Financial Performance - Net income for Q2 2021 was $48.0 million, a 66% increase from $28.9 million in Q2 2020, with earnings per share rising to $1.50 from $0.90, a 67% increase [256]. - Total revenue for Q2 2021 was $95.6 million, up from $93.9 million in Q2 2020, driven by net interest income of $84.6 million, which increased from $81.4 million [258]. - The annualized return on average assets (ROAA) for Q2 2021 was 1.68%, compared to 1.12% in Q2 2020, while return on average common equity (ROACE) increased to 14.92% from 9.84% [271]. - The efficiency ratio for Q2 2021 was 37.14%, slightly improved from 37.18% in Q2 2020, indicating effective cost management [264]. - The provision for credit losses decreased to a reversal of $6.2 million for the six months ended June 30, 2021, compared to a provision of $34.0 million for the same period in 2020, primarily due to an improved macroeconomic outlook [280]. - Total noninterest income increased to $21.5 million for the six months ended June 30, 2021, a 20% increase from $18.0 million in the same period in 2020 [281]. Loan and Credit Quality - As of June 30, 2021, the outstanding balance of Paycheck Protection Program (PPP) loans was $238.0 million through 537 business loans, with an average yield of 6.13% for the first six months of 2021 [237]. - The Company sold a total of $169.8 million of PPP loans during the second quarter of 2021, recognizing $4.7 million in accelerated interest income from these sales [237]. - Total loans decreased by 6.5% from $7.8 billion at December 31, 2020, to $7.3 billion at June 30, 2021, with average loans down 3.6% year-over-year [278]. - The Company recorded a negative provision for credit losses for the three months ended June 30, 2021, due to improving economic forecasts and credit quality [242]. - Nonperforming assets totaled $54.5 million at June 30, 2021, representing 0.50% of total assets, down from $65.9 million or 0.59% of total assets at December 31, 2020 [316]. - Total nonperforming loans amounted to $49.5 million at June 30, 2021, which is 0.68% of total loans, compared to $60.9 million or 0.79% of total loans at December 31, 2020 [324]. Deposits and Funding - Average deposits increased by 18.2% for the first six months of 2021 compared to the same period in 2020, despite total deposits being 1.9% lower than at December 31, 2020 [278]. - Total deposits decreased to $9.0 billion as of June 30, 2021, from $9.2 billion at December 31, 2020 [357]. - Noninterest bearing demand deposits grew to $3,175,419 million, compared to $2,566,348 million in the previous year [299]. - The cost of funds decreased to 0.37% from 0.65% year-over-year [299]. Investment Portfolio - The investment portfolio increased by 46.0% to $1.7 billion as of June 30, 2021, due to cash deployment from deposit inflows [355]. - The duration of the investment portfolio increased to 4.3 years at June 30, 2021, from 3.2 years at December 31, 2020 [394]. - The net unrealized gain before income tax on the investment portfolio was $6.7 million at June 30, 2021, down from $21.8 million at June 30, 2020 [397]. Risk Management - The Company has implemented heightened risk management procedures for its commercial real estate portfolio, including periodic stress testing [420]. - The company continues to monitor its concentration in commercial real estate lending to remain compliant with federal guidance [420]. - The Company continues to monitor early signs of deterioration in borrowers' financial conditions to mitigate risk effectively [317]. Capital and Shareholder Returns - The ratio of common equity to total assets increased to 11.92% at June 30, 2021, from 11.16% at December 31, 2020, due to earnings of $91.5 million [289]. - The total risk-based capital ratio improved to 17.98% as of June 30, 2021, up from 17.04% at December 31, 2020 [359]. - The Company initiated a repurchase program allowing for the repurchase of up to 1,588,848 shares, with 1,466 shares repurchased in Q1 2021 for $62,000 [424]. - A quarterly cash dividend of $0.35 per share was announced on June 30, 2021, payable on August 2, 2021 [425].

Eagle Bancorp, Inc. (NASDAQ:EGBN) Q2 2021 Results Conference Call July 22, 2021 10:00 AM ET Company Participants Susan Riel - President and Chief Executive Officer Charles Levingston - Chief Financial Officer Janice Williams - Chief Credit Officer Conference Call Participants Casey Whitman - Piper Sandler David Bishop - Seaport Research Partners Catherine Mealor - KBW Brody Preston - Stephens, Inc Christopher Marinac - Janney Montgomery Scott David Bishop - Seaport Research Partners Operator Good day and th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number 0-25923 Eagle Bancorp, Inc. (Exact name of registrant as specified in its charter) Maryland 52-2061461 (State or o ...

Eagle Bancorp, Inc. (NASDAQ:EGBN) Q1 2021 Earnings Conference Call April 22, 2021 10:00 AM ET Company Participants Charles Levingston - EVP & CFO Susan Riel - President, CEO & Director Janice Williams - EVP Conference Call Participants Casey Whitman - Piper Sandler & Co. Steven Comery - G. Research Stuart Lotz - KBW Samuel Varga - Stephens Inc. Operator Hello, and welcome to the Eagle Bancorp, Inc. First Quarter 2021 Earnings Call. Please note that today's meeting is being recorded. [Operator Instructions]. ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Eagle Bancorp, Inc. operates EagleBank, a community bank focused on relationship banking for businesses in the Washington, D.C. metro area, with a significant commercial real estate loan concentration - Eagle Bancorp, Inc. is the holding company for EagleBank, a Maryland-chartered commercial bank operating **20** offices across Suburban Maryland, the District of Columbia, and Northern Virginia[9](index=9&type=chunk)[10](index=10&type=chunk) - The Bank's business model is centered on providing personalized, relationship-based banking services as an alternative to larger super-regional institutions in its market[11](index=11&type=chunk) Loan Portfolio Composition (as of December 31, 2020) | Loan Category | Percentage of Portfolio | | :--- | :--- | | Commercial Real Estate (Non-owner occupied) & Construction | 58% | | Commercial & Industrial (C&I) | 19% | | Commercial Real Estate (Owner occupied) & Construction | 15% | | Paycheck Protection Program (PPP) | 6% | | Consumer (Home Equity, Residential Mortgage, etc.) | 2% | - The company participated in the Paycheck Protection Program (PPP) in 2020, a federal lending program administered through the SBA to support small businesses during the COVID-19 pandemic[18](index=18&type=chunk) - As of December 31, 2020, the company employed **515** full and part-time employees, with women representing **59%** and racial and ethnic minorities representing **61%** of the workforce[66](index=66&type=chunk)[68](index=68&type=chunk) - The company and the bank are subject to comprehensive regulation and supervision by the Federal Reserve Board and the State of Maryland Office of Financial Regulation, covering aspects like capital adequacy, lending, and deposit activities[76](index=76&type=chunk)[83](index=83&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, high commercial real estate loan concentration, liquidity, increasing regulatory scrutiny, and cybersecurity threats - The COVID-19 pandemic poses a significant risk, adversely affecting customer creditworthiness, loan quality, and operational stability, with the Accommodation and Food Service industry (**10%** of the loan portfolio) particularly impacted[138](index=138&type=chunk)[140](index=140&type=chunk) - A substantial portion of the loan portfolio (**85%** secured by real estate) is concentrated in commercial real estate within the Washington, D.C. metropolitan area, creating a greater risk of defaults if the regional real estate market or economy deteriorates[165](index=165&type=chunk) - The company faces liquidity risk, as its largest funding source is customer deposits; a significant withdrawal of uninsured deposits (which were **$3.3 billion**, or **36%** of total deposits, at year-end) could force reliance on more expensive funding sources[160](index=160&type=chunk)[161](index=161&type=chunk) - As the company's assets approach and exceed **$10 billion**, it may become subject to additional and more stringent regulation and supervision by the Consumer Financial Protection Bureau (CFPB), which could increase compliance costs[196](index=196&type=chunk) - The company is exposed to cybersecurity risks, including attacks on its systems or those of its vendors, which could lead to financial losses, remediation costs, and reputational damage[220](index=220&type=chunk)[221](index=221&type=chunk) - The adoption of the Current Expected Credit Loss (CECL) accounting standard on January 1, 2020, introduces more volatility to the allowance for credit losses, as it requires estimating lifetime expected losses based on inherently subjective and complex forecasts[215](index=215&type=chunk)[217](index=217&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[229](index=229&type=chunk) [Properties](index=36&type=section&id=Item%202.%20Properties) The company operates **30** leased facilities, including its principal office in Bethesda, Maryland, across the Washington, D.C. metropolitan area - The company operates out of **30** leased facilities, including its principal office in Bethesda, Maryland, and various branch and operating locations in Washington, D.C., Suburban Maryland, and Northern Virginia[229](index=229&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal proceedings, which management does not expect to have a material financial impact - The company is involved in various legal proceedings in the ordinary course of business but does not expect them to have a material financial impact[231](index=231&type=chunk)[232](index=232&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[233](index=233&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq, declared **$0.88** per share in dividends in 2020, and repurchased **458,069** shares in Q4 2020 - The company's common stock is listed on the Nasdaq Capital Market under the symbol 'EGBN', with **31,783,355** shares outstanding as of February 1, 2021[235](index=235&type=chunk) - In 2020, the company declared aggregate cash dividends of **$0.88** per share, totaling **$28.3 million**[236](index=236&type=chunk) Issuer Repurchases of Common Stock (Q4 2020) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | October 2020 | — | n/a | | November 2020 | 371,300 | $37.46 | | December 2020 | 86,769 | $38.51 | | **Total Q4** | **458,069** | **$37.66** | - A new share repurchase program was authorized on December 16, 2020, for up to **1,588,848** shares, effective from January 1, 2021, through December 31, 2021[242](index=242&type=chunk) [Selected Financial Data](index=39&type=section&id=Item%206.%20Selected%20Financial%20Data) In 2020, total assets grew to **$11.1 billion** and deposits to **$9.2 billion**, while net income decreased to **$132.2 million** due to higher credit loss provisions Selected Historical Financial Data (2018-2020) | (in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Balance Sheet Data** | | | | | Total Assets | $11,117,802 | $8,988,719 | $8,389,137 | | Loans | $7,760,212 | $7,545,748 | $6,991,447 | | Deposits | $9,189,203 | $7,224,391 | $6,974,285 | | Total Shareholders' Equity | $1,240,892 | $1,190,681 | $1,108,941 | | **Income Statement Data** | | | | | Net Interest Income | $321,562 | $324,045 | $316,993 | | Provision for Credit Losses | $45,571 | $13,091 | $8,660 | | Net Income | $132,217 | $142,943 | $152,276 | Key Performance Ratios (2018-2020) | Ratio | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Interest Margin | 3.19% | 3.77% | 4.10% | | Efficiency Ratio | 39.25% | 39.99% | 37.31% | | Return on Average Assets | 1.28% | 1.61% | 1.91% | | Return on Average Common Equity | 10.98% | 12.20% | 14.89% | | Net Charge-offs to Average Loans | 0.26% | 0.13% | 0.05% | - The company uses non-GAAP financial measures such as tangible common equity, tangible book value per common share, and efficiency ratio, which management believes are useful for investors in analyzing performance[250](index=250&type=chunk)[257](index=257&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) 2020 financial performance was impacted by COVID-19 and CECL adoption, resulting in decreased net income to **$132.2 million** despite significant asset and deposit growth - The COVID-19 pandemic led to unprecedented economic disruption, prompting the company to implement loan modification programs, participate in the PPP, and adapt business practices[278](index=278&type=chunk)[279](index=279&type=chunk)[282](index=282&type=chunk) Key Financial Results (2020 vs. 2019) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net Income | $132.2M | $142.9M | | Diluted EPS | $4.09 | $4.18 | | Net Interest Margin | 3.19% | 3.77% | | Provision for Credit Losses | $45.6M | $13.1M | | Noninterest Income | $45.7M | $25.7M | | Total Assets (Year-End) | $11.1B | $9.0B | - The adoption of the CECL accounting standard on January 1, 2020, required an initial **$10.6 million** increase to the Allowance for Credit Losses (ACL) and contributed to higher provision expense throughout the year[291](index=291&type=chunk)[337](index=337&type=chunk) - Nonperforming assets increased to **$65.9 million** (**0.59%** of total assets) at year-end 2020, up from **$50.2 million** (**0.56%** of total assets) at year-end 2019[408](index=408&type=chunk) - The company's capital position remained strong, with a Total risk-based capital ratio of **17.04%** at December 31, 2020, well in excess of regulatory requirements for a well-capitalized institution[367](index=367&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=77&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk, managed by ALCO, showing a moderately asset-sensitive position with a **1.6%** projected net interest income increase from a **100** bps rate rise - The company's primary market risk is interest rate risk, which is managed by the Asset/Liability Committee (ALCO) through established policies and regular monitoring[511](index=511&type=chunk) Interest Rate Sensitivity Analysis (as of December 31, 2020) | Change in Interest Rates (bps) | % Change in Net Interest Income (12 months) | % Change in Net Income (12 months) | % Change in Market Value of Portfolio Equity | | :--- | :--- | :--- | :--- | | +200 | +5.0% | +8.5% | +4.7% | | +100 | +1.6% | +2.8% | +2.8% | | -100 | -1.6% | -2.6% | -11.3% | - At December 31, 2020, the company had a positive cumulative interest rate sensitivity gap of **$352 million** (**3%** of total assets) within one year, indicating a moderately asset-sensitive balance sheet[536](index=536&type=chunk) - The company uses interest rate swaps to manage interest rate risk, with one **$100.0 million** notional swap outstanding at year-end 2020, designated as a cash flow hedge against variable rate deposits[519](index=519&type=chunk) [Financial Statements and Supplementary Data](index=82&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the consolidated financial statements and an unqualified auditor's opinion, highlighting CECL adoption as a critical audit matter due to significant judgments - The independent registered public accounting firm, Dixon Hughes Goodman LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of the company's internal control over financial reporting as of December 31, 2020[546](index=546&type=chunk)[561](index=561&type=chunk) - The auditor identified the Allowance for Credit Losses as a critical audit matter due to significant management judgment required in determining historical loss experience, forecasting future economic conditions, and applying qualitative adjustments following CECL adoption[553](index=553&type=chunk)[557](index=557&type=chunk) - The company adopted ASC Topic 326 (CECL) on January 1, 2020, resulting in a **$10.6 million** increase to the allowance for credit losses on loans and a **$4.1 million** increase to the reserve for unfunded commitments, recorded as a cumulative-effect adjustment to retained earnings[548](index=548&type=chunk)[673](index=673&type=chunk) Consolidated Balance Sheet Highlights (December 31, 2020 vs 2019) | (in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Total Assets | $11,117,802 | $8,988,719 | | Loans, net | $7,650,633 | $7,472,090 | | Total Deposits | $9,189,203 | $7,224,391 | | Total Shareholders' Equity | $1,240,892 | $1,190,681 | Consolidated Income Statement Highlights (2020 vs 2019) | (in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Net Interest Income | $321,562 | $324,045 | | Provision for Credit Losses | $45,571 | $13,091 | | Noninterest Income | $45,696 | $25,699 | | Net Income | $132,217 | $142,943 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=149&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles, disclosures, or auditing scope - There were no changes in or disagreements with accountants on accounting and financial disclosures[917](index=917&type=chunk) [Controls and Procedures](index=149&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of December 31, 2020, following full remediation of a 2019 material weakness in the control environment - Management concluded that as of December 31, 2020, the company's disclosure controls and procedures were effective[919](index=919&type=chunk) - A material weakness in internal control over financial reporting identified as of December 31, 2019, was fully remediated by December 31, 2020[918](index=918&type=chunk)[928](index=928&type=chunk) - Remediation actions included splitting Chairman/CEO roles, restructuring the Board, hiring a new Chief Legal Officer, enhancing ethics programs, and strengthening related party transaction policies[929](index=929&type=chunk) - The independent registered public accounting firm, Dixon Hughes Goodman LLP, issued an unqualified report on the effectiveness of the company's internal control over financial reporting as of December 31, 2020[926](index=926&type=chunk) [Other Information](index=150&type=section&id=Item%209B.%20Other%20Information) No other information is reported under this item - None[932](index=932&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=151&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the company's 2021 Proxy Statement[933](index=933&type=chunk) [Executive Compensation](index=151&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the company's 2021 Proxy Statement[934](index=934&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=151&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the company's 2021 Proxy Statement[935](index=935&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=151&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the company's 2021 Proxy Statement[936](index=936&type=chunk) [Principal Accountant Fees and Services](index=151&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement - Information for this item is incorporated by reference from the company's 2021 Proxy Statement[937](index=937&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=151&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section details the financial statements, schedules, and exhibits filed with the Form 10-K, including an extensive list of corporate governance and material contracts - This section includes the consolidated financial statements and the report of the independent registered public accounting firm, Dixon Hughes Goodman LLP[939](index=939&type=chunk) - A list of exhibits filed with the report is provided, including the Certificate of Incorporation, Bylaws, indentures related to subordinated notes, various employment and compensation agreements, and required certifications[940](index=940&type=chunk)

Eagle Bancorp, Inc. (NASDAQ:EGBN) Q4 2020 Earnings Conference Call January 28, 2021 10:00 AM ET Company Participants Charles Levingston - Chief Financial Officer Susan Riel - President & Chief Executive Officer Jan Williams - Chief Credit Officer Conference Call Participants Casey Whitman - Piper Sandler Steve Comery - G. Research Stuart Lotz - KBW Dave Bishop - Seaport Global Feddie Strickland - Janney Montgomery Operator Ladies and gentlemen thank you for standing by and welcome to the Eagle Bancorp Inc. ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements as of September 30, 2020, detail the company's financial position, performance, and cash flows, including notes on accounting policies and COVID-19 impacts [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2020 | December 31, 2019 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$10,106,294** | **$8,988,719** | **+12.4%** | | Loans, net | $7,770,040 | $7,472,090 | +4.0% | | Total Deposits | $8,178,785 | $7,224,391 | +13.2% | | **Total Liabilities** | **$8,882,892** | **$7,798,038** | **+13.9%** | | **Total Shareholders' Equity** | **$1,223,402** | **$1,190,681** | **+2.7%** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $79,038 | $80,989 | $240,145 | $243,335 | | Provision for Credit Losses | $6,607 | $3,186 | $40,654 | $10,146 | | **Net Income** | **$41,346** | **$36,495** | **$93,325** | **$107,487** | | **Diluted EPS** | **$1.28** | **$1.07** | **$2.88** | **$3.12** | - Net income for Q3 2020 **increased 13.3% YoY to $41.3 million**, driven by a significant increase in noninterest income, particularly a **$9.7 million YoY increase in gain on sale of loans**; however, for the nine months ended September 30, 2020, **net income decreased 13.2% YoY to $93.3 million**, primarily due to a four-fold increase in the provision for credit losses[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $107,585 | $92,339 | | Net cash used in investing activities | ($475,566) | ($499,399) | | Net cash provided by financing activities | $983,116 | $480,718 | | **Net Increase in Cash and Cash Equivalents** | **$615,135** | **$73,658** | - The significant increase in cash and cash equivalents during the first nine months of 2020 was primarily driven by a **$954.4 million increase in deposits**, which fueled financing activities[26](index=26&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the adoption of the CECL standard, COVID-19 impacts, and breakdowns of key financial items - On January 1, 2020, the company adopted the new **CECL accounting standard** (ASU 2016-13), which resulted in a day-one cumulative-effect adjustment that **decreased retained earnings by $10.9 million**, net of tax; this standard replaces the incurred loss model with a lifetime expected credit loss model[21](index=21&type=chunk)[47](index=47&type=chunk)[87](index=87&type=chunk) - In response to the COVID-19 pandemic, the company implemented a short-term loan modification program; as of September 30, 2020, ongoing temporary modifications were in place for approximately 321 loans, representing an **outstanding balance of $851 million (10.8% of total loans)**[43](index=43&type=chunk)[157](index=157&type=chunk) - The company is an active participant in the Paycheck Protection Program (PPP), with **PPP loans totaling $456.1 million** as of September 30, 2020; these loans are fully guaranteed by the U.S. government[44](index=44&type=chunk)[113](index=113&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance, noting higher Q3 income offset by a nine-month decline due to increased credit loss provisions [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Q3 2020 net income rose on strong noninterest income, though nine-month results fell due to higher credit loss provisions and margin compression Key Performance Metrics | Metric | Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Income (in millions) | $41.3 | $36.5 | $93.3 | $107.5 | | Diluted EPS | $1.28 | $1.07 | $2.88 | $3.12 | | Net Interest Margin | 3.08% | 3.72% | 3.27% | 3.88% | | ROAA (annualized) | 1.57% | 1.62% | 1.24% | 1.66% | | ROACE (annualized) | 14.46% | 12.09% | 10.44% | 12.34% | - The **provision for credit losses increased significantly to $6.6 million for Q3 2020 and $40.7 million for the first nine months of 2020**, compared to $3.2 million and $10.1 million for the respective periods in 2019; this increase is attributed to the implementation of the CECL accounting standard and the economic impact of COVID-19[275](index=275&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk) - **Noninterest income surged 183% YoY in Q3 2020 to $17.8 million**, primarily due to a **$12.2 million gain on sale of loans**, which was up 377% from Q3 2019, reflecting a strong residential mortgage market and an accounting adjustment that accelerated revenue recognition[278](index=278&type=chunk)[280](index=280&type=chunk)[342](index=342&type=chunk) [Financial Condition](index=70&type=section&id=Financial%20Condition) Total assets grew to $10.1 billion, driven by deposit growth, while credit loss allowances and nonperforming assets increased Balance Sheet Summary (in billions) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Assets | $10.1 | $9.0 | | Total Loans | $7.9 | $7.6 | | Total Deposits | $8.2 | $7.2 | | Total Shareholders' Equity | $1.22 | $1.19 | - **Nonperforming assets stood at $63.0 million**, or 0.62% of total assets, at September 30, 2020, an increase from $50.2 million, or 0.56% of total assets, at December 31, 2019[325](index=325&type=chunk)[337](index=337&type=chunk) - The company identified industries of potential concern due to COVID-19, with loans to the **Accommodation & Food Services sector representing 10.2%** of the total loan portfolio and **Retail Trade representing 1.3%**[380](index=380&type=chunk)[382](index=382&type=chunk) [Liquidity and Capital Resources](index=73&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position and capital ratios well above regulatory minimums, with a delayed CECL impact on capital Regulatory Capital Ratios (Company) | Ratio | Sep 30, 2020 | Dec 31, 2019 | Minimum for Well-Capitalized* | | :--- | :--- | :--- | :--- | | CET1 Capital Ratio | 13.19% | 12.87% | 6.50% | | Tier 1 Capital Ratio | 13.19% | 12.87% | 8.00% | | Total Capital Ratio | 16.72% | 16.20% | 10.00% | | Tier 1 Leverage Ratio | 10.82% | 11.62% | 5.00% | `*Applies to Bank only` - The company has substantial secondary liquidity sources, including the ability to **borrow up to $1.3 billion from the FHLB** (with $350 million outstanding) and purchase up to $155 million in federal funds[395](index=395&type=chunk) - The company's Board of Directors declared a **quarterly cash dividend of $0.22 per share** in September 2020[442](index=442&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has a moderate interest rate risk profile, with simulations showing limited net interest income sensitivity to rate changes Interest Rate Sensitivity Analysis (at Sep 30, 2020) | Change in Interest Rates (basis points) | Percentage change in net interest income (next 12 months) | | :--- | :--- | | +200 | +6.0% | | +100 | +1.9% | | -100 | (1.3)% | | -200 | (2.0)% | [Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed effective, and remediation for a prior material weakness is considered complete - Management believes that the deficiencies contributing to a previously disclosed **material weakness have been remediated** as of June 30, 2020[454](index=454&type=chunk) - Key remediation actions included **splitting the roles of Chairman and CEO**, restructuring the Board of Directors, enhancing policies for related party transactions, and reinforcing the risk management function[455](index=455&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=83&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a class action lawsuit and regulatory investigations concerning internal controls and related party transactions - A **putative class action lawsuit** was filed against the Company, alleging violations of the Securities Exchange Act of 1934 related to disclosures about internal controls and related party loans; the defendants' motion to dismiss is currently under consideration by the court[460](index=460&type=chunk) - The Company has received document requests and subpoenas from regulators and U.S. Attorney's offices in connection with **investigations into related party transactions**, the retirement of former officers, and relationships with a local public official[462](index=462&type=chunk) [Risk Factors](index=83&type=section&id=Item%201A.%20Risk%20Factors) Key risks include the adverse impacts of the COVID-19 pandemic on credit quality, capital, liquidity, and operational security - The **COVID-19 pandemic** is expected to continue adversely affecting customers, potentially worsening credit quality; industries of particular concern include **Accommodation and Food Service (10.2% of loan portfolio)** and **Retail Trade (1.3% of loan portfolio)**[463](index=463&type=chunk)[467](index=467&type=chunk) - The company may need to record **additional provisions for credit losses** as the pandemic evolves, and the uncertainty impairs the ability to accurately forecast future losses under the new CECL methodology[468](index=468&type=chunk) - **Operational risks have increased** due to remote work arrangements, including heightened cybersecurity threats (phishing, malware), potential disruptions to IT infrastructure, and challenges in maintaining compliance programs like anti-money laundering[473](index=473&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred, and no shares were repurchased in Q3 2020 under the reinstated buyback program Issuer Purchases of Equity Securities (Q3 2020) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Number of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | July 2020 | 0 | N/A | 447,890 | | August 2020 | 157* | $29.52 | 447,733 | | September 2020 | 0 | N/A | 447,733 | | **Total** | **157** | **$29.52** | **447,733** | `*Includes shares acquired for tax withholding on vested restricted shares.`

Eagle Bancorp, Inc. (NASDAQ:EGBN) Q3 2020 Earnings Conference Call October 22, 2020 10:00 AM ET Company Participants Charles Levingston - Chief Financial Officer Susan Riel - President & Chief Executive Officer Jan Williams - Chief Credit Officer Conference Call Participants Casey Whitman - Piper Sandler Steven Comery - G. Research Catherine Mealor - KBW Christopher Marinac - Janney Montgomery Scott Brody Preston - Stephens, Inc Erik Zwick - Boenning & Scattergood Operator Ladies and gentlemen, thank you fo ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows total assets grew to $9.8 billion, driven by loan and deposit growth Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2020 | December 31, 2019 | Change (%) | | :----------------------------- | :------------ | :---------------- | :--------- | | Total Assets | $9,799,670 | $8,988,719 | 8.9% | | Total Liabilities | $8,611,775 | $7,798,038 | 10.4% | | Total Shareholders' Equity | $1,187,895 | $1,190,681 | -0.2% | | Loans, net | $7,912,965 | $7,472,090 | 5.9% | | Total Deposits | $7,935,972 | $7,224,391 | 9.9% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The income statement reflects a 22.5% decrease in quarterly net income due to a significant rise in credit loss provisions Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (%) | | :----------------------------- | :------------------------------- | :------------------------------- | :--------- | | Net Income | $28,856 | $37,243 | -22.5% | | Net Interest Income | $81,363 | $81,329 | 0.04% | | Provision for Credit Losses | $19,737 | $3,600 | 448.3% | | Noninterest Income | $12,495 | $6,360 | 96.5% | | Basic EPS | $0.90 | $1.08 | -16.7% | | Diluted EPS | $0.90 | $1.08 | -16.7% | | **Metric** | **Six Months Ended June 30, 2020** | **Six Months Ended June 30, 2019** | **Change (%)** | | Net Income | $51,979 | $70,992 | -26.8% | | Basic EPS | $1.60 | $2.06 | -22.3% | | Diluted EPS | $1.60 | $2.05 | -22.0% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income declined by 27.5% in the quarter, impacted by lower net income and unrealized gains Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Comprehensive Income | $30,459 | $42,002 | -27.5% | | Total unrealized gain on investment securities | $1,333 | $5,508 | -75.8% | | **Metric** | **Six Months Ended June 30, 2020** | **Six Months Ended June 30, 2019** | **Change (%)** | | Comprehensive Income | $63,688 | $79,034 | -19.4% | | Total unrealized gain on investment securities | $12,833 | $10,887 | 17.9% | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity slightly decreased due to the CECL adoption impact, share repurchases, and dividend payments Shareholders' Equity Changes (in thousands) | Metric | June 30, 2020 | December 31, 2019 | | :----------------------------------- | :------------ | :---------------- | | Total Shareholders' Equity | $1,187,895 | $1,190,681 | | Impact of adopting ASC 326 (CECL) on Retained Earnings (Jan 1, 2020) | $(10,931) | N/A | | Common stock repurchased (Six Months Ended June 30, 2020) | $(44,168) | N/A | | Cash dividends declared (Six Months Ended June 30, 2020) | $(14,180) | N/A | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show a significant increase in financing activities, leading to a substantial rise in cash and cash equivalents Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | | Net cash provided by operating activities | $48,317 | $48,805 | -1.0% | | Net cash used in investing activities | $(408,179) | $(369,004) | 10.6% | | Net cash provided by financing activities | $753,931 | $194,969 | 286.7% | | Net Increase (Decrease) In Cash and Cash Equivalents | $394,069 | $(125,230) | N/A | | Cash and Cash Equivalents at End of Period | $636,042 | $196,634 | 223.5% | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the accounting policies and financial statement line items [Note 1. Summary of Significant Accounting Policies](index=8&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note details the basis of financial statement presentation, key policies, and the adoption of the CECL standard - Eagle Bancorp, Inc. operates as a full-service community bank primarily in Northern Virginia, Suburban Maryland, and Washington, D.C., offering real estate, commercial, and consumer lending, as well as deposit products[26](index=26&type=chunk) - The COVID-19 pandemic has adversely impacted various industries, potentially reducing fee and interest income, and increasing credit losses. The Company has implemented loan modification programs and participated in the Paycheck Protection Program (PPP)[29](index=29&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - Effective January 1, 2020, the Company adopted ASU 2016-13 (CECL), replacing the incurred loss methodology with an expected loss methodology for credit losses, resulting in an initial adjustment of **$10.6 million to the allowance for credit losses** and **$4.1 million to the reserve for unfunded commitments**, charged to retained earnings[44](index=44&type=chunk)[85](index=85&type=chunk) - Short-term loan modifications made in good faith due to COVID-19 for current borrowers are not considered Troubled Debt Restructurings (TDRs) under the CARES Act. As of June 30, 2020, approximately **708 loans ($1.63 billion) were modified** under this program[40](index=40&type=chunk)[84](index=84&type=chunk) - The Company originated **$456 million in PPP loans** to over 1,400 businesses as of June 30, 2020, which are fully guaranteed by the U.S. government and do not carry an allowance for credit loss[41](index=41&type=chunk)[116](index=116&type=chunk) - The Allowance for Credit Losses (ACL) is an estimate of expected credit losses on loans and available-for-sale debt securities, measured using a collective (pool) basis with a lifetime loss-rate model, adjusted for current conditions and reasonable forecasts, including regional unemployment as a loss driver[48](index=48&type=chunk)[52](index=52&type=chunk)[70](index=70&type=chunk) Provision for Credit Losses Breakdown (Six Months Ended June 30, 2020, in thousands) | Category | Amount | | :-------------------- | :------- | | Loans | $33,909 | | AFS Debt Securities | $138 | | **Total** | **$34,047** | [Note 2. Cash and Due from Banks](index=23&type=section&id=Note%202.%20Cash%20and%20Due%20from%20Banks) This note details the Bank's reserve balances with the Federal Reserve and balances with other correspondent banks - The Bank maintains sufficient noninterest reserve balances with the Federal Reserve Bank to meet requirements, plus **significant interest-bearing excess reserves**[91](index=91&type=chunk) - Interest-bearing balances are held with the Federal Home Loan Bank of Atlanta, and noninterest-bearing balances with domestic correspondent banks for services[92](index=92&type=chunk) [Note 3. Investment Securities Available-for-Sale](index=23&type=section&id=Note%203.%20Investment%20Securities%20Available-for-Sale) This note details the composition and fair value of the available-for-sale investment securities portfolio Investment Securities Available-for-Sale (June 30, 2020, in thousands) | Category | Amortized Cost | Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | | :----------------------------------- | :------------- | :------------------- | :--------------------- | :---------------------- | :-------------------------- | | U.S. agency securities | $116,223 | $117,054 | $1,580 | $749 | $— | | Residential mortgage backed securities | $516,297 | $531,528 | $15,346 | $115 | $— | | Municipal bonds | $86,374 | $90,694 | $4,333 | $— | $13 | | Corporate bonds | $31,561 | $32,920 | $1,562 | $78 | $125 | | Other equity investments | $198 | $198 | $— | $— | $— | | **Total** | **$750,653** | **$772,394** | **$22,821** | **$942** | **$138** | - Total gross unrealized losses were primarily due to interest rate changes, not credit quality, for U.S. government agency securities. However, a **$138 thousand allowance for credit losses** was recorded for AFS corporate and municipal securities due to potential credit losses[97](index=97&type=chunk)[79](index=79&type=chunk) - Proceeds from sales and calls of investment securities were **$120.0 million** for the six months ended June 30, 2020, up from $42.1 million for the same period in 2019[101](index=101&type=chunk) - The carrying value of securities pledged as collateral for certain government deposits, repurchase agreements, and lines of credit was **$346 million** at June 30, 2020[102](index=102&type=chunk) [Note 4. Mortgage Banking Derivatives](index=27&type=section&id=Note%204.%20Mortgage%20Banking%20Derivatives) This note describes the Bank's use of derivatives in its mortgage banking activities and the impact of COVID-19 - The Bank uses interest rate lock commitments and forward sales contracts of mortgage-backed securities (MBS) as derivatives in its mortgage banking activities[103](index=103&type=chunk) - During the second quarter of 2020, the Company **suspended mandatory locking of loans for sale** due to significant market dislocation from COVID-19 and operational strain[107](index=107&type=chunk) - At June 30, 2020, there were **no material mortgage banking derivative financial instruments**. At June 30, 2019, the notional value of these instruments was $124.5 million[107](index=107&type=chunk) - A **net loss of $(165) thousand** related to mortgage banking derivative instruments was included in other noninterest income for the six months ended June 30, 2020, compared to a net gain of $219 thousand for the same period in 2019[108](index=108&type=chunk) [Note 5. Loans and Allowance for Credit Losses](index=29&type=section&id=Note%205.%20Loans%20and%20Allowance%20for%20Credit%20Losses) This note provides a detailed breakdown of the loan portfolio, credit quality indicators, and allowance for credit losses Loan Portfolio Composition (June 30, 2020, in thousands) | Loan Type | Amount | % of Total Loans | | :----------------------------------- | :------- | :--------------- | | Commercial | $1,607,056 | 20% | | PPP loans | $456,476 | 6% | | Income producing - commercial real estate | $3,678,946 | 46% | | Owner occupied - commercial real estate | $964,077 | 12% | | Real estate mortgage - residential | $93,601 | 1% | | Construction - commercial and residential | $995,550 | 12% | | Construction - C&I (owner occupied) | $149,845 | 2% | | Home equity | $74,921 | 1% | | Other consumer | $1,289 | 0% | | **Total Loans** | **$8,021,761** | **100%** | Allowance for Credit Losses Activity (Six Months Ended June 30, 2020, in thousands) | Metric | 2020 | | :----------------------------------- | :----- | | Balance at beginning of period, prior to adoption of ASC 326 | $69,944 | | Impact of adopting ASC 326 | $10,614 | | Net loans charged-off | $(9,385) | | Provision for credit losses | $37,623 | | **Ending balance** | **$108,796** | - PPP loans are included in the CECL model but do not carry an allowance for credit loss due to being **fully guaranteed by the U.S. government**[116](index=116&type=chunk) Nonaccrual Loans (June 30, 2020, in thousands) | Loan Type | Nonaccrual No Allowance | Nonaccrual with Allowance | Total Nonaccrual Loans | | :----------------------------------- | :---------------------- | :------------------------ | :--------------------- | | Commercial | $1,507 | $15,214 | $16,721 | | Income producing - commercial real estate | $8,544 | $8,735 | $17,279 | | Owner occupied - commercial real estate | $7,065 | $3,690 | $10,755 | | Real estate mortgage - residential | $5,503 | $2,713 | $8,216 | | Construction - commercial and residential | $2,298 | $3,087 | $5,385 | | Home equity | $50 | $550 | $600 | | Other consumer | $— | $6 | $6 | | **Total** | **$24,967** | **$33,995** | **$58,962** | - As of June 30, 2020, there were **13 Troubled Debt Restructurings (TDRs) totaling approximately $20.3 million**, with 10 of these loans ($12.3 million) performing under their modified terms. The CARES Act allows temporary suspension of TDR treatment for COVID-19 related modifications[152](index=152&type=chunk)[149](index=149&type=chunk) [Note 6. Leases](index=43&type=section&id=Note%206.%20Leases) This note discusses the Company's accounting for operating leases, primarily for real estate properties - As of June 30, 2020, the Company had **$25.4 million of operating lease Right-of-Use (ROU) assets** and **$27.1 million of operating lease liabilities** on its Consolidated Balance Sheet[156](index=156&type=chunk) Net Lease Cost (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | | :----------- | :----- | :----- | | Net Lease Cost | $4,349 | $4,245 | - The weighted average lease term for operating leases was **4.62 years**, and the weighted average discount rate was **4.00%** as of June 30, 2020[160](index=160&type=chunk) [Note 7. Other Derivatives](index=45&type=section&id=Note%207.%20Other%20Derivatives) This note explains the Company's use of interest rate swaps for hedging and customer risk management - As of June 30, 2020, the Company had one designated cash flow hedge notional interest rate swap transaction outstanding amounting to **$100 million**, associated with its variable rate deposits[165](index=165&type=chunk) - An estimated **$1.3 million will be reclassified as an increase in interest expense** from cash flow hedges over the next twelve months[166](index=166&type=chunk) - The Company uses non-designated derivatives to facilitate customer risk management strategies, which are simultaneously hedged by offsetting derivatives with third parties[167](index=167&type=chunk) - Derivative agreements contain credit risk contingent features, including collateral posting requirements and default provisions based on indebtedness or capital status[169](index=169&type=chunk)[172](index=172&type=chunk) - As of June 30, 2020, the aggregate fair value of derivative contracts with credit risk contingent features in a net liability position totaled **$6.1 million**, requiring **$1.9 million in posted collateral**[173](index=173&type=chunk) Fair Value of Derivatives (June 30, 2020, in thousands) | Type | Notional Amount | Fair Value | Balance Sheet Category | | :----------------------------------- | :-------------- | :--------- | :--------------------- | | Designated Cash Flow Hedge (Interest Rate Product) | $100,000 | $1,330 | Other Liabilities | | Non-designated Hedges (Interest Rate Product) | $154,447 | $4,523 | Other Assets | | Non-designated Hedges (Interest Rate Product) | $154,447 | $4,818 | Other Liabilities | | Non-designated Hedges (Other Contracts) | $27,150 | $150 | Other Liabilities | [Note 8. Other Real Estate Owned](index=52&type=section&id=Note%208.%20Other%20Real%20Estate%20Owned) This note reports the activity and balance of properties acquired through foreclosure - The ending balance of Other Real Estate Owned (OREO) was **$8,237 thousand** at June 30, 2020[182](index=182&type=chunk) - Real estate acquired from borrowers totaled **$6,750 thousand** for the six months ended June 30, 2020[182](index=182&type=chunk) - There were **no sales of OREO property** for the three and six months ended June 30, 2020 and 2019[181](index=181&type=chunk)[182](index=182&type=chunk) [Note 9. Long-Term Borrowings](index=52&type=section&id=Note%209.%20Long-Term%20Borrowings) This note details the Company's long-term borrowings, including subordinated notes and FHLB advances - Total long-term borrowings amounted to **$267,882 thousand** at June 30, 2020[184](index=184&type=chunk) - Long-term borrowings include **$70.0 million of 5.75% subordinated notes** due September 1, 2024, and **$150.0 million of 5.00% Fixed-to-Floating Rate Subordinated Notes** due August 1, 2026, both qualifying as Tier 2 capital[184](index=184&type=chunk)[185](index=185&type=chunk) - On February 26, 2020, the Bank borrowed **$50 million under an FHLB advance** at a fixed rate of 1.81% with a maturity date of February 26, 2030, to support loan growth[186](index=186&type=chunk) [Note 10. Net Income per Common Share](index=53&type=section&id=Note%2010.%20Net%20Income%20per%20Common%20Share) This note provides the calculation of basic and diluted net income per common share Earnings Per Common Share (EPS) (in thousands, except per share data) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Basic EPS | $0.90 | $1.08 | -16.7% | | Diluted EPS | $0.90 | $1.08 | -16.7% | | **Metric** | **Six Months Ended June 30, 2020** | **Six Months Ended June 30, 2019** | **Change (%)** | | Basic EPS | $1.60 | $2.06 | -22.3% | | Diluted EPS | $1.60 | $2.05 | -22.0% | [Note 11. Other Comprehensive Income](index=54&type=section&id=Note%2011.%20Other%20Comprehensive%20Income) This note presents the components of other comprehensive income and changes in accumulated other comprehensive income Other Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Other Comprehensive Income | $1,603 | $4,759 | -66.3% | | **Metric** | **Six Months Ended June 30, 2020** | **Six Months Ended June 30, 2019** | **Change (%)** | | Other Comprehensive Income | $11,709 | $8,042 | 45.6% | | Net unrealized gain on securities available-for-sale | $11,689 | $11,979 | -2.4% | - The balance of accumulated other comprehensive income (loss), net of tax, was **$14,668 thousand** at June 30, 2020[194](index=194&type=chunk) [Note 12. Fair Value Measurements](index=57&type=section&id=Note%2012.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy and presents assets and liabilities measured at fair value - The fair value hierarchy categorizes inputs into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) Assets Measured at Fair Value on a Recurring Basis (June 30, 2020, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total (Fair Value) | | :----------------------------------- | :------ | :------ | :------ | :----------------- | | Investment securities available-for-sale | $— | $719,276 | $33,118 | $752,394 | | Loans held for sale | $— | $68,433 | $— | $68,433 | | Interest Rate Caps | $— | $4,454 | $— | $4,454 | | **Total Assets** | **$—** | **$792,163** | **$33,118** | **$825,281** | Liabilities Measured at Fair Value on a Recurring Basis (June 30, 2020, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total (Fair Value) | | :----------------------------------- | :------ | :------ | :------ | :----------------- | | Interest rate swap derivatives | $— | $1,330 | $— | $1,330 | | Derivative liability | $— | $150 | $— | $150 | | Interest Rate Caps | $— | $4,748 | $— | $4,748 | | **Total Liabilities** | **$—** | **$6,228** | **$—** | **$6,228** | - Loans held for sale are carried at fair value (**$68,433 thousand** at June 30, 2020) and classified as Level 2[206](index=206&type=chunk)[211](index=211&type=chunk) Assets Measured at Fair Value on a Nonrecurring Basis (June 30, 2020, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total (Fair Value) | | :----------------------------------- | :------ | :------ | :------ | :----------------- | | Commercial | $— | $— | $18,047 | $18,047 | | Income producing - commercial real estate | $— | $— | $27,295 | $27,295 | | Owner occupied - commercial real estate | $— | $— | $10,815 | $10,815 | | Real estate mortgage - residential | $— | $— | $7,960 | $7,960 | | Construction - commercial and residential | $— | $— | $5,385 | $5,385 | | Home equity | $— | $— | $600 | $600 | | Other consumer | $— | $— | $6 | $6 | | Other real estate owned | $— | $— | $8,237 | $8,237 | | **Total Assets** | **$—** | **$—** | **$78,345** | **$78,345** | - The fair value of loans at June 30, 2020, was **$7,828,639 thousand**, compared to a carrying value of $7,912,965 thousand, with the fair value measurement classified as Level 3[226](index=226&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=65&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance, the impact of COVID-19, critical accounting policies, and capital adequacy [GENERAL](index=65&type=section&id=GENERAL) This section provides an overview of Eagle Bancorp, Inc as a community-focused bank in the Washington, D.C area - Eagle Bancorp, Inc. is a Bethesda, Maryland-headquartered bank holding company, operating through its wholly-owned subsidiary EagleBank, providing commercial and consumer banking services[230](index=230&type=chunk) - The Company primarily serves Northern Virginia, Suburban Maryland, and Washington, D.C., with **twenty branch offices** and various lending centers[230](index=230&type=chunk)[26](index=26&type=chunk) - Services offered include business and personal checking, NOW accounts, money market and savings accounts, commercial, construction, and consumer loans, residential mortgages, cash management, and origination/sale of SBA and FHA loans[232](index=232&type=chunk) [Impact of COVID-19](index=66&type=section&id=Impact%20of%20COVID-19) This section discusses the significant impact of the COVID-19 pandemic on the Company's operations and financial results - The COVID-19 pandemic has caused widespread economic and financial disruptions, impacting customer creditworthiness and business activity[233](index=233&type=chunk) - The Company has modified business practices, including directing employees to work from home and implementing business continuity plans[234](index=234&type=chunk) - As of June 30, 2020, the Bank had **$456 million in outstanding Paycheck Protection Program (PPP) loans** to over 1,400 businesses, with an average interest rate of 1.00% and an average yield of 2.91% (including fee amortization) for the second quarter of 2020[236](index=236&type=chunk) - As of June 30, 2020, temporary loan modifications were granted on approximately 708 loans, representing **$1.63 billion (approximately 20% of total loans)** in outstanding exposure, with deferred payments due at maturity. These modifications are not reflected as troubled debt restructurings (TDRs) due to provisions of the CARES Act[239](index=239&type=chunk)[240](index=240&type=chunk) - The economic pressures and CECL implementation have contributed to an **increased provision for credit losses** for the first six months of 2020, and the Company suspended its share repurchase program[241](index=241&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=68&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section highlights the adoption of the CECL standard for estimating credit losses and the assessment of goodwill - Effective January 1, 2020, the Company adopted the **CECL standard**, replacing the 'incurred loss' approach with an 'expected loss' approach for credit loss estimation, requiring significant management judgment and reliance on forecasts[244](index=244&type=chunk)[245](index=245&type=chunk)[247](index=247&type=chunk) - The Allowance for Credit Losses (ACL) and Reserve for Unfunded Commitments (RUC) are estimated based on past events, current conditions, and reasonable and supportable forecasts, with historical loss experience adjusted for asset-specific and environmental factors[246](index=246&type=chunk) - As of June 30, 2020, a goodwill impairment test was performed due to COVID-19, concluding that **no impairment existed**, though future events could lead to recording an impairment loss[250](index=250&type=chunk) [RESULTS OF OPERATIONS](index=72&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes financial performance for the three and six months ended June 30, 2020, compared to 2019 [Earnings Summary](index=72&type=section&id=Earnings%20Summary) This summary reviews financial performance, highlighting decreases in net income and EPS and increased credit loss provisions Earnings Summary Highlights (in millions, except EPS) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (%) | | :----------------------------- | :------------------------------- | :------------------------------- | :--------- | | Net Income | $28.9 | $37.2 | -23% | | Basic EPS | $0.90 | $1.08 | -17% | | Provision for Credit Losses | $19.7 | $3.6 | 448% | | Net Interest Income | $81.4 | $81.3 | 0.1% | | Net Interest Margin | 3.26% | 3.91% | -65 bps | | Noninterest Income | $12.5 | $6.4 | 96% | | Efficiency Ratio | 37.18% | 38.04% | -0.86% | | Net Charge-offs | $7.1 | $1.5 | 373% | | **Metric** | **Six Months Ended June 30, 2020** | **Six Months Ended June 30, 2019** | **Change (%)** | | Net Income | $52.0 | $71.0 | -27% | | Basic EPS | $1.60 | $2.06 | -22% | | Total Assets (June 30) | $9,800 | $8,670 | 13% | | Total Loans (June 30) | $8,020 | $7,200 | 11% | | Total Deposits (June 30) | $7,940 | $7,220 | 10% | - The increase in provision for credit losses was primarily due to the **implementation of the CECL accounting standard** and increased reserves associated with the impact of COVID-19[254](index=254&type=chunk)[270](index=270&type=chunk) - Net charge-offs in the second quarter of 2020 were primarily attributable to **one commercial relationship** to a personal services company that ceased business operations as a result of COVID-19[261](index=261&type=chunk) - Noninterest income increased significantly due to **higher gains on the sale of residential mortgage loans**, higher gains from FHA loan origination/securitization/sale/servicing, increased SBIC income, higher swap fee income, and higher prepayment fees[264](index=264&type=chunk)[284](index=284&type=chunk) [Net Interest Income and Net Interest Margin](index=78&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) This section analyzes the components of net interest income and margin, highlighting the impact of interest rates and loan growth Net Interest Income and Margin Trends (in thousands, except percentages) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Change (bps) | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------- | | Net Interest Income | $81,363 | $81,329 | N/A | | Net Interest Margin | 3.26% | 3.91% | -65 | | Average Earning Asset Yields | 3.91% | 5.21% | -130 | | Average Cost of Interest Bearing Liabilities | 1.01% | 2.06% | -105 | | Net Interest Spread | 2.90% | 3.15% | -25 | | **Metric** | **Six Months Ended June 30, 2020** | **Six Months Ended June 30, 2019** | **Change (bps)** | | Net Interest Income | $161,107 | $162,346 | N/A | | Net Interest Margin | 3.36% | 3.97% | -61 | | Net Interest Spread | 2.90% | 3.20% | -30 | - The addition of PPP loans (average yield of 2.91%) **negatively impacted the overall yield** of the total loan portfolio by approximately seven basis points in Q2 2020 and four basis points for the six months ended June 30, 2020[293](index=293&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) - Average loans increased by **$754.9 million** and average deposits increased by **$1.59 billion** for the three months ended June 30, 2020, compared to the same period in 2019[296](index=296&type=chunk) - Average liquidity for the second quarter of 2020 was **$1.1 billion**, significantly higher than $229 million for the second quarter of 2019, contributing to net interest margin compression[296](index=296&type=chunk) [Provision for Credit Losses](index=85&type=section&id=Provision%20for%20Credit%20Losses) This section discusses the provision for credit losses, including the adoption of CECL and the effects of COVID-19 Provision for Credit Losses and Net Charge-offs (Six Months Ended June 30, in thousands) | Metric | 2020 | 2019 | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | | Provision for Credit Losses- Loans | $33,909 | $6,960 | 387.2% | | Net Charge-offs | $9,385 | $4,818 | 94.8% | | Annualized ratio of net charge-offs to average loans | 0.24% | 0.13% | 84.6% | - The higher provisioning in 2020 is primarily due to the **implementation of the CECL accounting standard** and the impact of COVID-19 on actual and expected future credit losses[314](index=314&type=chunk) - Upon adoption of CECL on January 1, 2020, the allowance for credit losses was **increased by $10.6 million**, charged to retained earnings[314](index=314&type=chunk)[318](index=318&type=chunk) - The allowance for credit losses represented **1.36% of loans outstanding** at June 30, 2020, compared to 0.98% at December 31, 2019[263](index=263&type=chunk) [FINANCIAL CONDITION](index=97&type=section&id=FINANCIAL%20CONDITION) This section reviews the Company's financial position, including assets, liabilities, equity, and capital ratios [Summary](index=97&type=section&id=Summary) This summary provides a high-level overview of the Company's financial position and key capital ratios Financial Condition Summary (in millions, except per share data) | Metric | June 30, 2020 | December 31, 2019 | Change (%) | | :----------------------------------- | :------------ | :---------------- | :--------- | | Total Assets | $9,800 | $8,990 | 9% | | Total Loans (excluding HFS) | $8,020 | $7,550 | 6% | | Total Deposits | $7,940 | $7,220 | 10% | | Total Shareholders' Equity | $1,190 | $1,190 | 0% | | Book Value Per Share | $36.86 | $35.82 | 3% | | Tangible Book Value Per Share | $33.62 | $32.67 | 3% | | Common Equity Tier 1 (CET1) Risk Based Capital Ratio | 12.80% | 12.87% | -0.07% | | Total Risk Based Capital Ratio | 16.26% | 16.20% | 0.06% | | Tier 1 Leverage Ratio | 10.63% | 11.62% | -0.99% | | Tangible Common Equity Ratio | 11.17% | 12.22% | -1.05% | - The Company's capital ratios remain **substantially in excess of regulatory minimum** and buffer requirements, with all ratios above well-capitalized levels[365](index=365&type=chunk) - The share repurchase program was **placed on hold** during the first quarter of 2020 due to heightened stock market volatility and uncertainty regarding COVID-19, with no shares repurchased in the second quarter[366](index=366&type=chunk) [Loan Portfolio Exposures- COVID-19](index=99&type=section&id=Loan%20Portfolio%20Exposures-%20COVID-19) This section details loan portfolio exposures to industries potentially impacted by COVID-19 Loan Portfolio Exposure to COVID-19 Impacted Industries (June 30, 2020, in thousands) | Industry | Principal Balance | % of Loan Portfolio | | :----------------------------------- | :---------------- | :------------------ | | Accommodation & Food Services | $840,961 | 10.5% | | Retail Trade | $106,544 | 1.3% | Commercial Real Estate (CRE) Loan Exposures by Property Type (June 30, 2020, in thousands) | Property Type | Principal Balance | % of Loan Portfolio | | :----------------------------------- | :---------------- | :------------------ | | Restaurant | $31,364 | 0.4% | | Hotel | $35,815 | 0.4% | | Retail | $405,918 | 5.1% | - The Bank is actively working with customers in impacted industries, providing **PPP loans and payment deferrals** or interest-only periods, and monitoring rent collections for CRE investor borrowers[374](index=374&type=chunk)[376](index=376&type=chunk) [Deposits and Other Borrowings](index=101&type=section&id=Deposits%20and%20Other%20Borrowings) This section describes the Company's funding sources, including deposits and borrowings - Noninterest bearing deposits increased by **$351.7 million** and interest bearing deposits increased by **$359.9 million** for the six months ended June 30, 2020, compared to December 31, 2019[378](index=378&type=chunk) - Brokered deposits (excluding CDARS and ICS two-way) totaled **$1.79 billion (23% of total deposits)** at June 30, 2020[379](index=379&type=chunk) - Noninterest bearing demand deposits reached **$2.42 billion (30% of total deposits)** at June 30, 2020, partly due to funding of PPP loans[380](index=380&type=chunk) - Time deposits decreased by **$129.5 million** to $1.15 billion at June 30, 2020, from December 31, 2019[384](index=384&type=chunk) - FHLB advances increased to **$300.0 million** at June 30, 2020, from $250 million at December 31, 2019, supporting loan growth[385](index=385&type=chunk) [Liquidity Management](index=103&type=section&id=Liquidity%20Management) This section outlines the Company's liquidity strategy and sources of funds - Primary liquidity sources include cash, excess Federal Reserve reserves, loan repayments, federal funds sold, investment maturities/sales, and new core deposits[387](index=387&type=chunk) - Secondary liquidity sources include FHLB borrowings, brokered deposits, and federal funds purchased lines of credit[387](index=387&type=chunk) - At June 30, 2020, the Company had **$5.24 billion of primary and secondary liquidity sources**, deemed adequate to meet current and projected funding needs[392](index=392&type=chunk) - Average short-term liquidity was **$1.14 billion** in the second quarter of 2020, exceeding average needs[391](index=391&type=chunk) - The Bank is eligible for FHLB advances up to **$1.88 billion**, with $300 million outstanding at June 30, 2020[387](index=387&type=chunk) [Asset/Liability Management and Quantitative and Qualitative Disclosures about Market Risk](index=105&type=section&id=Asset%2FLiability%20Management%20and%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details strategies for managing interest rate risk, including simulation models and gap analysis [Commitments and Contractual Obligations](index=105&type=section&id=Commitments%20and%20Contractual%20Obligations) This section details the Company's off-balance sheet commitments and their associated risks Loan Commitments and Lines of Credit (June 30, 2020, in thousands) | Category | Amount | | :----------------------------------- | :------------- | | Unfunded loan commitments | $2,208,726 | | Unfunded lines of credit | $90,704 | | Letters of credit | $59,455 | | **Total** | **$2,358,885** | - Unfunded loan commitments include **$253.9 million** related to short-term interest rate lock commitments on residential mortgage loans[393](index=393&type=chunk) - The total commitment amount does not necessarily represent future cash requirements as commitments may expire without being drawn[393](index=393&type=chunk)[394](index=394&type=chunk) [Interest Rate Risk Management](index=107&type=section&id=Interest%20Rate%20Risk%20Management) This section describes the approach to managing interest rate risk through its Asset/Liability Committee (ALCO) - The net interest margin for the six months ended June 30, 2020, was **3.36%**, compared to 3.97% for the same period in 2019[400](index=400&type=chunk) - The duration of the investment portfolio was **3.1 years**, the loan portfolio was **1.5 years**, the interest-bearing deposit portfolio was **3.3 years**, and the borrowed funds portfolio was **6.3 years** at June 30, 2020[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[411](index=411&type=chunk) - Fixed rate loans amounted to **44% of total loans**, while variable and adjustable rate loans comprised **56%** (offset by 3% from PPP loans) at June 30, 2020[403](index=403&type=chunk)[405](index=405&type=chunk) - The net unrealized gain before income tax on the investment portfolio was **$21.8 million** at June 30, 2020, representing 3.0% of the portfolio's book value, primarily due to lower interest rates[406](index=406&type=chunk) Simulation Analysis: Percentage Change in Key Metrics (Next 12 Months, June 30, 2020) | Change in Interest Rates (basis points) | Percentage change in net interest income | Percentage change in net income | Percentage change in market value of portfolio equity | | :-------------------------------------- | :--------------------------------------- | :------------------------------ | :---------------------------------------------------- | | +400 | +17.4% | +31.6% | +17.3% | | +300 | +12.0% | +21.8% | +13.8% | | +200 | +6.7% | +12.1% | +10.0% | | +100 | +2.3% | +4.2% | +5.7% | | 0 | — | — | — | | -100 | -0.3% | -0.5% | -15.8% | | -200 | -0.8% | -1.4% | -28.1% | - Simulation results are within policy limits for net interest income, but **down-rate scenarios exceeded limits** due to the already low level of rates on non-maturing deposit instruments[412](index=412&type=chunk) [GAP Analysis](index=111&type=section&id=GAP%20Analysis) This section presents a static gap analysis to monitor interest rate sensitivity - At June 30, 2020, the Company had a **positive gap position of approximately $476 million** (5% of total assets) out to three months, and a positive cumulative gap position of $624 million (6% of total assets) out to twelve months[421](index=421&type=chunk) - This represents a shift from a negative gap position at March 31, 2019, and is within guideline limits established by the ALCO[421](index=421&type=chunk) - If interest rates increase by 100 basis points, net interest income and net interest margin are expected to increase modestly. If rates decline by 100 basis points, net interest income and margin are expected to decline modestly[423](index=423&type=chunk)[424](index=424&type=chunk) [Capital Resources and Adequacy](index=112&type=section&id=Capital%20Resources%20and%20Adequacy) This section discusses capital adequacy, regulatory requirements, and commercial real estate concentration risk - Non-owner-occupied commercial real estate (CRE) loans (including construction, land, and land development loans) represent **342% of total risk-based capital** at June 30, 2020. Construction, land, and land development loans represent 106% of total risk-based capital[429](index=429&type=chunk) - The Company and the Bank meet all Basel III Rules regulatory capital requirements, including the capital conservation buffer of 2.5% of CET1 capital, and are considered **well-capitalized**[434](index=434&type=chunk) Company Capital Ratios (June 30, 2020, in thousands) | Ratio | Amount | Ratio | Minimum Required For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Regulations* | | :----------------------------------- | :----- | :---- | :--------------------------------------------- | :--------------------------------------------------------------- | | CET1 capital (to risk weighted assets) | $1,085,861 | 12.80% | 7.00% | 6.50% | | Total capital (to risk weighted assets) | $1,379,471 | 16.26% | 10.50% | 10.00% | | Tier 1 capital (to risk weighted assets) | $1,085,861 | 12.80% | 8.50% | 8.00% | | Tier 1 capital (to average assets) | $1,085,861 | 10.63% | 4.00% | 5.00% | - The Company elected to adopt the March 2020 interim final rule, which provides an alternative option to **temporarily delay for two years the estimated impact of CECL adoption on regulatory capital**, followed by a three-year phase-in period[443](index=443&type=chunk) - The share repurchase program was **put on hold** during the first quarter of 2020 due to heightened stock market volatility and uncertainty regarding COVID-19, with no shares repurchased in the second quarter[436](index=436&type=chunk) - A regular quarterly cash dividend of **$0.22 per share** was announced on June 24, 2020[437](index=437&type=chunk) [Use of Non-GAAP Financial Measures](index=115&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP measures and provides a reconciliation to GAAP measures - The Company uses non-GAAP measures like tangible common equity to tangible assets, tangible book value per common share, and annualized return on average tangible common equity to evaluate capital adequacy and compare against other financial institutions[445](index=445&type=chunk) Non-GAAP Financial Measures (June 30, 2020, in thousands, except per share data) | Metric | Amount | | :----------------------------------- | :------------- | | Tangible common equity | $1,083,244 | | Tangible book value per common share | $33.62 | | Tangible common equity ratio | 11.17% | | Annualized Return on Average Tangible Common Equity (Three Months Ended June 30, 2020) | 10.80% | - These non-GAAP measures are derived by **excluding intangible assets** from common shareholders' equity and total assets, consistent with bank regulatory capital calculations[445](index=445&type=chunk)[448](index=448&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=118&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section references the MD&A for detailed information on the company's market risk management - Detailed market risk disclosures are provided in Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' under the caption 'Asset/Liability Management and Quantitative and Qualitative Disclosure about Market Risk'[450](index=450&type=chunk) [Item 4. Controls and Procedures](index=118&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and details the remediation of prior material weaknesses - Management concluded that the Company's disclosure controls and procedures were **effective as of June 30, 2020**, providing reasonable assurance for timely and accurate reporting[450](index=450&type=chunk) - Previously disclosed **material weaknesses in internal control over financial reporting have been remediated** through enhanced controls, including changes in leadership roles, Board restructuring, new committee appointments (e.g., Risk Committee), hiring a Chief Legal Officer, formalizing the ethics program, enhancing related party transaction policies, and reinforcing risk management[452](index=452&type=chunk)[453](index=453&type=chunk) - No material changes in internal control over financial reporting occurred during the second quarter of 2020, other than the described remediation efforts[452](index=452&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=120&type=section&id=Item%201.%20Legal%20Proceedings) This section updates on ongoing legal matters, including a class action lawsuit and governmental investigations - A putative **class action lawsuit** was filed alleging materially false or misleading statements regarding internal controls and related party loans, causing a decline in stock value. The Company intends to vigorously defend against these claims[458](index=458&type=chunk) - The Company has received document requests and subpoenas from securities and banking regulators and U.S. Attorney's offices related to related party transactions, former officers' retirement, and relationships with a public official, and is **cooperating with these ongoing investigations**[459](index=459&type=chunk) - **No regulatory restrictions** have been placed on the Company's ability to fully engage in its banking business as a result of these ongoing investigations[459](index=459&type=chunk) - The duration, scope, or outcome of these investigations and litigation are unpredictable, but based on current information, the Company does not believe the liabilities will have a **material effect** on its financial position[457](index=457&type=chunk)[459](index=459&type=chunk) [Item 1A. Risk Factors](index=120&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the significant adverse impacts of the COVID-19 pandemic on the company's business and operations - The COVID-19 pandemic and resulting containment measures have caused widespread economic and financial disruptions, with **significant, adverse, and potentially material impacts** on the Company's business, financial condition, liquidity, and results of operations[461](index=461&type=chunk) - Loan credit quality is expected to deteriorate, particularly in the **Accommodation and Food Service industry (10.5% of loan portfolio)** and **Retail Trade industry (1.3%)**, and for real estate-secured loans (79% of the portfolio)[463](index=463&type=chunk) - **Increased provisions for credit losses** are expected due to CECL and COVID-19, with $19.7 million and $34.0 million increases for the three and six months ended June 30, 2020, respectively[464](index=464&type=chunk) - **Increased demands on capital and liquidity** are anticipated due to higher loan originations (e.g., PPP loans with lower rates), potential draws on existing credit lines, and reduced capital/liquidity for more profitable loans[465](index=465&type=chunk) - **Operational risks are heightened** by remote working strategies, including increased cybersecurity risks, potential disruptions to information technology infrastructure, and strain on risk management models[472](index=472&type=chunk) - Reliance on external vendors and service providers (e.g., real estate appraisers, recording offices) may lead to **delays in loan origination and closings** due to limited availability caused by containment measures[473](index=473&type=chunk) - Strategic and reputational risks include potential damage to the Company's brand if its response to the pandemic is perceived as inadequate, and an **increased risk of litigation and regulatory scrutiny**[474](index=474&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=124&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on shares purchased by the Company and the suspension of the share repurchase program - The Company purchased **58 shares of common stock** at $44.60 per share during April 2020, primarily in connection with satisfying tax withholding obligations on vested restricted shares[476](index=476&type=chunk) - The share repurchase program was **suspended during the first quarter of 2020** due to heightened stock market volatility and uncertainty regarding the impact of COVID-19, resulting in no shares repurchased during the second quarter of 2020[476](index=476&type=chunk) - As of June 30, 2020, **447,890 shares remained authorized for repurchase** under the Repurchase Program[476](index=476&type=chunk) [Item 3. Defaults Upon Senior Securities](index=125&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[477](index=477&type=chunk) [Item 4. Mine Safety Disclosures](index=125&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that the disclosure item for mine safety is not applicable to the Company - This item is not applicable to the Company[477](index=477&type=chunk) [Item 5. Other Information](index=125&type=section&id=Item%205.%20Other%20Information) This section states that there are no required 8-K disclosures or changes in procedures for director nominations - No required 8-K disclosures were reported[477](index=477&type=chunk) - No changes in procedures for director nominations were reported[477](index=477&type=chunk) [Item 6. Exhibits](index=126&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and interactive data files - The exhibits include the Certificate of Incorporation, Bylaws, Subordinated Indentures, a Restricted Stock Award Agreement, Certifications from the CEO and CFO, and Interactive Data Files (XBRL) for the financial statements[478](index=478&type=chunk) [Signatures](index=127&type=section&id=Signatures) This section contains the signatures of the President and CEO, and the EVP and CFO, certifying the report - The report was signed by Susan G. Riel, President and Chief Executive Officer, and Charles D. Levingston, Executive Vice President and Chief Financial Officer, on August 10, 2020[482](index=482&type=chunk)

Eagle Bancorp, Inc. (NASDAQ:EGBN) Q2 2020 Earnings Conference Call July 23, 2020 10:00 AM ET Company Participants Charles Levingston - EVP & CFO Susan Riel - President, CEO & Director Janice Williams - EVP Conference Call Participants Christopher Marinac - Janney Montgomery Scott Steven Comery - G. Research Andrew Terrell - Stephens Inc. Stuart Lotz - KBW Erik Zwick - Boenning and Scattergood Operator Ladies and gentlemen, thank you for standing by, and welcome to the Eagle Bancorp, Inc. Second Quarter 2020 ...