What happened
Eagle Bancorp's (EGBN +1.31%) stock price soared this week, rising by as much as 16.2%, according to S&P Global Market Intelligence. As of 2:45 p.m. ET. Thursday, its share price was still up by 11.7% for the week, trading at about $28 per share. The stock remains down about 36% year to date.
The broader market was slightly higher for the week at that point Thursday, with the S&P 500 up by 0.4%, the Dow Jones Industrial Average up by 0.3%, and the Nasdaq Composite up by 0.2%.
So what
Eagle Bancorp, based in Bethesda, Maryland, is the holding company for Eagle Bank, a regional bank with about $11 billion in assets that serves the Northeast. Its stock price climbed higher this week on the strength of the solid second-quarter earnings report it released Wednesday.
The bank beat earnings and revenue estimates by significant margins. Its earnings per share came in at $0.94, ahead of analysts' consensus estimate of $0.71. Earnings were up 18.4% over the first quarter and up 83% year over year. However, its net income figure for Q2 2022 reflected one-time costs related to legal settlements associated with previously disclosed government investigations.
NASDAQ: EGBN
Key Data Points
Eagle Bancorp had revenue of $80.4 million in the quarter, which beat consensus estimates by 8%. Revenue was up 2% over the first quarter but down 9% year over year.
Loans on the books rose slightly compared to Q1 but were up 8.6% year over year. However, net interest income was down by 13.4% compared to a year ago due to significantly higher deposit costs.
Also, the bank had $7.7 billion in deposits, up 3.4% from Q1, but down 16% from a year ago. About 29% of its deposits are uninsured. Overall, the bank is well capitalized with a common equity tier 1 capital ratio of 13.6% -- almost double the regulatory minimum of 7%.
Now what
Regional banks have taken it on the chin this year, but Eagle Bancorp looks like it is in solid shape. What stands out most is its strong capital position. While its provision for credit losses declined in the quarter from $6.2 million to $5.2 million, its ratio of nonperforming assets and net charge-offs increased, so keep an eye on those metrics.
The bank also declared a $0.45 dividend for the third quarter, which gives it a yield of about 6.4% -- around twice the industry average. In the last three years, it has boosted its dividend by 27% per year, on average.
Its payout ratio is a bit high at 65%, but the bank has made efforts to curb costs in the first half, closing three branches and reducing its workforce.
With that yield, Eagle Bancorp might be an investment to consider as an income stock, but don't expect high returns given the current environment for regional banks.
