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, 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
September 30, 1997 0-19228
EAGLE BANCORP, INC.
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1860526
(State or other jurisdiction (I.R.S.Employer Identification No.)
of incorporation or organization)
335 South Main Street, P.O. Box 638
Statesboro, Georgia 30459
(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
October 10, 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
Notes to Consolidated Financial Statements........................5
Item 2. Management's Discussion and Analysis
or Plan of Operations..........................................6-14
Part II. Other Information
Item 1. Legal Proceedings...................................15
Item 2. Changes in Securities...............................15
Item 3. Defaults Upon Senior Securities.....................15
Item 4. Submission of Matters to a Vote
of Security Holders.................................15
Item 5. Other Information...................................15
Item 6. Exhibits and Reports on Form 8-K....................15
Signatures.................................................................16
<PAGE>
Part I. Financial Statements
Item 1.
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
September 30, December 31
1997 1996
---------- ----------
ASSETS
<S> <C> <C>
Cash and due from banks $ 4,298,649 $ 2,237,822
Federal funds sold -- 1,500,000
Interest-earning deposits in other banks -- 1,000,000
Investment securities:
Available for sale 6,354,005 6,898,784
Held to maturity 4,722,838 3,790,335
--------- ---------
Total investment securities 11,076,843 10,689,119
Loans, net of unearned income 50,510,381 42,638,858
Reserve for loan loss 695,926 639,500
------- -------
Loans, net 49,814,454 41,999,358
Premises and equipment, net 2,452,990 2,474,386
Other assets 961,446 829,308
------- -------
68,604,382 60,729,993
========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest-bearing deposits 6,695,769 5,184,539
Interest-bearing deposits 49,798,433 47,280,321
---------- ----------
Total Deposits 56,494,202 52,464,860
FHLB advances 1,874,495 548,250
Reverse repurchase agreement 977,000
Federal funds purchased 1,580,000 200,000
Accrued expenses and other liabilities 937,601 1,257,832
------- ---------
Total Liabilities 61,863,298 54,470,942
Shareholders' equity:
Common Stock, $1 par value, Authorized 862,845 862,845
10,000,000 shares; 862,845 shares
issued and outstanding
Additional paid-in capital 4,821,527 4,821,527
Retained earnings 1,043,765 586,583
Net unrealized gains (losses) on
investment securities available for sale 12,947 (11,904)
------ -------
Total Shareholders' equity 6,741,084 6,259,051
--------- ---------
Total liabilities and shareholders'equity $ 68,604,382 $ 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)
Nine Months Ended
September 30, September 30,
1997 1996
Interest Income:
<S> <C> <C>
Loans, including fees $ 3,298,041 $ 2,973,570
Interest on deposits in financial
institutions 1,205 --
Federal funds sold 45,452 40,553
Investment securities:
taxable 401,980 367,963
nontaxable 91,662 63,815
------ ------
Total interest income 3,838,342 3,445,901
Interest Expense:
Deposits 1,774,573 1,658,460
Other borrowings 72,030 21,076
Total interest expense 1,846,603 1,679,536
--------- ---------
Net interest income 1,991,738 1,766,365
Provision for possible loan losses 90,000 58,206
------ ------
Net interest income after provision
for possible loan losses 1,901,738 1,708,159
Noninterest income:
Service charges 296,904 259,910
Referral fees - mortgages 170,184 189,553
Security gains (losses) 1,293 (10,467)
Other 72,095 45,740
------ ------
Total nonInterest income 540,475 484,736
Noninterest expense:
Salaries and employee benefits 840,545 799,936
Net occupancy and equipment expense 231,579 212,166
Other operating expense 667,908 631,464
------- -------
Total noninterest expenses 1,740,032 1,643,566
--------- ---------
Income before income taxes 702,182 549,329
Income Taxes 245,000 206,777
------- -------
Net income $ 457,182 $ 342,552
=========== ===========
Net income per share $ 0.53 $ 0.40
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 2
<PAGE>
<TABLE>
<CAPTION>
EAGLE BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three Months Ended
September 30, September 30,
1997 1996
Interest Income:
<S> <C> <C>
Loans, including fees 1,190,519 1,019,185
Interest on deposits in financial
institutions - -
Federal funds sold 6,560 11,429
Investment securities:
taxable 133,905 132,090
nontaxable 31,192 23,280
------ ------
Total interest income 1,362,176 1,185,984
Interest Expense:
Deposits 612,717 560,774
Other borrowings 43,753 9,868
------ -----
Total interest expense 656,470 570,642
------- -------
Net interest income 705,705 615,342
Provision for possible loan losses 49,000 23,943
------ ------
Net interest income after provision
for possible loan losses 656,705 591,399
Noninterest income:
Service charges 103,987 81,113
Referral fees - mortgages 77,348 72,140
Security gains (losses) (0) (5,700)
Other 29,722 14,157
------ ------
Total nonInterest income 211,057 161,710
Noninterest expense:
Salaries and employee benefits 285,687 245,459
Net occupancy and equipment expense 79,213 71,869
Other operating expense 224,718 216,210
------- -------
Total noninterest expenses 589,618 533,538
------- -------
Income before income taxes 278,144 219,571
Income Taxes 100,278 84,103
------- ------
Net Income $177,886 $135,468
======= =======
Net income per share $ 0.21 $ 0.16
======== ========
</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,
1997 1996
---- ----
<S> <C> <C>
Net Income ..........................................$ 457,182 $ 342,552
Adjustments to reconcile net income
Provisions for possible loan losses ............. 90,000 58,206
Depreciation .................................... 133,434 124,169
Securities gains (losses) ....................... (1,293) 10,467
Amortization (accretion), net ................... (20,843) (17,979)
Amortization of organization cost ............... 4,894
Stock option expense ............................ 1,125
Accretion of loan fees .......................... (80,552) (23,401)
Loan fees, net .................................. 46,979 32,031
Deferred Income Tax Expense ..................... 0
Increase in other assets ........................ (123,440) (127,586)
Increase (decrease) in other liabilities ......... (320,231) 32,477
-------- ------
Net cash provided by operating activities .. 181,236 436,955
Cash Flows from investing activities:
Increase in loans, net ..........................(7,871,523) (3,661,971)
Purchase of investments - AFS ...................(1,416,432) (2,972,914)
Purchase of investments - HTM ...................(1,431,155) (1,658,532)
Purchase of premises and equipment .............. (112,038) (87,290)
Proceeds from certificate of deposits ........... 1,000,000 0
Maturities of investments - AFS ................. 1,020,000 1,500,000
Called investments - AFS ........................ 729,500 1,300,000
Sale of investments - AFS ....................... 250,000 0
Sale of investments - HTM ....................... 498,652 0
------- -
Net Cash used in investing activities ......(7,332,996) (5,580,707)
Cash Flow From Financing Activities
Increase in Deposits, Net ....................... 4,029,342 4,063,225
FHLB Advances ................................... 1,365,250 563,000
Repayment of FHLB advance ....................... (39,005) 0
Proceeds from reverse repurchases ................ 977,000
Cash dividends ................................... (215,689)
Federal fund repayments .......................... (700,000)
Federal funds purchased ..........................1,380,000 0
---------- -
Net Cash Provided By Financing Activities ....7,712,587 3,710,536
Net Increase (Decrease) in Cash and
Cash Equivalents ....................... 560,827 (1,433,216)
Cash And Cash Equivalents At Beginning of Period ......3,737,822 3,576,465
---------- ---------
Cash And Cash Equivalents At End of Period ............4,298,649 $ 2,143,249
========== ===========
Supplemental disclosures of cash paid during period for:
Interest... $ 1,829,258 $ 1,619,059
Income taxes.. $ 196,242 $ 252,713
</TABLE>
Page 4
<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 5
<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, 1997 compared to December 31, 1996, and the results of its operations for
the three and nine month periods ended September 30, 1997 compared to the
comparable periods ended September 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 main banking facility in Statesboro, Georgia.
Page 6
<PAGE>
FINANCIAL CONDITION
During the first nine months of 1997, total assets increased $7,874,388 or
approximately 13% as compared to amounts at December 31, 1996. This increase was
primarily a result of the bank's deposit base increasing by approximately
$4,029,342 and Federal Funds Purchased of $1,580,000 and other borrowings of
$2,103,245. The Bank's asset mix changed by a increase in loans of $7,871,523.
This represents an increase of approximately 18.46% in loans.
The following is a summary of deposits:
<TABLE>
9/30/97 12/31/96
<S> <C> <C>
Noninterest-bearing demand deposits ............... $ 6,695,769 $ 5,184,539
NOW accounts ...................................... 6,638,592 7,420,192
Money market accounts ............................. 2,165,939 3,077,437
Savings accounts .................................. 3,025,058 2,586,187
Individual retirement accounts .................... 3,425,741 2,958,922
Certificates of deposits of $100,000 or more ...... 10,651,732 10,319,613
Certificates of deposits of less than $100,000 .... 23,891,371 20,917,970
---------- ----------
Total deposits ........................... $56,494,202 $52,464,860
=========== ===========
</TABLE>
The Company's rate of growth was approximately 13% for the nine months of 1997
as compared to 9% for the same period in 1996. Factors expected to contribute to
a continuation in the Company's growth rate include:
1) the current loan demand 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 continue to achieve growth for 1997 in the 10%
range.
Page 7
<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, 1997, the Company's cash and due
from banks equaled $4,298,649, its investment securities available for sale
equaled $6,354,005. 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 $7,000,000. During the first nine months of 1997, the
Company had outstanding borrowings of $1,874,495 on a long-term basis from the
Federal Home Loan Bank to match loan funding rates and maturities with 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
September 30, 1997 was $977,000.
The Company's liquidity position, calculated as cash and due from banks, federal
funds sold, and investment securities not pledged divided by deposits, equaled
25.88% as of September 30, 1997 compared to 26.37% as of September 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 September 30, 1997
jumbo deposits equaled 18.85% of total deposits of $56,494,202. At September 30,
1996 jumbo deposits equaled 19.67% of total deposits of $52,464,860. 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 and county, city and educational funds. 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
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, 1997.
Page 8
<PAGE>
<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
Interest-sensitive
assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Loans 10,022 18,636 28,658 19,109 47,767 2,743 50,510
Investment securities - 925 925 9,008 9,933 1,144 11,077
---- ---- ---- ------ ------ ------ ------
Total Interest-
Sensitive Assets 10,022 19,561 29,583 28,117 57,700 3,887 61,587
Interest-sensitive
liabilities:
NOW, money
market and
savings accounts 11,830 - 11,830 - 11,830 - 11,830
Individual retirement
accounts and certificates
of deposits 7,220 22,817 30,037 7,932 37,969 - 37,969
Borrowings 2,581 1,073 3,654 388 4,042 389 4,431
------ ------ ------ ---- ------ ---- -----
Total interest-
sensitive liabilities 21,631 23,890 45,521 8,320 53,841 389 54,230
------- ------- ------- ------ ------- ---- ------
Interest-sensitivity
gap (11,609) (4,329) (15,938) 19,797 3,859 3,498 7,357
======== ======= ======== ======= ====== ====== =====
Ratio to total interest
sensitive assets -18.85% -7.03% -25.88% 32.14% 6.27% 5.68% 11.95%
======= ====== ======= ====== ===== ===== ======
</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 9
<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 9.82% at September 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 September 30, 1997.
<TABLE>
<CAPTION>
Eagle Bancorp, Inc. and Subsidiary
Required
Actual Minimum Excess
-------- ---------- --------
% Amount % Amount % Amount
------ ------ ----- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital......... 9.83% 6,741 6.00% 4,116 3.83% 2,625
Risk based capital..... 14.26% 7,389 8.00% 4,145 6.26% 3,244
Leverage ratio......... 9.83% 6,741 3.00% 2,058 6.83% 4,683
Eagle Bank and Trust
Tier 1 capital......... 9.48% 6,504 6.00% 4,115 3.48% 2,389
Risk based capital..... 13.80% 7,152 8.00% 4,146 5.80% 3,006
Leverage ratio......... 9.48% 6,504 3.00% 2,058 6.48% 4,446
</TABLE>
Page 10
<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, 1997 equaled
$705,705 or 14.69% more than the three month period ended September 30, 1996.
The average yield earned on interest-earning assets was 8.93% for the three
month period ended September 30, 1997 compared to 9.14% for the similar period
ended September, 30, 1996 and the average rate paid on interest-bearing
liabilities was 5.00% for the three month period ended September 30, 1997
compared to 5.12% for the comparable period ended September 30, 1996. The
Company's net interest margin for the three month period ended September 30,
1997 was 4.63% compared to 4.60% for the three month period ended September 30,
1996.
Net interest income for the nine month period ended September 30, 1997 equaled
$1,991,738 or 12.76% more than the nine month period ending September 30, 1996.
The average yield earned on interest-earning assets was 8.90% for the nine month
period ended September 30, 1997 compared to 9.13% for the similar period ended
September 30, 1996 and the average rate paid on interest-bearing liabilities was
4.95% for the nine month period ended September 30, 1997 compared to 5.16% for
the nine month period ended September 30, 1996. The Company's net interest
margin for the nine month period ended September 30, 1997 was 4.60% compared to
4.68% for the period ended September 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.
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 1.38% of outstanding loans
at September 30, 1997 as compared to 1.50% at December 31, 1996. The allowance
increased to $695,926 at September 30, 1997 from $639,500 at December 31, 1996.
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 1997 was $90,000 compared to $58,206 for the first nine months of 1996. This
provision is a result of evaluation as describe above of the loan portfolio
during the first nine months of 1997 as compared to the first nine months of
1996. Net charge-offs for the nine month period ended September 30, 1997 equaled
$33,574 compared to net charge-offs of $10,180 for the comparable period in
1996.
Page 11
<PAGE>
The following table summarizes nonperforming loans, potential problem loans, and
allowance for possible loan losses data as of September 30, 1997 and December
31, 1996.
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
Nonperforming loans (in thousands)
<S> <C> <C>
(over 90 days past due)................. $ 45 $ 123
Potential problem loans **(in thousands)
(internally classified).................. $ 167 $ 611
Asset Quality Ratios:
Nonperforming loans to total
loans, net of unearned income........... .089% 0.029%
Nonperforming loans to total assets...... .065% .202%
Nonperforming loans and potential
problem loans to total assets............ .31% 1.21%
Allowance for possible loan losses
to nonperforming loans.................... 6.47X 5.20X
Allowance for possible loan
losses to nonperforming loans
and potential problem loans............... 3.28X .087X
</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 gains (losses), primarily comprised of
service charges on deposit accounts and mortgage referral fees, for the nine
month period ended September 30, 1997 was approximately $540,475 compared to
$484,736 for the comparable period in 1996 and represents and increase of
approximately 11.50%. 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, 1997 was $211,057
compared to $161,710 for the three months ended September 30, 1996 and
represents and increase of approximately 30.52%.
Page 12
<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 $ 1,740,032 for the nine month period ended
September 30, 1997 compared to $ 1,643,566 for the comparable period of 1996.
The Company experienced noninterest expense of approximately $589,618 for the
three months ended September 30, 1997 compared to $533,538 for the three months
ended September 30, 1996. Other operating expenses increased approximately 5.86%
and 10.51% for the nine month and three month periods ended September 30, 1997
as compared to the same periods ended September 30, 1996. Major components of
noninterest expenses are shown below:
<TABLE>
<CAPTION>
Nine months ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Salaries and employee benefits $840,545 $799,936
Net occupancy and equipment expense 231,579 212,166
Major Compontents of other operating expenses:
Data processing expense 121,453 81,471
Stationery and supplies expense 50,133 69,915
Postage 47,409 42,448
Accounting and audit fees 28,550 57,510
Advertising and marketing expense 46,752 40,977
Other operatings expenses 373,610 339,142
------- -------
Total noninterest expense $1,740,032 $1,643,566
========== ==========
</TABLE>
Data processing expense increased due to the bank out-sourceing contract renewal
after the initial denovo contract. 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 13
<PAGE>
Income Taxes
The Company has recorded income tax expense of $245,000 for the first nine
months of 1997 representing an effect tax rate of approximately 35% which
compares to an effective tax rate of 37.6% recorded for the comparable period of
1996. The Company recorded for the three months ended September 30, 1997 income
tax expense of $100,278 as compared to $84,103 for the same period ended
September 30, 1996.
Net Income
The Company's net income was $177,859 for the three month period ended September
30, 1997 compared to $135,486 for the like period ended September 30, 1996
representing an increase of 31.27%. The Company's net income per share was $0.21
per share for the three month period ended September 30, 1997 compared to $0.16
per share for the comparable period for 1996. The Company's net income was
$457,182 or $0.53 per share for the first nine months of 1997 compared to
$342,552 or $0.40 per share for the comparable period for 1996 or an increase of
approximately 33.46% and 32.50% 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 14
<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.
Financial Data Sheet - Exhibit 27
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period covered by this
report.
Page 15
<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 6, 1997
Page 16
<PAGE>
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