New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Business News and Headlines
SEC Filings, Earing Reports, Press Releases
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
Eagle Bancorp Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 11, 2009 08:08PM

Eagle Bancorp Inc. (EGBN) filed Quarterly Report for the period ended 2009-03-31. EAGLE BANCORP is the holding company for EagleBank. The Bank is headquartered in Bethesda Maryland and conducts full service commercial banking services through nine offices located in Montgomery County Maryland and Washington D.C. The Company focuses on building relationships with businesses professionals and individuals in its marketplace. Eagle Bancorp Inc. has a market cap of $97.8 million; its shares were traded at around $7.67 with a P/E ratio of 12.1 and P/S ratio of 1.4. The dividend yield of Eagle Bancorp Inc. stocks is 0.7%.

Highlight of Business Operations:

The Company had an annualized return on average assets of 0.56% and an annualized return on average common equity of 5.87% for the first three months of 2009, as compared to returns on average assets and average common equity of 0.77% and 7.98%, respectively, for the same three months of 2008.

For the three months ended March 31, 2009, net interest income showed an increase of 57% as compared to the same period in 2008 on growth in average earning assets of 76%. For the three months ended March 31, 2009 as compared to the same period in 2008, the Company experienced a decline in its net interest margin from 4.19% to 3.76% or 43 basis points. This change was primarily due to margin compression, reflecting declines in market interest rates on earning assets resulting from Federal Reserve activities which have not been matched by comparable declines in rates on interest bearing liabilities and by a lesser benefit of noninterest funding sources in a much lower interest rate environment.

For the three months ended March 31, 2009 and 2008, average interest bearing liabilities funding average earning assets was 78% and 77%, respectively. Additionally, while the average rate on earning assets for the three months ended March 31, 2009, as compared to the same period in 2008 has declined by 123 basis points from 6.83% to 5.60%, the cost of interest bearing liabilities has decreased by 107 basis points from 3.43% to 2.36%, resulting in a slight decline in the net interest spread of 16 basis points from 3.40% for the three months ended March 31, 2008 to 3.24% for the three months ended March 31, 2009. The net interest margin decreased 43 basis points from 4.19% for the three months ended March 31, 2008 to 3.76% for the three months ended March 31, 2009, a larger decline than in the net interest spread as the benefit of average noninterest sources funding earning assets declined from 79 basis points for the three months ended March 31, 2008 to 52 basis points for the three months ended March 31, 2009. This decline was due to the lower level of interest rates in the quarter ended March 31, 2009 as compared to 2008.

In terms of the average balance sheet composition or mix, loans, which generally have higher yields than securities and other earning assets, decreased from 89% of average earning assets in the first three months of 2008 to 88% of average earning assets for the same period of 2009. Investment securities for the first three months of 2009 amounted to 11% of average earning assets, an increase of 1% from an average of 10% for the same period in 2008. Federal funds sold averaged 0.6% in the first three months of 2009 versus 0.7% of average earning assets for the same period of 2008.

Total noninterest expenses increased from $6.2 million in the first three months of 2008 to $10.3 million for the first three months of 2009, an increase of 66%. The primary reasons for this increase was the Fidelity acquisition which increased the size of the organization resulting in higher staff levels and related personnel costs, increased occupancy costs, higher internet and license agreement fees, and higher loan collection costs. In addition, higher costs were incurred for marketing, sponsorships, broker fees and legal, accounting and professional fees. The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 69.10% for the three months ended March 31, 2009, as compared to 65.07% for the three months ended March 31, 2008. The Company is placing additional emphasis in 2009 on noninterest expense management.

Net interest income is the difference between interest income on earning assets and the cost of funds supporting those assets. Earning assets are composed primarily of loans and investment securities. The cost of funds represents interest expense on deposits, customer repurchase agreements and other borrowings. Noninterest bearing deposits and capital are other components representing funding sources (refer to discussion above under Results of Operations). Changes in the volume and mix of assets and funding sources, along with the changes in yields earned and rates paid, determine changes in net interest income. Net interest income for the first three months of 2009 was $13.5 million compared to $8.6 million for the first three months of 2008, an increase of 57%. This increase in net interest income for the three months ended March 31, 2009 was attributable in part to the Fidelity acquisition which contributed to an increased volume of average earning assets of 76%, offset somewhat by a 10% decline in the net interest margin from 4.19% to 3.76%. The decline in the net interest margin was due to a lower benefit of noninterest funding sources as market interest rates were substantially lower in the first three months of 2009 as compared to 2008. In an effort to combat a weaker economic climate, the Federal Reserve lowered its targeted federal funds rate from 2.25% at March 31, 2008 to between 0.0% and 0.25% during December, 2008.

Read the The complete Report



Stocks Discussed: EGBN,
Rate this post:




Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't




Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial