Eagle Bancorp(EGBN) - 2025 Q3 - Quarterly Results

Third Quarter 2025 Earnings Announcement Overview of Q3 2025 Results Eagle Bancorp, Inc. reported a net loss of $67.5 million, or $2.22 per share, for the third quarter of 2025, an improvement of $2.3 million from the prior quarter's net loss of $69.8 million. This improvement was primarily driven by a $24.9 million decrease in provision expense, partially offset by a $22.5 million reduction in tax benefit. Pre-provision net revenue (PPNR) decreased to $28.8 million from $30.7 million due to a $3.6 million loss on the sale of loans | Metric | Q3 2025 (in millions) | Q2 2025 (in millions) | Change (QoQ, in millions) | | :-------------------------- | :-------- | :-------- | :----------- | | Net Loss | $(67.5) | $(69.8) | +$2.3 | | EPS ($) | $(2.22) | $(2.30) | +$0.08 | | PPNR (in millions) | $28.8 | $30.7 | $(1.9) | | Provision Expense (Change QoQ, in millions) | | | -$24.9 | | Tax Benefit (Change QoQ, in millions) | | | -$22.5 | | Net Interest Income (Change QoQ, in thousands) | | | +$383 | | Noninterest Income (Change QoQ, in millions) | | | -$3.9 | | Noninterest Expenses (Change QoQ, in millions) | | | -$1.6 | Management's Strategic Commentary CEO Susan G. Riel emphasized the company's ongoing strategy to address asset quality challenges within its loan portfolio, highlighting disciplined credit risk management and actions taken to reduce valuation risk in the office portfolio. She affirmed the core franchise's soundness and resilience, supported by strong capital, liquidity, and customer relationships - The Company continued to execute its strategy to resolve asset quality challenges within the loan portfolio[5] - Credit costs recognized reflect a commitment to managing credit risk with discipline and accountability, including actions to reduce valuation risk in the office portfolio[5] - The core franchise remains sound and resilient, with capital, liquidity, and customer relationships providing a strong foundation[5] Key Financial Highlights Dividend Declaration Eagle Bancorp, Inc. announced a cash dividend of $0.01 per share, payable on November 14, 2025, to shareholders of record as of November 3, 2025 - A cash dividend of $0.01 per share was declared[7][8] - The dividend is payable on November 14, 2025, to shareholders of record on November 3, 2025[7] Loan and Deposit Trends The company experienced an increase in C&I loans and average C&I deposits, alongside an overall increase in total deposits. However, total loans, including loans held for sale, decreased by 4% from the prior quarter, primarily due to declines in income-producing real estate loans - Total C&I loans (including owner-occupied) increased $105 million from the previous quarter[8] - Average C&I deposits increased $134 million, or 8.6%, from the previous quarter[8] - Total loans, including loans held for sale, were $7.4 billion at September 30, 2025, down 4% from the prior quarter-end, driven by declines in income-producing real estate loans[12][14] - Total deposits at quarter-end were $9.5 billion, up $0.3 billion (4%) QoQ and $0.9 billion YoY, primarily due to higher money market balances[15] Asset Quality Metrics Asset quality showed mixed results: the Allowance for Credit Losses (ACL) as a percentage of total loans decreased, and nonperforming assets significantly declined. However, annualized quarterly net charge-offs increased, and substandard and special mention loans also rose | Metric | Sep 30, 2025 | Jun 30, 2025 | Change (QoQ) | | :----------------------------------- | :----------- | :----------- | :----------- | | ACL as % of total loans (%) | 2.14% | 2.38% | -0.24% | | Performing office coverage (%) | 11.36% | 11.54% | -0.18% | | Nonperforming assets (in millions) | $133.3 | $228.9 | -$95.6 | | NPAs as % of total assets (%) | 1.23% | 2.16% | -0.93% | | Substandard and special mention loans (in millions) | $958.5 | $875.4 | +$83.1 | | Annualized quarterly net charge-offs (%) | 7.36% | 4.22% | +3.14% | | Net charge-offs (absolute, in millions) | $140.8 | $83.9 | +$56.9 | | Loans 30-89 days past due (in millions) | $29.1 | $34.7 | -$5.6 | Net Interest Margin and Liquidity The net interest margin improved to 2.43% for Q3 2025, primarily due to a reduction in interest-earning assets. The company maintained robust liquidity, with total on-balance sheet liquidity and available capacity of $5.3 billion, providing over 230% coverage for uninsured deposits - The net interest margin (NIM) increased to 2.43% for Q3 2025, up from 2.37% in the prior quarter, driven by the reduction in interest earning assets associated with a decline in nonaccrual loan balances in the CRE loan portfolio[8] - Total estimated insured deposits increased to $7.2 billion, representing 75.6% of deposits, compared to $6.8 billion (75.0%) in the prior quarter[10] - Total on-balance sheet liquidity and available capacity was $5.3 billion, providing a coverage ratio of over 230% for $2.3 billion in uninsured deposits[10] Capital Position Capital ratios remained strong, with the common equity tier 1 capital ratio at 13.58%. However, total shareholders' equity and book value per share both decreased by 5.2% from the prior quarter-end, primarily due to quarterly losses | Capital Ratio | Sep 30, 2025 | | :----------------------------------- | :----------- | | Common equity ratio (%) | 10.39% | | Tangible common equity ratio (%) | 10.39% | | Common equity tier 1 capital ratio (%) | 13.58% | - Total shareholders' equity was $1.1 billion at September 30, 2025, down 5.2% from the prior quarter-end, primarily due to quarterly losses[19] - Book value per share and tangible book value per share were both $37.00, down 5.2% from the prior quarter-end[19] Consolidated Financial Statements Consolidated Statements of Operations For the third quarter of 2025, Eagle Bancorp reported a net loss of $67.5 million, an improvement from the previous quarter's loss. This was influenced by a decrease in provision for credit losses and noninterest expenses, partially offset by a significant decline in noninterest income due to losses on loan and investment securities sales Consolidated Statements of Operations (Unaudited) - Three Months Ended | Metric | Sep 30, 2025 (in thousands) | Jun 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | | :----------------------------------- | :----------- | :----------- | :----------- | | Total interest income | $150,103 | $151,443 | $173,813 | | Total interest expense | $81,944 | $83,667 | $101,970 | | Net Interest Income | $68,159 | $67,776 | $71,843 | | Provision for Credit Losses | $113,215 | $138,159 | $10,094 | | Total Noninterest Income | $2,495 | $6,414 | $6,951 | | Total Noninterest Expense | $41,897 | $43,470 | $43,614 | | Net (Loss) Income | $(67,513) | $(69,775) | $21,815 | | Basic EPS ($) | $(2.22) | $(2.30) | $0.72 | | Diluted EPS ($) | $(2.22) | $(2.30) | $0.72 | - Net interest income increased $383 thousand QoQ, primarily driven by lower funding costs on brokered time deposits and a reduction in average short-term borrowings[13] - Provision for credit losses decreased to $113.2 million from $138.2 million QoQ, primarily due to lower office-related reserves, despite net charge-offs increasing to $140.8 million[13] - Noninterest income declined by $3.9 million QoQ, mainly due to a $3.6 million loss on the sale of two loans and a $2.0 million loss on the sale of investment securities[13] - Noninterest expense decreased by $1.6 million QoQ, primarily due to decreases in the FDIC assessment[13] Consolidated Balance Sheets As of September 30, 2025, total assets increased to $10.8 billion, while total loans (net) decreased. Total deposits grew to $9.5 billion, and other short-term borrowings were fully repaid. Total shareholders' equity decreased to $1.1 billion Consolidated Balance Sheets (Unaudited) | Metric | Sep 30, 2025 (in thousands) | Jun 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | | :----------------------------------- | :----------- | :----------- | :----------- | | Total Assets | $10,815,502 | $10,601,331 | $11,285,052 | | Loans, net | $7,148,451 | $7,537,868 | $7,858,402 | | Total Deposits | $9,463,559 | $9,119,607 | $8,540,850 | | Other short-term borrowings | $0 | $50,000 | $1,240,000 | | Total Liabilities | $9,692,026 | $9,416,264 | $10,059,628 | | Total Shareholders' Equity | $1,123,476 | $1,185,067 | $1,225,424 | - Total loans, including loans held for sale, were $7.4 billion at September 30, 2025, down 4% from the prior quarter-end, primarily due to declines in income-producing real estate loans[12][14] - Total deposits increased by $0.3 billion (4%) QoQ, driven by higher balances in money market accounts, offsetting lower brokered time deposits[15] - Other short-term borrowings were zero at September 30, 2025, as FHLB borrowings were repaid with excess cash from core deposit growth and sale of investment securities[15] Loan Mix and Asset Quality The loan portfolio composition shifted, with commercial loans increasing their share while income-producing commercial real estate and construction loans decreased. Asset quality metrics showed a reduction in nonperforming loans and assets, but a notable increase in net charge-offs and special mention loans Loan Balances - Period End | Loan Type | Sep 30, 2025 (in thousands) | Sep 30, 2025 (%) | Jun 30, 2025 (in thousands) | Jun 30, 2025 (%) | Sep 30, 2024 (in thousands) | Sep 30, 2024 (%) | | :----------------------------------- | :-------------------- | :--------------- | :-------------------- | :--------------- | :-------------------- | :--------------- | | Commercial | $1,217,805 | 17% | $1,207,512 | 15% | $1,154,349 | 14% | | Income producing - commercial real estate | $3,453,033 | 47% | $3,768,884 | 48% | $4,155,120 | 52% | | Owner occupied - commercial real estate | $1,494,711 | 20% | $1,365,901 | 18% | $1,276,240 | 16% | | Construction - commercial and residential | $1,010,367 | 14% | $1,211,728 | 16% | $1,174,591 | 15% | | Total loans | $7,304,679 | 100% | $7,721,664 | 100% | $7,970,269 | 100% | Asset Quality Metrics | Asset Quality Metric | Sep 30, 2025 (in thousands) | Jun 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | | :----------------------------------- | :----------- | :----------- | :----------- | | Nonperforming loans | $118,647 | $226,420 | $134,371 | | Other real estate owned | $14,684 | $2,459 | $2,743 | | Nonperforming assets | $133,331 | $228,879 | $137,114 | | Net charge-offs | $140,813 | $83,877 | $5,303 | | Special mention | $423,685 | $173,311 | $364,983 | | Substandard | $534,789 | $702,128 | $391,301 | Average Balances, Interest Yields And Rates Analysis Quarter-over-Quarter Comparison (Q3 2025 vs Q2 2025) Comparing Q3 2025 to Q2 2025, net interest income saw a slight increase, and the net interest margin improved by 6 basis points. The cost of funds remained relatively stable, while average interest-earning assets and interest-bearing liabilities both experienced decreases Average Balances, Interest Yields And Rates (Q3 2025 vs Q2 2025) | Metric | Q3 2025 | Q2 2025 | Change (QoQ) | | :-------------------------- | :-------- | :-------- | :----------- | | Net interest income (in thousands) | $68,159 | $67,776 | +$383 | | Net interest spread (%) | 1.48% | 1.43% | +0.05% | | Net interest margin (%) | 2.43% | 2.37% | +0.06% | | Cost of funds (%) | 3.16% | 3.17% | -0.01% | | Average Total interest earning assets (in thousands) | $11,137,543 | $11,487,006 | -$349,463 | | Average Total interest bearing liabilities (in thousands) | $8,420,694 | $8,687,505 | -$266,811 | Year-over-Year Comparison (Q3 2025 vs Q3 2024) On a year-over-year basis (Q3 2025 vs Q3 2024), net interest income decreased, despite an improvement in both net interest spread and net interest margin. The cost of funds saw a significant reduction, while average interest-earning assets and interest-bearing liabilities both declined Average Balances, Interest Yields And Rates (Q3 2025 vs Q3 2024) | Metric | Q3 2025 | Q3 2024 | Change (YoY) | | :-------------------------- | :-------- | :-------- | :----------- | | Net interest income (in thousands) | $68,159 | $71,843 | -$3,684 | | Net interest spread (%) | 1.48% | 1.26% | +0.22% | | Net interest margin (%) | 2.43% | 2.37% | +0.06% | | Cost of funds (%) | 3.16% | 3.69% | -0.53% | | Average Total interest earning assets (in thousands) | $11,137,543 | $12,072,891 | -$935,348 | | Average Total interest bearing liabilities (in thousands) | $8,420,694 | $9,083,484 | -$662,790 | Quarterly Financial Trends and Ratios Income Statement Trends Over the past five quarters, the company has shifted from reporting net income to consecutive net losses in Q2 and Q3 2025. Net interest income has shown a slight decline, while provision for credit losses has been highly volatile, peaking in Q2 2025 Income Statement Quarterly Trends (in thousands) | Metric | Q3 2025 (in thousands) | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q4 2024 (in thousands) | Q3 2024 (in thousands) | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | | Total interest income | $150,103 | $151,443 | $153,878 | $168,417 | $173,813 | | Total interest expense | $81,944 | $83,667 | $88,229 | $97,623 | $101,970 | | Net interest income | $68,159 | $67,776 | $65,649 | $70,794 | $71,843 | | Provision for credit losses | $113,215 | $138,159 | $26,255 | $12,132 | $10,094 | | Net (loss) income | $(67,513) | $(69,775) | $1,675 | $15,290 | $21,815 | Per Share Data Trends Basic and diluted earnings per share have turned negative in the most recent two quarters, following positive results in prior periods. Book value and tangible book value per common share have also shown a consistent downward trend, while the dividend per common share was significantly reduced in Q3 2025 Per Share Data Quarterly Trends | Metric | Q3 2025 ($) | Q2 2025 ($) | Q1 2025 ($) | Q4 2024 ($) | Q3 2024 ($) | | :----------------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | | Basic EPS | $(2.22) | $(2.30) | $0.06 | $0.51 | $0.72 | | Diluted EPS | $(2.22) | $(2.30) | $0.06 | $0.50 | $0.72 | | Book value per common share | $37.00 | $39.03 | $40.99 | $40.60 | $40.61 | | Tangible book value per common share | $37.00 | $39.03 | $40.99 | $40.59 | $40.61 | | Dividend per common share | $0.010 | $0.165 | $0.165 | $0.165 | $0.165 | Performance Ratios Quarterly Trends Profitability ratios, including Return on average assets and Return on average common equity, have become negative in the last two quarters. The net interest margin has remained relatively stable, while the efficiency ratio has shown some fluctuation, increasing in Q3 2025 Performance Ratios Quarterly Trends | Metric | Q3 2025 (%) | Q2 2025 (%) | Q1 2025 (%) | Q4 2024 (%) | Q3 2024 (%) | | :----------------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | | Return on average assets | (2.31) | (2.33) | 0.06 | 0.48 | 0.70 | | Return on average common equity | (22.66) | (22.35) | 0.55 | 4.94 | 7.22 | | Return on average tangible common equity | (22.66) | (22.35) | 0.55 | 4.94 | 7.22 | | Net interest margin | 2.43 | 2.37 | 2.28 | 2.29 | 2.37 | | Efficiency ratio | 59.30 | 58.60 | 59.50 | 61.50 | 55.40 | Other Ratios Quarterly Trends Asset quality ratios indicate an increase in the allowance for credit losses relative to nonperforming loans, while nonperforming assets to total assets decreased. Net charge-offs to average total loans significantly increased in Q3 2025. Capital ratios, including Common equity tier 1 and Tangible common equity, have shown slight declines but remain robust Other Ratios Quarterly Trends | Metric | Q3 2025 (%) | Q2 2025 (%) | Q1 2025 (%) | Q4 2024 (%) | Q3 2024 (%) | | :----------------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | | Allowance for credit losses to total loans | 2.14 | 2.38 | 1.63 | 1.44 | 1.40 | | Allowance for credit losses to total nonperforming loans | 131.67 | 81.17 | 64.59 | 54.81 | 83.25 | | Nonperforming assets to total assets | 1.23 | 2.16 | 1.79 | 1.90 | 1.22 | | Net charge-offs (annualized) to average total loans | 7.36 | 4.22 | 0.57 | 0.48 | 0.26 | | Common equity tier 1 capital (to risk weighted assets) | 13.58 | 14.01 | 14.61 | 14.63 | 14.30 | | Tangible common equity ratio | 10.39 | 11.18 | 11.00 | 11.02 | 10.86 | Average Balances Quarterly Trends Average total assets, earning assets, and loans have generally decreased over the past five quarters. Conversely, average total deposits have shown an increasing trend, while average total borrowings have significantly reduced Average Balances Quarterly Trends (in thousands) | Metric | Q3 2025 (in thousands) | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q4 2024 (in thousands) | Q3 2024 (in thousands) | | :-------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Total assets | $11,597,399 | $11,989,095 | $12,118,190 | $12,575,722 | $12,360,899 | | Total earning assets | $11,137,543 | $11,487,006 | $11,640,162 | $12,303,940 | $12,072,891 | | Total loans | $7,648,459 | $7,942,333 | $7,933,695 | $7,971,907 | $8,026,524 | | Total deposits | $10,163,215 | $10,226,095 | $9,883,233 | $10,056,463 | $9,344,414 | | Total borrowings | $131,225 | $355,914 | $794,940 | $1,118,276 | $1,654,736 | | Total shareholders' equity | $1,182,148 | $1,252,252 | $1,242,805 | $1,230,573 | $1,201,477 | GAAP Reconciliation to Non-GAAP Financial Measures Tangible Common Equity The company provides a reconciliation of common shareholders' equity to tangible common equity, which excludes intangible assets. This non-GAAP measure is considered important for evaluating capital adequacy and comparing financial institutions, aligning with bank regulatory capital calculations Tangible Common Equity Reconciliation (in thousands) | Metric | Sep 30, 2025 (in thousands) | Jun 30, 2025 (in thousands) | Sep 30, 2024 (in thousands) | | :----------------------------------- | :----------- | :----------- | :----------- | | Common shareholders' equity | $1,123,476 | $1,185,067 | $1,225,424 | | Less: Intangible assets | $0 | $9 | $21 | | Tangible common equity | $1,123,476 | $1,185,058 | $1,225,403 | | Tangible common equity ratio (%) | 10.39% | 11.18% | 10.86% | | Tangible book value per common share ($) | $37.00 | $39.03 | $40.61 | | Return on average tangible common equity (%) | (22.66)% | (22.35)% | 7.22% | - Tangible common equity is a non-GAAP measure consistent with bank regulatory capital calculations, useful for investors, regulators, and management to evaluate capital adequacy[51] Efficiency Ratio The efficiency ratio, a non-GAAP measure, is calculated by dividing GAAP noninterest expense by the sum of GAAP net interest income and GAAP noninterest income. It serves to measure a bank's overhead as a percentage of its revenue and its effectiveness in controlling operational activities Efficiency Ratio Calculation (in thousands) | Metric | Q3 2025 (in thousands) | Q2 2025 (in thousands) | Q3 2024 (in thousands) | | :-------------------------- | :-------- | :-------- | :-------- | | Net interest income | $68,159 | $67,776 | $71,843 | | Noninterest income | $2,495 | $6,414 | $6,951 | | Operating revenue | $70,654 | $74,190 | $78,794 | | Noninterest expense | $41,897 | $43,470 | $43,614 | | Efficiency ratio (%) | 59.30% | 58.59% | 55.35% | - The efficiency ratio measures a bank's overhead as a percentage of its revenue and is used to assess the effectiveness of controlling operational activities[52] Pre-Provision Net Revenue (PPNR) Pre-provision net revenue (PPNR) is a non-GAAP financial measure derived by subtracting noninterest expenses from the sum of net interest income and noninterest income. This metric is important to shareholders as it illustrates revenue performance before accounting for credit loss provisions and reversals Pre-Provision Net Revenue Calculation (in thousands) | Metric | Q3 2025 (in thousands) | Q2 2025 (in thousands) | Q3 2024 (in thousands) | | :-------------------------- | :-------- | :-------- | :-------- | | Net interest income | $68,159 | $67,776 | $71,843 | | Noninterest income | $2,495 | $6,414 | $6,951 | | Less: Noninterest expense | $(41,897) | $(43,470) | $(43,614) | | Pre-provision net revenue | $28,757 | $30,720 | $35,180 | - PPNR illustrates revenue excluding the impact of provisions and reversals to the allowance for credit losses on loans[53] Corporate Information and Disclosures About Eagle Bancorp Eagle Bancorp, Inc. is the holding company for EagleBank, a community bank established in 1998 and headquartered in Bethesda, Maryland. It operates through twelve banking offices and four lending offices across the Washington D.C. area, focusing on building relationships with businesses, professionals, and individuals - Eagle Bancorp is the holding company for EagleBank, which commenced operations in 1998[18] - The Bank is headquartered in Bethesda, Maryland, and operates through twelve banking offices and four lending offices in Suburban Maryland, Washington, D.C., and Northern Virginia[18] - The Company focuses on building relationships with businesses, professionals, and individuals in its marketplace[18] Conference Call Details Eagle Bancorp will host a conference call on Thursday, October 23, 2025, at 10:00 a.m. Eastern Time to discuss its third quarter 2025 financial results. A listen-only webcast and analyst registration link are provided, with a replay available on the company's website until November 6, 2025 - A conference call to discuss Q3 2025 financial results will be held on Thursday, October 23, 2025, at 10:00 a.m. Eastern Time[20] - A listen-only webcast is accessible at **https://register-conf.media-server.com/register/Bl6d1c218e6b0143a6903a372200e40cc7**[20](index=20&type=chunk) - A replay of the conference call will be available on the Company's website through November 6, 2025, at **https://www.eaglebankcorp.com/**[22](index=22&type=chunk) Forward-Looking Statements This press release contains forward-looking statements that are subject to significant uncertainties and risks, including economic conditions, government spending, interest rate volatility, and competitive factors. Readers are cautioned against undue reliance on these statements, and the company does not undertake to update them unless required by law - The press release contains forward-looking statements regarding future trends, plans, financial condition, and results of operations[22] - These statements are based on current and anticipated economic conditions and are subject to significant uncertainty, including factors like government workforce reductions, interest rate volatility, and bank failures[22] - Readers are cautioned against placing undue reliance on forward-looking statements, and the Company undertakes no obligation to revise or update them publicly, except as required by applicable law[22]