-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tm+SZenrHKVZrzxjn5hf6Zxe4jvhBY3l541e0H1fluVWcYL+FDZAI44FaNh2yRrw 2oQ4D9F4G/eakU6+Gew7pg== 0001005150-99-000433.txt : 19990517 0001005150-99-000433.hdr.sgml : 19990517 ACCESSION NUMBER: 0001005150-99-000433 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE BANCORP INC CENTRAL INDEX KEY: 0001050441 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 522061461 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25923 FILM NUMBER: 99622814 BUSINESS ADDRESS: STREET 1: 8101 GLENBROOK RD CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019869288 MAIL ADDRESS: STREET 1: 8101 GLENBROOK RD CITY: BETHESDA STATE: MD ZIP: 20814 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 0-25923 EAGLE BANCORP, INC (Exact name of registrant as specified in its charter) Maryland 52-2061461 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7815 Woodmont Avenue, Bethesda, Maryland 20814 (Address of principal executive offices) (Zip Code) (301) 986-1800 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. As of March 31, 1999, the registrant had 1,650,000 shares of Common Stock outstanding. EAGLE BANCORP, INC. BALANCE SHEETS MARCH 31, 1999 AND DECEMBER 31, 1998
ASSETS March 31, December 31, 1999 1998 ------------ ------------ Cash and due from banks $ 1,609,913 $ 1,292,006 Federal funds sold 7,443,529 5,429,047 Investment securities available for sale 26,712,478 22,569,699 Loans(net of allowance for credit losses of $229,800 and $163,800) 27,140,579 19,984,124 Premises and equipment, net 2,577,683 2,396,075 Other assets 464,653 368,232 ------------ ------------ TOTAL ASSETS $ 65,948,835 $ 52,039,183 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Deposits: Noninterest-bearing demand $ 7,466,263 $ 4,096,392 Interest-bearing transaction accounts 8,299,147 3,664,012 Savings and money market 15,083,322 17,061,269 Time, $100,000 or more 7,102,588 5,621,543 Other time 5,659,093 4,187,677 ------------ ------------ Total deposits 43,610,413 34,630,893 Customer repurchase agreements 7,644,053 2,304,694 Other liabilities 178,564 154,101 ------------ ------------ Total liabilities 51,433,030 37,089,688 ------------ ------------ STOCKHOLDERS' EQUITY: Common stock, $.01 par value; 5,000,000 authorized, 1,650,000 issued and outstanding 16,500 16,500 Surplus 16,483,500 16,483,500 Accumulated deficit (1,923,279) (1,561,660) Accumulated other comprehensive income (loss) (60,916) 11,155 ------------ ------------ Total stockholders' equity 14,515,805 14,949,495 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 65,948,835 $ 52,039,183 ============ ============
See notes to consolidated financial statements 2 EAGLE BANCORP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Three Months Three Months Ended Ended March 31, 1999 March 31, 1998 -------------- -------------- INTEREST INCOME: Interest and fees on loans $ 468,296 $ -- Taxable interest and dividends on investment securities 378,960 -- Interest on federal funds and securities purchased under agreement to resell 74,927 23,446 --------- --------- Total interest income 922,183 23,446 --------- --------- INTEREST EXPENSE: Interest on deposits 360,216 -- Interest on customer repurchase agreements 32,888 -- Interest on short-term borrowings 1,177 5,082 --------- --------- Total interest expense 394,281 5,082 --------- --------- NET INTEREST INCOME 527,902 18,364 PROVISION FOR CREDIT LOSSES 66,000 -- --------- --------- NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 461,902 18,364 --------- --------- NONINTEREST INCOME: Service charges on deposit accounts 23,303 -- Other income 12,317 -- --------- --------- Total noninterest income 35,620 -- --------- --------- NONINTEREST EXPENSES: Salaries and employee benefits 475,172 66,696 Premises and equipment expenses 162,566 -- Advertising 25,059 -- Insurance expense 23,584 -- Outside data processing 24,537 -- Other expenses 148,223 57,023 --------- --------- Total noninterest expenses 859,141 123,719 --------- --------- NET LOSS BEFORE INCOME TAX BENEFIT (361,619) (105,355) INCOME TAX BENEFIT -- -- --------- --------- NET LOSS $(361,619) $(105,355) ========= ========= LOSS PER SHARE: Basic $ (0.22) No shares outstanding Diluted $ (0.22) No shares outstanding
3 EAGLE BANCORP, INC. STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1999 and 1998
CASH FLOWS FROM OPERATING ACTIVITIES: March 31, 1999 March 31, 1998 -------------- -------------- Net loss $ (361,619) $ (105,355) Adjustments to reconcile net loss to net cash used by operating activities: Provision for credit losses 66,000 -- Depreciation and amortization 68,269 348 Increase in accrued interest and other assets (96,421) (23,750) Increase (decrease) in accrued expenses and other liabilities 48,314 (17,308) ------------ ------------ Net cash (used) by operating activities (275,457) (146,065) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of available for sale investment securities (37,636,052) -- Proceeds from maturities of available for sale securities 33,421,202 -- Increase in federal funds sold (2,014,482) -- Net increase in loans (7,222,455) -- Bank premises and equipment acquired (249,877) (24,140) ------------ ------------ Net cash used by investing activities (13,701,664) (24,140) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase in deposits 8,955,669 -- Increase in customer repurchase agreements 5,339,359 -- Decrease in payable to organizers -- 340,000 Increase in common stock subscriptions -- 9,934,300 ------------ ------------ Net cash provided by financing activities 14,295,028 10,274,300 ------------ ------------ NET INCREASE IN CASH 317,907 10,104,095 CASH AT BEGINNING OF PERIOD 1,292,006 7,214 ------------ ------------ CASH AT END OF PERIOD $ 1,609,913 $ 10,111,309 ============ ============
4 EAGLE BANCORP, INC Consolidated Statements Of Changes In Stockholders' Equity For The Quarter Ending March 31, 1999
Accumulated Other Total Accumulated Comprehensive Stockholders' Common Stock Surplus Deficit Income Equity ----------------------------------------------------------------------------------- Balances at December 31, 1998 $ 16,500 $ 16,483,500 $ (1,561,660) $ 11,155 $ 14,949,495 Net Loss (361,619) (361,619) Other comprehensive income- Unrealized gain on investment securities available for sale Total other comprehensive income (loss) - - - (72,071) (72,071) --------- ------------ -------------- ---------- ------------ Balances at March 31, 1999 $ 16,500 $ 16,483,500 $ (1,923,279) $ (60,916) $ 14,515,805 ========= ============ ============== ========== ============
5 EAGLE BANCORP, INC. NOTES TO FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION General - The financial statements of Eagle Bancorp, Inc. (the Company) included herein are unaudited; however, they reflect all adjustments consisting only of normal recurring accruals that, in the opinion of Management, are necessary to present fairly the results for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company believes that the disclosures are adequate to make the information presented not misleading. The results of operation for the three months ended March 31, 1999, are not necessarily indicative of the results of operations to be expected for the remainder of the year. 2. NATURE OF BUSINESS The Company, through its bank subsidiary, provides domestic financial services primarily in Montgomery County, Maryland. The primary financial services include real estate, commercial and consumer lending, as well as traditional demand deposits and savings products. From October 28, 1997 until July 20, 1998, when the Bank received regulatory approval, the Company was considered a development stage enterprise. 3. INCOME TAXES The Company uses the liability method of accounting for income taxes as required by SFAS No. 109, "Accounting for Income Taxes." Under the liability method, deferred-tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities (i.e., temporary differences) and are measured at the enacted rates that will be in effect when these differences reverse. Deferred income taxes will be recognized when it is deemed more likely than not that the benefits of such deferred income taxes will be realized; accordingly, no deferred income taxes or income tax benefits have been recorded by the Company. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion and analysis provides an overview of the financial condition and results of operations of Eagle Bancorp, Inc. (Company) and EagleBank (Bank) for the quarter ending March 31, 1999. In general, comparative discussion of the results of operations for the quarter ended March 31, 1998 and March 31, 1999 is not provided, as the Company had no operations other than organizational activity in the first and second quarters of 1998, and as such, comparisons do not provide accurate or meaningful information regarding the Company's financial position or results of operations. This discussion contains forward looking statements within the meaning of the Securities 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. These statements are based upon current and anticipated economic conditions, nationally and in the Company's market, interest rates and interest rate policy, the year 2000 issue, competitive factors 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 statement. The Company does not undertake to update any forward looking statement to reflect occurrences or events which may not have been anticipated as of the date of such statements. GENERAL Eagle Bancorp, Inc. was incorporated under the general corporation laws of the State of Maryland, on October 28, 1997, and is headquartered in Bethesda, Maryland. The Company was formed to be a bank holding company as defined by the Federal Reserve System. On July 20, 1998, having received the required approvals from the State of Maryland and Federal Reserve System and been accepted for deposit insurance by the FDIC, EagleBank opened its first office in Rockville, Maryland. On that date the Company became a bank holding company by capitalizing the Bank with $7.75 million. Since its opening the Bank has established a branch in Silver Spring and its main office in Bethesda. The Company has also increased its capital contributions to $9.25 million. FINANCIAL CONDITION As of March 31, 1999, assets were $65.9 million and deposits and customer repurchase agreements were $51.2 million, an increase from year end 1998, of 26.7% and 38.7% respectively. Management is pleased with the growth experienced during the quarter as it represents a cross section of business targeted by the Bank. The growth in loans, while satisfactory at $7.1 million is behind projections; however, based on recent activity, management believes, the loan portfolio should continue to grow at an acceptable rate. RESULTS OF OPERATIONS On a consolidated basis the Company is reporting a net loss of $361,619 for the quarter ended March 31, 1999. This loss was expected and is consistent with anticipated results. The Bank reported a loss of $451,021 while the Company realized net earnings on capital not invested in the Bank of $89,402. These losses are expected to be reduced in the future as the Bank increases its deposit base and generates additional loan volume. The Bank ended the quarter with deposits and customer repurchase agreements at $51.2 million and lending activity increased resulting in a net increase in loans, from year end, of $7.1 million. The market is very 7 competitive and the Bank is committed to maintaining a high quality portfolio which returns a reasonable market rate. The Bank plans to maintain the allowance for credit losses at an adequate level and ended the quarter with an allowance of 1% of its outstanding loans. The Company, exclusive of the Bank, held $4.7 million in participation loans. No allowance is being maintained on $4 million of those loans considered to be of minimal risk due to an underlying guarantee, however, 1% is maintained for the remaining approximate $0.7 million. Based on original proformas, it was expected that the Bank would sustain losses during its start up period and not show an operating profit for any month for at least eighteen months after opening for business. Additional branching commitments could extend that period for several months. Earnings from investments by the Company of capital not invested in the Bank will partially offset losses of the Bank and, on a consolidated basis, the Company may show a monthly profit earlier, although there can be no assurance of this. NET INTEREST INCOME Net interest income is the difference between income on assets and the cost of funds supporting those assets. Earning assets are composed primarily of loans and investments; interest bearing deposits and customer repurchase agreements and other borrowings make up the cost of funds. Noninterest bearing deposits and capital are other components representing funding sources. Changes in the volume and mix of assets and funding sources along with the changes in yields earned and rates paid, determine changes in net interest income. The net interest income for the quarter was $527,902. The investment portfolio, including interest on federal funds, accounted for nearly 50% of interest income. As the loan portfolio continues to grow it will contribute a greater portion of interest income both because of volume and yield. The yield on loans is 3% to 5% higher than on investment portfolio holdings. The cost of funds, primarily interest on deposits, is a function of the market and the Bank has offered competitive rates while building relationships and does not have any brokered funds. ALLOWANCE AND PROVISION FOR CREDIT LOSSES The provision for credit losses represents the expense recognized to fund the allowance for credit losses. This amount is based on many factors which reflect management's assessment of the risk in its loan portfolio. Those factors include economic conditions and trends, the value and adequacy of collateral, volume and mix of the portfolio, performance of the portfolio, internal loan processes and capital adequacy of the Company and Bank. During the quarter, management elected to maintain an allowance of 1% of outstanding loans. Based principally on current economic conditions, perceived asset quality and a strong capital position, the allowance is believed to be adequate. At March 31, there were no commercial or real estate loans past due more than thirty days and only one consumer loan over thirty days in the amount of $6,000. NONINTEREST INCOME Noninterest income is primarily deposit account service charges and fees and noninterest loan fees and amounted to $35,620 for the quarter. This source of income is expected to increase as the Bank's deposit account base increases and if fee generating income sources being considered by management prove viable. NONINTEREST EXPENSE Noninterest expense was $859,141 for the quarter with more than 50% in salaries and wages. Management has made a concentrated effort to budget and monitor noninterest expenses and believes it has established practices to control these expenses while meeting the requirements of an aggressively growing bank. 8 YEAR 2000 The year 2000 ("Y2K") issue is the result of computer programs using two digits to define the year, rather than four. Therefore, any computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. Timely and accurate data processing is essential to the operations of the Company. The Company enjoys certain advantages as it addresses year 2000 issues. It is not encumbered with embedded systems and programs purchased years ago, but has, and is installing, new monitored applications. The Bank's data processing is outsourced and the Bank is carefully reviewing its service provider to assure that it is meeting its schedule for full compliance. During the months of March and April the Bank has and will be testing the servicer's compliance with year 2000. The tests conducted in March went well and all systems seemed to be compliant. Year 2000 was a major issue in the selection of the Bank's data processing provider and was foremost in its consideration of other acquisitions of systems and applications. At the same time the Bank is actively testing its systems and requiring its vendors to show evidence of readiness for Y2K. As a result of the base from which the Company commenced its operations, the Company believes that incremental costs related to Y2K compliance are not expected to be material to the financial performance of the Company. Because all systems and services are new and were purchased Y2K compliant, the estimated cost of testing and reviewing is not expected to exceed $25,000. The Bank is also working with customers to increase awareness in their businesses of the need for and importance of Y2K attention. The Board of Directors of the Bank is active in its oversight of Y2K preparedness and regularly receives reports from management. The failure of the Company, its principal data processing provider, its customers, or of other service providers, including utilities, and government agencies, to be year 2000 compliant in a timely manner could have a negative impact on the Company's business, including but not limited to an inability to provide accurate and timely processing of customer transactions, and delays in loan collection practices. The Company's belief that it, and its primary suppliers of data processing services, will be Y2K compliant, are based on a number of assumptions and on statements made by third parties, involve events and actions which may be beyond the control of the Company, and are subject to uncertainty. The Company also is not able to predict the effect, if any, on the Company, financial markets or society in general of the public's reaction to Y2K. 9 PART II OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS None. ITEM 2 CHANGES IN SECURITIES None. ITEM 3 DEFAULTS UPON SENIOR SECURITIES None. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5 OTHER INFORMATION None. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K None. 10 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 27 Financial Data Schedule 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EAGLE BANCORP, INC. Date: May 13, 1999 By: /s/ Ronald D. Paul -------------------------------------------- Ronald D. Paul, President Date: May 13, 1999 By: /s/ Wilmer L. Tinley -------------------------------------------- Wilmer L. Tinley, Senior Vice President, CFO 12 EX-27 2 FDS
9 This schedule contains summary financial information extracted from the Form 10-QSB and is qualified in its entirety by reference to such financial statements. 0001050441 Eagle Bancorp, Inc. 1,000 US DOLLARS 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1 1,610 0 7,444 0 26,712 0 0 27,141 230 65,949 43,587 7,644 202 0 17 0 0 14,499 65,949 468 379 75 922 360 394 528 66 0 859 (362) (362) 0 0 (362) (0.22) (0.22) 6.41 0 0 0 0 164 0 0 230 230 0 230
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