(Source: PrimeNewswire)BETHESDA, Md., July 23, 2009 (GLOBE NEWSWIRE) -- Eagle Bancorp, Inc. (the "Company") (Nasdaq:EGBN), the parent company of EagleBank, today announced net income of $2.7 million for the quarter ended June 30, 2009. Net income available to common shareholders was $2.1 million ($0.16 per basic and diluted common share) for the three months ended June 30, 2009, compared to $1.9 million ($0.17 per basic and diluted common share) for the three months ended June 30, 2008, an increase of 11%.

For the six months ended June 30, 2009, the Company's net income was $4.7 million. Net income available to common shareholders was $3.6 million ($0.28 per basic and diluted common share), as compared to $3.5 million ($0.33 per basic common share and $0.32 per diluted common share) for 2008.

"At a time of substantial stress in our financial markets and instability in many banks, we are very pleased to report improved net income, continued deposit and loan growth and improvement in the level of nonperforming assets for Eagle Bancorp, Inc. for the second quarter of 2009. Additionally, Eagle Bancorp and EagleBank remain well capitalized," noted Ronald D. Paul, Chairman, President and Chief Executive Officer of Eagle Bancorp, Inc. Mr. Paul further noted "that EagleBank has remained diligent in meeting the credit needs of its clients throughout its market area which is reflected in the $172 million or 15.1% loan growth over the past 10 months since the acquisition of Fidelity & Trust Financial Corporation ("Fidelity") on August 31, 2008. Over the same time period, total deposits increased $120 million or 10.6%. The continued growth in loans and deposits is a clear sign that the integration of Eagle Bancorp and Fidelity has been successful and we have been able to maintain the high standard of banking that our new and existing customers deserve."

The continued growth in loans, average deposits, and other funding sources were the major drivers of the increase in net interest income for the three months ended June 30, 2009, as compared to the three month period ended June 30, 2008. Both lending and deposit activities showed growth for the three and six months ended June 30, 2009 as compared to the same periods in 2008. Average loans increased 69% and 72% for the three and six months ended June 30, 2009, respectively. Average deposits increased 72% and 74% for the three and six months ended June 30, 2009, respectively. Both periods gains were due in part to the acquisition of Fidelity.

At June 30, 2009, total assets were $1.6 billion compared to $915.8 million at June 30, 2008, a 74% increase. Total deposits amounted to $1.2 billion, at June 30, 2009, a 79% increase over deposits of $698.4 million at June 30, 2008, while total loans increased to $1.3 billion at June 30, 2009, from $795.1 million at June 30, 2008, a 65% increase. Total borrowed funds, which include customer repurchase agreements, increased to $174.3 million at June 30, 2009 from $127.7 million at June 30, 2008, a 37% increase.

Mr. Paul added "In spite of uncertainty 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 second quarter of 2009 of 3.91%, which was considerably higher than the net interest margin in the first quarter of 2009 of 3.76%."

At June 30, 2009, the Company's level of nonperforming assets of $34.1 million, representing 2.14% of total assets, was substantially lower than the $49.8 million of nonperforming assets or 3.33% of total assets, at March 31, 2009 and was higher as compared to the $26.4 million of nonperforming assets or 1.76% of total assets, at December 31, 2008. The March 31, 2009 level of nonperforming assets amount was elevated in large part due to one loan of approximately $10.9 million which was brought current in April by the borrower. During 2009 the Company has been highly pro-active in addressing existing and potential problem loans resulting from a weaker economy, which has resulted in a much improved level of nonperforming assets at June 30, 2009 as compared to March 31, 2009. Management remains attentive to early signs of deterioration in borrowers' financial conditions and to taking the appropriate action to mitigate risk. Furthermore, the Company is diligent in placing loans on nonaccrual status and believes, based on its loan portfolio risk analysis, that its allowance for loan losses at 1.50% of total loans at June 30, 2009 is adequate to absorb potential credit losses in the loan portfolio at that date. At June 30, 2009, the Company held $3.1 million of Other Real Estate Owned ("OREO") as compared to $909 thousand at December 31, 2008 and no OREO at June 30, 2008.

For the three months ended June 30, 2009, the Company reported an annualized return on average assets of 0.70% as compared to 0.56% for the three months ended March 31, 2009 and 0.84% for the three months ended June 30, 2008. The annualized return on average common equity for the most recent quarter was 7.71%, as compared to 5.87% for the three months ended March 31, 2009 and 8.81% for the three months ended June 30, 2008. The higher ratios for the second quarter of 2009 are due in part to investment gains amounting to $1.4 million. These gains were the result of asset/liability management decisions to reduce call risk in the portfolio of U.S. Agency securities, to reduce potential extension risk in longer term U.S. Agency mortgage backed securities and to better position the investment portfolio for potentially higher interest rates over future years. From a recurring or operating standpoint, investment gains realized were offset by a special deposit insurance premium assessment imposed on all banks by the FDIC in the second quarter of 2009, which has a pretax cost to the Company of $723 thousand, and to a one-time payment of $224 thousand upon termination of a former director's fee agreement. Taken together, these three non-recurring items positively impacted second quarter earnings by $274 thousand after tax or $0.02 per basic and diluted common shares.

Net interest income increased 56% for the three months ended June 30, 2009 over 2008, as the effect of favorable balance sheet growth was partially offset by a decline (43 basis points) in the net interest margin over the past twelve months. For the three months ended June 30, 2009, the net interest margin was 3.91% as compared to 4.34% for the three months ended June 30, 2008. The Company's net interest margin for the second quarter of 2009 improved by 15 basis points to 3.91% over the net interest margin for the first quarter of 2009 of 3.76%, as both pricing of new loans and the cost of funds was managed aggressively. 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. Additionally, the Company's issuance of $12.15 million of subordinated notes in the third quarter of 2008 caused an additional category of interest expense which did not exist in the second quarter of 2008. The Company's net interest margin remains favorable to peer banking companies.

The provision for credit losses was $1.7 million for the three months ended June 30, 2009 as compared to $814 thousand for the three months ended June 30, 2008. The higher provisioning in the second quarter of 2009 as compared to the second quarter of 2008 is primarily attributable to higher levels of loan growth in the second quarter of 2009 as compared to the same period in 2008 ($45.4 million as compared to $35.6 million), increases in specific reserves for problem and potential problem loans, and net charge-offs in the second quarter of 2009 of 0.35% of average loans as compared to the second quarter of 2008 of 0.20%. The provision for credit losses was $3.3 million for the first six months of 2009 as compared to $1.5 million in 2008. The higher provisioning in the first six months of 2009 as compared to 2008 is attributable to higher net charge-offs in 2009, risk migration within the portfolio and increased reserves for problem loans.

At June 30, 2009 the allowance for credit losses represented 1.50% of loans outstanding, unchanged from the allowance percentage at March 31, 2009. The 1.50% allowance represents an increase as compared to 1.45% at December 31, 2008 and 1.15% at June 30, 2008. The higher allowance percentage at June 30, 2009 as compared to December 31, 2008 and June 30, 2008 resulted primarily from increases in reserves for problem loans and 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 June 30, 2009, the allowance for credit losses represented 63% of nonperforming loans as compared to 41% at March 31, 2009 and 79% at June 30, 2008. The lower coverage ratio (allowance for credit losses to total nonperforming loans) at June 30, 2009 as compared to June 30, 2008 is reflective of impaired loans acquired from Fidelity (approximately $12.6 million, or 41% of nonperforming loans) which in accordance with generally accepted accounting principles, are carried at fair value, without any allowance attributable to pre-acquisition deterioration. Excluding these impaired loans carried at fair value, the pro-forma coverage ratio of the allowance to nonperforming loans is 107%.

For the three months ended June 30, 2009, the Company recorded net charge-offs of $1.1 million as compared to $393 thousand of net charge-offs for the three months ended June 30, 2008. Net charge-offs in the second quarter of 2009 were attributable to charge-offs in commercial and industrial loans ($795 thousand), consumer loans ($124 thousand), and commercial real estate investment property loans ($187 thousand), and real estate owner occupied commercial loans ($32 thousand).

For the six months ended June 30, 2009 net charge-offs totaled $2.1 million versus $418 thousand for the six months ended June 30, 2008. Net charge-offs in the six months ended June 30, 2009 were attributable to charge-offs in the unguaranteed portion of SBA loans ($202 thousand), commercial and industrial loans ($1.5 million), consumer loans ($124 thousand), and commercial real estate investment property loans ($187 thousand) and real estate owner occupied commercial loans ($32 thousand).

The ratio of nonperforming loans to total loans improved significantly to 2.36% of total loans at June 30, 2009 as compared to 3.67% of total loans at March 31, 2009. Total nonperforming loans were $31.0 million at June 30, 2009 as compared to $46.5 million at March 31, 2009, a decline of $15.5 million. This decline largely reflects one loan of approximately $10.9 million which was returned to current status during the second quarter and to a reduction of $4.6 million during the second quarter of 2009 in other nonperforming loans. The ratio of nonperforming loans to total loans at June 30, 2009 was elevated as compared to nonperforming loans to total loans at June 30, 2008 of 1.45% or $11.6 million. The increase in nonperforming loans year over year was primarily due to the loans acquired from Fidelity totaling approximately $15.7 million.

Noninterest income for the three months ended June 30, 2009 increased to $3.1 million from $970 thousand for the three months ended June 30, 2008, a 220% increase. This increase was due primarily to higher service charges on deposit accounts of $233 thousand, gains realized on the sale of residential and SBA loans of $375 thousand, and gains realized on the investment securities portfolio of $1.4 million. As noted earlier, investment gains realized in the second quarter of 2009 were the result of asset/liability management decisions to reduce call risk in the portfolio of U.S. Agency securities, to reduce potential extension risk in longer term U.S. Agency mortgage backed securities and to better position the investment portfolio for potentially higher interest rates over future years. Increased gains from mortgage banking activities in the second quarter of 2009 reflect higher levels of mortgage refinancing given lower market interest rates.

Noninterest expenses were $11.6 million for the three months ended June 30, 2009, as compared to $6.5 million for the three months ended June 30, 2008, a 77% increase. The Fidelity acquisition increased the size of the organization resulting in higher staff levels and related personnel costs of $1.4 million, increased occupancy costs of $724 thousand, and higher data processing of $172 thousand. In addition, higher costs were incurred for marketing and advertising of $128 thousand, legal, accounting and professional fees of $549 thousand, and FDIC insurance and regulatory fees increased $1.4 million. Other expenses increased $715 thousand primarily due to $155 thousand in OREO expenses, and the $224 thousand director fee agreement termination payment. The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was improved at 66.42% for the second quarter of 2009, as compared to 69.10% for the first quarter of 2009 and 72.54% for the fourth quarter of 2008. For the six months ended June 30, 2009; the efficiency ratio was 67.66% as compared to 64.50% for the six months ended June 30, 2008. The Company is placing additional emphasis on noninterest expense management.

For the six months ended June 30, 2009, the Company reported an annualized return on average assets of 0.63% as compared to 0.81% for the first six months of 2008, while the annualized return on average common equity was 6.81% in 2009, as compared to 8.40% for the same six month period in 2008. Declines in these ratios were due primarily to declines in the net interest margins, which factor is affecting all financial institutions, and to substantially higher provisions for loan losses.

For the first six months of 2009, net interest income increased 56% over the same period for 2008. As noted above, average loans increased 72% and average deposits increased by 74%. Both periods gains were due in part to the acquisition of Fidelity completed August 31, 2008. The net interest margin was 3.83% as compared to 4.26% for the first six months in 2008, as the effects of a steep decline in market interest rates impacted the Company. However, as mentioned above, the Company believes it has managed this very significant decline in market interest rates well and currently has a favorable net interest margin as compared to peer banking companies.

Noninterest income for the first six months of 2009 was $4.5 million compared to $1.9 million in the first six months of 2008, an increase of 137%. This increase was due primarily to higher service charges on deposit accounts of $542 thousand, gains realized on the sale of residential and SBA loans of $379 thousand, and gains realized on the investment securities portfolio of $1.5 million, earlier noted and discussed.

Noninterest expenses were $21.9 million for the first six months of 2009, as compared to $12.7 million for 2008, a 72% 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 of $3.1 million, increased occupancy costs of $1.5 million, and data processing of $379 thousand. In addition, higher costs were incurred for marketing and advertising of $362 thousand, legal, accounting and professional fees of $969 thousand, and FDIC insurance and regulatory fees of $1.7 million which includes the special FDIC assessment of approximately $723 thousand recorded in the second quarter of 2009. Other expenses increased $1.1 million primarily due to $161 thousand in OREO expenses, the $224 thousand director fee agreement termination payment, and $744 thousand in general and administrative costs due to the growth of the organization subsequent to the Fidelity acquisition.

By all regulatory measures, the Company and EagleBank were well capitalized at June 30, 2009. On May 15, 2009, the Company paid the quarterly dividend payment of $478 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 June 30, 2009, Eagle Bancorp had a total risk based capital ratio of 12.05%, a Tier 1 risk based capital ratio of 9.91%, and a tangible common equity capital ratio of 6.58%.

The financial information which follows on the following pages provides more detail on the Company's performance for the six and three months ended June 30, 2009 as compared to the six and three months ended June 30, 2008, as well as providing 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").