Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the quarterly period ended March 31,
2009
|
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
|
For
the transition period from _____ to
_____.
|
Commission
file number 0-29687
Eagle
Bancorp
(Exact
name of small business issuer as specified in its charter)
United
States
|
81-0531318
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
1400
Prospect Avenue, Helena, MT 59601
(Address
of principal executive offices)
(406)
442-3080
(Issuer's
telephone number)
Website
address:
www.americanfederalsavingsbank.com
Check
whether the issuer (1) filed all reports to be filed by Section 13 or 15(d) of
the Exchange Act during the past 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
by a check mark whether the registrant has submitted electronically and posted
on its corporate website, if any, every interactive data file required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
Indicate
by a check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer”,
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer
|
¨
|
Accelerated
filer ¨
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company x
|
(Do
not check if smaller
|
|
|
reporting
company)
|
|
|
Indicate
by check mark whether the registrant is a shell company (defined in Rule 12b-2
of the Exchange Act). Yes o No x
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:
Common
stock, par value $0.01 per share
|
1,075,312 shares
outstanding
|
As of May
10, 2009
EAGLE
BANCORP AND SUBSIDIARY
TABLE OF
CONTENTS
|
|
PAGE
|
PART
I.
|
FINANCIAL
INFORMATION
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
Consolidated
Statements of Financial Condition as of March 31, 2009 (unaudited) and
June 30, 2008
|
1
and 2
|
|
|
|
|
Consolidated
Statements of Income for the three months ended March 31, 2009 and 2008
and the nine months ended March 31, 2009 and 2008
(unaudited)
|
3
and 4
|
|
|
|
|
Consolidated
Statements of Changes in Stockholders' Equity for the nine months ended
March 31, 2009 and 2008 (unaudited)
|
5
|
|
|
|
|
Consolidated
Statements of Cash Flows for the nine months ended March 31, 2009 and 2008
(unaudited)
|
6
and 7
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
8
to 13
|
|
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition or Plan of
Operations
|
14
to 18
|
|
|
|
Item
3.
|
Controls
and Procedures
|
19
|
|
|
|
PART
II.
|
OTHER
INFORMATION
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
20
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
20
|
Item
3.
|
Defaults
Upon Senior Securities
|
20
|
Item
4.
|
Submission
of Matters to a Vote of Security-Holders
|
21
|
Item
5.
|
Other
Information
|
21
|
Item
6.
|
Exhibits
|
21
|
|
|
|
Signatures
|
|
22
|
|
|
|
Exhibit
31.1
|
|
|
|
|
|
Exhibit
31.2
|
|
|
|
|
|
Exhibit
32.1
|
|
|
EAGLE
BANCORP AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
(Dollars
in Thousands, Except for Per Share Data)
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$ |
2,246 |
|
|
$ |
3,541 |
|
Federal
funds sold
|
|
|
11,302 |
|
|
|
- |
|
Interest-bearing
deposits with banks
|
|
|
133 |
|
|
|
549 |
|
Total
cash and cash equivalents
|
|
|
13,681 |
|
|
|
4,090 |
|
|
|
|
|
|
|
|
|
|
Investment
securities SFAS 159, at market value
|
|
|
20 |
|
|
|
1,321 |
|
Investment
securities available-for-sale, at market value
|
|
|
76,005 |
|
|
|
78,417 |
|
Investment
securities held-to-maturity, at cost
|
|
|
376 |
|
|
|
697 |
|
Investment
in nonconsolidated subsidiary
|
|
|
155 |
|
|
|
155 |
|
Federal
Home Loan Bank stock, at cost
|
|
|
1,925 |
|
|
|
1,715 |
|
Mortgage
loans held-for-sale
|
|
|
7,374 |
|
|
|
7,370 |
|
Loans
receivable, net of deferred loan fees and allowance for loan losses of
$399 at March 31, 2009 and $300 at June 30, 2008
|
|
|
172,637 |
|
|
|
168,149 |
|
Accrued
interest and dividends receivable
|
|
|
1,477 |
|
|
|
1,426 |
|
Mortgage
servicing rights, net
|
|
|
1,881 |
|
|
|
1,652 |
|
Property
and equipment, net
|
|
|
12,142 |
|
|
|
8,080 |
|
Cash
surrender value of life insurance
|
|
|
6,449 |
|
|
|
6,285 |
|
Real
estate acquired in settlement of loans, net of allowance for
losses
|
|
|
- |
|
|
|
- |
|
Other
assets
|
|
|
1,262 |
|
|
|
550 |
|
Total
assets
|
|
$ |
295,384 |
|
|
$ |
279,907 |
|
See
accompanying notes to consolidated financial statements.
EAGLE
BANCORP AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION (Continued)
(Dollars
in Thousands, Except for Per Share Data)
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Deposit
accounts:
|
|
|
|
|
|
|
Noninterest
bearing
|
|
$ |
15,535 |
|
|
$ |
14,617 |
|
Interest
bearing
|
|
|
176,454 |
|
|
|
164,234 |
|
Federal
funds purchased
|
|
|
- |
|
|
|
3,000 |
|
Advances
from Federal Home Loan Bank and other borrowings
|
|
|
69,472 |
|
|
|
65,222 |
|
Long-term
subordinated debentures
|
|
|
5,155 |
|
|
|
5,155 |
|
Accrued
expenses and other liabilities
|
|
|
2,497 |
|
|
|
2,045 |
|
Total
liabilities
|
|
|
269,113 |
|
|
|
254,273 |
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Preferred
stock (no par value, 1,000,000 shares authorized, none issued or
outstanding)
|
|
|
- |
|
|
|
- |
|
Common
stock (par value $0.01 per share; 9,000,000 shares authorized; 1,223,572
shares issued; 1,075,312 and 1,076,072 outstanding at March 31, 2009 and
June 30, 2008, respectively)
|
|
|
12 |
|
|
|
12 |
|
Additional
paid-in capital
|
|
|
4,542 |
|
|
|
4,487 |
|
Unallocated
common stock held by employee stock ownership plan
("ESOP")
|
|
|
(28
|
) |
|
|
(55
|
) |
Treasury
stock, at cost (148,260 and 147,500 shares at March 31, 2009
and
|
|
|
|
|
|
|
|
|
June
30, 2008, respectively
|
|
|
(5,034
|
) |
|
|
(5,013
|
) |
Retained
earnings
|
|
|
28,053 |
|
|
|
27,025 |
|
Accumulated
other comprehensive loss
|
|
|
(1,274
|
) |
|
|
(822
|
) |
Total
stockholders' equity
|
|
|
26,271 |
|
|
|
25,634 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$ |
295,384 |
|
|
$ |
279,907 |
|
See
accompanying notes to consolidated financial statements.
EAGLE
BANCORP AND SUBSIDIARY
QUARTERLY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars
in Thousands, Except for Per Share Data)
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Interest
and Dividend Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$ |
2,862 |
|
|
$ |
2,750 |
|
|
$ |
8,654 |
|
|
$ |
8,169 |
|
Securities
available-for-sale
|
|
|
959 |
|
|
|
692 |
|
|
|
2,899 |
|
|
|
2,118 |
|
Interest
on deposits with banks
|
|
|
3 |
|
|
|
20 |
|
|
|
8 |
|
|
|
54 |
|
Securities
held-to-maturity
|
|
|
5 |
|
|
|
8 |
|
|
|
15 |
|
|
|
26 |
|
FHLB
dividends
|
|
|
(7
|
) |
|
|
4 |
|
|
|
5 |
|
|
|
9 |
|
Total
interest and dividend income
|
|
|
3,822 |
|
|
|
3,474 |
|
|
|
11,581 |
|
|
|
10,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
770 |
|
|
|
1,096 |
|
|
|
2,462 |
|
|
|
3,452 |
|
FHLB
advances and other borrowings
|
|
|
667 |
|
|
|
468 |
|
|
|
1,980 |
|
|
|
1,378 |
|
Subordinated
debentures
|
|
|
75 |
|
|
|
75 |
|
|
|
225 |
|
|
|
225 |
|
Total
interest expense
|
|
|
1,512 |
|
|
|
1,639 |
|
|
|
4,667 |
|
|
|
5,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
2,310 |
|
|
|
1,835 |
|
|
|
6,914 |
|
|
|
5,321 |
|
Loan
loss provision
|
|
|
72 |
|
|
|
- |
|
|
|
106 |
|
|
|
- |
|
Net
interest income after loan loss provision
|
|
|
2,238 |
|
|
|
1,835 |
|
|
|
6,808 |
|
|
|
5,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
deposit service charges
|
|
|
179 |
|
|
|
164 |
|
|
|
550 |
|
|
|
546 |
|
Net
gain on sale of loans
|
|
|
849 |
|
|
|
191 |
|
|
|
1,270 |
|
|
|
547 |
|
Mortgage
loan servicing fees
|
|
|
350 |
|
|
|
136 |
|
|
|
407 |
|
|
|
406 |
|
Net
gain (loss) on sale of available-for-sale securities
|
|
|
- |
|
|
|
72 |
|
|
|
57 |
|
|
|
72 |
|
Net
loss on securities SFAS 159
|
|
|
(17
|
) |
|
|
(118
|
) |
|
|
(1,303
|
) |
|
|
(549
|
) |
Other
|
|
|
165 |
|
|
|
174 |
|
|
|
485 |
|
|
|
450 |
|
Total
noninterest income
|
|
|
1,526 |
|
|
|
619 |
|
|
|
1,466 |
|
|
|
1,472 |
|
See
accompanying notes to consolidated financial statements.
EAGLE
BANCORP AND SUBSIDIARY
QUARTERLY
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Dollars
in Thousands, Except for Per Share Data)
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Noninterest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits
|
|
|
1,110 |
|
|
|
998 |
|
|
|
3,302 |
|
|
|
2,952 |
|
Occupancy
expenses
|
|
|
172 |
|
|
|
136 |
|
|
|
457 |
|
|
|
401 |
|
Furniture
and equipment depreciation
|
|
|
78 |
|
|
|
69 |
|
|
|
210 |
|
|
|
210 |
|
In-house
computer expense
|
|
|
104 |
|
|
|
73 |
|
|
|
278 |
|
|
|
220 |
|
Advertising
expense
|
|
|
74 |
|
|
|
52 |
|
|
|
268 |
|
|
|
185 |
|
Amortization
of mtg servicing fees
|
|
|
241 |
|
|
|
83 |
|
|
|
378 |
|
|
|
224 |
|
Federal
insurance premiums
|
|
|
54 |
|
|
|
5 |
|
|
|
70 |
|
|
|
15 |
|
Postage
|
|
|
31 |
|
|
|
23 |
|
|
|
109 |
|
|
|
79 |
|
Legal,
accounting, and examination fees
|
|
|
60 |
|
|
|
48 |
|
|
|
173 |
|
|
|
169 |
|
Consulting
fees
|
|
|
20 |
|
|
|
39 |
|
|
|
82 |
|
|
|
72 |
|
ATM
processing
|
|
|
17 |
|
|
|
13 |
|
|
|
45 |
|
|
|
40 |
|
Other
|
|
|
290 |
|
|
|
222 |
|
|
|
784 |
|
|
|
649 |
|
Total
noninterest expense
|
|
|
2,251 |
|
|
|
1,761 |
|
|
|
6,156 |
|
|
|
5,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes
|
|
|
1,513 |
|
|
|
693 |
|
|
|
2,118 |
|
|
|
1,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
454 |
|
|
|
155 |
|
|
|
635 |
|
|
|
356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
1,059 |
|
|
$ |
538 |
|
|
$ |
1,483 |
|
|
$ |
1,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$ |
0.99 |
|
|
$ |
0.50 |
|
|
$ |
1.39 |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$ |
0.87 |
|
|
$ |
0.44 |
|
|
$ |
1.22 |
|
|
$ |
1.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding (basic eps)
|
|
|
1,071,098 |
|
|
|
1,070,070 |
|
|
|
1,070,087 |
|
|
|
1,071,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding (diluted eps)
|
|
|
1,219,358 |
|
|
|
1,214,762 |
|
|
|
1,218,209 |
|
|
|
1,213,610 |
|
See
accompanying notes to consolidated financial statements.
EAGLE
BANCORP AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the
Nine Months Ended March 31, 2009 and 2008 (Unaudited)
(Dollars
in Thousands, Except for Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
|
|
|
UNALLOCATED
|
|
|
|
|
|
|
|
|
OTHER
|
|
|
|
|
|
|
PREFERRED
|
|
|
COMMON
|
|
|
PAID-IN
|
|
|
ESOP
|
|
|
TREASURY
|
|
|
RETAINED
|
|
|
COMPREHENSIVE
|
|
|
|
|
|
|
STOCK
|
|
|
STOCK
|
|
|
CAPITAL
|
|
|
SHARES
|
|
|
STOCK
|
|
|
EARNINGS
|
|
|
INCOME
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2007
|
|
$ |
- |
|
|
$ |
12 |
|
|
$ |
4,387 |
|
|
$ |
(92 |
) |
|
$ |
(4,759 |
) |
|
$ |
25,448 |
|
|
$ |
(908 |
) |
|
$ |
24,088 |
|
FAS
159 Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(117
|
) |
|
|
|
|
|
|
|
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,221 |
|
|
|
- |
|
|
|
1,221 |
|
Other
comprehensive income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,007 |
|
|
|
1,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
paid ($.72 per share)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(312
|
) |
|
|
- |
|
|
|
(312
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
stock purchased (1,250 shares @ $33.00; 3,285 shares @ $32.75; 1,000
shares @ $27.25; 750 shares @ $28.25)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(198
|
) |
|
|
- |
|
|
|
- |
|
|
|
(198
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESOP
shares allocated or committed to be released for allocation (3,450
shares)
|
|
|
- |
|
|
|
- |
|
|
|
77 |
|
|
|
28 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2008
|
|
$ |
- |
|
|
$ |
12 |
|
|
$ |
4,464 |
|
|
$ |
(64 |
) |
|
$ |
(4,957 |
) |
|
$ |
26,240 |
|
|
$ |
99 |
|
|
$ |
25,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2008
|
|
$ |
- |
|
|
$ |
12 |
|
|
$ |
4,487 |
|
|
$ |
(55 |
) |
|
$ |
(5,013 |
) |
|
$ |
27,025 |
|
|
$ |
(822 |
) |
|
$ |
25,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,483 |
|
|
|
- |
|
|
|
1,483 |
|
Other
comprehensive
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(452
|
) |
|
|
(452
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
paid
($.255
per share)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(326
|
) |
|
|
- |
|
|
|
(326
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
stock purchased
(750
shares @ $27.00)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(21
|
) |
|
|
- |
|
|
|
- |
|
|
|
(21
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EITF
No. 06-4 & 06-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(129
|
) |
|
|
|
|
|
|
(129
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESOP
shares allocated or
committed
to be released for
allocation
(1,150 shares)
|
|
|
- |
|
|
|
- |
|
|
|
55 |
|
|
|
27 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2009
|
|
$ |
- |
|
|
$ |
12 |
|
|
$ |
4,542 |
|
|
$ |
(28 |
) |
|
$ |
(5,034 |
) |
|
$ |
28,053 |
|
|
$ |
(1,274 |
) |
|
$ |
26,271 |
|
See
accompanying notes to consolidated financial statements.
EAGLE
BANCORP AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars
in Thousands, Except for Per Share Data)
|
|
Nine Months Ended
|
|
|
|
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
income
|
|
$ |
1,483 |
|
|
$ |
1,221 |
|
Adjustments
to reconcile net income to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Provision
for loan losses
|
|
|
106 |
|
|
|
- |
|
Provision
for mortgage servicing rights valuation losses
|
|
|
47 |
|
|
|
- |
|
Depreciation
|
|
|
359 |
|
|
|
342 |
|
Net
amortization of marketable securities premium and
discounts
|
|
|
120 |
|
|
|
167 |
|
Amortization
of capitalized mortgage servicing rights
|
|
|
378 |
|
|
|
224 |
|
Gain
on sale of loans
|
|
|
(1,270
|
) |
|
|
(546
|
) |
Net
realized (gain) loss on sale of available-for-sale
securities
|
|
|
(57
|
) |
|
|
(72
|
) |
Increase
in cash surrender value of life insurance
|
|
|
(163
|
) |
|
|
(162
|
) |
Loss
on sale of property and equipment
|
|
|
- |
|
|
|
3 |
|
Loss
in investment securities, SFAS 159
|
|
|
1,303 |
|
|
|
549 |
|
Change
in assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase)
decrease in assets:
|
|
|
|
|
|
|
|
|
Accrued
interest and dividends receivable
|
|
|
(50
|
) |
|
|
(84
|
) |
Loans
held-for-sale
|
|
|
(4
|
) |
|
|
247 |
|
Other
assets
|
|
|
(713
|
) |
|
|
235 |
|
Increase
(decrease) in liabilities:
|
|
|
|
|
|
|
|
|
Accrued
expenses and other liabilities
|
|
|
595 |
|
|
|
(147
|
) |
Net
cash provided by operating activities
|
|
|
(2,134
|
) |
|
|
1,977 |
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of securities:
|
|
|
|
|
|
|
|
|
Investment
securities available-for-sale
|
|
|
(10,849
|
) |
|
|
(26,363
|
) |
Proceeds
from maturities, calls and principal payments:
|
|
|
|
|
|
|
|
|
Investment
securities held-to-maturity
|
|
|
321 |
|
|
|
210 |
|
Investment
securities available-for-sale
|
|
|
8,446 |
|
|
|
10,395 |
|
FHLB
stock purchased
|
|
|
(210
|
) |
|
|
- |
|
Proceeds
from sales of investment securities available-for-sale
|
|
|
4,062 |
|
|
|
4,852 |
|
Net
increase in loans receivable, excludes transfers to real estate acquired
in settlement of loans
|
|
|
(3,932 |
) |
|
|
(6,797
|
) |
Purchase
of property and equipment
|
|
|
(4,421
|
) |
|
|
(974
|
) |
Purchase
of bank owned life insurance
|
|
|
- |
|
|
|
(300
|
) |
Proceeds
from sale of equipment
|
|
|
- |
|
|
|
9 |
|
Net
cash used in investing activities
|
|
|
(6,583
|
) |
|
|
(18,968
|
) |
See
accompanying notes to consolidated financial statements.
EAGLE
BANCORP AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
(Dollars
in Thousands, Except for Per Share Data)
|
|
Nine Months Ended
|
|
|
|
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Net
(decrease) increase in checking and savings accounts
|
|
$ |
$13,137 |
|
|
$ |
$(508 |
) |
Net
decrease in federal funds
|
|
|
(3,000
|
) |
|
|
(3,800
|
) |
Payments
on FHLB advances and other borrowings
|
|
|
(6,750
|
) |
|
|
(7,700
|
) |
FHLB
advances and other borrowings
|
|
|
11,000 |
|
|
|
33,700 |
|
Purchase
of treasury stock
|
|
|
(21
|
) |
|
|
(197
|
) |
Dividends
paid
|
|
|
(326
|
) |
|
|
(312
|
) |
Net
cash provided by financing activities
|
|
|
14,040 |
|
|
|
21,183 |
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
|
9,591 |
|
|
|
4,192 |
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
|
|
4,090 |
|
|
|
3,069 |
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS, end of period
|
|
$ |
13,681 |
|
|
$ |
7,261 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash
paid during the period for interest
|
|
$ |
4,670 |
|
|
$ |
5,005 |
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for income taxes
|
|
$ |
1,353 |
|
|
$ |
660 |
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Increase
in market value of securities available-for-sale
|
|
$ |
1,043 |
|
|
$ |
(857 |
) |
|
|
|
|
|
|
|
|
|
Mortgage
servicing rights capitalized
|
|
$ |
654 |
|
|
$ |
236 |
|
See
accompanying notes to consolidated financial statements.
EAGLE
BANCORP AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
1. BASIS OF
PRESENTATION
The
accompanying unaudited consolidated financial statements have been prepared in
accordance with instructions for Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements. However, such information reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of results for the unaudited
interim periods.
The
results of operations for the three and nine month periods ended March 31, 2009
are not necessarily indicative of the results to be expected for the fiscal year
ending June 30, 2009 or any other period. The unaudited consolidated
financial statements and notes presented herein should be read in conjunction
with the audited consolidated financial statements and related notes thereto
included in Eagle’s Form 10-KSB for the fiscal year ended June 30,
2008.
NOTE
2. INVESTMENT
SECURITIES
Investment
securities are summarized as follows:
(Dollars
in thousands)
|
|
March 31, 2009 (Unaudited)
|
|
|
June 30, 2008 (Audited)
|
|
|
|
AMORTIZED
COST
|
|
|
GROSS
UNREALIZED
GAINS/(LOSSES)
|
|
|
FAIR
VALUE
|
|
|
AMORTIZED
COST
|
|
|
GROSS
UNREALIZED
GAINS/(LOSSES)
|
|
|
FAIR
VALUE
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
government and agency obligations
|
|
$ |
1,122 |
|
|
$ |
5 |
|
|
$ |
1,127 |
|
|
$ |
2,242 |
|
|
$ |
(10 |
) |
|
$ |
2,232 |
|
Municipal
obligations
|
|
|
24,973 |
|
|
|
(746
|
) |
|
|
24,227 |
|
|
|
22,790 |
|
|
|
(600
|
) |
|
|
22,190 |
|
Corporate
obligations
|
|
|
11,732 |
|
|
|
(1,490
|
) |
|
|
10,242 |
|
|
|
12,811 |
|
|
|
(89
|
) |
|
|
12,722 |
|
Mortgage-backed
securities
|
|
|
8,823 |
|
|
|
154 |
|
|
|
8,977 |
|
|
|
13,135 |
|
|
|
(119
|
) |
|
|
13,016 |
|
Collateralized
mortgage obligations
|
|
|
31,266 |
|
|
|
166 |
|
|
|
31,432 |
|
|
|
28,580 |
|
|
|
(356
|
) |
|
|
28,224 |
|
Common
stock
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
82 |
|
|
|
(49
|
) |
|
|
33 |
|
Corporate
preferred stock
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
|
|
$ |
77,916 |
|
|
$ |
(1,911 |
) |
|
$ |
76,005 |
|
|
$ |
79,640 |
|
|
$ |
(1,223 |
) |
|
$ |
78,417 |
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
obligations
|
|
$ |
375 |
|
|
$ |
10 |
|
|
$ |
385 |
|
|
$ |
675 |
|
|
$ |
11 |
|
|
$ |
686 |
|
Mortgage-backed
securities
|
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
|
|
22 |
|
|
|
- |
|
|
|
22 |
|
Total
|
|
$ |
376 |
|
|
$ |
10 |
|
|
$ |
386 |
|
|
$ |
697 |
|
|
$ |
11 |
|
|
$ |
708 |
|
Securities
SFAS 159:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
$ |
2,000 |
|
|
$ |
1,980 |
|
|
$ |
20 |
|
|
$ |
2,000 |
|
|
$ |
619 |
|
|
$ |
1,321 |
|
Total
|
|
$ |
2,000 |
|
|
$ |
1,980 |
|
|
$ |
20 |
|
|
$ |
2,000 |
|
|
$ |
619 |
|
|
$ |
1,321 |
|
Beginning
July 1, 2007 the Company elected to account for its preferred stock under SFAS
No. 159 Fair Value Option for
Financial Assets and Financial Liabilities, which allows an entity the
irrevocable option to elect fair value for the initial and subsequent
measurement for certain financial assets and liabilities on a
contract-by-contract basis. Subsequent changes in fair value of these
assets are recognized in earnings when incurred. The
market value of preferred stock was $20 and $1,321 at March 31, 2009 and June
30, 2008, respectively, resulting in a loss in value of $17 and 1,303 for the
three and nine month periods ended March 31, 2009, respectively, and is included
in noninterest income.
EAGLE
BANCORP AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
3. LOANS
RECEIVABLE
Loans
receivable consist of the following:
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
|
(Dollars in
Thousands)
|
|
First
mortgage loans:
|
|
|
|
|
|
|
Residential
mortgage (1-4 family)
|
|
$ |
83,273 |
|
|
$ |
86,751 |
|
Commercial
real estate
|
|
|
36,117 |
|
|
|
28,197 |
|
Real
estate construction
|
|
|
4,828 |
|
|
|
7,317 |
|
|
|
|
|
|
|
|
|
|
Other
loans:
|
|
|
|
|
|
|
|
|
Home
equity
|
|
|
28,252 |
|
|
|
28,034 |
|
Consumer
|
|
|
12,923 |
|
|
|
11,558 |
|
Commercial
|
|
|
7,571 |
|
|
|
6,502 |
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
172,964 |
|
|
|
168,359 |
|
|
|
|
|
|
|
|
|
|
Less:
Allowance for loan losses
|
|
|
(399
|
) |
|
|
(300
|
) |
Add:
Deferred loan fees, net
|
|
|
72 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
172,637 |
|
|
$ |
168,149 |
|
Loans net
of related allowance for loan losses on which the accrual of interest has been
discontinued were $2,737 and $0 at March 31, 2009 and June 30, 2008,
respectively. Classified assets, including real estate owned, totaled
$1,154 and $106 at March 31, 2009 and June 30, 2008, respectively.
The
following is a summary of changes in the allowance for loan losses:
|
|
Nine Months
Ended
|
|
|
Year Ended
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
(Dollars
in Thousands)
|
|
Balance,
beginning of period
|
|
$ |
300 |
|
|
$ |
518 |
|
Provision
charged to operations
|
|
|
106 |
|
|
|
(175
|
) |
Charge-offs
|
|
|
(16
|
) |
|
|
(54
|
) |
Recoveries
|
|
|
9 |
|
|
|
11 |
|
Balance,
end of period
|
|
$ |
399 |
|
|
$ |
300 |
|
EAGLE
BANCORP AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
4. DEPOSITS
Deposits
are summarized as follows:
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
(Dollars
in Thousands)
|
|
Noninterest
checking
|
|
$ |
15,535 |
|
|
$ |
14,617 |
|
Interest-bearing
checking
|
|
|
34,670 |
|
|
|
30,720 |
|
Passbook
|
|
|
24,839 |
|
|
|
23,906 |
|
Money
market
|
|
|
26,571 |
|
|
|
25,275 |
|
Time
certificates of deposit
|
|
|
90,374 |
|
|
|
84,333 |
|
Total
|
|
$ |
191,989 |
|
|
$ |
178,851 |
|
NOTE
5. EARNINGS
PER SHARE
Basic
earnings per share for the three months ended March 31, 2009 is computed using
1,071,098 weighted average shares outstanding. Earnings per share for
the nine months ended March 31, 2009 is computed using 1,070,087 weighted
average shares outstanding. Basic earnings per share for the three
months ended March 31, 2008 is computed using 1,070,070 weighted average shares
outstanding. Earnings per share for the nine months ended March 31,
2008 is computed using 1,071,124. Diluted earnings per share is computed using
the treasury stock method by adjusting the number of shares outstanding by the
shares purchased. The weighted average shares outstanding for
the diluted earnings per share calculations are 1,219,358 for the three months
ended March 31, 2009 and 1,214,762 for the three months ended March 31,
2008. The weighted average shares outstanding for diluted earnings
per share calculations are 1,218,209 for the nine months ended March 31, 2009
and 1,213,610 for the nine months ended March 31, 2008.
NOTE
6. DIVIDENDS
AND STOCK REPURCHASE PROGRAM
This
fiscal year Eagle has paid three dividends of $0.255 per share on August 22,
2008, November 21, 2008, and February 20, 2009. A dividend of $0.255
per share was declared on April 16, 2009, payable May 22, 2009 to stockholders
of record on May 1, 2009. Eagle Financial MHC, Eagle’s mutual holding
company, has waived the receipt of dividends on its 648,493 shares.
At their
regular meeting of January 17, 2008, the Company’s Board of Directors announced
a stock repurchase program for up to 28,750 shares. This represented
approximately 6.7% of the outstanding common stock held by the
public. The repurchased shares will be held as treasury stock and
will be held for general corporate purposes and/or issuance pursuant to Eagle’s
benefit plans. 4,510 shares have been purchased under this
program.
NOTE
7. FAIR
VALUE DISCLOSURES
SFAS 157
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants. A
fair value measurement assumes that the transaction to sell the asset or
transfer the liability occurs in the principal market for the asset or liability
or, in the absence of a principal market, the most advantageous market for the
asset or liability. The price in the principal (or most advantageous) market
used to measure the fair value of the asset or liability shall not be adjusted
for transaction costs. An orderly transaction is a transaction that assumes
exposure to the market for a period prior to the measurement date to allow for
marketing activities that are usual and customary for transactions involving
such assets and liabilities; it is not a forced transaction. Market participants
are buyers and sellers in the principal market that are (i) independent,
(ii) knowledgeable, (iii) able to transact and (iv) willing to
transact.
EAGLE
BANCORP AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
7. FAIR
VALUE DISCLOSURES -
continued
SFAS 157
requires the use of valuation techniques that are consistent with the market
approach, the income approach and/or the cost approach. The market approach uses
prices and other relevant information generated by market transactions involving
identical or comparable assets and liabilities. The income approach uses
valuation techniques to convert future amounts, such as cash flows or earnings,
to a single present amount on a discounted basis. The cost approach is based on
the amount that currently would be required to replace the service capacity of
an asset (replacement costs). Valuation techniques should be consistently
applied. Inputs to valuation techniques refer to the assumptions that market
participants would use in pricing the asset or liability. Inputs may be
observable, meaning those that reflect the assumptions market participants would
use in pricing the asset or liability developed based on market data obtained
from independent sources, or unobservable, meaning those that reflect the
reporting entity’s own assumptions about the assumptions market participants
would use in pricing the asset or liability developed based on the best
information available in the circumstances. In that regard, SFAS 157 establishes
a fair value hierarchy for valuation inputs that gives the highest priority to
quoted prices in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. The fair value hierarchy is as
follows:
|
•
|
Level
1 Inputs – Unadjusted quoted prices in active markets for identical assets
or liabilities that the reporting entity has the ability to access at the
measurement date.
|
|
•
|
Level
2 Inputs – Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly.
These include quoted prices for similar assets or liabilities in active
markets, quoted prices for identical or similar assets or liabilities in
markets that are not active, inputs other than quoted prices that are
observable for the asset or liability (for example, interest rates,
volatilities, prepayment speeds, loss severities, credit risks and default
rates) or inputs that are derived principally from or corroborated by
observable market data by correlation or other
means.
|
|
•
|
Level
3 Inputs – Significant unobservable inputs that reflect an entity’s own
assumptions that market participants would use in pricing the assets or
liabilities.
|
A
description of the valuation methodologies used for assets and liabilities
measured at fair value, as well as the general classification of such
instruments pursuant to the valuation hierarchy, is set forth
below.
In
general, fair value is based upon quoted market prices, where available. If such
quoted market prices are not available, fair value is based upon internally
developed models that primarily use, as inputs, observable market-based
parameters. Valuation adjustments may be made to ensure that financial
instruments are recorded at fair value.
While
management believes the Company’s valuation methodologies are appropriate and
consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could
result in a different estimate of fair value at the reporting date.
Investment
Securities Available for Sale – Securities classified as available for sale are
reported at fair value utilizing Level 1 and Level 2 inputs. For these
securities, the Company obtains fair value measurements from an independent
pricing service. The fair value measurements consider observable data that may
include dealer quotes, market spreads, cash flows, the U. S. Treasury yield
curve, live trading levels, trade execution data, market consensus prepayments
speeds, credit information and the bond’s terms and conditions, among other
things.
Preferred
Stock - SFAS 159 – Freddie Mac and Fannie Mae preferred stock are reported at
fair value utilizing Level 1 and Level 2 inputs. For these securities, the
Company obtains fair value measurements from an independent pricing service. The
fair value measurements consider observable data that may include dealer quotes,
market spreads, cash flows, the U. S. Treasury yield curve, live trading levels,
trade execution data, market consensus prepayments speeds, credit information
and the bond’s terms and conditions, among other things.
Loans
Held for Sale – These loans are reported at the lower of cost or fair value.
Fair value is determined based on expected proceeds based on sales contracts and
commitments and are considered Level 2 inputs.
Impaired
Loans – Impaired loans are reported at the fair value of the underlying
collateral if repayment is expected solely from the collateral. Collateral
values are estimated using Level 3 inputs based on internally customized
discounting criteria.
EAGLE
BANCORP AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
7. FAIR
VALUE DISCLOSURES -
continued
Mortgage
Servicing Rights – Fair values are estimated by stratifying the mortgage
servicing portfolio into groups of loans with similar financial characteristics,
such as loan type, interest rate, and expected maturity. The Company
obtains market survey data estimates and bid quotations from secondary market
investors who regularly purchase mortgage servicing
rights. Assumptions regarding loan payoffs are determined using
historical information on segmented loan categories for nonspecific
borrowers.
The
following table summarizes financial assets and financial liabilities measured
at fair value on a recurring basis as of March 31, 2009, segregated by the level
of the valuation inputs within the fair value hierarchy utilized to measure fair
value (dollars in thousands):
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
Total
Fair
|
|
Inputs
|
|
Inputs
|
|
Inputs
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
Investment
securities available-for-sale
|
$
|
|
$
|
76,005
|
|
|
$
|
|
$
|
Preferred
stock - SFAS 159
|
|
|
|
20
|
|
|
|
|
|
Loans
held-for-sale
|
|
|
|
7,374
|
|
|
|
|
|
Certain
financial assets and financial liabilities are measured at fair value on a
nonrecurring basis; that is, the instruments are not measured at fair value on
an ongoing basis but are subject to fair value adjustments in certain
circumstances (for example, when there is evidence of
impairment). The following table summarizes financial assets and
financial liabilities measured at fair value on a nonrecurring basis as of
March 31, 2009, segregated by the level of the valuation inputs within the
fair value hierarchy utilized to measure fair value (dollars in
thousands):
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
Total
Fair
|
|
Inputs
|
|
Inputs
|
|
Inputs
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
Impaired
loans
|
$
|
|
$
|
-
|
|
|
$
|
|
$
|
Mortgage
servicing rights
|
|
|
|
1,881
|
|
|
|
|
|
As of
March 31, 2009, certain impaired loans were remeasured and reported at fair
value through a specific valuation allowance allocation of the allowance for
possible loan losses based upon the fair value of the underlying collateral.
Impaired loans with a carrying value of $40 were reduced by specific valuation
allowance allocations totaling $40 to a total reported fair value of $0 based on
collateral valuations utilizing Level 3 valuation inputs.
As of
March 31, 2009, mortgage servicing rights were remeasured and reported at fair
value through a valuation allowance based upon the fair value of the calculated
servicing rights. Servicing rights with a carrying value of $1,928 were reduced
by the valuation allowance totaling $47 to a total reported fair value of $1,881
based on collateral valuations utilizing Level 2 valuation
inputs.
EAGLE
BANCORP AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 8. RECENTLY ISSUED
PRONOUNCEMENTS
In
June 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
Interpretation of FASB Statement No. 109 (FIN 48).” The
interpretation prescribes a recognition threshold and measurement attribute for
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. Benefits from tax positions
must be recognized in the financial statements only when it is more likely than
not that the tax position will be sustained upon examination by the appropriate
taxing authority that would have full knowledge of all relevant
information. A tax position that meets the more-likely-than-not
recognition threshold is measured at the largest amount of benefit that is
greater than fifty percent likely of being realized upon ultimate
settlement. Tax positions that previously failed to meet the
more-likely-than-not recognition threshold must be recognized in the first
subsequent financial reporting period in which that threshold is
met. Previously recognized tax positions that no longer meet the
more-likely-than-not recognition threshold must be derecognized in the first
subsequent financial reporting period in which that threshold is no longer
met. FIN 48 also provides guidance on the accounting for and
disclosure of unrecognized tax benefits, interest and penalties. The
new interpretation was effective for the Bank January 1,
2007. The implementation of the provisions of the new interpretation
did not have a significant impact on the Bank’s consolidated financial position
or results of operations. The Bank files income tax returns in the U. S. federal
jurisdiction and is no longer subject to U. S. federal income tax examinations
by tax authorities for years before 2005.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS
160”). SFAS 160 (a) amends ARB 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and the
deconsolidation of a subsidiary; (b) changes the way the consolidated income
statement is presented; (c) establishes a single method of accounting for
changes in a parent’s ownership interest in a subsidiary that do not result in
deconsolidation; (d) requires that a parent recognize a gain or loss in net
income when a subsidiary is deconsolidated; and (e) requires expanded
disclosures in the consolidated financial statements that clearly identify and
distinguish between the interests of the parent’s owners and the interests of
the noncontrolling owners of a subsidiary. The accounting provisions
of SFAS 160 must be applied prospectively, but the presentation and disclosure
requirements must be applied retrospectively to provide comparability in the
financial statements. Early adoption is prohibited. SFAS
160 is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. The Company is in the
process of determining the impact of adopting this new accounting principle on
its consolidated financial position, results of operations and cash
flows
In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations—a replacement
of FASB No. 141 (“SFAS 141(R)”). SFAS 141(R) requires (a) a
company to recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at fair value as of the acquisition
date; and (b) an acquirer in preacquisition periods to expense all
acquisition-related costs, among various other modifications to SFAS No.
141. SFAS 141(R) requires that any adjustments to an acquired
entity’s deferred tax asset and liability balance that occur after the
measurement period be recorded as a component of income tax
expense. This accounting treatment is required for business
combinations consummated before the effective date of SFAS No. 141(R)
(non-prospective), otherwise SFAS 141(R) must be applied prospectively. The
presentation and disclosure requirements must be applied retrospectively to
provide comparability in the financial statements. Early adoption is
prohibited. SFAS 141(R) is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. The impact of this standard is dependent upon the level of
future acquisitions.
In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an Amendment of FASB Statement
No. 133 (“SFAS 161”). SFAS 161 requires companies to
provide qualitative disclosures about the objectives and strategies for using
derivatives, quantitative data about the fair value of gains and losses on
derivative contracts, and details of credit-risk-related contingent features in
their hedged positions. The statement also requires companies to disclose
more information about the location and amounts of derivative instruments in
financial statements; how derivatives and related hedges are accounted for under
SFAS 133, Accounting for
Derivative Instruments and Hedging Activities; and how the hedges affect
the entity’s financial position, financial performance and cash
flows. SFAS 161 is effective for periods beginning after
November 15, 2008. The Company will comply with the disclosure
provisions of SFAS 161 to the extent it has entered into derivative transactions
in the year of adoption.
On
November 14, 2008, the Securities and Exchange Commission (“SEC”) issued its
long-anticipated proposed International Financial Reporting Standards (“IFRS”)
roadmap outlining milestones that, if achieved, could lead to mandatory
transition to IFRS for U.S. domestic registrants starting in
2014. IFRS is a comprehensive series of accounting standards
published by the International Accounting Standards Board
(IASB). Under the proposed roadmap, the Company could be required
through its parent company to prepare financial statements in accordance with
IFRS, and the SEC will make a determination in 2011 regarding the mandatory
adoption of IFRS for U.S. domestic registrants. Management is
currently assessing the impact that this potential change would have on the
Company’s consolidated financial statements, and will continue to monitor the
development of the potential implementation of IFRS.
EAGLE
BANCORP AND SUBSIDIARY
MANAGEMENT
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Note
Regarding Forward-Looking Statements
This
report contains certain “forward-looking statements.” Eagle Bancorp
(“Eagle” or the “Company”) desires to take advantage of the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995 and is
including this statement for the express purpose of availing itself of the
protections of the safe harbor with respect to all such forward-looking
statements. These forward-looking statements, which are included in
Management’s Discussion and Analysis, describe future plans or strategies and
include Eagle’s expectations of future financial results. The words
“believe,” “expect,” “anticipate,” “estimate,” “project,” and similar
expressions identify forward-looking statements. Eagle’s ability to
predict results or the effect of future plans or strategies or qualitative or
quantitative changes based on market risk is inherently
uncertain. Factors which could affect actual results but are not
limited to include (i) change in general market interest rates, (ii) general
economic conditions, (iii) local economic conditions, (iv)
legislative/regulatory changes, (v) monetary and fiscal policies of the U.S.
Treasury and Federal Reserve, (vi) changes in the quality or composition of
Eagle’s loan and investment portfolios, (vii) demand for loan products, (viii)
deposit flows, (ix) competition, and (x) demand for financial services in
Eagle’s markets. These factors should be considered in evaluating the
forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements which speak only as of their
dates.
Overview
The
Company’s primary activity is its ownership of its wholly owned subsidiary,
American Federal Savings Bank (the “Bank”). The Bank is a federally
chartered savings bank, engaging in typical banking
activities: acquiring deposits from local markets and investing in
loans and investment securities. The Bank’s primary component of
earnings is its net interest margin (also called spread or margin), the
difference between interest income and interest expense. The net
interest margin is managed by management (through the pricing of its products
and by the types of products offered and kept in portfolio), and is affected by
moves in interest rates. Noninterest income in the form of fee income
and gain on sale of loans adds to the Bank’s income.
The Bank
has a strong mortgage lending focus, with the majority of its loans in
single-family residential mortgages. This has led to successfully
marketing home equity loans to its customers, as well as a wide range of shorter
term consumer loans for various personal needs (automobiles, recreational
vehicles, etc.). In recent years the Bank has focused on adding
commercial loans to its portfolio, both real estate and non-real
estate. The purpose of this diversification is to mitigate the Bank’s
dependence on the mortgage market, as well as to improve its ability to manage
its spread. The Bank’s management recognizes the need for sources of
fee income to complement its margin, and the Bank now maintains a significant
loan serviced portfolio, which provides a steady source of fee
income. The gain on sale of loans also provides significant fee
income in periods of high mortgage loan origination volumes. Fee
income is also supplemented with fees generated from the Bank’s deposit
accounts. The Bank has a high percentage of non-maturity deposits,
such as checking accounts and savings accounts, which allows management
flexibility in managing its spread. Non-maturity deposits do not
automatically reprice as interest rates rise, as do certificates of
deposit.
Recently,
management’s focus has been on improving the Bank’s core
earnings. Core earnings can be described as income before taxes, with
the exclusion of gain on sale of loans and adjustments to the market value of
the Bank’s loan serviced portfolio. Management believes that the Bank
will need to continue to focus on increasing net interest margin, other areas of
fee income, and control operating expenses to achieve earnings growth going
forward. Management’s strategy of growing the bank’s loan portfolio
and deposit base is expected to help achieve these goals: loans
typically earn higher rates of return than investments; a larger deposit base
will yield higher fee income; increasing the asset base will reduce the relative
impact of fixed operating costs. The biggest challenge to the
strategy is funding the growth of the Bank’s balance sheet in an efficient
manner.
Financial
Condition
Comparisons
of results in this section are between the nine months ended March 31, 2009 and
June 30, 2008.
Total
assets increased by $15.48 million, or 5.53%, to $295.38 million at March 31,
2009, from $279.91 million at June 30, 2008. Total liabilities
increased by $14.84 million to $269.11 million at March 31, 2009, from $254.27
million at June 30, 2008. Total equity increased $638,000 to $26.27
million at March 31, 2009 from $25.63 million at June 30, 2008.
EAGLE
BANCORP AND SUBSIDIARY
MANAGEMENT
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Financial
Condition - continued
Net loans
receivable increased $4.49 million, or 2.67%, to $172.64 million at March 31,
2009 from $168.15 million at June 30, 2008. Commercial real estate
and land loans showed the largest increase of $7.92 million in the nine month
period. Residential mortgages and real estate construction both
decreased by $3.45 million and $2.49 million, respectively (see Note 3 to the
financial statements on page 9 for more details). Total loan
originations were $136.69 million for the nine months ended March 31, 2009, with
single family mortgages accounting for $96.09 million of the
total. Home equity and commercial real estate and land loan
originations totaled $12.13 million and $18.40 million, respectively, for the
same period. Construction loan originations (including those for
commercial real estate and land development loans) totaled $2.49
million. Consumer loan originations totaled $4.95
million. Loans held for sale remained at $7.37 million for both
periods. Investment securities available-for-sale (AFS) decreased
$2.41 million, or 3.08%, to $76.01 million at March 31, 2009 from $78.42 million
at June 30, 2008. Mortgage backed securities decreased $4.04 million,
which was the largest decrease in the investment category.
Deposits
increased $13.14 million, or 7.35%, to $191.99 million at March 31, 2009 from
$178.85 million at June 30, 2008. Time certificates of deposit
accounts had the
largest increase, followed by interest-bearing checking. Noninterest checking,
money market accounts, and savings accounts also increased (see Note 4 to the
financial statements on page 10 for more details). Advances and other
borrowings increased $4.25 million, to $69.47 million from $65.22
million.
The
increase in total equity was attributable to earnings for the nine months of
$1.48 million offset by an increase in other comprehensive loss of $452,000 (due
to an increase in net unrealized loss on securities available-for-sale), and by
purchases of treasury stock and the payment of three quarterly $0.255 per share
regular cash dividends.
Results
of Operations for the Three Months Ended March 31, 2009 and 2008
Net
Income. Eagle’s net income for the quarter ended March 31,
2009 was $1.06 million and $538,000 for the three months ended March 31,
2008. The increase of $521,000, or 96.84%, was due to increases in
noninterest income of $907,000 and net interest income of $475,000, offset by an
increase in noninterest expense of $490,000 and provision for loan losses of
$72,000. Also, Eagle’s tax provision was $299,000 higher in the current
quarter. Basic earnings per share were $0.99 for the current period,
compared to $0.50 for the previous year’s period.
Net Interest
Income. Net interest income increased $475,000 for the current
quarter. Total interest and dividend income increased $348,000, while
interest expense decreased $127,000.
Interest and Dividend
Income. Total interest and dividend income was $3.82 million
for the quarter ended March 31, 2009, compared to $3.47 million for the quarter
ended March 31, 2008, representing an increase of $348,000, or
10.02%. Interest and fees on loans increased to $2.86 million for the
three months ended March 31, 2009 from $2.75 million for the same period ended
March 31, 2008. This increase of $112,000, or 4.07%, was due
primarily to the increase in the average balances on loans. Average
balances for loans receivable, net, increased for the quarter ended March 31,
2009 to $180.58 million, compared to $166.52 million for the previous
year. This represents an increase of $14.06 million, or
8.44%. The average interest rate on loans decreased by 27 basis
points, from 6.61% to 6.34%.
Interest
and dividends on investment securities available-for-sale (AFS) increased to
$959,000 for the quarter ended March 31, 2009 from $692,000 for the same quarter
last year. Average balances on investments increased to $76.35
million for the quarter ended March 31, 2009, compared to $61.05 million for the
quarter ended March 31, 2008. The average interest rate earned on
investments increased to 5.06% from 4.59%, or 47 basis points.
Interest
Expense. Total interest expense decreased to $1.51 million for
the quarter ended March 31, 2009, from $1.64 million for the quarter ended March
31, 2008, a decrease of $127,000, or 7.75%. Interest on deposits
decreased $326,000 or 29.74%. This decrease was due to decreases in average
rates paid, as average balances increased. The average rate paid on
deposits decreased to 1.79% for the three months ended March 31, 2009 down from
2.69% for the same quarter last year. The average deposit balance
increased to $171.76 million for the three months ended March 31, 2009 from
$162.84 million for the three months ended March 31,
2008. Certificates of deposit had a significant decrease in average
rates paid. Its average rate decreased from 4.24% down to 2.93%, a
reduction of 131 basis points, while rates on savings and money market accounts
had considerable decreases of 15 and 91 basis points, respectively. Interest on
advances and other borrowings increased $199,000 or 42.52%. A significant
increase in the average balance of borrowings, resulted in an increase in
interest paid on borrowings to $667,000 in the current quarter compared to
$468,000 in the previous year’s quarter. The average rate on
borrowings, however, decreased from 4.79% for the quarter ended March 31, 2008
to 4.06% for the quarter ended March 31, 2009.
EAGLE
BANCORP AND SUBSIDIARY
MANAGEMENT
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results
of Operations for the Three Months Ended March 31, 2009 and 2008 -
continued
Provision for Loan
Losses. Provisions for loan losses are charged to earnings to
maintain the total allowance for loan losses at a level considered adequate by
the Bank, to provide for probable loan losses based on prior loss experience,
volume and type of lending conducted by the Bank, past due loans in portfolio,
and local and national economies. The Bank’s policies require the
review of assets on a quarterly basis. The Bank classifies loans as
well as other assets if warranted. While the Bank believes it uses
the best information available to make a determination with respect to the
allowance for loan losses, it recognizes that future adjustments may be
necessary. A $72,000 provision for loan losses was made for the
quarter ended March 31, 2009, while none was made for the quarter ended March
31, 2008. Total classified assets increased from $106,000 at June 30,
2008 to $1.15 million at March 31, 2009. The Bank currently has no foreclosed
real estate.
Noninterest Income. Total
noninterest income increased to $1.53 million for the quarter ended March 31,
2009, from $619,000 for the quarter ended March 31, 2008, an increase of
$907,000 or 146.53%. This was primarily due to increases in gain on
sale of loans of $658,000, and $214,000 in mortgage loan servicing
fees. The mortgage loan servicing fee includes an adjustment of
$192,000 to the mortgage servicing rights valuation allowance to reflect an
increase in value during the quarter ended March 31, 2009.
Noninterest
Expense. Noninterest expense increased by $490,000, or 27.83%,
to $2.25 million for the quarter ended March 31, 2009, from $1.76 million for
the quarter ended March 31, 2008. This increase was primarily due to
increases in amortization of mortgage servicing rights of $158,000, salaries and
benefits of $112,000, occupancy expense of $36,000 and in-house computer expense
of $31,000. The increase in amortization of mortgage servicing rights
is due to a higher rate of loan prepayments compared to the prior period’s
quarter resulting in a higher amount of mortgage servicing rights written off
for prepaid or refinanced loans. The salaries and benefits increase
was due to a slightly larger staff, merit raises and other inflationary
items. The occupancy and in-house computer expenses increase was
partly due to the costs associated with the establishment of a new branch in
Helena in January 2009. Other expense categories showed minor
changes.
Income Tax
Expense. Eagle’s income tax expense was $454,000 for the
quarter ended March 31, 2009, compared to $155,000 for the quarter ended March
31, 2008. The effective tax rate for the quarter ended March 31, 2009
was 30.00% and was 22.37% for the quarter ended March 31, 2008.
Results
of Operations for the Nine Months Ended March 31, 2009 and 2008
Net
Income. Eagle’s net income was $1.48 million and $1.22 million
for the nine months ended March 31, 2009 and 2008, respectively. The
increase of $262,000, or 21.46%, was due to an increase in net interest income
of $1.59 million, offset by an increase in noninterest expense of $940,000, a
decrease in noninterest income of $6,000, and an increase in provision for loan
loss of $106,000. Eagle’s tax provision was $279,000 higher in the
current nine month period. Basic earnings per share were $1.39 and
$1.14 for the nine month periods ended March 31, 2009 and 2008,
respectively.
Net Interest
Income. Net interest income increased to $5.32 million for the
nine months ended March 31, 2008 from $5.01 million for the nine months ended
March 31, 2007. This increase of $309,000 was the result of an
increase in interest income of $1.02 million, partially offset by an increase in
interest expense of $711,000.
Interest and Dividend
Income. Total interest and dividend income was $11.58 million
for the nine months ended March 31, 2009, compared to $10.38 million for the
same period ended March 31, 2008, an increase of $1.21 million, or
11.61%. Interest and fees on loans increased to $8.65 million for
2009 from $8.17 million for 2008. This increase of $485,000, or
5.94%, was due primarily to an increase in the average balances for loans
receivable, net, for the nine months ended March 31, 2009. Average
balances for loans receivable, net, for this period were $178.43 million,
compared to $164.45 million for the previous year’s period. This is
an increase of $13.98 million, or 8.50%. The average interest rate
earned on loans receivable decreased by 16 basis points, to
6.46%. Interest and dividends on securities available-for-sale (AFS)
increased to $2.90 million for the nine months ended March 31, 2009 from $2.12
million for the nine months ended March 31, 2008. Interest on
securities held-to-maturity (HTM) decreased to $15,000 from
$26,000. Average balances on investment securities increased to
$78.30 million for the nine months ended March 31, 2009 compared to $63.40
million for the same period ended March 31, 2008. The average
interest rate earned on investments increased 46 basis points, to 4.97% from
4.51%.
EAGLE
BANCORP AND SUBSIDIARY
MANAGEMENT
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results
of Operations for the Nine Months Ended March 31, 2009 and 2008 -
continued
Interest
Expense. Total interest expense decreased to $4.67 million for
the nine months ended March 31, 2009 from $5.06 million for the nine months
ended March 31, 2008, a decrease of $388,000 million, or
7.68%. Interest on deposits decreased to $2.46 million for the nine
months ended March 31, 2009 from $3.45 million for the nine months ended March
31, 2008. This decrease of $990,000, or 28.68%, was the result of a
decrease in average rates paid on deposit accounts accompanied by a modest
increase in average balances in deposit accounts. Average rates paid
on deposits decreased 86 basis points from 2008 to 2009. Average
rates paid on certificates of deposit, money market accounts, and savings
accounts all decreased, while interest bearing checking accounts rates
increased, due to a change in checking account product
offerings. Average balances in interest-bearing deposits
increased to $168.27 million for the nine month period ended March 31, 2009
compared to $163.97 million for the same period in the previous
year. Interest paid on borrowings increased to $2.21 million for the
nine months ended March 31, 2009 from $1.60 million for the same period ended
March 31, 2008. The increase was due to increases in the average
balances of borrowings from $43.79 million in 2008 to $72.77 million in
2008. The average rate paid on borrowings decreased 87 basis points
from 2008 to 2009.
Provision for Loan
Losses. Provisions for loan losses are charged to earnings to
maintain the total allowance for loan losses at a level considered adequate by
the Bank, to provide for probable loan losses based on prior loss experience,
volume and type of lending conducted by the Bank, available peer group
information, and past due loans in portfolio. The Bank’s policies
require the review of assets on a quarterly basis. The Bank
classifies loans as well as other assets if warranted. While the Bank
believes it uses the best information available to make a determination with
respect to the allowance for loan losses, it recognizes that future adjustments
may be necessary. Provision for loan losses for the nine month period
ended March 31, 2009 was $106,000 and zero for the nine month periods ended
March 31, 2008. Total classified assets increased from $106,000 at
June 30, 2008 to $1.15 million at March 31, 2009. The Bank currently
has no foreclosed real estate.
Noninterest
Income. Total noninterest income remained the same at $1.47
million for both nine months ended March 31, 2009, and 2008. Net gain
on sale of loans increased by $723,000 which was offset by an increase in net
loss on SFAS 159 securities of $754,000 and was principally attributable to
losses on Fannie Mae and Freddie Mac preferred stock in the first
quarter. The other items in noninterest income had minor
changes. The net gain on sale of loans increased due a significant
increase in loans sold on the secondary market compared to the prior
period. The increase in sales was the result of a significant
increase in mortgage loan orginations experienced during the period resulting
from the very low rates currently available on mortgage loans. 1-4
family mortgage loan originations increased from $40.42 million for the nine
month period ended March 31, 2008 to $96.09 million for the nine month period
ended March 31, 2009, an increase of $55.67 million, or 137.73%.
Noninterest
Expense. Noninterest expense increased by $940,000, or 18.02%,
to $6.16 million for the nine months ended March 31, 2009, from $5.22 million
for the nine months ended March 31, 2008. This increase was primarily
due to increases in salaries and employee benefits of $350,000, occupancy
expense of $56,000, in-house computer expense of $58,000, advertising of
$83,000, amortization of mortgage servicing rights of $154,000, and federal
insurance premiums of $55,000. The increase in salaries and benefits
was due to a slightly larger staff, increases in incentive pay, normal raises
and other inflationary items such as health insurance
premiums. The increase in occupancy expenses was due to
the new branch in Helena area repair and maintenance items. The
increase in in-house computer expense was due to opening a new branch in Helena
and other inflationary increases. The increase in advertising was the
result of a new checking account product promotion and a direct market mailing
campaign. The increase in amortization of mortgage servicing rights
was due to a higher rate of loan prepayments compared to the prior period
(resulting in a higher amount of mortgage servicing rights written off on loans
that were prepaid or refinanced). Other categories of noninterest
expense showed modest increases.
Income Tax
Expense. Eagle’s income tax expense was $635,000 for the nine
months ended March 31, 2009, compared to $356,000 for the nine months ended
March 31, 2008. The effective tax rate for the nine months ended
March 31, 2009 was 29.98% and was 22.57% for the nine months ended March 31,
2008.
Liquidity,
Interest Rate Sensitivity and Capital Resources
The
Company’s subsidiary, American Federal Savings Bank (the Bank), is required to
maintain minimum levels of liquid assets as defined by the Office of Thrift
Supervision (OTS) regulations. The OTS has eliminated the statutory
requirement based upon a percentage of deposits and short-term
borrowings. The OTS states that the liquidity requirement is retained
for safety and soundness purposes, and that appropriate levels of liquidity will
depend upon the types of activities in which the company engages. For
internal reporting purposes, the Bank uses the previous regulatory definitions
of liquidity. The Bank’s average liquidity ratio was 9.22% and 9.08%
for the months ended March 31, 2009 and March 31, 2008,
respectively.
EAGLE
BANCORP AND SUBSIDIARY
MANAGEMENT
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity,
Interest Rate Sensitivity and Capital Resources - continued
The
Bank’s primary sources of funds are deposits, repayment of loans and
mortgage-backed securities, maturities of investments, funds provided from
operations, and advances from the Federal Home Loan Bank of Seattle and other
borrowings. Scheduled repayments of loans and mortgage-backed
securities and maturities of investment securities are generally
predictable. However, other sources of funds, such as deposit flows
and loan prepayments, can be greatly influenced by the general level of interest
rates, economic conditions and competition. The Bank uses liquidity
resources principally to fund existing and future loan
commitments. It also uses them to fund maturing certificates of
deposit, demand deposit withdrawals and to invest in other loans and
investments, maintain liquidity, and meet operating expenses.
Liquidity
may be adversely affected by unexpected deposit outflows, higher interest rates
paid by competitors, and similar matters. Management monitors projected
liquidity needs and determines the level desirable, based in part on commitments
to make loans and management’s assessment of the bank’s ability to generate
funds.
At
December 31, 2008 (the most recent report available), the Bank’s measure of
sensitivity to interest rate movements, as measured by the OTS, improved from
the previous quarter. The Bank’s capital ratio as measured by the OTS
increased slightly during the same period. The Bank is well within
the guidelines set forth by the Board of Directors for interest rate risk
sensitivity.
As of
March 31, 2009, the Bank’s regulatory capital was in excess of all applicable
regulatory requirements. At March 31, 2009, the Bank’s tangible,
core, and risk-based capital ratios amounted to 9.08%, 9.08%, and 13.14%,
respectively, compared to regulatory requirements of 1.5%, 3.0%, and 8.0%,
respectively. See the following table (amounts in
thousands):
|
|
(Unaudited)
|
|
|
|
At March 31, 2009
|
|
|
|
|
|
|
For Capital
|
|
|
|
|
|
|
Adequacy
|
|
|
|
Dollar
|
|
|
Purposes
|
|
|
|
Amount
|
|
|
% of Assets
|
|
Tangible
capital:
|
|
|
|
|
|
|
Capital
level
|
|
$ |
26,415 |
|
|
|
9.08
|
% |
Requirement
|
|
|
4,365 |
|
|
|
1.50 |
|
Excess
|
|
$ |
22,050 |
|
|
|
7.58
|
% |
Core
capital:
|
|
|
|
|
|
|
|
|
Capital
level
|
|
$ |
26,415 |
|
|
|
9.08
|
% |
Requirement
|
|
|
8,730 |
|
|
|
3.00 |
|
Excess
|
|
$ |
17,685 |
|
|
|
6.08
|
% |
Risk-based
capital:
|
|
|
|
|
|
|
|
|
Capital
level
|
|
$ |
26,774 |
|
|
|
13.14
|
% |
Requirement
|
|
|
16,296 |
|
|
|
8.00 |
|
Excess
|
|
$ |
10,478 |
|
|
|
5.14
|
% |
Impact
of Inflation and Changing Prices
Our
financial statements and the accompanying notes have been prepared in accordance
with accounting principles generally accepted in the United States of America,
which require the measurement of financial position and operating results in
terms of historical dollars without considering the change in the relative
purchasing power of money over time and due to inflation. The impact
of inflation is reflected in the increased cost of our
operations. Interest rates have a greater impact on our performance
than do the general levels of inflation. Interest rates do not
necessarily move in the same direction or to the same extent as the prices of
goods and services.
EAGLE
BANCORP AND SUBSIDIARY
CONTROLS AND
PROCEDURES
Based on
their evaluation, the Company’s Chief Executive Officer, Peter J. Johnson, and
Chief Financial Officer, Clint J. Morrison, have concluded the Company’s
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) are effective as of March 31, 2009 to ensure that information
required to be disclosed in the reports that the Company files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms. During the last fiscal quarter, there
have been no significant changes in the Company’s internal control over
financial reporting that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
EAGLE
BANCORP AND SUBSIDIARY
Part
II - OTHER INFORMATION
Item
1. Legal Proceedings.
Neither
the Company nor the Bank is involved in any pending legal proceeding other than
non-material legal proceedings occurring in the ordinary course of
business.
Item
2. Unregistered Sales of Equity Securities Use of
Proceeds.
c) Small
Business Issuer Purchases of Equity Securities.
The
Company publicly announced a stock repurchase program on January 17, 2008. The
Company was authorized to acquire up to 28,750 shares of common stock with the
price subject to market conditions. No expiration date was set for the
repurchase program. As of March 31, 2009, 4,510 shares have been repurchased
under this plan. The Company made no purchases during the three month
period ended March 31, 2009.
Item
3. Defaults Upon Senior Securities.
Not
applicable.
EAGLE
BANCORP AND SUBSIDIARY
Part
II - OTHER INFORMATION (Continued)
Item
4. Submission of Matters to a Vote of Security
Holders.
Not
applicable
Item
5. Other Information.
None.
Item
6. Exhibits.
31.1
Certification by Peter J. Johnson, Chief Executive Officer, pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 (a) of the Sarbanes-Oxley Act of 2002.
31.2
Certification by Clint J. Morrison, Chief Financial Officer, pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 (a) of the Sarbanes-Oxley Act of 2002.
32.1
Certification by Peter J. Johnson, Chief Executive Officer, and Clint J.
Morrison, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
EAGLE
BANCORP AND SUBSIDIARY
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
EAGLE
BANCORP
|
|
|
|
Date: May
12, 2009
|
By:
|
/s/ Peter J.
Johnson
|
|
Peter
J. Johnson
|
|
President/CEO
|
|
|
|
Date: May
12, 2009
|
By:
|
/s/ Clint J.
Morrison
|
|
Clint
J. Morrison
|
|
Senior
Vice President/CFO
|