(Source: PrimeNewswire)BETHESDA, Md., April 23, 2009 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the "Company") (Nasdaq:EGBN), the parent company of EagleBank, today announced net income of $2.1 million for the three months ended March 31, 2009. Net income available to common shareholders was $1.5 million for the three months ended March 31, 2009 ($0.12 per basic and diluted common share), after accrual of preferred stock dividends, compared to $1.7 million ($0.15 per basic and diluted common share) for 2008.

"We are pleased to report continuing solid financial results for Eagle Bancorp, Inc. for the first quarter of 2009," noted Ronald D. Paul, Chairman, President and Chief Executive Officer of Eagle Bancorp, Inc. "A long-term trend of growth in our balance sheet continued in the most recent quarter, as assets increased by almost $600 million year over year" added Mr. Paul, "including loan growth of over $100 million during the two quarters following consummation of our acquisition of Fidelity & Trust Financial Corporation ("Fidelity")." The loan growth was primarily funded by the $38.2 million of capital the Company obtained from the U.S. Treasury late in December 2008 and growth in deposits and borrowed funds. The continued growth in average deposits, other funding sources and loans were the major drivers of the increase in net interest income for the three months ended March 31, 2009, as compared to the three month period ended March 31, 2008. "In spite of substantial stress in the financial markets and a difficult interest rate environment, wherein the Federal Reserve continues to inject liquidity into financial markets to keep interest rates at very low levels, the Company maintained a strong net interest margin for the first quarter of 2009 of 3.76%, which was slightly higher than the net interest margin in the fourth quarter of 2008 of 3.74%."

At March 31, 2009, the Company's level of non-performing assets of $49.8 million representing 3.33% of total assets, and was elevated as compared to both March 31, 2008, ($11.7 million or 1.30% of total assets) and December 31, 2008, ($26.4 million or 1.76% of total assets), reflective of the weakened economic situation in our region. Management remains attentive to early signs of deterioration in borrower's financial conditions. The Company is conservative in placing loans on non-accrual status and believes, based on its loan portfolio risk analysis, that its allowance for loan losses at 1.50% of total loans at March 31, 2009 is adequate to absorb any credit losses in the loan portfolio at that date. Since March 31, 2009, one loan of approximately $10.9 million, representing approximately 23% of total non-performing loans was brought current with additional funds posted in an escrow account by the borrower. Delays in completing the documentation on the extension caused the loan to be included in non-performing status at March 31, 2009. Non-performing assets net of this loan amounted to $38.9 million or 2.60% of total assets.

For the three months ended March 31, 2009, the Company reported an annualized return on average assets (ROAA) of 0.56% as compared to 0.77% for the three months ended March 31, 2008. The annualized return on average common equity (ROACE) was 5.87%, as compared to 7.98% for the same period in 2008. The lower ratios are due principally to a decline in the net interest margin in the past twelve months and to substantial increases in the provisions to the allowance for credit losses.

Both lending and deposit activities showed growth for the period ended March 31, 2009 as compared to the same period in 2008, as average loans increased 75% and average deposits increased by 77%. While a significant portion of these increases was due to the Fidelity acquisition, the Company increased loans by approximately $100 million and increased deposits and customer repurchase agreements by approximately $28 million in the two full quarters since the acquisition.

Net interest income increased 57% for the three months ended March 31, 2009 over 2008, as the effect of favorable growth noted above was partially offset by declines in the net interest margin. For the three months ended March 31, 2009 the net interest margin was 3.76% as compared to 4.19% for the three months ended March 31, 2008 and 3.74% for the three months ended December 31, 2008. Margin compression, reflecting declines in market interest rates on earning assets resulting from Federal Reserve activities which have not been matched by comparable declines in rates on interest bearing liabilities, has been challenging the banking industry for a significant period. Additionally, the Company's issuance of $12.15 million of subordinated notes represents an additional category of interest expense which did not exist in the first quarter of 2008. The Company's net interest margin remains favorable to peer-banking companies.

The provision for credit losses was $1.6 million for the three months ended March 31, 2009 as compared to $720 thousand for the three months ended March 31, 2008. The higher provisioning in the first quarter of 2009 as compared to 2008 is attributable to risk migration within the portfolio and increased reserves for problem loans.

The allowance for credit losses represented 1.50% of loans outstanding at March 31, 2009, as compared to 1.45% at December 31, 2008 and 1.15% at March 31, 2008. The higher allowance percentage at March 31, 2009 as compared to December 31, 2008 resulted primarily from increases in reserves for problem loans. In addition to the factors noted above for the past quarter, the increase in the allowance at March 31, 2009 as compared to March 31, 2008 was attributable to the acquisition of the loan portfolio of Fidelity whose allowance for credit losses was approximately $7.5 million or 2.10% of loans outstanding at the date of the acquisition on August 31, 2008.

At March 31, 2009, the allowance for credit losses represented 41% of non-performing loans as compared to 72% at December 31, 2008 and 75% at March 31, 2008. This lower coverage ratio at March 31, 2009 is reflective of two primary factors: approximately $11.7 million, or 25% of non-performing loans were acquired from Fidelity and are carried at fair value, without any allowance attributable for pre-acquisition deterioration as required under AICPA Statement of Position 03-3, "Accounting for Certain Loans or Debt Securities Acquired in a Transfer", and the addition of one loan of approximately $10.9 million to non-performing status. The adjusted coverage ratio for loans excluding the non-performing loans acquired from Fidelity carried at fair value and the $10.9 million subsequently removed from non-performing status, is approximately 79%.

For the three months ended March 31, 2009, the Company recorded net charge-offs of $918 thousand (0.29% of average loans), as compared to $25 thousand of net charge-offs (0.01% of average loans) for the three months ended March 31, 2008. Net charge-offs in the most recent quarter were attributable to charge-offs in the non-guaranteed portion of SBA loans ($208 thousand), and commercial business loans ($710 thousand).

The ratio of non-performing loans to total loans increased from 2.01% ($25.5 million) at December 31, 2008 to 3.67% ($46.5 million) at March 31, 2009, an increase of $21.0 million, including one loan of approximately $10.9 million which subsequently returned to current status. Non-performing loans at March 31, 2009 increased by $34.8 million as compared to March 31, 2008's level of $11.7 million, or 1.54% of loans. The increase in non-performing loans is due to the following: one loan for approximately $10.9 million which was subsequently brought current, fifteen loans acquired from Fidelity totaling approximately $11.7 million, five commercial real estate loans totaling approximately $5.0 million which are currently experiencing delays in construction, development, and/or absorption, two commercial business loans totaling approximately $3.3 million, and a number of smaller commercial business loans totaling approximately $4.0 million. At March 31, 2009, the Company held $3.3 million of Other Real Estate Owned ("OREO") as compared to $909 thousand at December 31, 2008 and no OREO at March 31, 2008.

Noninterest income for the three months ended March 31, 2009 was $1.4 million as compared to $940 thousand for the three months ended March 31, 2008, a 52% increase. This increase was due primarily to higher service charges on deposit accounts and to gains realized on the investment securities portfolio.

Noninterest expenses were $10.3 million for the three months ended March 31, 2009, as compared to $6.2 million for the same period in 2008, a 66% increase. The primary reason for this increase was the Fidelity acquisition which increased the size of the organization resulting in higher staff levels and related personnel costs, increased occupancy costs, higher internet and license agreement fees, and higher loan collection costs. In addition, higher costs were incurred for marketing, sponsorships, broker fees, legal, and accounting and professional fees. The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 69.10% for the three months ended March 31, 2009, as compared to 65.07% for the three months ended March 31, 2008. The Company is placing additional emphasis on noninterest expense management.

By all regulatory measures, the Company and EagleBank were well capitalized at March 31, 2009. On February 17, 2009, the Company paid the initial quarterly dividend payment of $372 thousand on the $38.2 million of preferred stock Series A, issued in December 2008 to the U.S. Treasury under the Capital Purchase Plan (commonly referred to as TARP). The Company is regularly reviewing its capital needs and the availability, costs and benefits of capital alternatives in the marketplace.

At March 31, 2009, total assets were $1.50 billion compared to $899.5 million at March 31, 2008, a 67% increase. Total deposits amounted to $1.15 billion at March 31, 2009, a 68% increase over deposits of $685.7 million at March 31, 2008, while total loans increased to $1.27 billion at March 31, 2009, from $759.5 million at March 31, 2008, a 67% increase. Total borrowed funds, excluding customer repurchase agreements, increased to $72.2 million at March 31, 2009 from $62.0 million at March 31, 2008, a 16% increase. The increase in borrowed funds is primarily due to the $12.15 million in subordinated notes that the Company issued on August 28, 2008.

The financial information which follows provides more detail of the Company's performance for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008, including eight quarters of trend data. Persons wishing additional information should refer to the Company's Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission (the "SEC").

The Company is the holding company for EagleBank which commenced operations in 1998. The Bank is headquartered in Bethesda, Maryland, and conducts full service commercial banking through thirteen offices, located in Montgomery County, Maryland, Washington, D.C. and Fairfax County, Virginia. A new office in Potomac, Maryland is planned to open in the fourth quarter of 2009. The Company focuses on building relationships with businesses, professionals and individuals in its marketplace.

The Eagle Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6101

Forward-looking Statements: This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company's market, interest rates and interest rate policy, competitive factors, the Company's ability to successfully integrate the operations of Fidelity and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company's past results are not necessarily indicative of future performance.

    Eagle Bancorp, Inc.