EGBN Eagle Bancorp Inc

BETHESDA, Md., Oct. 17 /PRNewswire-FirstCall/ -- Eagle Bancorp, Inc. (the Company) (NASDAQ:EGBN), the parent company of EagleBank, today announced net income of $5.9 million for the nine months ended September 30, 2006, compared to $5.5 million for the first nine months of 2005, an increase of 7%. On a per-share basis, the Company earned $0.62 per basic share and $0.60 per diluted share for 2006, as compared to $0.59 per basic share and $0.56 cents per diluted share for 2005. Per share earnings have been adjusted for a 1.3 for 1 share stock split in the form of a stock dividend paid on July 5, 2006. (Logo: http://www.newscom.com/cgi-bin/prnh/20050927/EAGLEBANKLOGO ) For the third quarter of 2006, the Company earned $1.9 million ($0.20 per basic share and $0.19 per diluted share), as compared to $2.3 million ($0.25 per basic share and $0.23 per diluted share) for the third quarter of 2005, a 16% decrease. Lower third quarter earnings in 2006 as compared to 2005, were primarily due to a decline in the net interest margin, increased loan credit provision associated with a specifically identified problem commercial relationship, and higher noninterest expenses associated primarily with additional personnel. "We are pleased to report increased earnings for Eagle Bancorp for the first nine months of 2006," noted Ronald D. Paul, President and CEO of Eagle Bancorp, Inc. "While balance sheet growth in the quarter ended September 30 has slowed from historical levels, and a challenging interest rate environment has resulted in a declining net interest margin, the core business of Eagle Bancorp remains strong. Also, in spite of increases in the level of loan credit provision, which was due to weakness in one significant borrowing relationship identified in the third quarter, overall asset quality remains strong. The Company continues to make investments in personnel, facilities and systems to support a growing organization, while managing its overall costs, as measured by the efficiency ratio, which while elevated, remains favorable to peer banking companies," added Mr. Paul. EagleBank's ninth community banking office in Chevy Chase, Maryland had its first full quarter of operations in the third quarter of 2006. For the nine months ended September 30, 2006, the Company reported an annualized return on average assets (ROAA) of 1.13% as compared to 1.23% for the first nine months of 2005; while the annualized return on average equity (ROAE) was 11.54%, as compared to 12.07% for the same period in 2005. While both loans and average deposits continued to grow in the third quarter of 2006, resulting in growth in net interest income, the deposit base in the first nine months of 2006 has shifted to more interest bearing deposits resulting in higher funding costs. For the first nine months of 2006, net interest income increased 15% over the same period for 2005 and for the three months ended September 30, 2006, net interest income increased 9% as compared to the third quarter of 2005. The net interest margin was 4.88% as compared to 5.01% for the first nine months in 2006 and was 4.81% for the third quarter of 2006. Non-interest income for the first nine months of 2006 was $2.9 million compared to $3.2 million in the first nine months of 2005, a decline of 8%. Excluding net securities gains of $85 thousand during the first nine months of 2006 and $281 thousand during the same period in 2005, noninterest income declined by 2% in the nine month period. The decline was attributed primarily to lower amounts of gains on the sale of SBA loans which amounted to $689 thousand for the first nine months in 2006 as compared to $730 thousand for the same period in 2005. Activity in SBA sales to secondary markets can vary widely from period to period. EagleBank has been recognized as the leading community bank SBA lender in its marketplace and continued emphasis in this business is anticipated. Non-interest income for both the third quarter of 2006 and 2005 was $1.2 million. Excluding net securities losses of $71 thousand during the third quarter of 2006 and $269 thousand of net investment gains during the third quarter in 2005, noninterest income was $1.3 million in 2006 as compared to $1.0 million in 2005, the increase due to higher amounts of SBA gains in the period. Investment securities sales are generally undertaken for asset liability management purposes to better position the portfolio for expected interest rates. Non-interest expenses were $16.1 million for the first nine months of 2006, as compared to $14.1 million for 2005, a 14% increase. The primary reasons for this increase were increases in staff levels, and related personnel cost increases, increased occupancy cost, due in part to new banking offices, and higher data processing costs, director fees, broker fees, software licensing fees and professional fees associated with a larger organization. The efficiency ratio, which measures the relationship of noninterest expenses to the sum of net interest income and noninterest income was 59.65% for the first nine months of 2006 as compared to 58.52% for the same period in 2005 and was 60.40% for the third quarter of 2006 as compared to 54.01% for the same period in 2005. These ratios increased due to both a decline in the net interest margin in 2006 as compared to 2005 and higher levels of noninterest expenses. Non-interest expenses were $5.7 million for the third quarter of 2006, as compared to $4.7 million for 2005, a 20% increase, due substantially to the same factors mentioned above for the nine month period. The Company recorded net charge-offs of $356 thousand for the first nine months of 2006 as compared to net charge-offs of $55 thousand for the first nine months of 2005. The ratio of non-performing loans to total loans was .34% at September 30, 2006 as compared to .04% at September 30, 2005 and .41% at June 30, 2006. The provision for credit loss was $1.4 million for the first nine months of 2006 as compared to $1.3 million for the same period in 2005, and was $711 thousand for the third quarter of 2006 as compared to $424 thousand for the third quarter of 2005. The increase in the provision in the third quarter of 2006 as compared to 2005 was due to the identification of a problem commercial loan relationship, where the Company believes collection in full is in doubt. At September 30, 2006, the allowance for credit losses represented 1.19% of loans outstanding, as compared to 1.09% at September 30, 2005, and 1.10% at June 30, 2006. At September 30, 2006, total assets were $727.4 million compared to $647.0 million at September 30, 2005, a 12% increase. Total deposits amounted to $588.2 million at September 30, 2006, an 8% increase over deposits of $545.6 million at September 30, 2005, while total loans increased to $591.2 million at September 30, 2006, from $504.3 million at September 30, 2005, a 17% increase. Deposits declined in the third quarter of 2006 due to a large short- term deposit that occurred late in June. For the third quarter of 2006, average deposits increased by about 1% from the second quarter of 2006. Eagle Bancorp paid a regular quarterly cash dividend in each quarter of 2006 and declared a 30% stock dividend in May 2006 which was paid on July 5, 2006. All per share amounts have been adjusted to give effect to this stock split in the form of a stock dividend. The Summary of Financial Information presented on the following pages provides more detail of the Company's performance for the nine and three months ended September 30, 2006 as compared to 2005. Persons wishing additional information should refer to the Company's Form 10K for the year ended December 31, 2005 filed with the Securities and Exchange Commission on March 16, 2006. Eagle Bancorp is the holding company for EagleBank which commenced operations in 1998. The Bank is headquartered in Bethesda, Maryland, and conducts full service commercial banking services thru nine offices, located in Montgomery County, Maryland and Washington, D.C. The Company focuses on building relationships with businesses, professionals and individuals in its marketplace. In July, the Company formed Eagle Commercial Ventures, LLC as a direct subsidiary to provide subordinate financing for the acquisition, development and construction of real estate projects, who's primary financing would be done by EagleBank. Forward looking Statements: This press release 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 regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company's market, interest rates and interest rate policy, competitive factors and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward- looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company's past results are not necessarily indicative of future performance. CONTACT: Ronald D. Paul, +1-301-986-1800 Eagle Bancorp, Inc Statement of Condition Highlights Sept. 30, Dec. 31, Sept. 30, (in thousands) 2006 2005 2005 Unaudited Audited Unaudited Assets Cash and due from banks $18,989 $16,662 $17,639 Interest bearing deposits with other banks and other short-term investments 3,833 11,231 12,015 Federal funds sold 3,953 6,103 30,051 Investment securities available for sale, at fair value 79,638 68,050 63,887 Loans held for sale 5,825 2,924 2,327 Loans 591,232 549,212 504,290 Less: allowance for credit losses (7,046) (5,985) (5,496) Premises and equipment, net 7,122 5,774 5,744 Accrued interest, taxes and other assets 23,821 18,281 16,562 Total Assets $727,367 $672,252 $647,019 Liabilities and Stockholders' Equity Non interest bearing deposits $143,963 $165,103 $140,554 Interest bearing deposits 444,224 403,790 405,008 Total deposits 588,187 568,893 545,562 Customer repurchase agreements and federal funds purchased 35,974 32,139 31,470 Other borrowings 25,000 - 4,000 Other liabilities 7,639 6,256 2,400 Total liabilities 656,800 607,288 583,432 Stockholders' equity 70,567 64,964 63,587 Total Liabilities and Stockholders' Equity $727,367 $672,252 $647,019 Eagle Bancorp, Inc. Statements of Income Highlights (in thousands, except per share data) Nine Months Ended Three Months Ended September 30, September 30, 2006 2005 2006 2005 (Unaudited)(Unaudited)(Unaudited)(Unaudited) Total interest income $36,470 $26,120 $13,033 $9,758 Total interest expense 12,414 5,184 4,818 2,242 Net interest income 24,056 20,936 8,215 7,516 Provision for credit losses 1,418 1,311 711 424 Net interest income after provision for credit losses 22,638 19,625 7,504 7,092 Noninterest income (before investment gains) 2,816 2,884 1,287 970 Investment gains (losses) 85 281 (71) 269 Total noninterest income 2,901 3,165 1,216 1,239 Salaries and employee benefits 9,053 7,695 3,104 2,461 Premises and equipment expenses 2,795 2,468 1,107 851 Advertising 366 344 102 137 Outside data processing 655 574 219 189 Other expenses 3,212 3,024 1,164 1,091 Total noninterest expense 16,081 14,105 5,696 4,729 Income before income tax expense 9,458 8,685 3,024 3,602 Income tax expense 3,585 3,206 1,124 1,332 Net income $5,873 $5,479 $1,900 $2,270 Per Share Data: Earnings per share, basic (1) $0.62 $0.59 $0.20 $0.25 Earnings per share, diluted (1) $0.60 $0.56 $0.19 $0.23 Shares outstanding at period end 9,425,733 7,174,343 9,425,733 7,174,343 Weighted average shares outstanding, basic (1) 9,423,239 9,221,532 9,423,947 9,221,532 Weighted average shares outstanding, diluted (1) 9,853,794 9,795,245 9,869,514 9,795,245 Book value per share at period end (1) $7.49 $6.82 $7.49 $6.82 (1) All periods adjusted to give retroactive effect to the 1.3 to 1 stock split in the form of a 30% stock dividend paid on July 5, 2006 Eagle Bancorp, Inc. Performance Ratios (annualized): Return on average assets 1.13% 1.23% 1.05% n/a Return on average equity 11.54% 12.07% 10.84% n/a Net interest margin 4.88% 5.01% 4.81% n/a Efficiency ratio (2) 59.65% 58.52% 60.40% 54.01% Other Ratios: Allowance for credit losses to total loans 1.19% 1.09% 1.19% 1.09% Non performing loans to total loans 0.34% 0.04% 0.34% 0.04% Net charge-offs (annualized) to average loans 0.08% -0.01% -0.02% n/a Average equity to average assets 9.75% 10.22% 9.69% n/a Tier 1 leverage ratio 11.03% 10.18% 11.03% 10.18% Total risk based capital ratio 12.12% 12.57% 12.12% 12.57% Average Balances: Total assets $697,549 $593,496 $717,481 n/a Total earning assets $659,582 $558,956 $678,225 n/a Total loans (3) $565,380 $463,576 $581,874 n/a Total deposits $575,071 $495,318 $589,597 n/a Total stockholders' equity $68,026 $60,668 $69,537 n/a (2) Computed by dividing noninterest expense by the sum of net interest income and noninterest income (3) Includes loans held for sale http://www.newscom.com/cgi-bin/prnh/20050927/EAGLEBANKLOGO http://photoarchive.ap.org/ DATASOURCE: Eagle Bancorp, Inc. CONTACT: Ronald D. Paul of Eagle Bancorp, Inc., +1-301-986-1800 Web site: http://www.eaglebankmd.com/

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