2 0 1 9 R E P O R T T O S H A R E H O L D E R S Growing stronger, as planned. Your community bank is only growing stronger—and that’s good for the whole community. The year 2019 saw a continuation of the course we set for ourselves more than 20 years ago, and a confirmation of the long-term wisdom of that approach. Today, our leadership team is as strong as ever, with Norman Pozez as Executive Chairman of the Board and Susan Riel as President and CEO of the Company and the Bank. The Board is leaner and better balanced, with even more skill and experience. Our local market knowledge remains unrivaled, and with a solid financial footing, the Bank continues to be well positioned for further growth and profitability. Because our founding principles remain firmly in place, we’ll always put relationships first. We’ll always bring to the table our entrepreneurial flexibility and resourcefulness, our “blank sheet of paper.” And we’ll always be dedicated to serving not only the businesses of our local community but also its neighborhoods and people. That is who we set out to be, who we are, and who we always will be. Whatever the year. To Our Shareholders Once again, we are very pleased to share with you this annual report and our 2019 financial results along with other achievements of Eagle Bancorp, Inc., and our principal subsidiary, EagleBank. We are especially proud of our results, since 2019 was a very challenging year for financial markets generally, and for the banking industry in particular, because of the unusually dynamic interest rate environment and a flat yield curve. Despite these factors, the Company reported net income of $142.9 million for the year. While this represented a modest 6% decrease from the record earnings of 2018, we are still highly profitable and among the most successful banks in the country as measured by Return on Average Assets and Return on Average Tangible Common Equity. We have a sound balance sheet, and our capital ratios are significantly above the levels needed to be considered Well Capitalized. While EagleBank had healthy growth in deposits and in our earning assets of loans and marketable securities, the impact of the flat yield curve led to a decline in the Net Interest Margin, to 3.77% for the year. Other fundamentals were strong, as top-line revenue increases were driven by the growth in loans and deposits and an improvement in non-interest income due primarily to gains on the sale of residential mortgage loans. We also continued our disciplined approach to prudent growth of the core operating expenses to allow for the enhancements to personnel and technology necessary for the sustained development of the Company. Credit quality remained strong as Net Charge-Offs were only 0.13% of average loans for the year. The Reserve for Loan Losses was 0.98% of Total Loans at year end, and the Coverage Ratio of nonperforming loans was 151% at year end. 2019 was a year of building on our tradition of strong financial performance. Our level of profitability and sound balance sheet and position allowed us to return some capital to shareholders through a quarterly cash dividend of $0.22 per share, which commenced in the 2nd Quarter. In the 3rd Quarter, the Board authorized a Share Repurchase Program through which we acquired 1,304,500 shares by year end, thus returning about $55 million in additional capital to our shareholders. The share repurchase activity contributes incrementally to Earnings per Share. We are also proud to note that due to the continued quality earnings, the Tangible Book Value per Share had increased to $32.67 at year end. We have provided a CAGR of 17.5% in the Tangible Book Value per share over the last five years. Even with the economic headwinds we encountered during the year, EagleBank retained its position as a leading community bank in our market by delivering the high level of customized service and the certainty of execution that are the key components of our Relationships F-I-R-S-T strategy. We continued to upgrade our IT systems and expanded our physical footprint with the opening of a Loan Production Office in Prince George’s County, Maryland. We sustained our commitment to the community through the work of the EagleBank Foundation, the thousands of hours of volunteer efforts our employees spent with organizations throughout the Washington, DC, metropolitan area, and expanded participation in lending and direct investment programs to finance affordable housing. 3 Eagle Bancorp, Inc. 2019 Report to Shareholders However, 2019 was also a year of transition for our Company. In March, the Board selected new leadership for the Company after the resignation of the former CEO. Additional changes were made during the year as the Board, led by an Independent Chair, focused on its commitment to maintaining the highest standards of corporate governance policies and practices. In June, the Boards of both the Company and EagleBank were restructured and streamlined to improve efficiency of operations. After a review, certain Committees of the Board and Management were also restructured. During the year, the Board elected two new Directors who have strong backgrounds in risk management and financial reporting. In addition, several very capable individuals who had previously served as Directors of EagleBank were elected to the Board of the Company. A further beneficial effect of these moves was that we were able to achieve a long-standing goal of increasing the diversity of the Board by increasing women and minority representation. And we recently enhanced our Board governance through the appointment of a Lead Independent Director. At the management level, the leadership team was laying the foundation for the continued organic growth and development of the Bank. While the Relationships F-I-R-S-T approach to the market will remain consistent, the Bank is strengthening its commitment to its culture centered on quality, collaboration, and open communications. During the year, the Bank enhanced its training and development programs, and the Company has made Talent Management and Organizational Development critical in our Strategic Plan. We are grateful for your support during 2019. 2020 will be another demanding year due to the volatile economy and financial markets. We are also facing the impact of an unprecedented pandemic—one the Bank has been prepared for and is facing with determination and the focused discipline of its leadership and its business continuity planning. Through all this, our Company remains financially sound and well positioned as one of the leading community banks in the Washington, DC, metropolitan area. We look forward to meeting the challenges and leveraging the even greater opportunities that lie ahead. Sincerely, Norman R. Pozez Executive Chairman of the Board Susan G. Riel President and Chief Executive Officer Financial Highlights of 2019 Net Income of $142.9 Million High-Quality Earnings: Return on Average Assets 1.61% Return on Tangible Common Equity 13.40% Total Assets $8.99 Billion at Year End 10.47% Growth in Average Loans 12.21% Growth in Average Deposits Total Equity Capital of $1.2 Billion at Year End 11.99% Growth in Tangible Book Value per Share 4 5 Eagle Bancorp, Inc. 2019 Report to Shareholders Caring for kids. EagleBank serves The Children’s Inn at NIH as a supporter and banking partner. For nearly three decades, The Children’s Inn at NIH in Bethesda, MD, has been a haven for families with children undergoing clinical research studies at the National Institutes of Health. EagleBank has proudly supported the worthy organization for nearly two of those decades, and in 2011, The Children’s Inn deepened its relationship with us by becoming a customer as well. “To date, the Bank and Foundation have donated more than $317,000 to The Children’s Inn, which equates to more than 300 hours of one-on-one educational support, 12,000 nights of free lodging, and more than 54,000 meals served to approximately 1,500 families,” says Jennie Lucca, CEO, The Children’s Inn. “The Bank has also continued their dedication by supporting canned food drives, encouraging customers to donate their change in its branches, donating tickets for families to enjoy unique sporting experiences, and so much more.” “The relationship is personal. I smile every time I drive by an EagleBank sign.” Jean Buergler, Senior Director of Finance $317,000 DONATED TO THE CHILDREN’S INN, RESULTING IN: The Children’s Inn turned to EagleBank in 2013 for treasury services, thus expanding the banking relationship. “On the financial business side, EagleBank began providing ICS (Insured Cash Sweep) accounts that enabled The Inn to easily manage our current operating funds so they are always automatically and appropriately invested,” says Jean Buergler, Senior Director of Finance for The Children’s Inn. “Like so many of EagleBank’s customers, the relationship is personal. I smile every time I drive by an EagleBank sign.” 300 HOURS OF ONE-ON-ONE EDUCATIONAL SUPPORT 12,000 NIGHTS OF FREE LODGING 54,000 MEALS SERVED TO APPROXIMATELY 1,500 FAMILIES 6 7 Eagle Bancorp, Inc. 2019 Report to Shareholders Driving a business forward. EagleBank helped K. Neal Truck and Bus Center build a new headquarters. Building a community once again. The team behind a special-needs school takes on a new project to serve adults with disabilities. Across the DMV, from Prince George’s and Montgomery counties in Maryland to Fairfax County in Virginia, K. Neal Truck and Bus Center serves local businesses and school districts with everything they need to operate commercial vehicles, from new and used sales to service and parts. Recently, EagleBank partnered with the regional company to finance a new 50,000-square-foot headquarters, explains Korey Neal, President of K. Neal Truck and Bus Center. “Behind every great entrepreneur…is a great bank! This is absolutely true in my case,” Neal says. The bond is strong. Neal recalls the company extending an invitation to EagleBank’s former chief executive officer when President Barack Obama visited one of the dealerships in June 2010. EagleBank representatives also joined the company, Neal says, to celebrate the opening of the new headquarters in Hyattsville, MD, in August 2019. Designed to be environmentally friendly and energy-efficient, the headquarters includes a maintenance facility and corporate office—part of a larger community development project, Neal explains. “We’re excited to see the economic growth continue in this area and to expand our footprint,” he says. “Through ups and downs in the last decade, EagleBank has remained a steadfast and committed partner.” As the company evolves, so will its relationship with EagleBank. “EagleBank offers a personal touch and commitment to community—and serving the customer is a top priority,” Neal says. “Through more than a decade of partnership, K. Neal’s business needs don’t get lost or have to compete with other accounts. We remain a top priority.” “ Behind every great entrepreneur…is a great bank! This is absolutely true in my case.” Over a decade ago, local student Nicolas Copeland needed a special learning environment, and his parents, Jillian and Scott Copeland, were unable to find an ideal school for his unique needs. So the couple decided to build one. The Diener School in Potomac, MD, was established in 2007, with EagleBank by the couple’s side. More recently, as Nicolas approached adulthood, the local couple set their sights on building another environment designed to serve individuals with developmental disabilities in the next stage of their lives—and EagleBank was there to partner with the couple once again. “EagleBank was one of our first calls when we decided to pursue this project,” Jillian Copeland says. Main Street, a joint venture project with Jillian’s nonprofit Main Street Connect and RST Development (where Scott is a principal), is a 70-unit apartment community in Rockville, MD. It sets aside 25% of the units for adults with disabilities, with the rest dedicated to affordable housing. “Our roots run deep in this community, and we felt that it was the perfect place to open our flagship building,” Copeland says. Main Street is scheduled for completion in 2020. EagleBank partnered with the team to navigate the project’s unique financing and issue a construction loan. The Bank will also partner with the team once construction is completed. “EagleBank will remain our bank as Main Street Connect moves from the ‘capital’ side of the project to the ‘operating’ phase,” Copeland says. As the project name suggests, Main Street is designed to create a community, so partnering with a local bank was the logical choice. “While we have strong relationships with other banks, we do not share those same personal connections— connections that run beyond the deal at hand but speak to our shared values and commitment to community,” Copeland says. “ EagleBank was one of our first calls, and will remain our bank as Main Street moves to the ‘operating’ phase.” Jillian and Scott Copeland, Founders, Main Street Korey Neal, President, K. Neal Truck and Bus Center 8 9 Eagle Bancorp, Inc. 2019 Report to Shareholders The financing is in the bag. Local bag maker SCOUT looks to EagleBank to grow its Georgetown business. With names like “Spirit Liftah” and “Miss Manors,” SCOUT bags are definitely fun. But that fun—and the local business’s success—is rooted in function. And to accomplish both goals, the company needed a local banking partner. “EagleBank was incredibly receptive to a growing company of our size,” says Ben Johns, who co-owns SCOUT with his wife Deb. Based in the Georgetown neighborhood of Washington, DC, the company is a rarity in the nation’s capital, a city not known for producing fashion products. “What makes EagleBank different is that they don’t look at just the numbers,” Johns says. “They make an effort to understand our unique business and the ‘why’ of certain things we’re doing. They build a personal relationship with a strong foundation that helps in both good times and bad.” Each season, SCOUT creates a unique collection of bright, graphic patterns for their practical bag collection, which includes totes, backpacks, lunch boxes, coolers, storage bins, and more. EagleBank partnered with SCOUT as the business grew. “When we requested a doubling of our line of credit, EagleBank supported us,” Johns says. “And that doubling enabled us to optimize how we run our business—in our universe, that means being able to buy the right amount of inventory at the right time of year— which allowed us to grow quicker.” The family-owned, local business mirrors EagleBank’s own values. “We live and work here in DC, so it was only logical to partner with a strong—if not the strongest— community bank that truly understood the needs of local communities and companies,” Johns says. “What makes EagleBank different is that they don’t look at just the numbers.” Deb Johns, Founder and Creative Director, SCOUT Bags 10 Rapid growth through local expertise. Homegrown government contracting firm Intrepid Solutions blooms with EagleBank’s help. Like many towns in the Washington, DC, metropolitan area, Herndon, Virginia, is a place where government contractors thrive. Among them is Intrepid Solutions, established by Northern Virginia native Ryan Hebert. Currently the firm’s CEO, Hebert cites the area’s “white-hot economy, growth opportunities, and business/industry diversity” as reasons for putting down roots in local soil. To take advantage of those growth opportunities, finding a strong banking partner with local expertise seemed like a logical solution. Enter EagleBank. “From our initial meeting with EagleBank, their industry expertise and experience with key GovCon companies stood out,” says Hebert. And EagleBank has the capabilities to fully support Intrepid’s ambitious growth plans, according to Hebert. “In 2016, we doubled in size, and in 2017, we doubled in size again,” he says. “And we continued to increase our business significantly through 2019.” EagleBank also recently enabled the company’s first buy-side transaction, which Hebert credits with “further increasing our customers, capabilities, and contracts.” He voices particular praise for Toby Haggerty, his EagleBank relationship manager. “Toby has really stood out, compared to other bankers we have met with over the years,” Hebert says. “He has been with us since before much of our growth occurred, and now he has covered all facets of the growth lifecycle with us—a fantastic partner.” Hebert’s local pride is evident in his assessment of Northern Virginia as uniquely fertile ground for both home- grown businesses like his and major transplants from other cities. “That really fuels explosive growth,” he says, and with EagleBank’s intimate knowledge of the local market and deep understanding of the government contracting field, “EagleBank has been and will continue to be a critical partner as we continue our growth.” 11 Ryan Hebert, CPA, Chief Executive Officer, Intrepid Solutions and Services, LLC “ EagleBank has been and will continue to be a critical partner as we continue our growth.” Eagle Bancorp, Inc. 2019 Report to Shareholders History meets tech at the renewed Carnegie Library. The Historical Society of Washington, DC, opened the new DC History Center with help from EagleBank. The Historical Society of Washington, DC, has been housed in the Carnegie Library on Mount Vernon Square for two decades, but 2019 marked a major milestone for the nonprofit. Coinciding with the opening of a new Apple flagship store in the building, the Historical Society unveiled the DC History Center, featuring exhibition space, a research library, and a store. “Apple was very generous and thoughtful in its restoration of the Carnegie Library. Nevertheless, the Historical Society has had to raise substantial ongoing funding for additional staffing, exhibitions, and downtime during the two-year construction period,” says Julie Koczela, the nonprofit’s Board of Trustees Chair. “EagleBank was very important in helping the Historical Society get up and running quickly by providing a line of credit during this time of transition.” The center debuted with three exhibitions in May, and in just the first eight months over 50,000 visitors explored the space, according to Koczela. A few months later, the renewed Kiplinger Research Library opened its doors to the DC community as well, providing by-appointment access to its collection of resources. In the coming years, the Historical Society plans to expand its services to local schools and grow its digital outreach, Koczela explains. And as the local history organization evolves, the local bank will remain a loyal resource. “We believe EagleBank will be a strong and dependable partner going forward,” Koczela says. “As a community-focused bank, they understand that preserving and interpreting the city’s history helps instill pride and participation in neighborhoods and attract local businesses.” Anne McDonough, Library & Collections Director, Historical Society of Washington, DC “ We believe EagleBank will be a strong and dependable partner.” Enhancing the community. EagleBank funds a worthy partnership between Whitman-Walker Health and Fivesquares Development. “ Time has shown how successful EagleBank has been.” In virtually every neighborhood in our capital city, the streetscape is changing. New buildings are popping up like mushrooms after a spring shower. Rising at the corner of 14th and R, Northwest, is Liz, one of the most significant of these new developments from EagleBank’s perspective, because it grew out of a partnership between two respected local organizations and longtime friends of the Bank: Whitman-Walker Health System and Fivesquares Development. Established in 1978, internationally recognized Whitman-Walker Health is a nonprofit without an endowment. They sought to diversify the funding model by redeveloping their headquarters into a mixed-use project, including upscale residential, office, cultural/artistic, and retail space. “We can’t really build anything unless we have the community in the center of what we do. If we aren’t doing that, we aren’t supporting our values and our mission,” says Don Blanchon, CEO, Whitman-Walker Health System. “If there is a secret sauce to the success of this and the tremendous positive response we have had to this project, it’s the partnership model.” The selected developer was Fivesquares Development, based in Washington (at Liz, in fact). Their business is focused on working with nonprofit, academic, cultural, and government organizations to further their missions by optimizing their real estate, say co-founders Ron Kaplan and Andy Altman, so it was a natural fit. “As soon as we won the bid, we went straight to EagleBank for the financing,” Kaplan says. As a local developer, he had known about EagleBank since its inception. “I wish I’d invested with them way back then,” he says with a laugh. “Time has shown how successful EagleBank has been.” Fivesquares Development began a working relationship with EagleBank several years ago. Kaplan appreciates the alignment of his firm’s local focus and the genuine involvement of EagleBank in the community. “Knowing a community helps you really understand how to enhance that community,” he says. Altman admires EagleBank’s deep real estate expertise, including the understanding that development projects can take many years to come to fruition. “Taking the long view, believing in our vision for a new community,” Altman says, is something that sets EagleBank apart. 12 13 Eagle Bancorp, Inc. 2019 Report to Shareholders SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA EAGLE BANCORP, INC (NON-GAAP RECONCILIATION) Securities Loans held for sale Loans Allowance for credit losses Intangible assets, net Total assets Deposits Borrowings Total liabilities ) s d n a s u o h t n i s r a l l o d ( Preferred shareholders’ equity Common shareholders’ equity Total shareholders’ equity Tangible common equity 1 Interest income Interest expense Provision for credit losses ) s d n a s u o h t n i s r a l l o d ( Noninterest income Noninterest expense Income before taxes Income tax expense Net income Preferred dividends D N E D O R E P I - T E E H S E C N A L A B S N O I T A R E P O F O T N E M E T A T S Cash dividends declared Net income available to common shareholders Total Revenue 2 Net income, basic Net income, diluted Dividends declared Book value Tangible book value 3 N O M M O C R E P A T A D E R A H S YEARS ENDED DECEMBER 31 ’19 $ 843,363 ’18 $ 784,139 ’17 $ 589,268 ’16 $ 538,108 ’15 $ 504,772 ’14 $ 404,903 56,707 19,254 25,096 51,629 47,492 44,317 7,545,748 6,991,447 6,411,528 5,677,893 4,998,368 4,312,399 73,658 104,739 8,988,719 7,224,391 498,667 7,798,038 - 1,190,681 1,190,681 1,085,942 69,944 105,766 8,389,137 6,974,285 247,709 7,280,196 - 1,108,941 1,108,941 1,003,175 64,758 107,212 7,479,029 5,853,984 618,466 6,528,591 - 950,438 950,438 843,226 59,074 107,419 6,890,096 5,716,114 285,390 6,047,297 - 842,799 842,799 735,380 52,687 108,542 6,075,577 5,158,444 141,284 46,075 109,908 5,246,684 4,310,768 279,224 5,336,976 4,625,925 738,601 738,601 630,059 548,859 620,759 438,951 Five-Year Compound Growth Rate 16% 5% 12% 10% -1% 11% 11% 12% 11% - 71,900 -100% $ 429,630 $ 393,286 $ 324,034 $ 285,805 $ 253,180 $ 191,573 105,585 13,091 25,699 139,862 196,791 53,848 142,943 - 22,332 142,943 349,744 4.18 4.18 0.66 35.82 32.67 $ 76,293 8,660 22,586 126,711 204,208 51,932 152,276 - - 40,147 8,971 29,372 118,552 185,736 85,504 100,232 - - 152,276 339,579 100,232 313,259 $ $ 4.44 4.42 - 32.25 29.17 $ 2.94 2.92 - 27.80 24.67 27,640 11,331 27,284 115,016 159,102 61,395 97,707 - - 97,707 285,449 2.91 2.86 - 24.77 21.61 19,238 14,638 26,628 110,716 135,216 51,049 84,167 601 - 83,566 260,570 2.54 2.50 - 22.07 18.83 $ 13,095 10,879 18,345 99,728 86,216 31,958 54,258 $ - 53,644 196,823 2.01 1.95 - 18.21 14.56 614 -100% 17% 14% 20% 18% 52% 4% 7% 7% 18% 11% 21% - 22% 12% 16% 16% - 14% 18% 2% 5% 4% Common shares outstanding 33,241,496 34,387,919 34,185,163 34,023,850 33,467,893 30,139,396 Weighted average common shares outstanding, basic 34,178,804 34,306,336 34,138,536 33,587,254 32,836,449 26,683,759 Weighted average common shares outstanding, diluted 34,210,646 34,443,040 34,320,639 34,181,616 33,479,592 27,550,978 Net interest margin Efficiency ratio 4 Return on average assets Return on average common equity S O I T A R Return on average tangible common equity CET1 capital (to risk weighted assets) 5 Total capital (to risk weighted assets) Tier 1 capital (to risk weighted assets) Tier 1 capital (to average assets) Tangible common equity ratio Dividend payout ratio 3.77% 39.99% 1.61% 12.20% 13.40% 12.87% 16.20% 12.87% 11.62% 12.22% 15.79% 4.10% 37.31% 1.91% 14.89% 16.63% 12.49% 16.08% 12.49% 12.10% 12.11% - 4.15% 37.84% 1.41% 11.06% 12.54% 11.23% 15.02% 11.23% 11.45% 11.44% - 4.16% 40.29% 1.52% 12.27% 14.19% 10.80% 14.89% 10.80% 10.72% 10.84% - 4.33% 42.49% 1.49% 12.32% 14.69% 10.68% 12.75% 10.68% 10.90% 10.56% - 4.44% 50.67% 1.31% 13.50% 14.27% - 12.97% 10.39% 10.69% 8.54% - Nonperforming assets and loans 90+ past due $ 50,216 $ 17,671 $ 14,632 $ 20,569 $ 19,091 $ 35,667 Nonperforming assets and loans 90+ past due to total assets Nonperforming loans to total loans Allowance for credit losses to loans 0.56% 0.65% 0.98% 0.21% 0.23% 1.00% 0.20% 0.21% 1.01% 0.30% 0.31% 1.04% 0.31% 0.26% 1.05% 0.68% 0.52% 1.07% Allowance for credit losses to nonperforming loans 151.16% 429.72% 489.20% 330.49% 397.95% 205.30% Net charge-offs Net charge-offs to average loans $ 9,377 0.13% $ 3,475 0.05% $ 3,286 $ 4,945 $ 0.06% 0.09% 8,026 0.17% $ 5,724 0.17% 1 Tangible common equity, a non-GAAP financial measure, is defined as total common shareholders’ equity reduced by goodwill and other intangible assets. 2 Total revenue calculated as net interest income plus noninterest income. 3 Tangible book value per common share, a non-GAAP financial measure, is defined as tangible common shareholders’ equity divided by total common shares outstanding. 4 Efficiency ratio, a non-GAAP financial measure, is computed by dividing noninterest expense by the sum of net interest income and noninterest income. 5 Not applicable to fiscal years prior to 2015. Y T I L A U Q T E S S A ) s d n a s u o h t n i s r a l l o d ( 14 D N E D O R E P I - T E E H S E C N A L A B ) a t a d e r a h s r e p t p e c x e s d n a s u o h t n i s r a l l o d ( Common shareholders’ equity Less: Intangible assets, net Tangible common equity 1 YEARS ENDED DECEMBER 31 ’19 $ 1,190,681 ’18 $ 1,108,941 ’17 $ 950,438 ’16 $ 842,799 ’15 $ 738,601 ’14 $ 548,859 104,739 105,766 107,212 107,419 108,542 109,908 $ 1,085,942 $ 1,003,175 $ 843,226 $ 735,380 $ 630,059 $ 438,951 Book value 3 $ 35.82 $ 32.25 Less: Intangible book value per common share 3.15 3.08 Tangible book value 3,4 $ 32.67 $ 29.17 $ $ 27.80 3.13 24.67 $ $ 24.77 3.16 21.61 $ $ 22.07 3.24 18.83 $ $ 18.21 3.65 14.56 Total assets Less: Intangible assets, net Tangible assets Tangible common equity 1 Tangible assets $ 8,988,719 $ 8,389,137 $ 7,479,029 $ 6,890,096 $ 6,075,577 $ 5,246,684 104,739 105,766 107,212 107,419 108,542 109,908 $ 8,883,980 $ 8,283,371 $ 7,371,817 $ 6,782,677 $ 5,967,035 $ 5,136,776 $ 1,085,942 $ 1,003,175 $ 843,226 $ 735,380 $ 630,059 $ 438,951 8,883,980 8,283,371 7,371,817 6,782,677 5,967,035 5,136,776 Tangible common equity ratio 12.22% 12.11% 11.44% 10.84% 10.56% 8.54% Average common shareholders' equity $ 1,172,051 $ 1,022,642 $ 906,169 $ 796,400 $ 678,387 $ 397,425 Less: Average intangible assets 105,167 106,806 107,117 107,959 109,477 21,460 Average tangible common equity $ 1,066,884 $ 915,836 $ 799,052 $ 688,441 $ 568,910 $ 375,965 Net income 2,3 Less: Preferred dividends Average tangible common equity Return on average tangible common equity 2,3 $ 142,943 $ 152,276 $ 100,232 $ 97,707 $ 84,167 $ 54,258 - 1,066,884 13.40% - 915,836 16.63% - 799,052 12.54% - 688,441 14.19% 601 568,910 14.69% 614 375,965 14.27% Interest income Interest expense Net interest income Noninterest income Total revenue $ 429,630 $ 393,286 $ 324,034 $ 285,805 $ 253,180 $ 191,573 105,585 324,045 25,699 76,293 316,993 22,586 40,147 283,887 29,372 27,640 258,165 27,284 19,238 233,942 26,628 13,095 178,478 18,345 $ 349,744 $ 339,579 $ 313,259 $ 285,449 $ 260,570 $ 196,823 1 Tangible common equity, a non-GAAP financial measure, is defined as total common shareholders’ equity reduced by goodwill and other intangible assets. 2 The reported figure includes the effect of $4.7 million and $3.2 million of merger related expenses ($3.5 million and $2.2 million net of tax) for the twelve and three months ended December 31, 2014. As the magnitude of the merger expenses distorts the operational results of the Company, we present in the GAAP reconciliation and in the accompanying text certain performance ratios excluding the effect of the merger expenses during the twelve and three months periods ended December 31, 2014. We believe this information is important to enable shareholders and other interested parties to assess the core operational performance of the Company. 3 Presented giving retroactive effect to the 10% stock dividend paid on the common stock on June 14, 2013. 4 Tangible book value per common share, a non-GAAP financial measure, is defined as tangible common shareholders’ equity divided by total common shares outstanding. 15 Eagle Bancorp, Inc. 2019 Report to Shareholders BALANCED LOAN AND DEPOSIT GROWTH NET INCOME AVAILABLE TO COMMON SHAREHOLDERS Compound Annual Growth Rate* Total Loans: 18% Compound Annual Growth Rate* Total Deposits: 17% ASSET QUALITY EARNINGS PER DILUTED SHARE Total Loans ($) Non Performing Assets to Total Assets (%) Net Charge-Offs to Average Loans (%) CAPITAL LEVELS TOTAL SHAREHOLDER RETURN PERFORMANCE $1,350,000 $1,200,000 $1,050,000 $900,000 $750,000 $600,000 $450,000 $300,000 $150,000 $0 16 Total Regulatory Capital Common Shareholders’ Equity Common Shareholders' Equity Total Regulatory Capital** ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 NOTES ** Regulatory Capital consists of Shareholders’ Equity plus Allowance for Loan Losses plus Qualifying Debt (i.e. Subordinated Notes) less Intangibles. 2012 - Raised $45 million of Common Stock at an average price of $15.74 per share, as adjusted for a 10% stock dividend paid on the common stock on June 14, 2013. 2014 - Raised $70 million of Subordinated Notes due 2024 at 5.75%. 2015 - Raised $100 million of Common Stock at $35.50 per share. 2016 - Raised $150 million of Subordinated Notes due 2026 at 5.00%. 2019 - Repurchased $55 million of Common Stock at an average price of $42.06 per share. Declared Cash Dividends of $22 million. E U L A V X E D N I Source: S&P Global Market Intelligence Compound Annual Growth Rate* 33% Compound Annual Growth Rate* 24% Compound Annual Growth Rate* Eagle Bancorp, Inc. 17.8% Nasdaq Composite Index 16.1% S&P 500 Index 13.6% KBW Nasdaq Regional Banking Index 11.5% * CAGR excludes years with negative or zero values. 17 $0$1,000,000,000$2,000,000,000$3,000,000,000$4,000,000,000$5,000,000,000$6,000,000,000$7,000,000,000$8,000,000,000Total Loans’19’18’17’16’15’14’13’12’11’10’090%2%4%6%8%10%12%14%16%18%20%Net Charge-Offs to Average Loans (%)Non PerformingAssets to Total Assets (%)$0$1.00$2.00$3.00$4.00$5.00’19’18’17’16’15’14’13’12’11’10’09$0$40,000$80,000$120,000$160,000’19’18’17’16’15’14’13’12’11’10’09$0$1,000,000,000$2,000,000,000$3,000,000,000$4,000,000,000$5,000,000,000$6,000,000,000$7,000,000,000$8,000,000,000Total DepositsTotal Loans’19’18’17’16’15’14’13’12’11’10’09Compound Annual Growth Rate*0100200300400500600700KBW NASDAQ Regional Banking IndexS&P 500 IndexNASDAQ Composite IndexEagle Bancorp, Inc.’19’18’17’16’15’14’13’12’11’10’09EGBNEagle Bancorp, Inc. 2019 Report to Shareholders Our strong team is who we are. A salute to our employees, the community within our greater DC community. All year long, day in and day out, it’s our diverse team of people that makes EagleBank what it is. They are the face of the bank in branches all across the DC area. They are the voice of the bank on the phone. They are the ears that listen to each customer’s unique needs and goals, and the eyes that look for ways to help. They are the fingers on the pulse of the local market, and the hands that pitch in to support local charities and community events. And they are the heart of a work culture in which all are respected and encouraged to prosper. OUR VALUES: RELATIONSHIPS F -I-R-S-T 2019 EagleBank Holiday Party Flexible We begin our relationships based on our time-tested tradition of listening to each customer, collaborating with colleagues, and designing a comprehensive, creative solution that brings value to and appreciation from our customers. We enhance the relationship with empowered, “Yes, We Can” service and live up to our strong belief that formulas don’t make good banking sense, relationships do. Being entrepreneurial— it is our differentiator. Involved We build our relationships by developing a rapport that is based on partnership, mutual respect, and a desire to delight. We are unwavering in our commitment to the goals and growth of our customers, colleagues, and community through volunteerism. We believe that doing the little extras and staying involved with our customers demonstrates our difference. Responsive We shape our relationships by taking ownership for being ever-responsive, from beginning to end, day in and day out. We understand that reliable, accurate, and time-sensitive communication is fundamental to preserving reputation and relationships, internally and externally. Strong We strengthen our relationships each time we are called upon for our expertise and know-how. We are committed to enhancing our professional knowledge in order to remain credible, current, and strong partners with our customers, colleagues, and community. Our history of sustaining a well-capitalized and profitable position emphasizes our strength and reinforces our relationships. Trusted We uphold our relationships with honesty, openness, and reliability. We can be counted on to do “the right thing.” We understand that underlying a sound, long-lasting relationship is the essential element of trust. Trust can be lost in a moment, so we are vigilant in our actions and words. Our Mission We have a mission to be the most respected and profitable community bank. To do this, we put relationships first, to the delight of our customers, employees, and shareholders, and relentlessly deliver the most compelling service and value. 18 19 Eagle Bancorp, Inc. 2019 Report to Shareholders BOARD OF DIRECTORS Norman R. Pozez * Executive Chairman of Eagle Bancorp, Inc. Executive Chairman of EagleBank Chairman and Chief Executive Officer of Uniwest Companies Matthew D. Brockwell * (Retired) Audit Partner at PricewaterhouseCoopers LLP (PwC) Theresa G. LaPlaca * ** (Retired) Executive Vice President at Wells Fargo Leslie Ludwig * Co-Founder of L&L Advisors Kathy A. Raffa, CPA * Office Managing Partner of Marcum LLP’s Washington, DC Region Susan G. Riel * President and Chief Executive Officer of Eagle Bancorp, Inc. President and Chief Executive Officer of EagleBank James A. Soltesz, P.E. * President and Chief Executive Officer of Soltesz, Inc. Benjamin M. Soto, Esquire * President and Chief Executive Officer of Premium Title & Escrow, LLC EXECUTIVE OFFICERS Susan G. Riel President and Chief Executive Officer of Eagle Bancorp, Inc., and EagleBank Charles D. Levingston, CPA Executive Vice President and Chief Financial Officer of Eagle Bancorp, Inc., and EagleBank Antonio F. Marquez Executive Vice President of Eagle Bancorp, Inc. Senior Executive Vice President and President of Commercial Banking of EagleBank Lindsey S. Rheaume Executive Vice President of Eagle Bancorp, Inc. Executive Vice President and Chief Commercial & Industrial Lending Officer of EagleBank Paul Saltzman, Esquire Executive Vice President and Chief Legal Officer of Eagle Bancorp, Inc., and EagleBank Janice L. Williams, Esquire Executive Vice President of Eagle Bancorp, Inc. Senior Executive Vice President and Chief Credit Officer of EagleBank * Director of Eagle Bancorp, Inc. and EagleBank ** Lead Independent Director 20 VIRTUAL ANNUAL MEETING Thursday, May 21, 2020, at 10:00 a.m. See Proxy Statement for details on virtual meeting. FORM 10-K The Company’s Form 10-K may be obtained, free of charge, by contacting: Jane E. Cornett Vice President & Corporate Secretary Eagle Bancorp, Inc 7830 Old Georgetown Road, Third Floor Bethesda, MD 20814 240.497.2041 jcornett@EagleBankCorp.com For more 2019 financial information about Eagle Bancorp, Inc., visit our Investor Relations page at www.EagleBankCorp.com. STOCK EXCHANGE LISTING Common shares of Eagle Bancorp are traded on the Nasdaq Capital Market under the symbol EGBN. Transfer Agent and Registrar Computershare Trust Company, NA P.O. Box 30170 College Station, TX 77842 1.877.282.1168 www.computershare.com CORPORATE OFFICES 7830 Old Georgetown Road, Third Floor Bethesda, MD 20814 301.986.1800 INVESTOR RELATIONS 7830 Old Georgetown Road, Third Floor Bethesda, MD 20814 240.497.2040 investorrelations@EagleBankCorp.com COUNSEL Cleary Gottlieb Steen & Hamilton LLP 2112 Pennsylvania Avenue, NW Washington, DC 20037 Buckley LLP 2001 M Street, NW, Suite 500 Washington, DC 20036 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Dixon Hughes Goodman LLP 4350 Congress Street, Suite 900 Charlotte, NC 28209 EagleBank: Member Federal Deposit Insurance Corporation, Equal Housing Lender, Member Federal Reserve System, Member Federal Home Loan Bank of Atlanta, Affirmative Action/Equal Opportunity Employer ©2020 Eagle Bancorp, Inc. Leaders who know the way. EagleBank’s senior leadership team combines long experience with deep expertise. Susan G. Riel President & Chief Executive Officer Charles D. Levingston, CPA Chief Financial Officer Antonio F. Marquez President of Commercial Banking Lindsey S. Rheaume Chief Commercial & Industrial Lending Officer Paul Saltzman, Esquire Chief Legal Officer Janice L. Williams, Esquire Chief Credit Officer As EagleBank continues to grow, it is more important than ever to have senior leadership seasoned by decades in the business. We do. Susan Riel, for example, named EagleBank President and Chief Executive Officer in 2019, has been an executive with the Bank since its inception in 1998. Other members of the team have years of experience with major financial institutions, including The Federal Reserve Bank, HSBC, JPMorgan Chase, and others. Even more significant than their length of service, however, is the depth of knowledge and insight these leaders bring to the Bank. Having served as senior decision-makers through all market cycles, they are steady hands who can guide EagleBank through the years ahead. 21 Eagle Bancorp, Inc. 2019 Report to Shareholders OTHER OFFICES Premier Banking 2001 K Street, NW Suite 150 Washington, DC 20006 202.292.1630 Commercial Lending 7830 Old Georgetown Road Bethesda, MD 20814 240.497.2075 LPO 4550 Forbes Boulevard Lanham, MD 20706 301.246.3010 2001 K Street, NW Suite 150 Washington, DC 20006 202.292.1629 8245 Boone Boulevard Suite 820 Tysons Corner, VA 22182 703.277.2200 FHA Multifamily Lending 7830 Old Georgetown Road Bethesda, MD 20814 240.497.2075 LPO Residential Real Estate Lending 6010 Executive Boulevard Suite 300 Rockville, MD 20852 301.738.7200 Eagle Insurance Services, LLC 7830 Old Georgetown Road Bethesda, MD 20814 240.497.2075 Investment Advisory Services 7830 Old Georgetown Road Bethesda, MD 20814 240.497.2075 10 11 12 13 14 15 16 17 18 19 20 MARYLAND Bethesda 7815 Woodmont Avenue Bethesda, MD 20814 240.497.2044 Chevy Chase 5480 Wisconsin Avenue Suite 5476B Chevy Chase, MD 20815 301.280.6800 Park Potomac 12505 Park Potomac Avenue Potomac, MD 20854 301.444.4520 Shady Grove 9600 Blackwell Road Rockville, MD 20850 301.762.3076 Silver Spring 8665-B Georgia Avenue Silver Spring, MD 20910 301.588.6700 Twinbrook 12300 Twinbrook Parkway Suite 100 Rockville, MD 20852 301.287.8500 WASHINGTON, DC Dupont Circle 1228 Connecticut Avenue, NW Washington, DC 20036 202.466.3161 Gallery Place 700 7th Street, NW Washington, DC 20001 202.628.7300 Georgetown 3143 N Street, NW Washington, DC 20007 202.481.7025 K Street 2001 K Street, NW Washington, DC 20006 202.296.6886 McPherson Square 1425 K Street, NW Washington, DC 20005 202.408.8411 1 2 3 4 5 6 7 8 9 VIRGINIA Alexandria 277 S. Washington Street Alexandria, VA 22314 703.956.5075 Ballston 4420 N. Fairfax Drive Arlington, VA 22203 571.319.4800 Chantilly 13986 Metrotech Drive Chantilly, VA 20151 703.378.0010 Dulles Town Center 45745 Nokes Boulevard Suite 150 Sterling, VA 20166 703.230.1515 Fairfax 11166 Fairfax Boulevard Fairfax, VA 22030 703.359.4100 Merrifield 2905 District Avenue Suite 190 Fairfax, VA 22031 571.319.4900 Reston 12011 Sunset Hills Road Reston, VA 20190 571.319.4848 Rosslyn 1919 N. Lynn Street Arlington, VA 22209 571.319.4855 Tysons Corner 8245 Boone Boulevard Tysons Corner, VA 22182 703.752.9360 22 Branch Office Corporate Headquarters Regional Headquarters Loan Production Office 2954959549527039566661234678911121314151617181920510LPOLPOBethesdaRockvilleRosslynSilver SpringLanhamPotomacMerrifieldFairfaxTysons CornerRestonSterlingChantillyMONTGOMERY COUNTYPRINCE GEORGE’S COUNTYFAIRFAX COUNTYARLINGTONALEXANDRIALOUDOUN COUNTYDCMDVA E A G L E B A N K C O R P. C O M