Eagle Bancorp Profile
Eagle Bancorp, Inc. (Eagle) operates as the bank holding company for EagleBank that provides various banking products and services.
The bank operates various branch offices in Suburban Maryland; in the District of Columbia; and in Northern Virginia. The bank also has various lending centers and utilizes various digital capabilities, including remote deposit services and mobile banking services. The bank maintains its physical presence via branches and lending centers consistent with its strategic plan.
The bank has three active direct subsidiaries: Bethesda Leasing, LLC, Eagle Insurance Services, LLC and Landroval Municipal Finance, Inc. Bethesda Leasing, LLC holds title to and operates real estate owned and acquired through foreclosure. Eagle Insurance Services, LLC, which previously offered access to insurance products and services through a referral program with a third party insurance broker, continues to receive fee income in connection with such program. Landroval Municipal Finance, Inc. focuses on lending to municipalities by buying debt on the public market, as well as direct purchase issuance.
The bank operates as a community bank alternative to the super-regional financial institutions, which dominate its primary market area. The bank focuses on relationship banking, providing each client with a number of services, familiarizing itself with, and addressing itself to, client needs in a proactive, personalized fashion. Management believes that the bank's target market segments, small and medium-sized for profit and non-profit businesses and the consumer base working or living in and near the bank's market area, demand the convenience and personal service that an independent locally based financial institution such as the bank can offer.
Services
The bank offers a broad range of commercial banking services to its business and professional clients, as well as consumer banking services to individuals living and/or working primarily in the bank's market area. These services include (i) commercial loans for a variety of business purposes such as for working capital, equipment purchases, real estate lines of credit and government contract financing; (ii) asset based lending and accounts receivable financing (on a limited basis); (iii) construction and commercial real estate loans; (iv) business equipment financing; (v) consumer home equity lines of credit, personal lines of credit and term loans; (vi) consumer installment loans such as auto and personal loans; and (vii) personal credit cards offered through an outside vendor.
During the year ended December 31, 2023, the company ceased originating residential real estate mortgage loans and completed residual origination and sales activities on its residential real estate mortgage lending business. The company made the decision to cease originating residential real estate mortgage loans given the challenged nature of the business and the uncertainty of maintaining or increasing the volume or percentage of revenue or net income that has previously been produced by the residential mortgage business.
The bank emphasizes providing commercial banking services to sole proprietors, small and medium-sized businesses, partnerships, corporations, non-profit organizations and associations and investors living and working in and near the bank's primary service area. A full range of retail banking services are offered to accommodate the individual needs of both corporate customers, as well as the community the bank serves. The bank also offers online banking, mobile banking and a remote deposit service, which allows clients to facilitate and expedite deposit transactions through the use of electronic devices. A suite of Treasury Management services is also offered to business clients. The bank's deposits are insured by the Federal Deposit Insurance Corporation ('FDIC') to the fullest extent provided by law.
The bank's loan portfolio primarily consists of traditional business and real estate secured loans. Commercial and industrial loans are made, with a substantial portion having variable and adjustable rates, where the cash flow of the borrower's operating business is the principal source of debt service with a secondary emphasis on collateral. Real estate loans are made generally for commercial purposes and are structured using both variable and fixed rates and renegotiable rates which adjust in three to five years, with maturities of generally five to ten years. Commercial real estate loans, which comprise the largest portion of the loan portfolio, are secured by both owner occupied and non-owner occupied real property and include a component of acquisition, development and construction ('ADC') lending.
The bank's consumer loan portfolio is a smaller portion of the loan portfolio and has historically been generally comprised two loan types: (i) home equity loans and lines of credit that are structured with an interest only draw period followed either by a balloon maturity or a fully amortized repayment schedule; and, historically, (ii) first lien residential mortgage loans with the intent to sell conforming first trust loans on a servicing released basis to third party investors. The company completed the cessation and residual origination and sales activities of first lien residential mortgage origination for secondary sale during the year ended December 31, 2023.
The bank is also a preferred lender under the Small Business Administration's ('SBA') Preferred Lender Program. As a preferred lender, the bank can originate certain SBA loans in-house without prior SBA approval. SBA loans are made through programs designed by the federal government to assist the small business community in obtaining financing from financial institutions that are given government guarantees as an incentive to make the loans. Under certain circumstances, the bank attempts to further mitigate commercial term loan losses by using loan guarantee programs offered by the SBA. SBA lending is subject to federal legislation that can affect the availability and funding of the program. From time to time, this dependence on legislative funding causes limitations and uncertainties with regard to the continued funding of such programs, which could potentially have an adverse financial impact on the company's business.
The company originates multifamily Federal Housing Administration ('FHA') loans through the Department of Housing and Urban Development's Multifamily Accelerated Program. The company securitizes these loans through the Government National Mortgage Association ('Ginnie Mae') MBS I program and sells the resulting securities in the open market to authorized dealers in the normal course of business and periodically bundles and sells the servicing rights.
The composition of the company's loan portfolio is heavily weighted toward commercial real estate, both owner occupied and income producing. At December 31, 2023, owner occupied commercial real estate and construction - commercial and industrial ('C&I') (owner occupied) represented approximately 17% of the loan portfolio while non-owner occupied commercial real estate and real estate construction represented approximately 63% of the loan portfolio. The combined owner and non-owner occupied and commercial real estate loans represented approximately 81% of the loan portfolio. Real estate also serves as collateral for loans made for other purposes, resulting in 82% of all loans being secured or partially secured by real estate.
The company is also an active traditional commercial lender providing loans for a variety of purposes, including working capital, equipment and accounts receivable financing. The company's underwriting standards address collateral and debt service cash flow. Personal guarantees are generally required, but may be limited. In originating SBA loans, the company assumes the risk of non-payment on the unguaranteed portion of the credit. The company generally sells the guaranteed portion of the loan generating noninterest income from the gains on sale, as well as servicing income on the portion participated. SBA loans other than Paycheck Protection Program ('PPP') loans are subject to the same cash flow analyses as other commercial loans. SBA loans are subject to a maximum loan size established by the SBA, as well as internal loan size guidelines.
The company's lending activities are subject to a variety of borrower lending limits imposed by state and federal law. The company's loan portfolio includes ADC real estate loans, including both investment and owner occupied projects.
Deposit services include business and personal checking accounts, Negotiable Order of Withdrawal ('NOW') accounts, tiered savings and money market accounts and time deposits with varying maturity structures and customer options. A complete individual retirement account program is available. The bank also participates in the IntraFi Network, LLC ('IntraFi') Certificate of Deposit Account Registry Service ('CDARS') and its Insured Cash Sweep ('ICS') program, both of which function to provide greater FDIC insurance coverage for participating Bank customers. The bank also utilizes brokered deposit funds in its overall asset/liability management program.
The bank historically has offered a full range of online banking services for both personal and business accounts and has a Mobile Banking application. In early 2024, the bank launched a new online and mobile banking platform as the bank seeks to further modernize its deposit offerings to its customers. Other deposit services include cash management services, business sweep accounts, lockbox, remote deposit capture, account reconciliation services, merchant card services, safe deposit boxes and Automated Clearing House origination. After-hours depositories and automated teller machine ('ATM') service are also available.
The company and the bank maintain portfolios of short term investments and investment securities consisting primarily of the U.S. agency bonds and government sponsored enterprise mortgage-backed securities, municipal bonds and corporate bonds. The bank also owns equity investments related to membership in the Federal Reserve and the Federal Home Loan Bank of Atlanta ('FHLB').
Market Area
The primary market area of the bank is the Washington, D.C. metropolitan area.
Regulation
Supervision, regulation, and examination of the company by the regulatory agencies are intended primarily for the protection of depositors and the Deposit Insurance Fund (DIF), rather than the company's shareholders.
The company is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (BHC Act) and is subject to regulation and supervision by the FRB. The BHC Act and other federal laws subject bank holding companies to restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and actions, including regulatory enforcement actions for violations of laws and regulations and unsafe and unsound banking practices. As a bank holding company, the company is required to file with the FRB an annual report and such other additional information as the FRB may require pursuant to the BHC Act. The FRB may also examine the company and each of its subsidiaries. The company is subject to risk-based capital requirements adopted by the FRB, which are substantially identical to those applicable to the bank.
The bank is a Maryland chartered commercial bank and a member of the Federal Reserve and a state member bank, whose accounts are insured by the DIF of the FDIC up to the maximum legal limits of the FDIC. The bank is subject to regulation, supervision and regular examination by the state of Maryland Office of Financial Regulation and the FRB. The regulations of these various agencies govern most aspects of the bank's business, including required reserves against deposits, loans, investments, mergers and acquisitions, borrowing, dividends and location and number of branch offices. The laws and regulations governing the bank generally have been promulgated to protect depositors and the DIF and not for the purpose of protecting shareholders.
The FRB and the FDIC focus on the soundness of the bank's risk management framework and capabilities, given the greater complexity and impact of the bank's risks as a larger institution.
The bank is also required to provide information to the CFPB on a quarterly basis, and is subject to periodic examinations by the CFPB focused on compliance with consumer laws and regulations, as a banking organization over $10 billion in total assets.
Deposits at the bank are insured up to applicable limits by the DIF of the FDIC and the bank is subject to deposit insurance assessments to maintain the DIF. Deposit insurance assessments are based on average total assets minus average tangible equity. For larger institutions, such as the bank, the FDIC uses a performance score and a loss-severity score to calculate an initial assessment rate.
History
Eagle Bancorp, Inc. was incorporated under the laws of the state of Maryland in 1997.
