Eagle Bancorp(EGBN) - 2025 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2025, net interest income was $68.2 million, a decrease of $3.7 million (approximately 5.1%) compared to $71.8 million for the same period in 2024[223] - Net loss for the three months ended September 30, 2025, was $67.5 million, compared to a net income of $21.8 million for the same period in 2024, representing a decrease of $89.3 million[224] - Pre-provision net revenue (PPNR) for the three months ended September 30, 2025, was $28.8 million, down from $35.2 million for the same period in 2024, a decrease of approximately 18.2%[225] - For the nine months ended September 30, 2025, net interest income was $201.6 million, a decrease of $16.3 million (approximately 7.5%) compared to $217.9 million for the same period in 2024[223] - PPNR for the nine months ended September 30, 2025, was $87.9 million, significantly higher than $3.7 million for the same period in 2024, indicating a substantial improvement[226] Credit Losses - The provision for credit losses for the three months ended September 30, 2025, was $113.2 million, an increase of $103.1 million compared to $10.1 million for the same period in 2024[223] - The significant increase in the provision for credit losses was the primary driver for the net loss reported for the three and nine months ended September 30, 2025[224] - Provision for credit losses for loans increased significantly to $113.2 million in Q3 2025 from $10.1 million in Q3 2024, reflecting a rise in net charge-offs[246] - The total charge-offs for the nine months ended September 30, 2025, amounted to $236.7 million, significantly higher than $29.5 million for the same period in 2024, with net charge-offs of $235.9 million[308] - The qualitative reserve for credit losses increased due to continued uncertainty in the commercial real estate market, particularly in the office sector[249] Noninterest Income and Expenses - Noninterest income for the three months ended September 30, 2025, was $2.5 million, a decrease of $4.5 million (approximately 64.2%) compared to $7.0 million for the same period in 2024[223] - Noninterest expense for the three months ended September 30, 2025, was $41.9 million, a decrease of $1.7 million (approximately 3.9%) compared to $43.6 million for the same period in 2024[223] - Total noninterest expense for Q3 2025 decreased by $1.7 million or 4% compared to Q3 2024, primarily due to lower legal, accounting, and professional fees[262] - For the first nine months of 2025, total noninterest expense decreased by $99.3 million or 43% compared to the same period in 2024, largely due to a $104.2 million goodwill impairment in 2024[263] Assets and Equity - As of September 30, 2025, total assets were $10.82 billion, a decrease of $314 million from $11.13 billion as of December 31, 2024, driven by a $630.2 million decrease in loans held for investment[270] - Total shareholders' equity decreased by 8% to $1.12 billion as of September 30, 2025, compared to $1.23 billion as of December 31, 2024[232] - The ratio of common equity to total assets decreased to 10.39% as of September 30, 2025, from 11.02% as of December 31, 2024[232] - Book value per share decreased by 8.87% to $37.00 as of September 30, 2025, from $40.60 as of December 31, 2024[275] Loan Portfolio - Loans held for investment decreased by $630.2 million or 7.9% to $7.3 billion as of September 30, 2025, with a notable shift towards commercial lending[279] - The loan portfolio consisted of 82% real estate-related loans as of September 30, 2025, with non-owner occupied commercial real estate representing 61% of the total[281] - The total loan portfolio as of September 30, 2025, was $7.3 billion, with $2.99 billion maturing in one year or less[296] - The Company has executed balance sheet optimization actions to reduce commercial real estate loan concentration, reflecting a strategic focus on improving portfolio resilience and risk-adjusted returns[294] Liquidity and Capital - As of September 30, 2025, the Company had primary sources of liquidity amounting to $2.1 billion, which included interest-bearing deposits and other short-term investments[363] - The total secondary sources of liquidity available as of September 30, 2025, were $4.8 billion, including FHLB unused availability and other brokered deposit programs[363] - The Company believes it has sufficient liquidity sources to meet current and projected funding needs, totaling $6.9 billion as of September 30, 2025[363] - The Company and the Bank exceeded all Basel III capital requirements, including a minimum CET1 ratio of 7.0%[372] Interest Rates and Margin - The cost of funds was 3.16% for the three months ended September 30, 2025, compared to 3.69% for the same period in 2024[236] - The net interest margin was 2.43% for the three months and 2.37% for the nine months ended September 30, 2025, compared to 2.37% and 2.40% for the same periods in 2024, reflecting a 6 basis point increase and a 3 basis point decrease, respectively[229] - The simulation analysis indicated a 26.2% increase in net interest income with a 400 basis point increase in interest rates over the next 12 months[398] - The Company experienced a decrease in 12-month net interest income of 6.8% with a 100 basis point decrease in market interest rates as of September 30, 2025[400] Nonperforming Assets - Nonperforming assets totaled $133.3 million as of September 30, 2025, representing 1.23% of total assets, down from $211.4 million or 1.90% of total assets as of December 31, 2024[312] - Total nonperforming loans had an amortized cost of $118.6 million as of September 30, 2025, representing 1.62% of total loans, a decrease from $208.7 million or 2.63% of total loans as of December 31, 2024[314] - The performing office coverage ratio was 11.36% as of September 30, 2025, up from 3.81% as of December 31, 2024[306] Dividends - The Company announced a quarterly cash dividend of $0.010 per share, payable on November 14, 2025[373]