UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-25923
EAGLE BANCORP, INC
(Exact name of registrant as specified in its charter)
Maryland 52-2061461
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7815 Woodmont Avenue, Bethesda, Maryland 20814
(Address of principal executive offices) (Zip Code)
(301) 986-1800
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
As of May 9, 2000, the registrant had 2,062,474 shares of Common Stock
outstanding.
<PAGE>
Part I
Item 1 - Financial Statements
EAGLE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2000 AND DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -----------------
<S> <C> <C>
Cash and due from banks $ 5,529,797 $ 3,831,763
Federal funds sold 1,181,641 6,099,872
Investment securities available for sale 42,986,951 36,598,346
Loans (net of allowance for credit losses of
$702,037 and $579,037) 72,358,625 63,276,158
Premises and equipment, net 2,625,513 2,684,605
Other assets 862,752 727,575
----------------- -----------------
TOTAL ASSETS $ 125,545,279 $ 113,218,319
----------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 18,686,276 $ 16,240,731
Interest-bearing transaction accounts 15,128,265 11,990,458
Savings and money market 36,745,518 40,252,998
Time, $100,000 or more 22,003,210 13,094,189
Other time 10,336,520 9,412,671
----------------- -----------------
Total deposits 102,899,789 90,991,047
Customer repurchase agreements 8,395,148 7,982,910
Other borrowings 100,000 275,000
Other liabilities 348,473 294,543
----------------- -----------------
Total liabilities 111,743,410 99,543,500
----------------- -----------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 5,000,000
authorized, 2,062,474 and 1,650,000 issued and
outstanding 20,625 16,500
Surplus 16,479,375 16,483,500
Accumulated deficit (2,284,915) (2,412,453)
Accumulated other comprehensive income (loss) (413,216) (412,728)
----------------- -----------------
Total stockholders' equity 13,801,869 13,674,819
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 125,545,279 $ 113,218,319
----------------- -----------------
See notes to consolidated financial statements
</TABLE>
2
<PAGE>
EAGLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 and 1999
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
----------------- ------------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 1,442,007 468,296
Taxable interest and dividends on investment securities 548,478 378,960
Interest on federal funds and securities
purchased under Agreement to resell 108,664 74,927
----------------- ------------------
Total interest income 2,099,149 922,183
----------------- ------------------
INTEREST EXPENSE:
Interest on deposits 755,299 360,216
Interest on customer repurchase agreements 100,832 32,888
Interest on short-term borrowings 730 1,177
----------------- ------------------
Total interest expense 856,861 394,281
----------------- ------------------
NET INTEREST INCOME 1,242,288 527,902
PROVISION FOR CREDIT LOSSES 123,000 66,000
----------------- ------------------
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES 1,119,288 461,902
----------------- ------------------
NONINTEREST INCOME:
Service charges on deposit accounts 44,935 23,303
Other income 30,822 12,317
----------------- ------------------
Total noninterest income 75,757 35,620
----------------- ------------------
NONINTEREST EXPENSES:
Salaries and employee benefits 586,996 475,172
Premises and equipment expenses 196,622 162,566
Advertising 20,396 25,059
Insurance 16,895 23,584
Outside data processing 46,970 24,537
Other expenses 199,628 148,223
----------------- ------------------
Total noninterest expenses 1,067,507 859,141
----------------- ------------------
NET INCOME (LOSS) BEFORE INCOME TAX BENEFIT 127,538 (361,619)
INCOME TAX BENEFIT - -
----------------- ------------------
NET INCOME (LOSS) $ 127,538 $ (361,619)
----------------- ------------------
INCOME (LOSS) PER SHARE:
Basic $ 0.06 $ (0.18)
Diluted $ 0.06 $ (0.18)
See notes to consolidated financial statements
</TABLE>
3
<PAGE>
EAGLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 and 1999
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES: March 31, 2000 March 31, 1999
----------------- -----------------
<S> <C> <C>
Net income (loss) $ 127,538 (361,619)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Provision for credit losses 123,000 66,000
Depreciation and amortization 79,515 68,269
- -
Increase in other assets (135,177) (96,421)
Increase in other liabilities 53,930 48,314
----------------- -----------------
Net cash (used) by operating activities 248,806 (275,457)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale investment securities (23,417,077) (37,636,052)
Proceeds from maturities of available for sale securities 17,027,984 33,421,202
Decrease (increase) in federal funds sold 4,918,231 (2,014,482)
Net increase in loans (9,205,467) (7,222,455)
Bank premises and equipment acquired (20,423) (249,877)
----------------- -----------------
Net cash used by investing activities (10,696,752) (13,701,664)
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deposits 11,908,742 8,955,669
Increase in customer repurchase agreements 412,238 5,339,359
Decrease in other borrowings (175,000) -
----------------- -----------------
Net cash provided by financing activities 12,145,980 14,295,028
----------------- -----------------
NET INCREASE IN CASH 1,698,034 317,907
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD 3,831,763 1,292,006
----------------- -----------------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 5,529,797 $ 1,609,913
----------------- -----------------
See notes to consolidated financial statements
</TABLE>
4
<PAGE>
EAGLE BANCORP, INC
Consolidated Statements Of Changes In Stockholders' Equity For The Three Months
Ending March 31, 2000 and 1999
<TABLE>
<CAPTION>
Accumulated
Other Total
Common Accumulated Comprehensive Stockholders'
Stock Surplus Deficit Income Equity
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1999 $ 16,500 $ 16,483,500 $ (1,561,660) $ 11,155 $14,949,495
Net Loss (361,619) (361,619)
Other comprehensive income-unrealized
loss on investment securities
available for sale (72,071) (72,071)
-------------
Total other comprehensive loss (433,690)
----------------------------------------------------------------------
Balances at March 31, 1999 $ 16,500 $ 16,483,500 $ (1,923,279) $(60,916) $13,782,491
======================================================================
Balances at January 1, 2000 $ 16,500 $ 16,483,500 $ (2,412,453) $(412,728) $13,674,819
-------------
Net income 127,538 127,538
Other comprehensive income - unrealized
loss on investment securities
available for sale (488) (488)
-------------
Total other comprehensive income 127,050
Five for four stock split in the
form of a 25% stock dividend 4,125 (4,125)
----------------------------------------------------------------------
Balances at March 31, 2000 $ 20,625 $ 16,479,375 $ (2,284,915) $(413,216) $13,801,869
======================================================================
</TABLE>
5
<PAGE>
EAGLE BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
General - The financial statements of Eagle Bancorp, Inc. (the "Company")
included herein are unaudited; however, they reflect all adjustments
consisting only of normal recurring accruals that, in the opinion of
Management, are necessary to present fairly the results for the periods
presented. Certain information and note disclosures normally included in
financial statements prepared in accordance with Generally Accepted
Accounting Principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission. The Company
believes that the disclosures are adequate to make the information
presented not misleading. The results of operation for the three months
ended March 31, 2000 are not necessarily indicative of the results of
operations to be expected for the remainder of the year.
2. NATURE OF BUSINESS
The Company, through its bank subsidiary, provides domestic financial
services primarily in Montgomery County, Maryland. The primary financial
services include real estate, commercial and consumer lending, as well as
traditional demand deposits and savings products.
3. INCOME TAXES
The Company uses the liability method of accounting for income taxes as
required by SFAS No. 109, "Accounting for Income Taxes." Under the
liability method, deferred-tax assets and liabilities are determined based
on differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities (i.e., temporary differences) and
are measured at the enacted rates that will be in effect when these
differences reverse. Deferred income taxes will be recognized when it is
deemed more likely than not that the benefits of such deferred income taxes
will be realized; accordingly, no deferred income taxes or income tax
benefits have been recorded by the Company.
4. EARNINGS
Earnings per common share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding during the period.
Diluted net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding
during the period, including any potential dilutive common shares
outstanding, such as options and warrants.
Basic and diluted earnings per share are the same for the three months
ended March 31, 2000 and March 31, 1999 because the inclusion of any stock
equivalents would have been antidilutive. Earnings per share have been
stated to reflect a 25% stock dividend paid March 31, 2000.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This discussion and analysis provides an overview of the financial
condition and results of operations of Eagle Bancorp, Inc. ("Company") and
EagleBank ("Bank") for the three months ended March 31, 2000 and March 31,
1999.
Forward Looking Statements. This discussion contains forward looking
statements within the meaning of the Securities 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. 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
statement. The Company does not undertake to update any forward looking
statement to reflect occurrences or events which may not have been
anticipated as of the date of such statements.
GENERAL
Eagle Bancorp, Inc. was incorporated under the general corporation laws of
the State of Maryland, on October 28, 1997, and is headquartered in
Bethesda, Maryland. The Company was formed to be the registered bank
holding company for EagleBank, its Maryland chartered commercial bank
subsidiary.
On July 20, 1998, having received the required approvals from the State of
Maryland and Federal Reserve System and been accepted for deposit insurance
by the FDIC, EagleBank opened its first office in Rockville, Maryland and
the Company became a bank holding company. The Company initially
capitalized the Bank with $7.75 million. Since its opening, the Bank has
established two branches in Silver Spring and its main office in Bethesda.
Through March 31, 2000, the Company had made total capital contributions to
the Bank of $12.75 million. The Company monitors the Bank's growth and
plans to make additional contributions to the Bank's capital at such times
as it deems necessary in order to maintain the Bank's capital at
appropriate levels. These contributions are from proceeds of the Company's
original offering which have been retained at the Company. In view of
strong growth at the Bank, discussed in this analysis, the Company made a
capital contribution in March sufficient to allow the Bank to maintain
adequate capital levels and to accommodate reasonable levels of anticipated
further growth.
FINANCIAL CONDITION
As of March 31, 2000, assets were $125.5 million and deposits and customer
repurchase agreements were $111.3 million, an increase from year end 1999
of 10.9% and 12.4% respectively. Management is pleased with the growth
experienced during the three months and the fact that it represents core
growth from a cross section of businesses targeted by the Bank.
Loans increased $9.2 million for the three months as compared to year end
1999. This represents an increase of 14.4% in the first quarter. Management
is pleased with the continued growth in the loan portfolio and the quality
of loans it has been able to consider.
At March 31, 2000, the Company had borrowings of $100 thousand. These
borrowings were of a short term nature and were for the purpose of funding
loan participations with the Bank. The Company anticipates the use of short
term borrowing for funds management purposes as it assists the Bank with
its growth plans.
7
<PAGE>
RESULTS OF OPERATIONS
On a consolidated basis the Company recorded net income of $127,538 for the
three months ended March 31, 2000, as compared to a loss of $361,619 for
the three months ended March 31, 1999. The income reported for the quarter
is the first quarterly consolidated income for the Company and represents
income of $0.06 per share as compared to a loss of $0.18 for the first
quarter of 1999. The reported income for the quarter ending is the direct
result of earning asset growth producing interest spreads and margins
sufficient to exceed the operating costs of the Company. On a month to
month basis December 1999 was the first profitable month and those results
increased each following month through the first quarter.
As noted above, the Company ended the three months with deposits and
customer repurchase agreements at $111.3 million and increased lending
activity resulted in a net increase in loans, from year end, of $9.2
million. The loan growth in the first quarter continued to reflect
management's commitment to maintain a high quality portfolio which returns
reasonable market rates. Growth in both deposits and loans were consistent
with management's expectations, however, management notes increasing
competition for both deposits and loans.
The Company and Bank plan to maintain the allowance for credit losses at an
adequate level and ended the quarter with an allowance of 1.00% of its
outstanding loans adjusted for cash and marketable securities secured
loans. The Bank has adopted a loan allowance analysis process which it
employs to assist in establishing the level of the allowance.
It was expected that the Bank would sustain losses during its start up
period and not show an operating profit for any month for at least eighteen
months after opening for business. Management is pleased that this report
reflects profitability on target with its original projections.
NET INTEREST INCOME
Net interest income is the difference between income on assets and the cost
of funds supporting those assets. Earning assets are composed primarily of
loans and investments; interest bearing deposits and customer repurchase
agreements and other borrowings make up the cost of funds. Noninterest
bearing deposits and capital are other components representing funding
sources. Changes in the volume and mix of assets and funding sources along
with the changes in yields earned and rates paid, determine changes in net
interest income.
The net interest income for the three months ended March 31, 2000, was
$1,242,288, as compared to $527,902 for the period ended March 31, 1999.
This improvement is a result of the growth in earning assets and to a much
lesser degree the increase in interest rates initiated by the Federal
Reserve. Total interest income for the period ended March 31, 2000, was
$2,099,199 compared to $922,183, for the period ended March 31, 1999.
Total interest expense was $856,861 for the three months ended March 31,
2000 and $394,281 for the three months ended March 31, 1999. The increase,
as with the increase in interest income, reflects an increase in volume,
the growth of interest bearing deposits and customer repurchase agreements,
and to a much lesser degree interest rates paid on deposits.
ALLOWANCE AND PROVISION FOR CREDIT LOSSES
The provision for credit losses represents the expense recognized to fund
the allowance for credit losses. This amount is based on many factors which
reflect management's assessment of the risk in its loan portfolio. Those
factors include economic conditions and trends, the value and adequacy of
collateral, volume and mix of the portfolio, performance of the portfolio,
internal loan processes and capital adequacy of the Company and Bank.
At March 31, 2000, the allowance for credit losses was 1.00% of outstanding
loans excluding loans secured by cash and/or readily marketable securities.
The allowance has been established based principally on current economic
conditions, perceived asset quality, the Company's capital position,
results of external loan reviews and the Bank's internal allowance analysis
process. Given these considerations the allowance is believed to be
adequate. At March 31, there were no loans past due more than thirty days
and no debt had been restructured. For the three months ended March 31,
2000, the Company made a provision for possible credit losses of $123,000.
8
<PAGE>
NONINTEREST INCOME
Noninterest income primarily represents deposit account service charges and
fees and noninterest loan fees. For the three months ended March 31, 2000
noninterest income amounted to $75,757, as compared to $35,620 for the
period ended March 31, 1999 the increase is reflective of the overall
growth of the Bank and its customer base. Management is continually seeking
sources of noninterest income and in late 1999 established a residential
construction/permanent loan function which will generate fees, in addition
to interest, as loans are sold.
EagleCapital a division of the Bank has been formed to refer commercial
real estate loans beyond the abilities of the Bank, to brokers for a fee.
This activity is expected to add to noninterest income in the future.
NONINTEREST EXPENSE
Noninterest expense was $1,067,507 for the three month period ended March
31, 2000 compared to $859,141 for the period ended March 31, 1999. The
relative increase of 24% form the first quarter of 1999 to the first
quarter of 2000 reflects a stability in noninterest expense when compared
to the increase in income. This stability contributed to the quarter's
profit. Management has made a concentrated effort to budget and monitor
noninterest expenses and believes it has established practices to control
these expenses while meeting the requirements of an aggressively growing
bank.
9
<PAGE>
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
Use of Proceeds. On February 9, 1998, the Company's registration
statement on Form SB-2 (No. 333-42083) relating to its initial offering of
common stock, $.01 par value, were declared effective by the Securities and
Exchange Commission, and the offering commenced, on May 13, 1999, the Company's
registration statement on Form SB-2 (No. 333-51197), registering an additioal
270,000 shares, was declared effective. On June 22, 1998, the offering was
terminated. All of the 1,650,000 shares being offered having been sold at the
offering price of $10.00 per share. Aggregate expenses of the offering were
$100,413, resulting in net proceeds of the offering of $16,399,587. No person or
entity underwrote the Company's offering, which was made through the efforts of
the Company's organizing directors and executive officers, with the limited
assistance of Koonce Securities, Inc. in order to comply with the securities
laws of certain of the states in which the shares were offered. Koonce received
a fee of $10,000 for its services in connection with the offering, and
reimbursement of $1,280 in out of pocket expenses.
During the Company's organizational period, certain directors of the
Company made advances to the Company which were repaid from the proceeds of the
offering, with an aggregate of $5,010 in interest, representing interest at the
price rate, as adjusted on a monthly basis. A portion of the loans were
converted, without interest, into payment for subscriptions for common stock in
the offering.
An aggregate of $12,750,000 has been contributed through March 31, 2000
to the capital of the Bank for use in its lending and investment activities. An
aggregate of $3,054,000 has been expended by the Bank in renovation,
construction and equipping of its main offices and three branch offices.
$561,000 of the funds retained by the Company have been used for the purchase of
loan participations from the Bank. The remaining proceeds of the offering
retained by the Company are held in temporary investments pending contribution
to the Bank.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(11) Statement Re: Computation of Per Share Earnings
(21) Subsidiaries of the Registrant
The only subsidiary of the registrant is EagleBank, a
Maryland chartered commercial banking company.
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
10
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
(11) Statement Re: Computation of Per Share Earnings
(21) Subsidiaries of the Registrant
The only subsidiary of the registrant is EagleBank, a
Maryland chartered commercial banking company.
(27) Financial Data Schedule
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE BANCORP, INC.
Date: May 10, 2000 By: /s/ Ronald D. Paul
--------------------------------------------
Ronald D. Paul, President
Date: May 10, 2000 By: /s/ Wilmer L. Tinley
--------------------------------------------
Wilmer L. Tinley, Senior Vice President, CFO
12
Exhibit 11
Statement of Computation of Per Share Earnings
Set forth below are the bases for the computation of earnings per share
for the periods shown.
Three Months Ended March 31,
------------------------------------
Earnings (loss) Per Common Share 2000 1999
Basic $0.06 $(0.18)
Average Shares Outstanding 2,062,474 2,062,474
Diluted $0.06 $(0.18)
Average Shares Outstanding 2,075,342 2,062,474
13
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001050441
<NAME> Eagle Bancorp, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,530
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,182
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,987
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 73,061
<ALLOWANCE> 702
<TOTAL-ASSETS> 125,545
<DEPOSITS> 102,900
<SHORT-TERM> 8,495
<LIABILITIES-OTHER> 348
<LONG-TERM> 0
<COMMON> 21
0
0
<OTHER-SE> 13,781
<TOTAL-LIABILITIES-AND-EQUITY> 125,545
<INTEREST-LOAN> 1,442
<INTEREST-INVEST> 548
<INTEREST-OTHER> 109
<INTEREST-TOTAL> 2,099
<INTEREST-DEPOSIT> 755
<INTEREST-EXPENSE> 102
<INTEREST-INCOME-NET> 1,242
<LOAN-LOSSES> 123
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,068
<INCOME-PRETAX> 127
<INCOME-PRE-EXTRAORDINARY> 127
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 127
<EPS-BASIC> 0.06
<EPS-DILUTED> 0.06
<YIELD-ACTUAL> 7.70
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 579
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 702
<ALLOWANCE-DOMESTIC> 702
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 702
</TABLE>
