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 September 30, 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 November 9, 2000, the registrant had 2,062,474 shares of Common
Stock outstanding.
<PAGE>
Item 1 - Financial Statements
EAGLE BANCORP, INC.
CONSOLIDTED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 7,459,576 $ 3,831,763
Interest bearing deposits with other banks 200,000 --
Federal funds sold 1,697,926 6,099,872
Investment securities available for sale 40,051,396 36,598,346
Loans (net of allowance for credit losses of
$910,537 and $579,037) 94,122,424 63,276,158
Premises and equipment, net 2,643,925 2,684,605
Other assets 1,478,299 727,575
------------- -------------
TOTAL ASSETS $ 147,653,546 $ 113,218,319
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 21,911,203 $ 16,240,731
Interest-bearing transaction accounts 17,356,921 11,990,458
Savings and money market 42,624,651 40,252,998
Time, $100,000 or more 26,123,739 13,094,189
Other time 12,354,030 9,412,671
------------- -------------
Total deposits 120,370,544 90,991,047
Customer repurchase agreements 7,005,136 7,982,910
Other short term borrowings 5,000,000 275,000
Other liabilities 439,747 294,543
------------- -------------
Total liabilities 132,815,427 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 (1,617,255) (2,412,453)
Accumulated other comprehensive income (loss) (44,626) (412,728)
------------- -------------
Total stockholders' equity 14,838,119 13,674,819
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 147,653,546 $ 113,218,319
============= =============
</TABLE>
See notes to consolidated financial statements
2
<PAGE>
EAGLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 2000 and 1999
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $5,264,564 $ 2,149,326 $2,035,198 $ 978,295
Taxable interest and dividends on
investment securities 1,846,955 1,073,555 672,796 341,998
Interest on federal funds and securities
purchased under Agreement to resell 223,070 174,714 39,895 30,090
---------- ----------- ---------- -----------
Total interest income 7,334,589 3,397,595 2,747,889 1,350,383
---------- ----------- ---------- -----------
INTEREST EXPENSE:
Interest on deposits 2,794,153 1,132,319 1,091,490 409,524
Interest on customer repurchase agreements 253,708 170,226 70,730 69,338
Interest on short-term borrowings 59,431 11,609 57,429 19,933
---------- ----------- ---------- -----------
Total interest expense 3,107,292 1,314,154 1,219,649 498,795
---------- ----------- ---------- -----------
NET INTEREST INCOME 4,227,297 2,083,441 1,528,240 851,588
PROVISION FOR CREDIT LOSSES 331,500 325,700 104,000 139,000
---------- ----------- ---------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
CREDIT LOSSES 3,895,797 1,757,741 1,424,240 712,588
---------- ----------- ---------- -----------
NONINTEREST INCOME:
Service charges on deposit accounts 249,706 91,584 100,929 34,359
Other income 65,228 47,015 21,018 22,142
---------- ----------- ---------- -----------
Total noninterest income 314,934 138,599 121,947 56,501
---------- ----------- ---------- -----------
NONINTEREST EXPENSES:
Salaries and employee benefits 1,733,972 1,452,961 580,023 500,937
Premises and equipment expenses 652,520 538,273 233,662 192,715
Advertising 70,026 72,849 26,262 23,779
Office supplies 61,813 46,358 21,729 15,145
Outside data processing 179,898 106,988 67,212 44,725
Loss on sale of investment securities 65,632 4,489 -- 4,489
Other expenses 651,672 506,316 229,760 158,838
---------- ----------- ---------- -----------
Total noninterest expenses 3,415,533 2,728,234 1,158,648 940,628
---------- ----------- ---------- -----------
NET INCOME (LOSS) BEFORE INCOME TAX BENEFIT 795,198 (831,894) 387,539 (171,539)
INCOME TAX BENEFIT -- -- -- --
---------- ----------- ---------- -----------
NET INCOME (LOSS) $ 795,198 $ (831,894) $ 387,539 $ (171,539)
========== =========== ========== ===========
NET INCOME (LOSS) PER SHARE:
Basic $ 0.39 $ (0.40) $ 0.19 $ (0.08)
Diluted $ 0.39 $ (0.40) $ 0.19 $ (0.08)
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
EAGLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 and 1999
<TABLE>
<CAPTION>
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 795,198 (831,894)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Provision for credit losses 331,500 325,700
Depreciation and amortization 250,244 210,437
Loss on sale of investment securities 65,632 4,489
Increase in other assets (750,724) (272,794)
Increase in other liabilities 145,204 84,883
------------ ------------
Net cash provided (used) by operating activities 837,054 (479,179)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in interest bearing deposits with other banks $ (200,000) --
Purchases of available for sale investment securities (47,416,090) (41,643,226)
Proceeds from maturities of available for sale securities 39,331,143 39,618,392
Proceeds from sale of available for sale securities 4,934,367
Decrease in fereal funds sold 4,401,946 4,314,549
Net increase in loans (31,177,766) (36,593,234)
Bank premises and equipment acquired (209,564) (530,226)
------------ ------------
Net cash used by investing activities (30,335,964) (34,833,745)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deposits 29,379,497 31,330,496
(Decrease) increase in customer repurchase agreements (977,774) 6,363,449
Increase in and other short term borrowings 4,725,000 1,700,000
------------ ------------
Net cash provided by financing activities 33,126,723 39,393,945
------------ ------------
NET INCREASE IN CASH 3,627,813 4,081,021
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD 3,831,763 1,292,006
------------ ------------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 7,459,576 $ 5,373,027
============ ============
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
EAGLE BANCORP, INC
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS
ENDING SEPTEMBER 30, 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 (831,894) (831,894)
Other comprehensive income-
Unrealized loss on investment
Securities available for sale (335,110) (335,110)
-----------
Total comprehensive loss (1,167,004)
------------------------------------------------------------------------------
Balances at September 30, 1999 $ 16,500 $ 16,483,500 $(2,393,554) $(323,955) $13,782,491
------------------------------------------------------------------------------
Balances at January 1, 2000 $ 16,500 $ 16,483,500 $(2,412,453) $(412,728) $13,674,819
-----------
Net Income 795,198 795,198
Other comprehensive income-
Unrealized Gain on investment securities
available for sale 368,102 368,102
-----------
Total comprehensive income 1,163,300
Five for four stock split effected
in the Form of a 25% stock dividend 4,125 (4,125)
------------------------------------------------------------------------------
Balances at September 30, 2000 $ 20,625 $ 16,479,375 $(1,617,255) $ (44,626) $14,838,119
------------------------------------------------------------------------------
</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 nine months ended September 30, 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. INVESTMENT SECURITIES
Amortized cost and estimated market value of securities available - for
- sale are summarized as follows:
<TABLE>
<CAPTION>
September 30, 2000
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- --------- ------------ -----------
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 1,499,745 $ -- $ (2,085) $ 1,497,660
U. S. Government Agency securities 37,696,280 156,534 (204,657) 37,648,157
Federal Reserve Bank and
Federal Home Loan Bank stock 627,200 627,200
Other equity investments 272,797 41,612 (36,030) 278,379
----------- --------- ------------ -----------
$40,096,022 $ 198,146 $ (242,772) $40,051,396
=========== ========= ============ ===========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- --------- ------------ -----------
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 1,498,308 $ -- $ (3,933) $ 1,494,375
U. S. Government Agency securities 34,970,060 -- (403,304) 34,566,756
Federal Reserve Bank stock 271,100 -- -- 271,100
Other equity investments 271,606 43,546 (49,037) 266,115
----------- --------- ------------ -----------
$37,011,074 $ 43,546 $ (456,274) $36,598,346
=========== ========= ============ ===========
</TABLE>
6
<PAGE>
4. 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 bases 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.
5. EARNINGS
Earnings per common share are 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. Earnings per
share have been restated to reflect a 25% stock dividend distributed
March 31, 2000.
7
<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 nine months ended September 30, 2000 and
September 30, 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, beliefs 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. The Bank has applied for, and is awaiting final
approval of, a new office to be located at 20th and K Streets in
Washington, DC. Current plans call for the opening of this office to be
in early spring of 2001.
At September 30, 2000, the Company had made total capital contributions
to the Bank of $14.75 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 June sufficient to
allow the Bank to maintain adequate capital levels and to accommodate
reasonable levels of anticipated further growth.
FINANCIAL CONDITION
As of September 30, 2000, assets were $147.7 million and deposits and
customer repurchase agreements were $127.4 million, an increase from
year end 1999 of 30.4% and 28.7% respectively. Management is pleased
with the growth experienced during the nine months and the fact that it
represents core growth from a cross section of businesses targeted by
the Bank. While the Bank does not rely on or solicit brokered deposits,
regulatory rules require that $15 million of deposits at September 30,
2000 and $15 million of deposits at December 31, 1999 be classified as
brokered deposits. The source of these funds is a customer well known
to the Bank and management considers the relationship to be a core
deposit relationship.
Loans increased $31.2 million for the nine months as compared to year
end 1999. This represents an increase of 48.8% for the period.
Management is pleased with the continued growth in the loan portfolio
and the quality of loans it has been able to consider.
At September 30, 2000, the Bank had a Federal Home Loan Bank advance of
$5 million, secured by US government agency securities, in addition to
$7 million in customer repurchase agreements. The Federal Home
8
<PAGE>
Loan Bank advance was consistent with the Bank's funds management
policy and was for short term funding of loans originated by the Bank.
The Bank anticipates the use of Federal Home Loan Bank advances,
federal funds purchased and reverse repurchase agreements for funds
management purposes in addition to the sales of securities from the
investment portfolio.
RESULTS OF OPERATIONS
On a consolidated basis the Company recorded net income of $795,198 for
the nine months ended September 30, 2000, as compared to a loss of
$831,894 for the nine months ended September 30, 1999. The income for
the quarter ended September 30, 2000 was $387,539, as compared to a
loss of $171,539 for the quarter ended September 30, 1999. Per share
income was $0.39 for the nine months and $0.19 for the quarter ended
September 30, 2000 as compared to per share losses of $0.40 for the
nine months ended September 30,1999 and $0.08 for the quarter ended
September 30,1999. The reported income for the nine months is the
direct result of strong deposit and loan growth and careful management
of the Bank's cost of funds.
As noted above, the Company ended the nine months with deposits and
customer repurchase agreements at $127.4 million and increased lending
activity resulted in a net increase in loans, from year end, of $31.2
million. Management believes that the loan growth in the first nine
months continued to reflect its 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 nine months with an allowance of
.99% 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.
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 nine months ended September 30, 2000,
was $4,227,297, as compared to $2,083,441 for the period ended
September 30, 1999. This improvement is a result of the 86% overall
growth in average earning assets, including a 131% increase in average
loans, and to a lesser degree the increase in interest rates initiated
by the Federal Reserve. Also, during the nine months ended September
30, 2000, average loans increased to 63.3% of average earning assets,
as compared to 50.9% during the comparable period in 1999. Total
interest income for the period ended September 30, 2000, was $7,334,589
compared to $3,397,595 for the period ended September 30, 1999. This
was principally as a result of the increased levels of average earning
assets, and the 111 basis point increase in the average rate on
interest earning assets, compared to the same period in 1999.
Total interest expense was $3,107,292 for the nine months ended
September 30, 2000 and $1,314,154 for the nine months ended September
30, 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 lesser degree interest
rates paid on deposits.
The following average balance, interest yields and rates, and net
interest margin table, reflects the improvement
9
<PAGE>
in spreads and margin, from the first nine months of 1999 to the first
nine months of 2000, as they were impacted by the growth in earning
assets and the change in mix from investments to loans.
AVERAGE BALANCES, INTEREST YIELDS, AND RATES, AND NET INTEREST MARGIN
NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
2000 1999
---- ----
Average Average Average Average
Balance Interest Yield/Rate Balance Interest Yield/Rate
------------ ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest earnings assets:
Loans $ 77,281,188 $ 5,264,564 9.10% $33,374,004 $2,149,326 8.60%
Investment securities 39,764,469 1,846,955 6.20% 27,304,954 1,073,555 5.25%
Federal funds sold
and other interest 4,967,974 223,070 6.00% 4,901,937 174,714 4.76%
------------ ----------- ----------- ----------
Total interest earning assets 122,013,631 7,334,589 8.03% 65,580,895 3,397,595 6.92%
------------ ----------- ----------- ----------
Total noninterest earning assets 8,232,564 5,763,572
Less: allowance for credit losses 729,181 285,732
------------ -----------
Total noninterest earning assets 7,503,383 5,477,840
------------ -----------
TOTAL ASSETS $129,517,014 $71,058,735
------------ -----------
LIABILITIES AND STOCKHOLDERS'EQUITY
Interest bearing liabilities:
NOW accounts 14,586,004 205,687 1.88% 8,659,112 105,636 1.63%
Savings and money market accounts 38,655,254 1,255,301 4.34% 19,200,072 543,387 3.78%
Certificates of deposit 33,443,784 1,333,135 5.32% 13,908,828 483,296 4.64%
Customer repurchase agreements 8,326,514 253,708 4.07% 5,611,767 170,226 4.05%
Short term borrowings 1,206,569 59,461 6.58% 326,868 11,609 4.74%
------------ ----------- ----------- ----------
Total ineterest bearing liabilities 96,218,125 3,107,292 4.31% 47,706,647 1,314,154 3.68%
------------ ----------- ----------- ----------
Non interest bearing liabilities:
Non interest bearing deposits 18,754,812 8,804,005
Other liabilities 512,206 265,549
------------ -----------
Total non interest bearing liabilities 19,267,018 9,069,554
-----------
Stockholders equity 14,031,871 14,282,534
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $129,517,014 $71,058,735
------------ -----------
Net interest income $ 4,227,297 $2,083,441
----------- ----------
Net interest spread 3.72% 3.24%
Net interest margin 4.63% 4.26%
</TABLE>
10
<PAGE>
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 and internal loan processes.
At September 30, 2000, the allowance for credit losses was .99% 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,
results of external loan reviews and the Bank's internal allowance
analysis process which includes analysis of peer group loss experience.
Given these considerations the allowance is believed to be adequate. At
September 30, there was one consumer loan past due more than thirty
days in the amount of $3,000 and one consumer loan placed on non
accrual in the amount of $2,000, no debt has been restructured. For the
nine months ended September 30, 2000, the Company made a provision for
possible credit losses of $331,500.
NONINTEREST INCOME
Noninterest income primarily represents deposit account service charges
and fees and noninterest loan fees. For the nine months ended September
30, 2000 noninterest income amounted to $314,934, as compared to
$138,599, for the period ended September 30, 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 significantly to noninterest
income.
NONINTEREST EXPENSE
Noninterest expense was $3,415,533 for the nine month period ended
September 30, 2000 compared to $2,728,234 for the period ended
September 30, 1999. Included in September 30, 2000, noninterest expense
is a loss on sale of investment securities of $65,632, which occurred
in the second quarter. This loss was planned as management elected to
sell certain Bank securities and reinvest the proceeds in higher
yielding securities, of equal quality, thereby increasing the overall
portfolio yield. This strategy resulted in an increase in portfolio
income sufficient to offset the loss by December 31, 2000, and assure
higher yields for a period of one to two years beyond that date.
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.
LIQUIDITY
Liquidity is a measure of the Bank's ability to meet the demands
required for the funding of loans and to meet depositors requirements
for use of their funds. The Bank's sources of liquidity are made up of
cash balances, due from banks, federal funds sold and short term
securities. There are other sources of liquidity which may be used by
the Bank, such as Federal Home Loan Bank advances. A Federal Home Loan
Bank advance was taken in late September 2000, in the amount of $5
million, secured by US governemt agency securities, to meet short term
loan funding requirements.
At September 30, 2000, the Bank's liquidity formula reported $20
million of liquidity in excess of the amount which might be required to
meet projected and contingent needs.
11
<PAGE>
CAPITAL
The following table shows the Company and Bank capital ratios and the
corresponding minimum regulatory requirements. As reflected in the
table the Company and Bank exceed all capital ratio requirements:
Capital ratios and minimum regulatory guidelines at September 30, 2000:
Minimum
Actual Guidelines
------ ----------
Total Risk-Based Capital:
Company 14.84% 8.00%
Bank 13.25% 8.00%
Tier 1 Risk-Based Capital:
Company 13.83% 4.00%
Bank 12.39% 4.00%
Leverage Ratio Capital:
Company 10.70% 8.00%
Bank 9.55% 8.00%
12
<PAGE>
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None.
ITEM 2 CHANGES IN SECURITIES
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, was 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 additional
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
prime rate, as adjusted on a monthly basis. A portion of the loans was
converted, without interest, into payment for subscriptions for common stock in
the offering.
An aggregate of $14,750,000 has been contributed through September 30,
2000 to the capital of the Bank for use in its lending and investment
activities.
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.
13
<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
14
<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: November 13, 2000 By: /s/ Ronald D. Paul
--------------------------------------------
Ronald D. Paul, President
Date: November 13, 2000 By: /s/ Wilmer L. Tinley
--------------------------------------------
Wilmer L. Tinley, Senior Vice President, CFO
15
