Eagle Bancorp(US:EGBN)2022-11-08 16:00Financial Performance - Net income for Q3 2022 was $37.3 million, a decrease of $6.3 million or 14.5% compared to Q3 2021's $43.6 million[199]. - Total revenue for Q3 2022 was $89.2 million, up from $87.3 million in Q3 2021, driven by an increase in net interest income to $83.9 million from $79.0 million[201]. - Noninterest income decreased by 36.0% to $5.3 million in Q3 2022 from $8.3 million in Q3 2021, primarily due to lower gains on the sale of residential loans[203]. - Net income for the nine months ended September 30, 2022 was $98.7 million, a decrease of $36.3 million or 26.9% compared to $135.1 million in the same period of 2021[210]. - Total revenue for the nine months ended September 30, 2022, was $265.6 million, down from $276.1 million in the same period in 2021, with net interest income slightly increasing to $247.3 million[212]. - Adjusted net income for the nine months ended September 30, 2022, was $121,611 thousand, compared to $135,071 thousand for the same period in 2021[376]. Interest Income and Margin - The net interest margin increased to 3.02% in Q3 2022 from 2.73% in Q3 2021, reflecting higher average investment and loan balances[202]. - Net interest income for the three months ended September 30, 2022, was $83.9 million, an increase from $79.0 million for the same period in 2021, driven by higher average loan balances and yields[223]. - The net interest margin for the nine months ended September 30, 2022, was 2.86%, a decrease from 2.91% for the same period in 2021[213]. - The Company achieved a net interest margin of 2.86% for the nine months ended September 30, 2022, compared to 2.91% for the same period in 2021[327]. - Net interest income represented 93% of the Company's revenue for the first three quarters of 2022, up from 89% in the last three quarters of 2021[344]. Noninterest Income and Expenses - Gain on sale of loans dropped 75.4% to $821 thousand in Q3 2022 compared to $3.3 million in Q3 2021, attributed to a 79.44% decline in residential mortgage originations[204]. - Total noninterest income decreased by 38.5% to $18.3 million for the nine months ended September 30, 2022, primarily due to a decline in gains on the sale of loans[214]. - Noninterest expenses slightly decreased by 0.5% to $36.2 million in Q3 2022 from $36.4 million in Q3 2021[207]. - Noninterest expenses increased by 14.9% to $126.2 million for the nine months ended September 30, 2022, largely due to a $22.9 million accrual of settlement expenses[218]. - Total noninterest expense for the three months ended September 30, 2022, totaled $36.2 million, a slight decrease of 0.5% from $36.4 million for the same period in 2021[279]. Asset Quality and Credit Losses - The allowance for credit losses was $75,141, down from $92,169 in the previous year[231]. - Nonperforming assets totaled $9.6 million at September 30, 2022, representing 0.09% of total assets, a decrease from $30.8 million or 0.26% of total assets at December 31, 2021[252]. - The provision for credit losses on loans for the three months ended September 30, 2022, was $3.0 million, compared to a reversal of $8.3 million for the same period in 2021[246]. - The company reported total charge-offs of $2,034 thousand for the nine months ended September 30, 2022, compared to $13,114 thousand for the same period in 2021[250]. - The company's allowance for credit losses was 1.04% of total loans at September 30, 2022, deemed adequate to absorb expected credit losses[254]. Capital and Liquidity - CET1 capital to risk-weighted assets ratio stands at 15.11% as of September 30, 2022, exceeding the minimum required of 7.00%[362]. - Total capital to risk-weighted assets ratio is 16.10%, well above the required 10.50%[362]. - The Company had $4.3 billion in primary and secondary liquidity sources as of September 30, 2022, deemed adequate to meet current and projected funding needs[321]. - The Company maintains a capital conservation buffer of 2.5% of CET1 capital for capital adequacy purposes[360]. - The Company had $500 million in FHLB short-term advances as part of its asset liability strategy to support loan growth[313]. Deposits and Loans - Total deposits declined by 12.2% to $8.8 billion at September 30, 2022, down from $10.0 billion at December 31, 2021, due to deposit outflows related to rising interest rates[294]. - Total loans increased by 3.4% to $7.3 billion at September 30, 2022, from $7.1 billion at December 31, 2021, driven by growth in commercial real estate and commercial and industrial loans[292][302]. - Brokered deposits amounted to $2.5 billion, representing 28.0% of total deposits as of September 30, 2022, compared to 26.5% at December 31, 2021[308]. - The Company had $2.9 billion in noninterest-bearing demand deposits, accounting for 33% of total deposits, down from $3.3 billion at December 31, 2021[309]. - Total loans, excluding loans held for sale and PPP loans, amounted to $7,297,257 thousand as of September 30, 2022, an increase from $7,014,493 thousand at December 31, 2021[372]. Investment Portfolio - The investment portfolio increased by $345.9 million, or 13.1%, from December 31, 2021, to September 30, 2022[328]. - The net unrealized loss before income tax on the investment securities available-for-sale portfolio was $224.1 million at September 30, 2022, representing 8% of the investment portfolio's book value[332]. - The duration of the investment portfolio increased to 4.8 years at September 30, 2022, from 4.3 years at December 31, 2021[330]. - The weighted average rate of the Company's variable rate loans increased by approximately 179 basis points from December 31, 2021, to September 30, 2022[334]. - The Company's cost of interest-bearing deposits increased by 157 basis points at September 30, 2022, comprising 67% of total deposits[334].