Eagle Bancorp(US:EGBN)2025-02-27 21:26Financial Performance - The net loss for the year ended December 31, 2024, was $47.0 million, compared to a net income of $100.5 million for the same period in 2023, primarily due to a goodwill impairment of $104.2 million[272]. - The efficiency ratio significantly worsened to 88.99% in 2024 from 49.12% in 2023, reflecting increased operational costs[266][271]. - Net interest income decreased to $288.7 million for 2024, a 1% decline from $290.5 million in 2023, primarily due to increased interest expenses on deposits and borrowings[284]. - Total noninterest income in 2024 was $19.9 million, representing a 7% decrease from $21.5 million in 2023[284]. - The return on average assets (ROAA) was (0.38)% in 2024, down from 0.84% in 2023, primarily due to the goodwill impairment[282]. Asset and Loan Portfolio - As of December 31, 2024, the Company had total assets of approximately $11.1 billion, total loans of $7.9 billion, and total deposits of $9.1 billion[248]. - Total assets decreased from $11.66 billion in 2023 to $11.13 billion in 2024, a reduction of approximately 4.5%[265]. - The loan portfolio remained relatively flat at $7,934,888 thousand as of December 31, 2024, a decrease of $33,807 thousand or 0.4% from $7,968,695 thousand in 2023[333]. - The composition of the loan portfolio includes 83% related to real estate, with 66% being non-owner occupied commercial real estate as of December 31, 2024[334]. - The Company maintained a commercial real estate (CRE) loan portfolio of $6.5 billion, representing 81.5% of total loans, compared to $6.1 billion or 77.0% at December 31, 2023[340]. Credit Losses and Allowance - The provision for credit losses increased by $34.8 million, totaling $66.4 million for 2024, compared to $31.5 million in 2023[265][272]. - The allowance for credit losses increased to $114.4 million in 2024, up from $85.9 million in 2023, reflecting a higher risk environment[265]. - Nonperforming assets and loans 90+ days past due rose to $211.4 million, representing 1.90% of total assets, compared to 0.57% in 2023[266]. - The Company recorded net charge-offs of $38.6 million in 2024, up from $18.9 million in 2023, reflecting increased credit losses[266]. - The coverage ratio for allowance for credit losses to total nonperforming loans decreased to 55% in 2024 from 131% in 2023[376]. Deposits and Funding - Total deposits reached $9.1 billion at December 31, 2024, marking a 4% increase from $8.8 billion in 2023, driven by a $558.2 million rise in interest-bearing time deposits[387]. - Noninterest-bearing deposits fell by $734.7 million, or 32%, to $1.5 billion in 2024, while interest-bearing deposits increased by $499.5 million, or 12%[388]. - Brokered deposits increased to $4.0 billion, or 43.61% of total deposits, as of December 31, 2024, compared to $2.5 billion, or 28.8% of total deposits, in 2023[393]. - The Company had total borrowings of $600.8 million, a decrease from $1.4 billion in 2023, reflecting a strategic shift in funding sources[398]. - The average daily balance of customer repurchase agreements increased to $37.9 million in 2024 from $36.7 million in 2023[398]. Market Conditions and Economic Outlook - The Company experienced a 3.1% real U.S. GDP growth in 2024, compared to 3.3% growth in 2023, despite inflationary pressures and higher interest rates[245]. - The unemployment rate in the U.S. increased to 4.0% at the end of 2024, up from 3.7% at the end of 2023[245]. - The ten-year U.S. Treasury rate averaged 4.21% in 2024, up from 3.96% in 2023, indicating an increase in longer-term interest rates[246]. - The Federal Reserve decreased interest rates by a total of 100 basis points in September 2024 and the fourth quarter, which had minimal impact on net interest margin for most of the year[428]. - The Company remains cautious regarding commercial real estate market conditions, particularly in the office sector, while noting resilience in the multi-family commercial real estate sector[247]. Strategic Initiatives - The Company’s strategy focuses on growth, retaining talented staff, and building quality lending and deposit relationships, which has fostered future growth opportunities[251]. - The Company has implemented risk management procedures and underwriting criteria to address risks in its commercial real estate portfolio[344]. - The Company expects to maintain heightened risk management procedures due to its commercial real estate concentration[434].