Eagle Bancorp, Inc. (EGBN) has delivered positive earnings surprises in the last four quarters; most recently beating by nearly 13% in the third quarter. This Zacks #1 Rank (Strong Buy), commercial bank hit a new 52-week high on October 31 shortly after its quarterly announcement. With a solid year-to-date return of 37.2% and an expected long-term earnings growth rate of 10%, this stock looks like a solid momentum pick.
Impressive Third Quarter Results
On October 22, Eagle Bancorp reported third quarter earnings of 44 cents per share, topping the Zacks Consensus Estimate of 39 cents by 12.8% and the year-ago earnings of 31 cents by 41.9%. The result was helped by increased net interest income and elevated non-interest income, partially offset by enhanced non-interest expenses.
Net Interest income climbed 31.1% year over year to $33.3 million, driven by strong balance sheet growth and net interest margin expansion. Net interest margin expanded 29 basis points on a year-over-year basis to 4.44%. Additionally, the company's non-interest income surged 40.0% to $4.9 million. However, non-interest expenses rose 21.7% to $19.1 million.
Eagle Bancorp's capital position improved in the quarter. Total assets came in at $3.0 billion, up 15.4% year over year. Total deposits also surged 23.8% to $2.6 billion. Moreover, total loans increased 15.0% from the year-ago quarter to $2.3 billion.
Common Stock Offering
On October 31, Eagle Bancorp closed the sale of 552,012 shares of its common stock at a price of $18.25 per share in an underwritten offering. The company received net proceeds of about $9.7 million after underwriting discounts and expenses.
Previously, Eagle Bancorp completed the sale of 2,052,074 shares of its common stock in open market trading under an 'at the market' equity offering program. The average price was $17.06 per share, for net proceeds of about $33.8 million after commissions.
Earnings Momentum on an Upswing
The past 30 days have seen an upsurge in all 5 estimates for 2012, boosting the Zacks Consensus Estimate by 6.7% to $1.60. For 2013 as well, all estimates moved north over the same time frame, helping the Zacks Consensus Estimate advance 8.2% to $1.71.
The Zacks Consensus Estimate for 2012 reflects year-over-year growth of about 40.2%, while the expected growth rate for 2013 is 6.8%.
Eagle Bancorp currently trades at 13.0x 12-month forward earnings, an 8% discount to the peer group average of 14.2x. Its price to book ratio of 1.6 is at a 33% premium to the peer group average of 1.2.
The company has a trailing 12-month ROE of 13.8%, compared with the peer group average of 10.7%. This implies that the company reinvests its earnings more efficiently than its peer group.
Chart Shows Strength
Eagle Bancorp has witnessed strong price momentum since the third quarter earnings release. Moreover, the company has been continuously outperforming its 200-day moving average along with S&P 500 for the past year. The year-to-date return for the stock is 37.2%, compared with the S&P 500's return of 12.4%.
Headquartered in Bethesda, Maryland, Eagle Bancorp, the holding company for EagleBank, provides various banking products and services. The company was founded in 1997 and operates through 16 branch offices in Montgomery County, Maryland, Washington, D.C. and Northern Virginia. With a market capital of about $431.6 million, Eagle Bancorp competes with Horizon Bancorp. (HBNC), among others.
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