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, 1997
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, 1997 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, 1997.
<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
Note to Consolidated Financial Statements...........6
Item 2. Management's Discussion and Analysis
or Plan of Operations..........................7 to 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 06/30/97 12/31/96
<S> <C> <C>
Cash & Due From Banks ............................ 2,119,986 2,237,822
Federal Funds Sold ............................... 0 1,500,000
Interest-earning deposits in other banks ......... 0 1,000,000
Invetment securities:
Available for sale ............................. 6,600,664 6,898,784
Held to maturity ............................... 4,539,578 3,790,335
--------- ---------
Total investment securities ...................... 11,140,242 10,689,119
Loans , net of unearned income ................... 48,281,904 42,638,858
Reserve for Loan Loss ............................ 671,297 639,500
------- -------
Loans, net ................................... 47,610,607 41,999,358
Premises and equipment, net ...................... 2,493,173 2,474,386
Other Assets ..................................... 1,081,301 829,308
--------- -------
64,445,309 60,729,993
========== ==========
Liabilities and Shareholder's Equity
Liabilities:
Deposits:
Noninterest-bearning deposits ............... 5,711,489 5,184,539
Interest-bearning deposits ................... 48,917,736 47,280,321
---------- ----------
Total Deposits .......... 54,629,225 52,464,860
Borrowings ...................................... 1,518,750 748,250
Reserse repurchaes agreements ................... 983,000
Accrued expenses and other liabilitties .......... 771,545 1,257,832
------- ---------
Total Liabilities ............................. 57,902,520 54,470,942
SHAREHOLDER'S EQUITY
Common Stock, $1 par value, Authorized ........... 862,845 862,845
10,000,000 shares; 862,845 shares
issued and outstanding
Additiona paid-in capital ........................ 4,821,527 4,821,527
Retained earnings ................................ 865,898 586,583
Net unrealized holding losses on investment
securities available for sale .................. (7,481) (11,904)
Total share Holders' equity .... 6,542,789 6,259,051
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY ...... 64,445,309 60,729,993
========== ==========
</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
June 30,
1997 1996
---- ----
<S> <C> <C>
Interest Income:
Loans, including fees 1,091,198 993,095
Interest on deposits in financial institutions .... 0 0
Federal funds sold 3,311 11,751
Investment securities:
taxable 141,688 122,936
nontaxable 31,516 21,041
------ ------
Total interest income 1,267,714 1,148,823
Interest Expense:
Deposits 583,489 548,955
Other Borrowings 19,088 9,790
Total Interest Expense 602,577 558,745
------- -------
Net interest income 665,137 590,078
Provision for possible loan losses 35,000 20,735
------ ------
Net interest income after provision
for possible loan losses 630,137 569,343
Noninterest income:
Service Charges 104,221 91,893
Referral Fees - Mortgages 21,267 38,485
Security gains 1,293 --
Other 42,209 8,115
------ -----
Total NonInterest Income 168,989 138,493
Noninterest expense:
Salaries and employee benefits 274,697 269,776
Net occupancy and equipment expense 77,596 68,951
Other operating expense 220,277 206,531
------- -------
Total noninterest expenses 572,571 545,258
Income before income taxes 226,555 162,578
Income Taxes 75,622 61,805
------ ------
Net income 150,933 100,773
======= =======
Net income per share 0.17 0.12
==== ====
</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,
1997 1996
<S> <C> <C>
Interest Income:
Loans, including fees .................... 2,107,522 1,954,386
Interest on deposits in financial
institutions ........................... 1,205 0
Federal funds sold 38,892 29,124
Investment securities:
taxable 268,076 235,871
nontaxable 60,471 40,535
------ ------
Total interest income 2,476,166 2,259,916
Interest Expense:
Deposits 1,161,856 1,097,684
Other Borrowings 28,277 11,209
------ ------
Total Interest Expense 1,190,133 1,108,893
--------- ---------
Net interest income 1,286,033 1,151,023
Provision for possible loan losses 41,000 34,263
------ ------
Net interest income after provision
for possible loan losses 1,245,033 1,116,760
Noninterest income:
Service Charges 192,916 178,796
Referral Fees - Mortgages 92,836 117,413
Security gains 1,293 (4,766)
Other 42,373 31,583
------ ------
Total NonInterest Income 329,418 323,026
Noninterest expense:
Salaries and employee benefits 554,858 554,477
Net occupancy and equipment expense 152,366 140,297
Other operating expense 443,190 415,255
------- -------
Total noninterest expenses 1,150,414 1,110,029
Income before income taxes 424,038 329,757
Income Taxes 144,722 122,674
------- -------
Net income 279,316 207,083
======= =======
Net income per share 0.32 0.24
==== ====
</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,
1997 1996
---- ----
<S> <C> <C>
Cash Flows from operating activities:
Net income ......................................... 279,315 207,084
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for possible loan losses ............ 41,000 34,263
Depreciation .................................. 87,028 79,611
Stock compensation expense .................... -- 1,125
Amortization and (accretion), net ............. 5,954 (9,556)
Accretion of deferred loan fees ............... (60,625) (14,208)
Loan fees ..................................... 19,625 29,167
Amortization of organizational cost ........... -- 4,895
Securities gains .............................. 4,500 4,766
Securities losses ............................. (3,206) --
(Increase) decrease in other assets ............ (259,080) (95,353)
Increase (decrease) in other liabilities ...... (54,864) (56,109)
Net cash provided by operating ............ 59,647 185,685
activities
Cash flows from investing activities:
Increase in loans, net ........................ (5,611,249) (2,678,861)
Proceeds from:
maturities/called of investment securities
held to maturitiy .................... 998,652 1,300,000
sales/called/maturities of investment
securities:
available for sale ................... 1,297,641 500,000
maturities of interest earning deposits
in financial institutions ............ 1,000,000 0
Purchase of investment securities:
available for sale ....................... (1,495,259) (1,333,651)
held to maturity ......................... (1,247,895) (1,658,532)
Purchase of premises and equipment ............ (105,815) (24,219)
Net cash used in investing
activities .................... (5,163,925) (3,895,263)
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(continued)
Six months ended
June 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from financing activities:
Increase in deposits, net ................... 2,164,365 3,082,145
Increase (decrease) in
federal funds purchased ................ (200,000) (700,000)
Proceeds from reverse repurchase ............ 983,000
Repayment of Federal Home Loan advances ..... (14,750)
Federal Home Loan Bank advances ............. 985,250 577,750
Cash dividend ............................... (431,423) (215,689)
-------- --------
Net cash provided by financing ......... 3,486,442 2,744,206
activities
Net decrease in cash and
cash equivalents .................. (1,617,836) (965,372)
---------- --------
Cash and cash equivalents at beginning
of period ......................... 3,737,822 3,576,465
Cash and cash equivalents at end of
period ............................ 2,119,986 2,611,093
========= =========
Supplemental disclosures of cash paid during
period for:
Interest ............................... $ 1,441,740 $ 1,085,248
=========== ===========
Income taxes ........................... $ 131,942 $ 189,333
=========== ===========
</TABLE>
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,
1997 compared to December 31, 1996, and the results of its operations for the
three and six month periods ended June 30, 1997 compared to the comparable
periods ended June 30, 1996. 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 1996 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 facilities in Statesboro, Georgia.
FINANCIAL CONDITION
During the first six months of 1997, total assets increased $3,715,316
or approximately 6.1% (12.2% per annum) as compared to amounts at
December 31, 1996. This increase was a result of the bank's deposit base
increasing by approximately $2,164,365 and borrowings increase of
$1,753,500. The Bank's asset mix changed primarily by an increase in loans of
$5,643,046 or approximately 13.2% when compared to the December 31, 1996
levels. This increase in loans was primarily funded by the increase in
deposits and borrowings. The following is a summary of the Company's
deposits by type at June 30, 1997 and December 31, 1996:
Page 7
<PAGE>
<TABLE>
<CAPTION>
DEPOSITS
6/30/97 12/31/96
<S> <C> <C>
Noninterest-bearing demand deposits .............. $ 5,711,489 $ 5,184,539
NOW accounts ..................................... 6,938,610 7,420,192
Money market accounts ............................ 2,232,294 3,077,437
Savings accounts ................................. 3,139,319 2,586,187
Individual retirement accounts ................... 3,200,582 2,958,922
Certificates of deposits of $100,000 or more ..... 11,290,836 10,319,613
Certificates of deposits of less than $100,000 ... 22,116,095 20,917,970
---------- ----------
Total deposits .......................... $54,629,225 $52,464,860
=========== ===========
</TABLE>
FINANCIAL CONDITION (cont)
The Company's rate of growth of approximately 6.1% (12.2% per annum) for the
first half of 1997 approximates the 5.4% (10.8% per annum) growth that the
Company achieved for the first half of 1996. 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 involvement
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 1997 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.
Page 8
<PAGE>
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, 1997, the Company's cash and due from
banks equaled $2,119,986, its investment securities available for sale equaled
$6,600,664. 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 $2,500,000 and with the Federal Home Loan Bank, Atlanta, Ga. for
a secured credit line of $7,000,000. During the first six months of 1997, the
Company had outstanding borrowings of $1,518,750 of a short and long-term
basis from the Federal Home Loan Bank to match loan funding rates and
maturities with loan borrowing rates and maturities. Securities sold
under repurchase agreements are treated as financing activities and are carried
at the amounts at which the securities will be subsequently reacquired as
specified in the agreements, the amount at June 30, 1997 was $983,000.00.
The Company's liquidity position, calculated as cash and due from banks, federal
funds sold, and investment securities not pledged divided by deposits, equaled
22.15% as of June 30, 1997 compared to 28.54% as of June 30, 1996. 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 June 30, 1997
jumbo deposits equaled 20.67% of total deposits of $54,629,255. At December 31,
1996 jumbo deposits equaled 19.67% of total deposits of $52,464,860.
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.
Page 9
<PAGE>
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,
1997.
<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY TABLE
0-90 days 91-365 days One to five years Over five years
Current Current Cumulative Current Cumulative Current Cumulative
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-sensitive assets:
Loans .............................. 8,873 18,835 27,708 18,041 45,749 2,533 48,282
Investment securities .............. 100 505 605 9,390 9,995 1,145 11,140
--- --- --- ----- ----- ----- ------
Total interest-sensitive assets 8,973 19,340 28,313 27,431 55,744 3,678 59,422
Interest-sensitive liabilities:
NOW, money market and
savings accounts .............. 12,310 0 12,310 0 12,310 0 12,310
Individual retirement accounts and
certificates of deposits ....... 6,484 22,465 28,949 7,659 36,608 0 36,608
Borrowings .............................. 998 1,045 2,043 236 2,279 223 2,502
--- ----- ----- --- ----- --- -----
Total interest-sensitive liabilities 19,792 23,510 43,302 7,895 51,197 223 51,420
------ ------ ------ ----- ------ --- ------
Interest-sensitivity gap ................ (10,819) (4,170) (14,989) 19,536 4,547 3,455 8,002
======= ====== ======= ====== ===== ===== =====
Ratio to total interest
sensitive assets ................... -18.21% -7.02% -25.22% 32.88% 7.65% 5.81% 13.47%
===== ==== ===== ===== ==== ==== =====
</TABLE>
Page 10
<PAGE>
LIQUIDITY AND INTEREST RATE SENSITIVITY (cont)
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 10.15% at June 30, 1997
as compared to 10.31% at December 31, 1996. Management anticipates the existing
capital levels will be adequate to sustain the Company's anticipated growth for
the foreseeable future.
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.
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, 1997.
Page 11
<PAGE>
<TABLE>
<CAPTION>
Eagle Bancorp, Inc. and Subsidiary
Required
Actual Minimum Excess
----- --------- ------
% Amount % Amount % Amount
----- ----- ---- ------- --- -------
<S> <C> <C> <C> <C> <C> <C>
Risk Based Capital . 14.50% 7,167 6.00% 2,964 8.50% 4,203
Tier 1 Capital ..... 13.26% 6,550 8.00% 3,951 5.26% 2,599
Leverage ratio ..... 10.16% 6,550 3.00% 1,933 7.16% 4,617
Eagle Bank and Trust
Risk Based Capital . 14.01% 6,922 6.00% 2,964 8.01% 3,958
Tier 1 Capital ..... 12.76% 6,305 8.00% 3,952 4.76% 2,353
Leverage Ratio ..... 9.79% 6,305 3.00% 1,933 7.42% 4,372
</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.
Net interest income for the three month period ended June 30, 1997 equaled
$665,137 or 12.71% more than the three month period ending June 30, 1996 of
$590,078. The average yield earned on interest-earning assets decreased to 9.02%
for the three month period ended June 30, 1997 from 9.09% for the similar three
month period ended June, 30, 1996 and the average rate paid on interest-bearing
liabilities decreased to 4.95% for the three month period ended June 30, 1997
from 5.22% for the comparable period ended June 30, 1996. The Company's net
interest margin for the three month period ended June 30, 1997 was 4.73%
compared to 4.67% for the comparable period ended June 30, 1996.
Net interest income for the six month period ended June 30, 1997 equalled
$1,286,033 or 15.16% more than the six month period ending June 30, 1996 of
$1,116,760. The average yield earned on interest-earning assets increased to
9.14% for the six month period ended June 30, 1997 from 8.70% for the similar
period ended June 30, 1996 and the average rate paid on interest-bearing
liabilities decreased to 4.84% for the six month period ended June 30, 1997 from
5.80% for the six month period ended June 30, 1996. The Company's net interest
margin for the six month period ended June 30, 1997 was 4.52% compared to 4.01%
for the period ended June 30, 1996.
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.
Page 13
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.
The allowance for possible loan losses approximated 1.39% of outstanding loans
at June 30, 1997 as compared to 1.50% at December 31, 1996. The allowance
increased to $671,297 at June 30, 1997 from $639,500 at December 31, 1996
The allowance relates primarily to the level of the loan portfolio and related
credit risks. The provision for the first six months of 1997 was $41,000
compared to $34,263 for the first six months of 1996. The provision for the
three months ended June 30, 1997 was $35,000 as compared to $20,735 for the
same period ended June 30, 1996. Net chargeoffs for the six month period
ended June 30, 1997 equaled $9,203 compared to net recoveries of $4,737 for the
comparable period in 1996.
Page 13
<PAGE>
The following table summarizes nonperforming loans, potential problem loans, and
allowance for possible loan losses data as of June 30, 1997 and December 31,
1996.
<TABLE>
<CAPTION>
June 30,
December 31,
1997 1996
(in thousands)
<S> <C> <C>
Nonperforming loans (0ver 90 days) .................... 90 123
Potential problem loans (internally classified) ....... 110 611
Asset Quality Ratios:
Nonperforming loans to total loans,
net of unearned income ........................... 0.19% 0.029%
Nonperforming loans to total assets ................... 0.17% 1.43%
Nonperforming loans and potential
problem loans to total assets .................... 0.31% 1.72%
Allowance for possible loan losses to
nonperforming loans ............................... 7.45X 5.20X
Allowance for possible loan losses to
nonperforming loans and
potential problem loans .......................... 3.36X .087X
</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 14
<PAGE>
Noninterest Income
Noninterest income, net of securities gains, is primarily comprised of service
charges on deposit accounts, which for the six month period ended June 30, 1997
was approximately $329,418 as compared to $323,026 for the comparable period in
1996. 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, 1997 was $168,989
compared to $138,493 for the three months ended June 30, 1996. 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 $1,150,414 for
the six month period ended June 30, 1997 compared to $1,110,029 for the
comparable period of 1996. The Company experienced other operating
expenses of approximately $572,571 for the three months ended June 30, 1997
compared to $545,258 for the three months ended June 30, 1996. Other
operating expenses increased approximately 3.64% and 5.01% for the six month
and three month periods ended June 30, 1997 as compared to the same periods
ended June 30, 1996.
Other Operating Expenses:
<TABLE>
<CAPTION>
Six months ended
June 30,
1997 1996
---- ----
<S> <C> <C>
Salaries and$employee be$efits 554,858 554,477
Net occupancy and equipment expense 152,366 140,297
Data processing expense 77,662 55,185
Regulatory assessments 7,721 7,311
Insurance Expense 11,708 14,085
Stationery and supplies expense 33,213 51,874
Legal Expense 17,472 17,553
Postage 29,205 28,387
Accounting and audit fees 19,550 26,580
Advertising and marketing expense 34,242 32,715
ATM expense 13,768 13,269
Directors' fees 23,400 23,400
Dues and subscription 10,845 12,206
Business taxes and licenses 10,832 18,769
Correspondent bank services 13,681 15,248
All other expenses 139,891 98,673
------- ------
Total NonInterest expense 1,150,414 1,110,029
========= =========
</TABLE>
Page 15
<PAGE>
Income Taxes
The Company has recorded income tax expense of $144,722 for the six months ended
June 30, 1997 representing an effective tax rate of approximately 34% which
compares to an effective tax rate of 37% recorded for the comparable period of
1996. The Company recorded for the three months ended June 30, 1997 income tax
expense of $75,622 or 33% as compared to $61,805 or 38% for the same period
ended June 30, 1996.
Net Income
The Company earned net income of $279,315 or approximately 0.32 per share for
the six month period ended June 30, 1997. This compares to $207,083 or
approximately 0.24 per share for the like period ended June 30, 1996. The
Company earned net income of $150,933 or approximately 0.17 per share for the
three months ended June 30, 1997. This compares to $100,773 or approximately
0.12 per share for the same period ended June 30, 1996.
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.
A) At the Annual Meeting of Shareholders held on May 27, 1997, the
following directors were elected to hold office for the coming
year:
For
Robert D. Coston 545,133
J. Bird Hodges, Jr. 544,983
Betty K. Minick 545,133
Paul E. Parker 545,133
Paul A. Whitlock, Jr. 545,133
The following directors will continue their term: T. J. Morris, Jr.,
W. Dale Parker, Erskine Russell, Solly Trapnell., 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 27, 1997,
Tiller, Stewart and Company, was ratified as the independent auditors
for the Company. Votes were cast as follows:
For 540,783
Against 150
Abstain 7,530
Item 5.
Other Information
Item 6.
Exhibits and Reports on Form 8-K
(a) Exhibits. Financial Data Schedule
(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: August 14, 1997
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