Eagle Bancorp
Annual Report 2021

Plain-text annual report

2021 REPORT TO SHAREHOLDERS TO OUR SHAREHOLDERS On behalf of the Board of Directors of Eagle Bancorp, we are pleased to present our 2021 financial results and highlight several achievements. This past year was one of our most successful, thanks to the hard work of more than 500 dedicated and talented individuals across the company. Even with the challenges posed by two years of operating during a global pandemic, our team members focused on creating value for our shareholders, clients, colleagues, partners and our greater community. In 2021, we achieved several milestones for our shareholders, including record annual earnings and a record level of year-end assets. For the year, our earnings were $177 million, or $5.52 per diluted share, and at year-end, our assets were $11.8 billion. We raised our dividend three times during the year, and we returned to our shareholders almost $40 million, or $1.40 per share, via dividends. Based on our fourth quarter dividend, our annualized dividend would amount to $1.60 per share, and based on an average closing stock price of $57.88 per share in the fourth quarter of 2021, our dividend yield was 2.8%. It was also through our team members’ hard work that we were able to assist our clients in providing access to the SBA’s Paycheck Protection Program (PPP). Over the life of the program, EagleBank originated 2,381 PPP loans to businesses within our community with a total value of $720 million. Today, as the program winds down, we will continue to assist with the loan forgiveness process, and work with our clients to meet their ongoing credit needs. Our record earnings enabled us to continue to bolster equity, equity ratios, and both book and tangible book values. At year-end 2021, equity was $1.35 billion, up $110 million from the prior year-end, and common equity was 11.40% of assets, up 24 basis points, from the prior year-end. At year-end 2021, book value increased 8.3% from the prior year-end and tangible book value was up 9.0%. As we progress in 2022, we will continue our focus on diversity, equity and inclusion. We truly believe that diversity of talent equals diversity of thought, and we invest in partnerships that help us find that talent and better serve our diverse community. Our Diversity, Equity and Inclusion Council (DEIC) has been holding company wide meetings and recently launched our employee resource group (ERG) program to foster a more diverse and inclusive workplace, and a mentorship program that formally pairs skilled, knowledgeable mentors with mentees who can learn from Our strength in equity gives us the resources to continue to lend. We see tremendous opportunity being based them through regular, ongoing interaction. These initiatives are extremely important to the continued success of in the Washington, DC metropolitan area, one of the nation’s premier markets as businesses reopen, workers EagleBank and have the full support of both the senior staff and the Board. At the Board level, we have a diverse return to work and consumer activity increases. With a legal lending limit of more than $200 million, we can work group that includes four women and two men who identify as minorities. with any business in the market. Our CRE, C&I and FHA lending teams remain committed to serving the needs of our commercial clients every day, and our residential mortgage division continues to help local homeowners and homebuyers achieve their dreams. In closing, we want to thank our teammates for all the hard work over the past two years in a difficult environment. Throughout the pandemic our team has adapted to new ways of doing business, listened to our clients, found ways to meet their needs, used our resources effectively and deepened connections – in short, we put Our strength also extends to asset quality, which continued to improve during the year. This is a testament not only Relationships F - I- R - S - T. to the quality of our lending and underwriting teams, but to the resiliency of our clients. Net charge-offs to average loans were 0.18% in 2021, down 8 basis points from the prior year, and the allowance for credit losses to loans was 1.06%, down 35 basis points from the prior year-end. Another area contributing to earnings, and in which we continue to lead our peers, is efficiency. EagleBank remains disciplined on costs, and benefits from our long-held commitment to a “branch light” strategy. In 2021, as part of our continued effort to reduce expenses, we closed three branches with expiring leases, reducing our branch count to 17, and redeemed subordinated debt of $150 million, saving $7.5 million in interest expenses. For the year, our efficiency ratio was 40.9% and our average deposits per branch were $587 million. Flexible – Involved – Responsive – Strong – Trusted We also want to thank all our shareholders and stakeholders for joining us on our journey forward. Norman R. Pozez Executive Chairman of the Board Susan G. Riel President and Chief Executive Officer 2 3 Eagle Bancorp, Inc. 2021 Report to ShareholdersSIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA Dollars in millions, except per share data E Net income Return on average assets Return on average tangible common equity Net interest margin Efficiency ratio1 Diluted earnings Cash dividends ’21 $ 176.7 1.49% 14.73% 2.81% 40.9% FOR THE YEAR OR YEAR ENDED DECEMBER 31 ’20 $ 132.2 ’19 $ 142.9 ’18 $ 152.3 ’17 $ 100.2 1.28% 12.03% 3.19% 39.3% 1.61% 13.40% 3.77% 40.0% 1.91% 16.63% 4.10% 37.3% 1.41% 12.54% 4.15% 37.8% ’16 97.7 $ 1.52% 14.19% 4.16% 40.3% $ 5.52 $ 4.09 $ 4.18 $ 4.42 $ 2.92 $ 2.86 $ 1.40 $ 0.88 $ 0.66 - - - Tangible book value per share2 $ 38.97 $ 35.74 $ 32.67 $ 29.17 $ 24.67 $ 21.61 Common shares outstanding (in millions) 32.0 31.8 33.2 34.4 34.2 34.0 ASSETS & TANGIBLE BOOK VALUES Assets and Tangible Book Values Assets and Tangible Book Values Tangible Book Value Per Share (1) Assets Assets and Tangible Book Values Tangible Book Value Per Share1 Tangible Book Value Per Share (1) Assets $12,000 Tangible Book Value Per Share (1) Assets ) s n o i l l i m n i ( s t e s s A $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 ) s n o i l l i i ( i ) l s l i n m o n m s t n e i s ( s s A t e s s A ) s n o i l l i m n i ( s t e s s A $12,000 $10,000 $10,000 $8,000 $8,000 $6,000 $6,000 $4,000 $4,000 $2,000 $2,000 $0 2016 $0 2017 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 2020 $0.00 2020 2016 2017 2018 2019 2018 2016 2019 2017 2020 2018 2021 2019 e r a h S r e P e u l a V k o o B e b g n 2021 a T l i 2021 $60.00 $60.00 $50.00 $50.00 $40.00 $40.00 $30.00 $30.00 $20.00 $20.00 $10.00 $10.00 $0.00 $0.00 e r a h S e r r a e h P S e r u e l P a V e u k l o a o V B k o e o b B g e n l a b T g n a T e r a h S r e p e u l a V k o o B e b g n a T l l i i i $ 11,847 $ 11,118 $ 8,989 $ 8,389 $ 7,479 $ 6,890 7,066 75 9,982 1,351 1,245 0.18% 0.26% 1.06% 15.02% 16.15% 10.19% 10.60% 7,760 110 9,189 1,241 1,136 0.26% 0.59% 1.41% 13.49% 17.04% 10.31% 10.31% 7,546 74 7,224 1,191 1,086 0.13% 0.56% 0.98% 12.87% 16.20% 11.62% 12.22% 6,991 70 6,974 1,109 1,003 0.05% 0.21% 1.00% 12.49% 16.08% 12.10% 12.11% 6,412 65 5,854 950 843 0.06% 0.20% 1.01% 11.23% 15.02% 11.45% 11.44% 5,678 59 5,716 $200 843 743 ) s n o i l l i $150 0.09% m n $100 $50 $0 2016 2017 0.30% 1.04% i ( e m o c n I 10.80% t e N 14.89% 10.72% 10.84% $200 $200 $150 $150 $100 $100 $50 $50 $0 i l l i i l l i i ( i ) l s l i n m ) s o n o n m m e m n n o e e c m n m o o c t n e c N n t e N i ( i ( I I i t e N NET INCOME & EPS (DILUTED) Net Income & EPS (diluted) Net Income & EPS (diluted) Net Income Net Income & EPS (diluted) Earnings Per Share (diluted) Earnings Per Share (diluted) Net Income Earnings Per Share (diluted) $7.00 Net Income ) s n o $7.00 $6.00 $5.00 ) d e t u l i d ( $3.00 $4.00 e r a h S r e p s g n 2018 2019 2020 2021 n r a E 2018 2019 2020 2021 $0.00 $2.00 $1.00 i ) ) l i d e t u d d e t ( u e l r i a d h ( S e r r a e h p S s r g e n p n s r g a n E n r a E i i ) d e t u l i d ( e r a h S r e p s g n n r a E i $6.00 $7.00 $5.00 $6.00 $4.00 $5.00 $3.00 $4.00 $2.00 $3.00 $1.00 $2.00 $0.00 $1.00 $0.00 2016 2017 $0 2018 2019 2020 2021 2016 2017 $ 42.28 $ 39.05 $ 35.82 $ 32.25 $ 27.80 $ 24.77 3.31 3.31 3.15 3.08 3.13 3.16 $ 38.97 $ 35.74 $ 32.67 $ 29.17 $ 24.67 $ 21.61 $ 1,351 $ 1,241 $ 1,191 $ 1,109 $ 950 $ 843 106 105 105 106 107 107 $ 1,245 $ 1,136 $ 1,086 $ 1,003 $ 843 $ 735 $ 11,847 $ 11,118 $ 8,989 $ 8.389 $ 7,479 $ 6,890 105 105 105 106 107 107 $ 11,742 $ 11,013 $ 8,884 $ 8,283 $ 7,372 $ 6,783 e u l a V x e d n I TOTAL SHAREHOLDER RETURN PERFORMANCE C N A M R O F R E P N O M M O C R E P E R A H S T E E H S E C N A L A B Assets Loans (excluding held for sale) Allowance for loan losses Deposits Shareholders’ equity Tangible common equity3 T E S S A Net charge-offs to average loans Y T I L A U Q Nonperforming assets to assets Allowance for credit losses to loans CET1 capital (to risk weighted assets) Total capital (to risk weighted assets) Tier 1 capital (to average assets) Tangible common equity ratio Book value per share Less: Intangible book value Tangible book value per share2 Shareholders’ equity Less: Intangible assets, net Tangible common equity3 Assets Less: Intangible assets Tangible Assets4 L A T I P A C N O I T A I L I C N O C E R P A A G - N O N COMMON EQUITY & CAPITAL RATIOS ) s n o i l l i m n i ( y t i u q E n o m m o C ) s n o i l l i m n i ( s n a o L l a t o T LOANS & ASSET QUALITY o i t a R l a t i p a C y t i l a u Q t e s s A COMPOUNDED ANNUAL GROWTH RATE 12/31/11 to 12/31/21 12/31/11 to 3/11/22 Eagle Bancorp, Inc. 16.7% 16.5% NASDAQ Composite Index 21.0% 18.2% S&P 500 Index 16.6% 14.8% KBW NASDAQ Regional Banking Index 12.5% 12.3% Average common shareholders’ equity $ 1,305 $ 1,204 $ 1,172 $ 1,023 $ 906 $ 796 Less: Average intangible assets 105 105 105 107 107 107 Average tangible common equity5 $ 1,200 $ 1,099 $ 1,067 $ 916 $ 799 $ 689 1 Efficiency ratio, a non-GAAP financial measure, is computed by dividing noninterest expense by the sum of net interest income and noninterest income. 2 Tangible book value per share, a non-GAAP financial measure, is defined as tangible common equity divided by common shares outstanding. 3 Tangible common equity, a non-GAAP financial measure, is defined as shareholders’ equity reduced by goodwill and other intangible assets. 4 Tangible assets, a non-GAAP financial measure, is defined as assets reduced as intangible assets. 5 Average tangible common equity, a non-GAAP financial measure, is defined as average common shareholders’ equity reduced by average intangible assets. 4 1 Tangible book value per share, a non-GAAP financial measure, is defined as tangible common equity divided by common shares outstanding. See non-GAAP reconciliation on prior page. Source: S&P Global Market Intelligence © 2022 5 010020030040050060070012/31/1112/31/1212/31/1312/31/1412/31/1512/31/1612/31/1712/31/1812/31/1912/31/2012/31/2103/11/22Index ValueTotal Return Performance0.00%5.00%10.00%15.00%20.00%$0$200$400$600$800$1,000$1,200201620172018201920202021Capital RatioCommon Equity (in millions)Common Equity and Capital RatiosCommon EquityCET1 CapitalTotal Capital (to RWA)0.00%5.00%10.00%15.00%20.00%$0$200$400$600$800$1,000$1,200201620172018201920202021Capital RatioCommon Equity (in millions)Common Equity and Capital RatiosCommon EquityCET1 CapitalTotal Capital (to RWA)0.00%1.00%2.00%3.00%4.00%$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000201620172018201920202021Asset Quality Total Loans (in millions)Loans & Asset QualityTotal LoansNon-Performing Assets to Total AssetsNet Charge-offs to Average Loans0.00%1.00%2.00%3.00%4.00%$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000201620172018201920202021Asset Quality Total Loans (in millions)Loans & Asset QualityTotal LoansNon-Performing Assets to Total AssetsNet Charge-offs to Average LoansEagle Bancorp, Inc. 2021 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 Senior Vice President and Chief Financial Officer of the University of Oklahoma Steven Freidkin Founder and Chief Executive Officer of Ntiva, Inc. Ernest Drew Jarvis Managing Principal of Jarvis Commercial Real Estate Theresa G. LaPlaca Founder and President TLP Leadership Advisory Services 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 VIRTUAL ANNUAL MEETING Thursday, May 19, 2022, at 10:00 a.m. EDT 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, Bethesda, MD 20814 240.497.2041 jcornett@EagleBankCorp.com For more 2021 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. CORPORATE OFFICES 7830 Old Georgetown Road, Bethesda, MD 20814 301.986.1800 INVESTOR RELATIONS David G. Danielson 7830 Old Georgetown Road, Bethesda, MD 20814 240.552.9534 ddanielson@EagleBankCorp.com EXECUTIVE MANAGEMENT Susan G. Riel *** President and Chief Executive Officer of Eagle Bancorp, Inc., and EagleBank Joseph L. Clarke Executive Vice President and Chief Operating Officer of EagleBank Jeff Curry *** Executive Vice President of Eagle Bancorp, Inc. Executive Vice President & Chief Risk Officer of 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 Ryan Riel Executive Vice President and Chief Real Estate 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 TRANSFER AGENT Computershare Trust Company, NA By Regular Mail P.O. Box 505000, Louisville, KY 40233-5000 By Overnight Delivery 462 South 4th Street, Suite 1600, Louisville, KY 40202 By Phone Toll Free 877.282.1168 COUNSEL Cleary Gottlieb Steen & Hamilton LLP 2112 Pennsylvania Avenue, NW, Washington, DC 20037 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Crowe LLP 1455 Pennsylvania Avenue, NW, Suite 700, Washington, DC 20004 * Directors of Eagle Bancorp, Inc. and EagleBank ** Lead Independent Director *** Executive Officer of Eagle Bancorp, Inc. 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 ©2022 Eagle Bancorp, Inc. 6 VIRGINIA Alexandria 277 S. Washington Street, Alexandria, VA 22314 Ballston 4420 N. Fairfax Drive, Arlington, VA 22203 Chantilly 13986 Metrotech Drive, Chantilly, VA 20151 Fairfax 11166 Fairfax Boulevard, Fairfax, VA 22030 Merrifield 2905 District Avenue, Suite 190, Fairfax, VA 22031 Tysons Corner 8245 Boone Boulevard, Tysons Corner, VA 22182 MARYLAND Bethesda 7735 Old Georgetown Road, Suite 100, Bethesda, MD 20814 Chevy Chase 5480 Wisconsin Avenue, Suite 5476B, Chevy Chase, MD 20815 Park Potomac 12505 Park Potomac Avenue, Potomac, MD 20854 Shady Grove 9600 Blackwell Road, Rockville, MD 20850 Silver Spring 8665-B Georgia Avenue, Silver Spring, MD 20910 Twinbrook 12300 Twinbrook Parkway, Suite 100, Rockville, MD 20852 1 2 3 4 5 6 7 8 9 10 11 12 Branch Office Corporate Headquarters Regional Headquarters Loan Production Office WASHINGTON, DC Dupont Circle 1228 Connecticut Avenue, NW, Washington, DC 20036 Gallery Place 700 K Street, NW, Suite 60, Washington, DC 20001 Georgetown 3143 N Street, NW, Washington, DC 20007 K Street 2001 K Street, NW, Washington, DC 20006 McPherson Square 1425 K Street, NW, Washington, DC 20005 LOAN PRODUCTION OFFICES 7830 Old Georgetown Road, Bethesda, MD 20814 4550 Forbes Boulevard, Lanham, MD 20706 2001 K Street, NW, Suite 150, Washington, DC 20006 8245 Boone Boulevard, Suite 820, Tysons Corner, VA 22182 6010 Executive Boulevard, Suite 300, Rockville, MD 20852 13 14 15 16 17 LPO LPO LPO LPO LPO OTHER OFFICES Premier Banking 2001 K Street, NW, Suite 150, Washington, DC 20006 Eagle Insurance Services, LLC 7830 Old Georgetown Road, Bethesda, MD 20814 Investment Advisory Services 7830 Old Georgetown Road, Bethesda, MD 20814 7 295495954952703956666123589101112131415174LPOLPOLPOLPOLPO1676RockvilleRosslynSilver SpringLanhamPotomacMerrifieldFairfaxTysons CornerSterlingChantillyBethesdaMONTGOMERYCOUNTYPRINCEGEORGE’SCOUNTYFAIRFAX COUNTYARLINGTONALEXANDRIALOUDOUN COUNTYDCMDVAEagle Bancorp, Inc. 2021 Report to Shareholders 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. RELATIONSHIPS FIRST 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 relation ships 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. We believe that diversity of talent equals diversity of thought, and only serves to strengthen our role as community builders. TRUSTED We uphold our relationships with honesty, openness and reliability. Our actions reflect our values, and underscore our commitment to a diverse and inclusive environment. 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. E AG L E B A N KC O R P.C O M 

Continue reading text version or see original annual report in PDF format above