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 SEPTEMBER 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
September 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 November 13, 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...........4-5
Notes to Consolidated Financial Statements........6
Item 2. Management's Discussion and Analysis
or Plan of Operations....................7-16
Part II. Other Information
Item 1. Legal Proceedings...............................17
Item 2. Changes in Securities...........................17
Item 3. Defaults Upon Senior Securities.................17
Item 4. Submission of Matters to a Vote
of Security Holders...................17
Item 5. Other Information...............................17
Item 6. Exhibits and Reports on Form 8-K................17
Signatures.....................................................18
<PAGE>
<TABLE>
<CAPTION>
Part I. Financial Statements
Item 1.
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
Assets 09/30/96 12/31/95
-------- --------
<S> <C> <C>
Cash and due from banks................... $ 2,123,249 $ 2,316,465
Federal funds sold........................ 20,000 1,260,000
Investment securities:
Available for sale....................... 7,055,443 4,945,680
Held to maturity......................... 3,789,587 4,087,345
Loans, net of unearned income............. 41,083,039 37,442,325
Less allowance for possible
loan losses.................... 618,027 570,000
------------ ------------
Loans, net............... 40,465,012 36,872,325
------------ ------------
Premises and equipment, net............. 2,511,816 2,548,695
Other assets............................ 871,251 743,665
------------ ------------
$56,836,358 $52,774,175
============ ============
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest-bearing deposits.......... $ 4,649,746 $ 4,253,543
Interest-bearing deposits............. 44,296,168 40,629,146
------------ ------------
Total deposits................ 48,945,914 44,882,689
Borrowings............................... 563,000 700,000
Accrued expenses and other liabilities... 809,313 776,866
Accrued dividend payable................. 0 215,689
------------ ------------
Total liabilities 50,318,227 46,575,244
------------ ------------
Shareholders' equity:
Common stock.......................... 862,845 862,755
Additional paid-in capital............ 4,821,527 4,820,492
Retained earnings..................... 858,702 516,150
Net unrealized holding losses in
investment securities available
for sale............................. (24,943) ( 466)
------------- ------------
Total shareholders' equity. 6,518,131 6,198,931
------------- ------------
$ 56,836,358 $ 52,774,175
============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 1
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three months ended
September 30,
1996 1995
<S> <C> <C>
Interest income:
Loans, including fees................ $ 1,091,325 $1,002,152
Federal funds sold................... 11,429 28,483
Investment securities: Taxable....... 132,090 98,319
Nontaxable.... 23,280 7,850
----------- ----------
Total interest income.......... 1,258,124 1,136,804
Interest expense
Deposits............................ 560,774 539,330
Borrowings............................ 9,868 0
----------- ----------
Total interest expense......... 570,642 539,330
----------- ----------
Net interest income..... 687,482 597,474
Provision for possible loan losses....... 23,943 43,751
----------- ----------
Net interest income after provision
for possible loan losses...... 663,539 553,723
----------- ----------
Noninterest income:
Service charges on deposit accounts... 81,113 79,117
Loss on sale of securities........... (5,700) 0
Other operating income................ 14,157 12,181
----------- ----------
Total noninterest income........ 89,570 91,298
----------- ----------
Noninterest expense:
Salaries and employee benefits........ 245,459 229,360
Net occupancy and equipment expense... 71,869 53,630
Other operating expense............... 216,210 177,008
----------- -----------
Total noninterest expense........ 533,538 459,998
----------- -----------
Income before income taxes 219,571 189,023
Income taxes................... 84,103 41,271
----------- ----------
Net income ............ $ 135,468 $ 143,752
=========== ==========
Net income per share................ $ 0.15 $ 0.17
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 2
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Nine months ended
September 30,
1996 1995
<S> <C> <C>
Interest income:
Loans, including fees................ $ 3,163,123 $2,779,086
Interest on deposits in financial
institutions................... 0 6,335
Federal funds sold................... 40,553 62,186
Investment securities: Taxable....... 367,963 313,370
Nontaxable.... 63,815 21,995
----------- ----------
Total interest income 3,635,454 3,182,972
Interest expense ......................
Deposits............................ 1,658,460 1,438,442
Borrowings.......................... 21,076 0
----------- ----------
Total interest expense........ 1,679,536 1,438,442
----------- ----------
Net interest income.... 1,955,918 1,744,530
Provision for possible loan ............ 58,206 75,403
----------- ----------
Net interest income after provision
for possible loan losses...... 1,897,712 1,669,127
----------- ----------
Noninterest income:
Service charges on deposit accounts... 259,910 238,537
Securities losses..................... (10,467) (4,530)
Other operating income................ 45,740 46,350
----------- ----------
Total noninterest income........ 295,183 280,357
----------- ----------
Noninterest expense:
Salaries and employee benefits........ 799,936 663,321
Net occupancy and equipment expense... 212,166 166,042
Other operating expense............... 631,464 570,805
----------- -----------
Total noninterest expense....... 1,643,566 1,400,168
----------- -----------
Income before income taxes ............. 549,329 549,316
Income taxes............................ 206,777 179,866
----------- -----------
Net income ............ $ 342,552 $ 369,450
=========== ===========
Net income per share.................... $ 0.39 $ 0.43
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income ........................... $ 342,552 $ 369,450
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for possible loan losses..... 58,206 75,403
Depreciation........................... 124,169 94,778
Stock compensation expense............. 1,125 0
Amortization and (accretion), net...... (17,979) ( 5,347)
Amortization of organization cost...... 4,894 13,442
Accretion of deferred loan fees........ (23,401) (23,338)
Loan fees, net......................... 32,031 28,968
Securities losses.............. 10,467 4,531
Increase in other assets............... (127,586) ( 24,721)
Increase in other
liabilities........................ 32,477 118,431
------------- ----------
Net cash provided by
operating activities......... 436,955 651,597
------------- ----------
Cash flows from investing activities:
Increase in loans, net................. (3,661,971) (4,553,481)
Proceeds from:
Sales of investment securities...... 1,300,000 1,000,000
Maturities of investment securities. 1,500,000 2,200,000
Maturities of interest-earning deposits
in financial institutions.... 0 500,000
Purchase of:
interest-earning deposits in
financial institutions............ 0 (500,000)
Investment securities:
available for sale................... (2,972,914) (2,478,095)
held to maturity................. (1,658,532) 0
Purchase of premises and equipment.... ( 87,290) (347,757)
------------ -----------
Net cash used in investing
activities................... (5,583,155) (4,179,333)
------------ -----------
</TABLE>
Page 4
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Cont)
<S> <C> <C>
Cash Flow from financing activities:
Net increase in deposits... 4,063,225 3,691,720
(Decrease) in
federal funds purchased...... (700,000) 0
Increase in other borrowings..... 563,000 0
Cash dividends................... (215,689) 0
------------ -----------
Net cash provided by financing
activities:................. 3,710,536 3,691,720
------------- -----------
Net increase (decrease) in cash and
cash equivalents................. (1,433,216) 163,984
Cash and cash equivalents at beginning
of period........................ 3,576,465 2,609,517
----------- -----------
Cash and cash equivalents at
end of period. $ 2,143,249 $2,773,501
============ ===========
Supplemental disclosures of cash paid during period for:
Interest... $ 1,619,059 $ 1,159,585
Income taxes.. $ 252,713 $ 143,184
</TABLE>
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
September 30, 1996 compared to December 31, 1995, and the results of its
operations for the three and nine month periods ended September 30, 1996
compared to the comparable periods ended September 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
main banking facility in Statesboro, Georgia. The Company and the Bank
were formed in September, 1989 and were a developmental stage enterprise
until the Bank commenced operations on February 20, 1991.
Page 7
FINANCIAL CONDITION
During the first nine months of 1996, total assets increased $4,062,183
or approximately 7.7% as compared to amounts at December 31, 1995. This
increase was primarily a result of the bank's deposit base increasing by
approximately $4,063,225. The Bank's asset mix changed by a decrease in
federal funds sold of $1,240,000 while loans increased by $3,640,714 and
investments increased by $1,812,013. This represents an increase of
approximately 9.72% in loans and an increase of approximately 20.0% in
investments.
The following is a summary of deposits:
<TABLE>
<CAPTION>
9/30/96 12/31/95
<S> <C> <C>
Noninterest-bearing deposits $ 4,649,746 $ 4,253,543
NOW accounts 6,806,135 6,137,518
Money market accounts 1,982,932 2,096,008
Savings accounts 2,606,333 2,650,107
Individual retirement accounts 2,817,840 2,762,189
Certificates of deposits of $100,000 or
more 9,124,911 5,874,418
Certificates of deposits of $100,000 or
less 20,958,017 21,108,906
Total deposits $48,945,914 $44,882,689
=========== ===========
</TABLE>
The Company's rate of growth was approximately 9.05% for the nine months
of 1996 as compared to 9.0% for the same period in 1995. Factors
expected to contribute to a continuation in the Company's growth rate
include:
1) the current loan and deposit rate environment in the local
area and the bank's community activities,
2) a relatively stable economy in the local area, and
3) management's emphasis on profitability.
The Company believes it can achieve growth for 1996 in the 10% range.
Page 8
<PAGE>
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 September 30, 1996, the Company's cash and due from
banks equalled $2,123,249, its investment securities available for sale
equalled $7,055,443, and its federal funds sold equalled $20,000. 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 nine months of 1996, the Company had
outstanding borrowings of $563,000 on a long-term basis from the Federal
Home Loan Bank to match loan funding rates and maturities with 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 26.37% as of September 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%.
The Company continues to monitor the percentage of certificates of
deposit of $100 thousand and over (jumbo deposits) to total deposits.
At September 30, 1996 jumbo deposits equalled 18.64% of total deposits
of $48,945,914. At September 30, 1995 jumbo deposits equaled 13.46% of
total deposits of $44,394,540. Jumbo deposits are primarily with
individuals who reside in the Company's primary service area and to whom
the Bank has had consistent deposit relations since inception. The
current year's increase in the jumbo deposit balances are funds on
deposit from various local governmental agencies and are secured by
pledged collateral having a fair market value equal to at least 110% of
those deposits.
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
Page 9
<PAGE>
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 September 30, 1996.
<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY TABLE
<S> <C> <C> <C> <C> <C> <C> <C>
0-90 days 91-365 days One to Five Years Over five years
--------- ----------- ----------------- --------------
Current Current Cumulative Current Cumulative Current Cumulative
Interest-sensitive assets:
Loans.............................. $ 7,705 $18,472 $26,177 $14,748 $40,925 $158 $41,083
Investment securities.............. 550 910 1,460 8,657 10,117 728 10,845
Federal funds sold................ 20 0 20 0 20 0 20
------ ------ ------ ------ ------ ----- ------
Total interest-sensitive assets.... 8,275 19,382 27,657 23,405 51,062 886 51,948
Interest-sensitive liabilities:
NOW, money market, and
savings accounts................. 11,395 0 11,395 0 11,395 0 11,395
Individual retirement accounts and
Certificates of deposits............ 5,277 21,196 26,473 6,428 32,901 0 32,901
Borrowings......................... 0 0 0 0 0 563 563
------ ------- ------ ------ ------ ----- ------
Total interest-sensitive
liabilities.............. 16,672 21,196 37,868 6,428 44,296 563 44,859
------ ------ ------ ------ ------ ----- ------
Interest-sensitivity gap.. $(8,397) $(1,814) (10,211) $16,977 $6,766 $ 323 $ 7,089
====== ====== ======= ====== ====== ====== ======
Ratio to interest sensitive assets.. (16.17)% 3.86% (19.66)% 32.68% 13.02% 0.62% 13.65%
====== ====== ====== ====== ===== ====== ======
</TABLE>
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.
Page 10
<PAGE>
CAPITAL RESOURCES
The Company continues to maintain a satisfactory level of capital as
measured by its total shareholders' equity to total assets ratio of
11.74% at September 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 of 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 completed the construction and installation of a
new ATM drive-up facility at 335 South Main Street, Statesboro, Ga. in
late September, 1996 at a cost of approximately $60,000. 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 11
<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 September 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......... 15.56% 6,517 6.00% 2,513 9.56% 2,561
Risk based capital..... 17.04% 7,137 8.00% 3,350 9.04% 3,457
Leverage ratio......... 11.51% 6,543 3.00% 1,705 8.51% 4,838
Eagle Bank and Trust
Tier 1 capital......... 13.81% 5,783 6.00% 2,513 7.81% 3,270
Rick based capital..... 15.29% 5,783 8.00% 3,350 7.29% 2,433
Leverage ratio......... 10.22% 5,809 3.00% 1,705 7.22% 4,104
</TABLE>
Page 12
<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. The Company's interest-bearing
liabilities consist of deposits, secured and/or unsecured borrowings.
Net interest income for the three month period ended September 30, 1996
equalled $687,482 or 15.06% more than the three month period ended
September 30, 1995. The average yield earned on interest-earning assets
was 9.69% for the three month period ended September 30, 1996 compared
to 9.69% for the similar period ended September, 30, 1995 and the
average rate paid on interest-bearing liabilities was 5.12% for the
three month period ended September 30, 1996 compared to 4.90% for the
comparable period ended September 30, 1995. The Company's net interest
margin for the three month period ended September 30, 1996 was 4.57%
compared to 4.79% for the three month period ended September 30, 1995.
Net interest income for the nine month period ended September 30, 1996
equalled $1,955,918 or 12.12% more than the nine month period ending
September 30, 1995. The average yield earned on interest-earning assets
was 9.81% for the nine month period ended September 30, 1996 compared to
9.33% for the similar period ended September 30, 1995 and the average
rate paid on interest-bearing liabilities was 5.17% for the nine month
period ended September 30, 1996 compared to 4.50% for the nine month
period ended September 30, 1995. The Company's net interest margin for
the nine month period ended September 30, 1996 was 4.64% compared to
4.38% for the period ended September 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 13
<PAGE>
The allowance for possible loan losses approximated 1.50% of outstanding
loans at September 30, 1996 as compared to 1.52% at December 31, 1995
and 1.58% at September 30, 1995. The allowance increased to $618,027 at
September 30, 1996 from $570,000 at December 31, 1995 and $600,000 at
September 30, 1995. The change in the allowance relates primarily to
the change in the loan portfolio and to related credit risks. The
provision for the first nine months of 1996 was $58,206 compared to
$75,403 for the first nine months of 1995. This provision is a result
of evaluation as describe above of the loan portfolio during the first
nine months of 1996 as compared to the first nine months of 1995 and the
company's continued favorable charge-off experience in 1996. Net
charge-offs for the nine month period ended September 30, 1996 equalled
$10,180 compared to net charge-offs of $2,903 for the comparable period
in 1995.
The following table summarizes nonperforming loans, potential problem
loans, and allowance for possible loan losses data as of September 30,
1996 and December 31, 1995.
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Nonperforming loans
(over 90 days past due)................. $ 125 $ 629
Potential problem loans *
(internally classified).................. $ 357 $ 291
Asset Quality Ratios:
Nonperforming loans to total
loans, net of unearned income........... .30% 1.68%
Nonperforming loans to total assets...... .22% 1.19%
Nonperforming loans and potential
problem loans to total assets............ .85% 1.74%
Allowance for possible loan losses
to nonperforming loans.................... 4.94X .91X
Allowance for possible loan
losses to nonperforming loans
and potential problem loans............... 1.28X .62X
</TABLE>
** Potential problem loans are loans 60 to 89 past due.
The Company's management believes that the allowance for possible loan
losses is adequate to cover potential losses in the loan portfolio.
Noninterest Income
Noninterest income, net of securities losses, primarily comprised of
service charges on deposit accounts, for the nine month period ended
September 30, 1996 was approximately $295,183 compared to $280,357 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 from the three months ended
September 30, 1996 was $89,570 compared to $91,298 for the three months
ended September 30, 1995.
Page 14
<PAGE>
Noninterest Expense
Noninterest expense is composed primarily of salaries and employee
benefits, net occupancy and equipment expense, and noninterest expense
as shown below. The Company had noninterest expenses of $ 1,643,566 for
the nine month period ended September 30, 1996 compared to $ 1,400,167
for the comparable period of 1995. The Company experienced noninterest
expense of approximately $533,538 for the three months ended September
30, 1996 compared to $459,998 for the three months ended September 30,
1995. Other operating expenses increased approximately 17.38% and
15.99% for the nine month and three month periods ended September 30,
1996 as compared to the same periods ended September 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:
<TABLE>
<CAPTION>
Nine months ended
September 30,
1996 1995
<S> <C> <C>
Salaries and employee
benefits........................ $799,936 $663,321
Net occupancy and
equipment expense............... 212,166 166,042
Data processing expense............ 81,470 68,645
Regulatory assessments............. 10,967 55,996
Insurance expense.................. 21,056 22,990
Stationery and supplies
expense......................... 69,915 51,313
Legal expense...................... 36,083 22,406
Postage............................ 42,448 38,919
Accounting and audit fees.......... 37,510 28,321
Advertising and marketing expense.. 40,977 37,459
Amortization of
organizational cost............. 4,895 13,441
ATM interchange expense............ 18,346 33,845
Directors fees 35,100 37,200
Business taxes and licenses........ 26,986 17,719
Correspondence Bank Services....... 22,856 20,940
Dues and subscriptions............. 18,569 9,191
</TABLE>
Data processing expense increased due to the bank out-sourceing its item
processing. Regulatory assessments decreased due to the refund by the
FDIC. Directors' fees were approved in January, 1995 for the first time
since inception. Unlike many other financial institutions, the Company
was not affected by the FDIC special assessment on SAIF-insured deposits
in the third quarter of 1996 because all of the Company's deposits are
in the FDIC Bank Insurance Fund (BIF).
Page 15
<PAGE>
Income Taxes
The Company has recorded income tax expense of $206,777 for the first
nine months of 1996 representing an effect tax rate of approximately
37.6% which compares to an effective tax rate of 32.7% recorded for the
comparable period of 1995. The Company recorded for the three months
ended September 30, 1996 income tax expense of $84,103 as compared to
$41,271 for the same period ended September 30, 1995. The increase in
the Company's effective income tax rate from the 1995 period to the 1996
period is attributable to the decline in the valuation allowance for
deferred income tax assets recorded during previous years.
Net Income
The Company's net income was $135,468 for the three month period ended
September 30, 1996 compared to $143,752 for the like period ended
September 30, 1995 representing an decrease of 5.76%. The Company's net
income per share was $0.15 per share for the three month period ended
September 30, 1996 compared to $0.17 per share for the comparable period
for 1995.
The Company's net income was $342,552 or $0.39 per share for the first
nine months of 1996 compared to $369,450 or $0.43 per share for the
comparable period for 1995 or a decrease of approximately 7.28% and
9.30% respectively.
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 16
<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.
None
Item 5.
Other Information
None
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 17
<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. Williams, 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: November 13, 1996
Page 18
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11.1
EAGLE BANCORP, INC. AND SUBSIDIARY
Computation of Earnings per Common Share
(Unaudited)
Nine months ended September 30,
1996 1995
Primary
<S> <C> <C>
Net income $ 342,552 $369,450
========= =========
Shares:
Weighted average number of common shares outstanding 862,845 862,755
Shares issuable from assumed exercise of options 22,256 6,313
--------- ---------
Weighted average number of common shares
and common share equivalents 885,101 869,068
========= =========
Net income per common share and common share equivalent $ 0.39 $ 0.43
========= =========
Fully Diluted
Net income: $ 342,552 $ 369,450
========= =========
Shares:
Weighted average number of common shares as adjusted
per primary computation above 885,101 869,068
Shares issuable from assumed exercise of
options computed on a fully
diluted basis 97 0
--------- ----------
885,198 869,068
========= =========
Net income per common share and common share
equivalent $ 0.39 $ 0.43
========= ==========
</TABLE>
Page 19
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Computation of Earnings per Common Share
(Unaudited)
Three months ended September 30,
1995 1995
Primary
<S> <C> <C>
Net Income $ 135,468 $ 143,752
========= =========
Shares:
Weighted average number of common shares outstanding 862,845 862,755
Shares issuable from assumed exercise of options 22,256 6,313
--------- ---------
Weighted average number of common shares
and common share equivalents 885,101 869,068
========= =========
Net income per common share and common share equivalent: $ 0.15 $ 0.17
========= =========
Fully Diluted
Net income $ 135,468 $ 143,752
========= =========
Shares:
Weighted average number of common shares as adjusted
per primary computation above 885,101 869,,068
Shares issuable from assumed exercise of
options computed on a fully
diluted basis 97 0
--------- ----------
885,198 869,068
========= ==========
Net income per common share and common share
equivalent: $ 0.15 $ 0.17
========= ==========
</TABLE>
Page 20
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 2,123,249
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 20,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,789,587
<INVESTMENTS-CARRYING> 7,055,443
<INVESTMENTS-MARKET> 7,124,356
<LOANS> 41,083,039
<ALLOWANCE> 618,027
<TOTAL-ASSETS> 56,836,358
<DEPOSITS> 48,945,914
<SHORT-TERM> 563,000
<LIABILITIES-OTHER> 809,313
<LONG-TERM> 0
0
0
<COMMON> 862,845
<OTHER-SE> 5,655,286
<TOTAL-LIABILITIES-AND-EQUITY> 56,836,358
<INTEREST-LOAN> 3,163,123
<INTEREST-INVEST> 408,516
<INTEREST-OTHER> 63,815
<INTEREST-TOTAL> 3,635,454
<INTEREST-DEPOSIT> 1,658,460
<INTEREST-EXPENSE> 1,679,536
<INTEREST-INCOME-NET> 1,955,918
<LOAN-LOSSES> 58,206
<SECURITIES-GAINS> (10,467)
<EXPENSE-OTHER> 1,643,566
<INCOME-PRETAX> 546,329
<INCOME-PRE-EXTRAORDINARY> 546,329
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 342,552
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
<YIELD-ACTUAL> 9.63
<LOANS-NON> 125,000
<LOANS-PAST> 823,514
<LOANS-TROUBLED> 125,000
<LOANS-PROBLEM> 357,000
<ALLOWANCE-OPEN> 570,000
<CHARGE-OFFS> 26,000
<RECOVERIES> 16,000
<ALLOWANCE-CLOSE> 618,000
<ALLOWANCE-DOMESTIC> 618,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
