SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
For the quarter ended Commission file number
June 30, 1996 0-19228
EAGLE BANCORP, INC.
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1860526
(State or other jurisdiction of (I.R.S. Employer incorporation or organization)
identification No.)
335 South Main Street, P.O. Box 638
Statesboro, Georgia 30458
(Address of principal executive offices)
Registrant's telephone number, including area code: (912) 764-8900
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 and 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 Registrant's classes of
common stock, as of the close of the period covered by this Report.
862,845 shares of Common Stock, $1 par value per share, were outstanding as of
August 14, 1996.
<PAGE>
EAGLE BANCORP, INC.
AND SUBSIDIARY
Index
Part I. Financial Statements
Page No.
Item 1. Consolidated Balance Sheets.......................1
Consolidated Statements of Income...............2,3
Consolidated Statements of Cash Flows.............4
Note to Consolidated Financial Statements.........6
Item 2. Management's Discussion and Analysis
or Plan of Operations..................6 to 14
Part II. Other Information
Item 1. Legal Proceedings.................................16
Item 2. Changes in Securities.............................16
Item 3. Defaults Upon Senior Securities...................16
Item 4. Submission of Matters to a Vote
of Security Holders.....................16
Item 5. Other Information.................................16
Item 6. Exhibits and Reports on Form 8-K.............18 & 19
Signatures................................................17
<PAGE>
Part I. Financial Statements
Item 1.
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
Assets
06/30/96 12/31/95
<S> <C> <C>
Cash and due from banks ............................ $ 2,501,093 $ 2,316,465
Federal funds sold ................................. 110,000 1,260,000
Investment securities:
Available for sale ................................ 5,732,075 4,945,680
Held to maturity .................................. 4,445,877 4,087,345
Loans, net of unearned income ...................... 40,121,186 37,442,325
Less allowance for possible
loan losses ............................. 609,000 570,000
------------ ------------
Loans, net ....................... 39,512,186 36,872,325
------------ -----------
Premises and equipment, net ........................ 2,493,303 2,548,695
Other assets ....................................... 839,018 743,665
------------ ------------
$ 55,633,552 $ 52,774,175
============ ===========
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest-bearing deposits .............. $ 4,650,717 $ 4,253,543
Interest-bearing deposits ................. 43,314,117 40,629,146
------------ ------------
Total deposits ................... 47,964,834 44,882,689
Borrowings ....................................... 577,750 700,000
Accrued expenses and other liabilities ........... 720,757 776,866
Accrued dividend payable ......................... 0 215,689
------------ ------------
Total liabilities ................ 49,263,341 46,575,244
----------- ------------
Shareholders' equity:
Common stock, $1 par value. Authorized
10,000,000 shares; 862,845 issued and
outstanding .............................. 862,845 862,755
Additional paid-in capital ................ 4,821,527 4,820,492
Retained earnings ......................... 723,234 516,150
Net unrealized holding losses on investment
securities available for sale ........... (37,395) ( 466)
---------- ------------
Total shareholders' equity ....... 6,370,211 ,198,931
---------- -----------
$ 55,633,552 $ 52,774,175
============ ============
</TABLE>
See accompanying note to consolidated financial statements.
Page 1
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three months ended
June 30,
<S> <C> <C>
1996 1995
Interest income:
Loans, including fees ...................... $ 1,031,580 $ 927,855
Interest earning deposits in financial
institutions ........................... 0 2,677
Federal funds sold ......................... 11,751 17,824
Investment securities:
taxable ........................... 122,936 106,503
nontaxable ........................ 21,041 7,059
----------- -----------
Total interest income ............. 1,187,308 1,061,918
----------- -----------
Interest expense:
Deposits ................................... 548,955 490,763
Other borrowings ........................... 9,790 0
----------- -----------
Total interest expense ................ 558,745 490,763
----------- -----------
Net interest income ............... 628,563 571,155
Provision for possible loan losses .................. 20,735 26,652
----------- -----------
Net interest income after provision
for possible loan losses ........ 607,828 544,503
----------- -----------
Noninterest income:
Service charges on deposit accounts ........ 91,893 79,663
Securities losses .......................... (4,766) (4,531)
Other operating income ..................... 12,881 11,954
----------- -----------
Total noninterest income .......... 100,008 87,086
----------- -----------
Noninterest expense:
Salaries and employee benefits ............. 269,776 222,241
Net occupancy and equipment expense ........ 68,951 55,820
Other operating expense .................... 206,531 201,674
----------- -----------
Total noninterest expense ......... 545,258 479,735
----------- -----------
Income before income taxes .......................... 162,578 151,854
Income taxes ........................................ 61,805 57,886
----------- -----------
Net income ................................. $ 100,773 $ 93,968
=========== ===========
Net income per share ................................ $ 0.11 $ 0.11
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 2
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Six months ended
June 30,
1996 1995
<S> <C> <C>
Interest income:
Loans, including fees ...................... $ 2,071,799 $ 1,776,934
Interest earning deposits in financial
institutions ........................... 0 6,335
Federal funds sold ......................... 29,124 33,703
Investment securities:
taxable .......................... 235,871 215,051
nontaxable ....................... 40,535 14,145
----------- -----------
Total interest income ............. 2,377,329 2,046,168
----------- -----------
Interest expense:
Deposits ................................... 1,097,684 899,113
Other borrowings ........................... 11,209 0
----------- -----------
Total interest expense ................ 1,108,893 899,113
Net interest income ............... 1,268,437 1,147,055
Provision for possible loan losses .................. 34,263 31,652
----------- -----------
Net interest income after provision
for possible loan losses ........ 1,234,174 1,115,403
----------- -----------
Noninterest income:
Service charges on deposit accounts ........ 178,796 159,420
Securities losses .......................... (4,766) (4,531)
Other operating income ..................... 31,583 34,170
----------- -----------
Total noninterest income .......... 205,613 189,059
----------- -----------
Noninterest expense:
Salaries and employee benefits ............. 554,477 433,962
Net occupancy and equipment expense ........ 140,297 112,412
Other operating expense .................... 415,255 393,795
----------- -----------
Total noninterest expense ......... 1,110,029 940,169
----------- -----------
Income before income taxes ................. 329,758 364,293
Income taxes ........................................ 122,674 138,594
----------- -----------
Net income ................................. $ 207,084 $ 225,699
=========== ===========
Net income per common share ......................... $ 0.23 $ 0.26
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
June 30,
1995 1995
<S> <C> <C>
Cash flows from operating activities:
Net income .......................................... $ 207,084 $ 225,699
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for possible loan losses ......... 34,263 31,652
Depreciation ............................... 79,611 63,348
Stock Compensation Expense ................. 1,125 0
Amortization and (accretion), net .......... (9,556) (7,144)
Accretion of deferred loan fees ............ (14,208) (13,385)
Loan fees .................................. 29,167 53,315
Amortization of organizational cost ........ 4.895 8,924
Securities losses .......................... 4,766 4,531
(Increase) decrease in other assets ........ (95,353) 15,294
Increase (decrease) in other
liabilities ............................ (56,109) (21,178)
----------- -----------
Net cash provided by
operating activities ..... 185,685 361,056
----------- -----------
Cash flows from investing activities:
Increase in loans, net ..................... (2,678,861) (3,848,393)
Proceeds from:
maturities of investment securities
held to maturity .................. 1,300,000 1,000,000
sales of investment securities
available for sale ................ 500,000 2,200,000
maturities of interest earning deposits
in financial institutions ......... 0 500,000
Purchase of investment securities
investment in interest-earning deposits
in financial institutions ......... 0 (500,000)
available for sale .................... (1,333,651) (2,111,908)
held to maturity ...................... (1,658,532) 0
Purchase of premises and equipment ......... (24,219) (58,693)
----------- -----------
Net cash used in investing
activities ............... (3,895,263) (2,818,994)
----------- -----------
</TABLE>
Page 4
<PAGE>
Consolidated Statements of Cash Flows (Cont)
Six months ended
June 30,
1996 1995
Cash flows from financing activities:
Increase in deposits Net ............ 3,082,145 2,264,803
Increase (decrease) in
federal funds purchased .......... (700,000) 0
Other borrowings .................... 577,750 0
Cash dividend ....................... (215,689) 0
----------- -----------
Net cash provided by financing
activities ................. 2,744,206 2,264,803
----------- -----------
Net decrease in cash and
cash equivalents ........... ( 965,372) ( 143,307)
Cash and cash equivalents at beginning
of period .................. 3,576,465 2,609,517
----------- -----------
Cash and cash equivalents at end of
period ..................... $ 2,611,093 $ 2,466,210
=========== ===========
Supplemental disclosures of cash paid during the period for:
Interest ............................ $ 1,085,248 $ 727,717
Income taxes ........................ $ 189,333 $ 95,456
See accompanying notes to consolidated financial statements.
Page 5
<PAGE>
EAGLE BANCORP, INC. AND SUBSIDIARY
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
The unaudited consolidated financial statements include the accounts of Eagle
Bancorp, Inc. ("the Company") and its wholly owned subsidiary, Eagle Bank and
Trust. The accompanying unaudited consolidated financial statements do not
include all information and notes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. All adjustments consisting of normal recurring
accruals which, in the opinion of management, are necessary to a fair statement
of the financial position and results of operations for the periods covered by
this report have been included.
Page 6
<PAGE>
Item 2.
Management's Discussion and Analysis or Plan of Operations
GENERAL
The following is a discussion of the Company's financial condition at June 30,
1996 compared to December 31, 1995, and the results of its operations for the
three and six month periods ended June 30, 1996 compared to the comparable
periods ended June 30, 1995. This discussion of the Company's financial
condition and results of operations should be read in conjunction with the
Company's unaudited consolidated financial statements appearing elsewhere in
this report and the Company's 1995 Annual Report on Form 10-KSB as filed with
the Securities and Exchange Commission.
Eagle Bancorp, Inc. (the "Company") is a one-bank holding company providing a
full range of banking services to individual and corporate customers in Bulloch
County and surrounding areas through its wholly-owned bank subsidiary, Eagle
Bank and Trust (the "Bank"). The Bank operates under a state charter granted by
the Georgia Department of Banking and Finance (the "GDBF") and serves its
customers from its two banking facility in Statesboro, Georgia.
FINANCIAL CONDITION
During the first six months of 1996, total assets increased $2,859,377 or
approximately 5.4% (10.8% per annum) as compared to amounts at December 31,
1995. This increase was a result of the bank's deposit base increasing by
approximately $3,082,145. The Bank's asset mix changed by an increase in loans
of $2,678,861 or approximately 7.2% and an increase in investment securities of
$1,144,927 when compared to the December 31, 1995 levels. This increase in loans
and investments was funded by the increase in deposits. The following is a
summary of the Company's deposits by type at June 30, 1996 and December 31,
1995:
6/30/96 12/31/95
Noninterest-bearing demand deposits ... $ 4,650,717 $ 4,253,543
NOW accounts .......................... 6,775,467 6,137,518
Money market accounts ................. 1,992,191 2,096,008
Savings accounts ...................... 2,640,237 2,650,107
Individual retirement accounts ........ 2,854,911 2,762,189
Certificates of deposits of $100,000 or
more .............................. 8,093,002 5,953,410
Certificates of deposits of $100,000 or
less .............................. 20,958,309 21,029,914
----------- -----------
Total deposits ............... $47,964,834 $44,882,689
========== ============
Page 7
<PAGE>
FINANCIAL CONDITION (cont)
The Company's rate of growth of approximately 5.4% (10.8% per annum) for the
first half of 1996 approximates the 5.4% (10.8% per annum) growth that the
Company achieved for the first half of 1995. Factors expected to contribute to a
continuation of the Company's growth rate include:
1) the current loan and deposit rate environment in the local
area and the bank's community evolvement
2) a relatively stable economy in the local area, and
3) management's emphasis on profitability.
The Company believes it can continue to achieve growth for 1996 in the 10%
range.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity management involves the matching of cash flow requirements of
customers, those of depositors withdrawing or depositing funds and borrowers
needing loans, and the ability of the Company to meet those requirements.
Management monitors and maintains appropriate levels of assets and liabilities
so maturities of assets are such that adequate funds are provided to meet
estimated customer withdrawals and loan fundings.
The Company's liquidity position depends primarily upon the liquidity of its
assets relative to its needs to respond to short-term demand for funds caused by
withdrawals from deposit accounts and loan funding commitments. Primary sources
of liquidity are scheduled payments on the Company's loans and interest on and
maturities of its investments. The Company may also utilize its cash and due
from banks, federal funds sold and investment securities available for sale to
meet liquidity requirements. At June 30, 1996, the Company's cash and due from
banks equalled $2,501,093, its investment securities available for sale equalled
$5,732,075, and its federal funds sold equalled $110,000. All of these assets
could be converted to cash on short notice.
Subject to certain conditions, the Company also has the ability, on a short-term
basis, to purchase federal funds from other financial institutions. Presently,
the Company has made arrangements with certain banks for short-term unsecured
advances up to $3,500,000 and with the Federal Home Loan Bank, Atlanta, Ga. for
a secured credit line of $5,000,000. During the first six months of 1996, the
Company had outstanding borrowings of $590,000 on a long-term basis from the
Federal Home Loan Bank to match loan funding rates and maturities with loan
borrowing rates and maturities.
The Company's liquidity position, calculated as cash and due from banks, federal
funds sold, and investment securities not pledged divided by deposits, equalled
28.54% as of June 30, 1996 compared to 21.00% as of December 31, 1995. The
Company's optimum liquidity ratio is 30% with a minimum acceptable ratio of 20%.
Management monitors liquidity daily and is striving to maintain its liquidity
ratio between 20% and 30%.
Page 8
<PAGE>
LIQUIDITY AND INTEREST RATE SENSITIVITY (cont)
The Company continues to monitor the percentage of certificates of deposit of
$100 thousand and over (jumbo deposits) to total deposits. At June 30, 1996
jumbo deposits equalled 16.9% of total deposits of $47,964,834. At June 30, 1995
jumbo deposits equalled 12.8% of total deposits of $42,967,623. A substantial
portion of theses jumbo deposits are with individuals who reside in the
Company's primary service area who are either shareholders, organizers, or
directors of the Company and whom the Bank has had consistent deposit relations
since inception.
The relative interest rate sensitivity of the Company's assets and liabilities
indicates the extent to which the Company's net interest income may be affected
by interest rate movements. The Company's ability to reprice assets and
liabilities in the same dollar amounts and at the same time minimizes interest
rate risks. One method of measuring the impact of interest rate changes on net
income is to measure, in a number of time frames, the interest sensitivity gap,
by subtracting interest-sensitive liabilities from interest-sensitive assets, as
reflected in the following table. Such interest sensitivity gap represents the
risk, or opportunity, in repricing. If more assets than liabilities are repriced
at a given time in a rising rate environment, net interest income improves; in a
declining rate environment, net interest income deteriorates. Conversely, if
more liabilities than assets are repriced while interest rates are rising, net
interest income deteriorates; if interest rates are falling, net interest income
improves. The Company's strategy in minimizing interest rate risk is to minimize
the impact of short term interest rate movements on its net interest income
while managing its middle and long-term interest sensitivity gap in light of
overall economic trends in interest rates. The following table illustrates the
relative sensitivity of the Company to changing interest rates as of June 30,
1996.
<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY TABLE
0-90 days 91-365 day One to Fiv Over five years
Current Current Cumulative Current Cumulative Current Cumulative
------- ------- ------- ------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-sensitive assets:
Loans ............................................... 7,544 16,758 24,302 14,581 38,883 1,252 40,135
Investment securities ............................... 750 2,334 3,084 7,094 10,178 0 10,178
Federal Funds sold .................................. 110 0 110 0 110 0 110
------- ------- ------- ------- ------- ------- -------
Total interest-sensitive assets ................. 8,404 19,092 27,496 21,675 49,171 1.252 50,423
Interest-sensitive liabilities:
NOW, money market, and
savings accounts .................................. 11,409 0 11,409 0 11,409 0 11,409
Individual retirement accounts and
certificates of deposits ............................ 7,267 18,299 25,566 6,339 31,905 0 31,905
Borrowings .......................................... 0 0 0 0 0 578 578
------- ------- ------- ------- ------- ------- -------
Total interest-sensitive
liabilities ................................... 18,676 18,299 36,975 6,339 43,314 578 43,892
------- ------- ------- ------- ------- ------- -------
Interest-sensitivity gap ............................ (10,272) 793 (9,479) 15,336 5,857 578 6,531
======= ======= ======= ======= ======= ======= =======
Ratio to total interest
sensitive assets ................................. -20.37 1.57 -18.80 30.41 11.61 1.34 12.95
======= ======= ======= ======= ======= ======= =======
</TABLE>
Page 9
<PAGE>
LIQUIDITY AND INTEREST RATE SENSITIVITY (cont)
Because of continued pressures of rising rates and the Company's net liability
sensitive position in the one year horizon at June 30, 1996, the Company
believes downward pressures on its net interest margin could have a negative
impact on net interest income in 1996.
Since all interest rates and yields do not adjust at the same velocity, the
interest rate sensitivity gap is only an indicator of the potential effects of
interest rate changes on net interest income.
CAPITAL RESOURCES
The Company continues to maintain a satisfactory level of capital as measured by
its total shareholders' equity to total assets ratio of 11.45% at June 30, 1996
as compared to 11.75% at December 31, 1995. Management anticipates the existing
capital levels will be adequate to sustain the Company's anticipated growth for
the foreseeable future.
The Company in October, 1995 completed construction on its first branch facility
which is located at 726 Northside Drive, Statesboro, Georgia. The Company's
existing investment in the land for the branch facility of $217,000, the
Company's capital expenditures related to the new branch facility were $613,000
for a total investment in the new branch of $830,000. The Company does not
expect to make any other significant capital expenditures for the remainder of
1996.
The Company is not aware of any recommendations by regulatory authorities which,
if implemented would have a significant impact on its liquidity, capital
resources, or operations except for the recent FDIC reduction in insurance
premiums on deposits which has had a favorable impact on the Company's results
of operations.
The Georgia Department of Banking and Finance requires that State- chartered
banks in Georgia maintain a ratio of primary capital, as defined, to total
assets of not less than 6%. The Company intends to maintain a satisfactory level
of capital necessary to satisfy regulatory requirements and to accommodate
expected growth patterns.
Page 10
<PAGE>
CAPITAL RESOURCES (cont)
The following tables compare the Company's and its subsidiary's capital ratios
to the minimum capital ratios required to be maintained under applicable
regulatory guidelines at June 30, 1996.
<TABLE>
<CAPTION>
Eagle Bancorp, Inc. and Subsidiary
Required
Actual Minimum Excess
----- --------- ------
% Amount % Amount % Amount
----- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital ...................................... 15.88% 6,407 6.00% 2,421 9.88% 3,986
Risk based capital .................................. 17.39% 7,.016 8.00% 3,228 9.39% 3,778
Leverage ratio ...................................... 11.52% 6,407 3.00% 1,669 8.52% 4,738
Eagle Bank and Trust
Tier 1 capital ...................................... 13.93% 5,622 6.00% 3.338 7.93% 2,284
Rick based capital .................................. 15.44% 6,231 8.00% 3,228 7.44% 3,003
Leverage ratio ...................................... 10.42% 5,622 3.00% 1,669 7.42% 3,953
</TABLE>
Page 11
<PAGE>
RESULTS OF OPERATIONS
Net Interest Income
The Company's net interest income, the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities, is
the Company's principal source of income. Interest-earning assets for the
Company include loans, federal funds sold, and investment securities.
Net interest income for the three month period ended June 30, 1996 equalled
$628,563 or 10.05% more than the three month period ending June 30, 1995 of
$571,155. The average yield earned on interest-earning assets increased to 9.40%
for the three month period ended June 30, 1996 from 8.92% for the similar three
month period ended June, 30, 1995 and the average rate paid on interest-bearing
liabilities increased to 5.22% for the three month period ended June 30, 1996
from 4.08% for the comparable period ended June 30, 1995. The Company's net
interest margin for the three month period ended June 30, 1996 was 4.98%
compared to 4.84% for the comparable period ended June 30, 1995.
Net interest income for the six month period ended June 30, 1996 equalled
$1,268,437 or 10.58% more than the six month period ending June 30, 1995 of
$1,147,055. The average yield earned on interest-earning assets increased to
9.60% for the six month period ended June 30, 1996 from 9.14% for the similar
period ended June 30, 1995 and the average rate paid on interest-bearing
liabilities increased to 5.80% for the six month period ended June 30, 1996 from
4.18% for the six month period ended June 30, 1995. The Company's net interest
margin for the six month period ended June 30, 1996 was 5.12% compared to 4.96%
for the period ended June 30, 1995.
Although management continues to explore methods to improve its net interest
margin, there are no assurances that current levels can be maintained due to
market interest rate fluctuations and the very competitive local banking
environment.
Provision for Possible Loan losses
The Company provides for possible loan losses based upon information available
at the end of each period. By evaluating the adequacy of the allowance for
possible loan losses at the end of each period, management maintains the
allowance for possible loan losses at a level adequate to provide for losses
that can reasonably be anticipated. The level of allowance for possible loan
losses is based on management's periodic loan-by-loan evaluation and other
analysis of its loan portfolio, as well as its assessment of prevailing and
anticipated economic conditions in Southeast Georgia.
A substantial portion of the Company's loans are secured by real estate,
including real estate and other collateral in Bulloch County and surrounding
counties. Accordingly, the ultimate collectibility of a substantial portion of
the Company's loan portfolio is susceptible to changes in economic conditions in
these market areas.
Page 12
<PAGE>
RESULTS OF OPERATIONS (cont)
The allowance for possible loan losses approximated 1.52% of outstanding loans
at June 30, 1996 as compared to 1.52% at December 31, 1995 and 1.50% at June 30,
1995. The allowance increased to $609,000 at June 30, 1996 from $570,000 at
December 31, 1995 and $559,300 at June 30, 1995. The allowance relates primarily
to the level of the loan portfolio and related credit risks. The provision for
the first six months of 1995 was $34,263 compared to $31,652 for the first six
months of 1995. The provision for the three months ended June 30, 1996 was
$20,735 as compared to $26,652 for the same period ended June 30, 1995. Net
recoveries for the six month period ended June 30, 1996 equalled $4,737 compared
to net recoveries of $148 for the comparable period in 1995.
The following table summarizes nonperforming loans, potential problem loans, and
allowance for possible loan losses data as of June 30, 1996 and December 31,
1995.
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------- -------
(in thousands)
<S> <C> <C>
Nonperforming loans
(over 90 days past due) .................................................. 36 629
Potential problem loans
(internally classified) .................................................. 26 291
Asset Quality Ratios:
Nonperforming loans to total
loans, net of unearned income ........................................... 0.09% 1.68%
Nonperforming loans to total assets ...................................... 0.06% 0.78%
Nonperforming loans and potential
problem loans to total assets ........................................... 0.11% 2.46%
Allowance for possible loan losses
to nonperforming loans ................................................... 16.92X 0.91X
Allowance for possible loan
losses to nonperforming loans
and potential problem loans .............................................. 9.82X 0.62X
</TABLE>
** Potential problem loans are loans 60 to 89 days past due.
The Company's management believes that the allowance for possible loan losses is
adequate to cover potential losses in the loan portfolio.
Page 13
<PAGE>
RESULTS OF OPERATIONS (cont)
Noninterest Income
Noninterest income, net of securities losses, is primarily comprised of service
charges on deposit accounts, which for the six month period ended June 30, 1996
was approximately $210,379 as compared to $193,590 for the comparable period in
1995. Service charges on deposit accounts includes fees on deposit accounts,
fees for returned checks and fees for overdraft accounts. Noninterest income,
net of securities losses for the three months ended June 30, 1996 was $104,774
compared to $91,617 for the three months ended June 30, 1995. These increases
were primarily from service charges on deposit accounts which increase with the
overall levels of deposit accounts..
Noninterest Expense
Noninterest expenses are composed primarily of salaries and employee benefits,
net occupancy and equipment expense, and other operating expense as shown below.
The Company experienced other operating expenses of approximately $1,110,029 for
the six month period ended June 30, 1996 compared to $940,169 for the comparable
period of 1995. The Company experienced other operating expenses of
approximately $545,258 for the three months ended June 30, 1996 compared to
$479,735 for the three months ended June 30, 1995. Other operating expenses
increased approximately 18.07% and 13.66% for the six month and three month
periods ended June 30, 1996 as compared to the same periods ended June 30, 1995.
A substantial percentage of this increase relates directly to the opening of the
full service branch facility in October, 1995, which required the addition of
approximately 5 full-time equivalent employees as well as increased occupancy
and equipment expense. Substantial components of noninterest expenses are shown
below:
Other Operating Expenses:
Six months ended
June 30,
1996 1995
Salaries and employee benefits ..... $554,477 $433,962
Net occupancy and equipment expense 140,297 112,412
Data processing expense ............ 55,185 46,875
Regulatory assessments ............. 7,311 54,107
Insurance expense .................. 14,085 15,925
Stationery and supplies
expense ......................... 51,874 28,796
Legal expense ...................... 17,553 12,824
Postage ............................ 28,386 26,247
Accounting and audit fees .......... 26,580 17,020
Advertising and marketing expense .. 31,275 27,822
Amortization of
organizational cost ............. 4,895 8,924
ATM interchange expense ............ 13,269 23,971
Directors' fees .................... 23,400 25,500
Dues and subscriptions ............. 12,205 5,629
Business taxes and licenses ........ 18,049 12,171
Correspondent bank services ........ 15,248 14,172
Page 14
<PAGE>
RESUTLTS OF OPERATIONS (cont)
Income Taxes
The Company has recorded income tax expense of $122,674 for the six months ended
June 30, 1996 representing an effective tax rate of approximately 37% which
compares to an effective tax rate of 38% recorded for the comparable period of
1995. The Company recorded for the three months ended June 30, 1996 income tax
expense of $61,805 or 38% as compared to $57,886 or 38% for the same period
ended June 30, 1995.
Net Income
The Company earned net income of $207,084 or approximately 0.23 per share for
the six month period ended June 30, 1995. This compares to $225,699 or
approximately 0.26 per share for the like period ended June 30, 1995. The
Company earned net income of $100,773 or approximately 0.11 per share for the
three months ended June 30, 1996. This compares to $131,731 or approximately
0.11 per share for the same period ended June 30, 1995. The decrease in net
income is a direct result of the additional expenses (salaries and facilities)
incurred in the opening of the branch.
Inflation
Inflation impacts the growth in total assets in the banking industry and causes
a need to increase equity capital at higher than normal rates in order to meet
regulatory capital requirements. The Company copes with the effects of inflation
through effectively managing its interest rate sensitivity gap position and by
periodically reviewing and adjusting the pricing of services to consider current
costs.
Page 15
<PAGE>
Part II. Other Information
Item 1.
Legal Proceedings.
None
Item 2.
Changes in Securities
None
Item 3.
Defaults upon Senior Securities
None
ITEM 4.
Submission of matters to a vote of security holders.
A) At the Annual Meeting of Shareholders held on May 28, 1996, the
following directors were elected to hold office for the coming
year:
For Againist Abstained
T.J. Morris, Jr. 576,444 0 0
W. Dale Parker 576,444 0 0
Erskine Russell 576,444 0 0
Solly Trapnell 576,444 0 0
The following directors will continue their term: Julian B.
Hodges, Jr., Paul E. Parker, Robert D. Coston, Betty K. Minick,
Paul A. Whitlock, Jr., Lemuel A. Deal, Robert E. Lane, James B.
Lanier, Jr., Marcus B. Seligman and Andrew M. Williams, III.
(B) At the Annual Meeting of Shareholders held on May 28, 1996, KPMG Peat
Marwick, LLP was ratified as the independent auditors for the Company. Votes
were cast as follows:
For 574,044
Against 300
Abstain 2,550
Item 5.
Other Information
Item 6.
Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibit is attached:
Exhibit 11.1 Computation of Earnings per Common Share
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period covered by this report.
Page 16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused the Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EAGLE BANCORP, INC.
By:/S/ Andrew M. William, III
Andrew M. Williams, III
President
(Principal Executive Officer)
By:/S/ William E. Green
William E. Green
Assistant Secretary
(Principal Financial Officer and
Principal Accounting Officer)
Date: August 14, 1996
Page 17
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11.1
EAGLE BANCORP, INC. AND SUBSIDIARY
Computation of Earnings per Common Share
(Unaudited)
Six months ended
June 30,
1996 1995
Primary
<S> <C> <C>
Net Income ............................................................................ $207,084 $225,699
========= =========
Shares:
Weighted average number of common shares outstanding ................................ 862,845 862,755
Shares issuable from assumed exercise of options
and warrants ....................................................................... 17,186 6,313
-------- ---------
Weighted average number of common shares
and common share equivalents ............................................... 880,031 869,068
======== =========
Net income per common share and common share equivalent ............................... $ 0.24 $ 0.26
======== =========
Fully Diluted
Net income: ........................................................................... $207,084 $225,699
======== =========
Shares:
Weighted average number of common shares as adjusted
per primary computation above ...................................................... 880,031 869,068
Additional shares issuable from assumed exercise of
options and warrants computed on a fully
diluted basis ....................................................................... 0 0
-------- ---------
880,031 869,068
======== =========
Net income ............................................................................ $ 0.23 $ 0.26
======== =========
</TABLE>
Page 18
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11.1 (cont)
EAGLE BANCORP, INC. AND SUBSIDIARY
Computation of Earnings per Common Share
(Unaudited)
Three months ended June 30,
1996 1995
Primary
<S> <C> <C>
Net Income ............................................ $100,773 $ 93,968
======== ========
Shares:
Weighted average number of common shares outstanding 862,845 862,755
Shares issuable from assumed exercise of options
and warrants ....................................... 17,186 6,313
-------- ---------
Weighted average number of common shares
and common share equivalents ............... 880,031 869,068
======== =========
Net income per common share and common share equivalent $ 0.11 $ 0.11
======== =========
Fully Diluted
Net income: ........................................... $100,773 $ 93,968
======== =========
Shares:
Weighted average number of common shares as adjusted
per primary computation above ...................... 880,031 869,068
Additional shares issuable from assumed exercise of
options and warrants computed on a fully
diluted basis ....................................... 0 0
-------- ---------
880,031 869,068
========= =========
Net income ............................................ $ 0.11 $ 0.11
======== =========
</TABLE>
Page 19
