Y 2016Y 2017Y 2018Y 2019Y 2020YTD Strong, Consistent Growth of Tangible Book Value per Share 16 NOTE: Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 37 - 41.
Slide 17: Competitive Net Interest Margin in Challenging Rate Environment
Competitive Net Interest Margin in Challenging Rate Environment 17 NOTE: Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 billion and $10 b ill ion. 4.33% 4.16% 4.15% 4.10% 3.77% 3.49% 3.26% 3.49% 3.48% 3.53% 3.58% 3.49% 3.36% 2.00% 2.50% 3.
Slide 18: Yields and Cost of Funds
4.69% 4.60% 4.73% 5.09% 5.00% 4.55% 3.91% 3.93% 3.93% 4.06% 4.38% 4.49% 4.29% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 2015Y 2016Y 2017Y 2018Y 2019 2020Q1 2020Q2 Yield on Average Earning Assets EGBN Peer Group Yields and Cost of Funds 18 NOTE: Bank Holding Company Performance Report Peer Grou
Slide 19: Moderate Interest Rate Risk Position
Moderate Interest Rate Risk Position 19 • Both assets and liabilities remain short with repricing durations at 18 months on loans and 39 months on deposits • A 100 bps shock increase would increase Net Interest Income by about $7.0 million or 2.3% on a static balance sheet over a 12 month period (Do
Slide 20: Consistent Increases in Operating Leverage
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 Revenue ($000s) Non-Int Expense ($000s) Consistent Increases in Operating Leverage 20 NOTE: Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 37 - 41. Q4 2017 & Q1 2019 is shown o
Slide 21: Superior Efficiency Ratio
Superior Efficiency Ratio 21 NOTE: Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 billion and $10 b ill ion. 42% 40% 40% 37% 40% 44% 37% 65% 64% 62% 61% 62% 64% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1 2
Slide 22: Deposit Composition and Growth
Deposit Composition and Growth 22 • Commercial focus drives growth of Noninterest Bearing Demand accounts • Wholesale Deposits used to enhance cost of funds, not a strategy to replace growth in core deposits (1) Core deposits include CDAR’s and ICS reciprocal deposits. (Dollar Values in Thousands) D
Slide 23: Detail of Loan Portfolio
Detail of Loan Portfolio 23 • Concentration in quality markets: Washington, DC, Montgomery County, Fairfax County • Held for Sale residential mortgages not included NOTE : Data as of June 30, 2020 32.0% 45.8% 14.3% (Dollar Value in Thousands) County C&I Owner Occupied CRE Income Producing CRE CRE Br
Slide 24: Credit Quality Trends
Credit Quality Trends 24 (Dollar Values in Thousands) 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1 2020Q2 Nonperforming Assets: Accruing Loans 90 or More Days Past Due -$ -$ -$ -$ -$ -$ -$ Nonaccrual 13,239 17,875 13,238 16,277 48,730 47,737 58,962 Total Nonperforming Loans (NPLs) 13,239$ 17,875$ 13,238$ 16
Slide 25: Consistent Asset Quality
Consistent Asset Quality 25 Total Loans ($mms) Net Charge-Off History for the periods ended December 31, 2019 EGBN EGBN Loan Type 2 Year Avg. 3 Year Avg. Income Producing CRE 0.03% 0.03% Owner Occupied CRE 0.01% 0.01% Construction and Land 0.16% 0.16% Commercial & Industrial 0.20% 0.18% 0.0% 2.0% 4.
Slide 26: COVID - Higher Risk Portfolio Segments
COVID - 19 Higher Risk Portfolio Segments 26 Industry areas of potential concern within the Loan Portfolio as of June 30, 2020: Industry Principal Balance (millions) % of Loan Portfolio Accommodation & Food Service $841 10.5% Retail Trade $107 1.3% Collateral driven exposures on loans secured by com
Slide 27: Loan Modifications/Deferrals
Loan Modifications/Deferrals 27 • $1,437 million (87%) of the July 17 deferrals secured by RE, cash or marketable securities • COVID Task Force to manage modified loans created in June • Secondary deferrals generally require additional credit support (i.e. guarantor, collateral) • 65% of the $ 490 m
Slide 28: Strength in C&I Lending
Strength in C&I Lending 28 • At 23% of the Loan Portfolio, EagleBank has a much larger focus on C&I Lending than other local peer banks • C&I Loan Portfolio is predominantly variable rate loans • Owner Occupied Loans are key to small and mid - market relationships • DDA Operating Accounts of C&I rel
Slide 29: CRE Risk Management
CRE Risk Management 29 • 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 30: CRE Concentration
CRE Concentration 30 (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 CRE (excluding owner occupied) concentration as a percentage of EGBN consolidated r
Slide 31: ADC Concentration
ADC Concentration 31 (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. (Dolla
Slide 32: Capital Management
Capital Management 32 • 1,182,931 shares repurchased in 1st Quarter 2020; Capital impact ($44.1) million • Dividend of $0.22 per share declared in 2 nd , 3 rd & 4th Quarter of 2019 and 1 st & 2nd Quarter of 2020 • $150 million of 10 Year, 5 Year non - call, 5.00% Subordinated Notes sold in July 2016
Slide 33: Experienced Senior Management Team
Experienced Senior Management Team 33 Susan G. Riel CEO & President, Eagle Bancorp & EagleBank 44 years in banking 22 years with EGBN Antonio F. Marquez EVP, Eagle Bancorp; Senior EVP & President of Commercial Banking, EagleBank 35 years in banking 9 years with EGBN Charles D. Levingston EVP & Chief
Slide 34: Board Focused on Vision and Oversight
Board Focused on Vision and Oversight 34 Norman R. Pozez Executive Chair - Board of Directors 11 years with EGBN Kathy A. Raffa Director, Chair - Audit Committee 4 years with EGBN Leslie Ludwig Director, Chair - Compensation Committee 3 years with EGBN Theresa G. LaPlaca Lead Independent Director, C
Slide 35: Appendices
Appendices 35
Slide 36: Performance Statistics Summary
Performance Statistics Summary 36 NOTE: (1) Bank Holding Company Performance Report Peer Group represents companies with consolidated assets between $3 billion and $ 10 billion. (2) Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 37 - 41. * Data for 2017Y is sh
Slide 37: Non - GAAP Reconciliation
Non - GAAP Reconciliation 37 GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 Common shareholders' equity 1,184,594$ 1,190,681$ 1,162,778$ 1,187,895$ Less: Intangible assets (104,915) (104,739) (104,695) (1
Slide 38: Non - GAAP Reconciliation
Non - GAAP Reconciliation 38 * Data for 2017 is shown on an operating basis. GAAP Reconciliation (Unaudited) (dollars in thousands except per share data) December 31, 2015 December 31, 2016 December 31, 2017* December 31, 2018 December 31, 2019 Common shareholders' equity 738,601$ 842,799$ 965,026$
Slide 39: Non - GAAP Reconciliation
Non - GAAP Reconciliation 39 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 40: Non - GAAP Reconciliation
Non - GAAP Reconciliation 40 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 41: Non - GAAP Reconciliation
Non - GAAP Reconciliation 41 (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 42: Loan Portfolio and Growth
Loan Portfolio and Growth 42 (Dollar Values in Thousands) Annual Growth Rate Loan Type Balance % of Total Balance % of Total Balance % of Total % Commercial and Industrial 1,475,201$ 20.0% 1,545,906$ 20.5% 1,607,056$ 20.0% 8.9% Commercial Real Estate: Owner Occupied 970,850 13.1% 985,409 13.1% 964,0
Slide 43: Geographic Detail – Income Producing CRE
Geographic Detail – Income Producing CRE 43 • Focus in core sub - markets: Washington, DC, Montgomery County, Fairfax County NOTE: Data as of June 30, 2020 (Dollar Value in Thousands) Single Office/ Mixed Redevel./ Multi- & 1-4 County Condo Hotel Use Retail Family Industrial Single & 1-4 Family Othe
Slide 44: Geographic Detail – Construction
Geographic Detail – Construction 44 • 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 June 30, 2020 (Dollar Value in Thousands) Sin
Slide 45: Conservative Securities Portfolio
Conservative Securities Portfolio 45 • Portfolio has $21.9 million of net unrealized gains at June 30, 2020 • Average life of portfolio is 3 .1 years • Excludes Federal Reserve and Federal Home Loan Bank stock (Dollar Values in Thousands) June 30, 2020 Gross Gross Estimated Amrt. Cost Amortized Unre
Slide 46: Nationally Recognized Financial Performance
Nationally Recognized Financial Performance 46 • “Sm - All Stars” Designation 2011, 2013, 2014, 2015, 2016 & 2017 Independent Community Bankers of America • Member of KBW Bank Honor Roll 2010 - 2018 • Named as one of Top 100 Performing Community Banks 2018 • Community Bankers Cup Award 2012 - 2019
Slide 47: Highly Regarded by Bank Rating Firms
Highly Regarded by Bank Rating Firms 47 FIRM BANK RATING B AUER F INANCIAL , I NC A - 300/300 Green - ***
Slide 48: Experienced Management Team
Experienced Management Team 48 Susan G. Riel, Chief Executive Officer & President Eagle Bancorp & EagleBank Ms. Riel, President - Chief Executive Officer of the Bank and Bancorp, and formerly Chief Operating Officer. Ms. Riel has been w ith the bank for 20 years. She previously served as Executive V
Slide 49: Experienced Management Team
Experienced Management Team 49 Lindsey S. Rheaume , EVP, Chief C&I Lending Officer Mr. Rheaume joined EagleBank as Chief C&I Lending Officer in December 2014 and has over 33 years of commercial lending, credit risk and managerial experience in the financial industry. Most recently, he served as rela
Slide 50: Historical Balance Sheet
Historical Balance Sheet 50 * Data for 2017 is shown on an operating basis. (Dollar Values in Thousands) 2015Y 2016Y 2017Y* 2018Y 2019Y 5 Year Compound Growth Rate 2020YTD Assets Cash and Equivalents $298,363 $368,163 $190,473 $321,864 $241,973 (1.1%) $636,042 Securities Available for Sale 504,772 5
Slide 51: Historical Income Statement
Historical Income Statement 51 * Data for 2017 is shown on an adjusted basis. Please refer to the Non - GAAP reconciliation and footnotes in the appendices on pages 37 - 41. (Dollar Values in Thousands, except per share data) 2015Y 2016Y 2017Y* 2018Y 2019Y 5 Year Compound Growth Rate 2020YTD Total I
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