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10 Bank Stocks From the South for Smart Long-Term Investors

6. Eagle Bancorp

Shares of Eagle Bancorp (EGBN) of Bethesda, Md., closed at $20.52 Monday, returning 41% year-to-date, following a 1% return last year.

The shares trade for 1.7 times their reported Sept. 30 tangible book value of $11.97, and for 12 times the consensus 2013 EPS estimate of $1.70.

Eagle Bancorp had $3.0 billion in total assets as of Sept. 30. The Company in May began a $40 million "at-the-market" common equity raise, with net proceeds from the sale of new shares totaling $28.8 million as of Sept. 30.

Third-quarter net income available to common shareholders was $9.5 million, or 45 cents a share, increasing from $7.6 million, or 38 cents a share, in the second quarter, and $6.3 million, 32 cents a share, in the third quarter of 2011. Net interest income increased to $33.3 million in the third quarter, from $31.0 million the previous quarter, and $25.4 million a year earlier.

Eagle Bancorp's net interest margin continued to impress, widening to 4.44% in the third quarter, from 4.39% the previous quarter, and 3.98% a year earlier. Following similar improvement in the second quarter, Marinac said that the margin expansion meant that in addition to acquiring new customers, the company was "doing more business with the same customers."

Marinac rates Eagle Bancorp "Outperform," with a price target of $22.50, saying on Oct. 22 that "new personnel hires with deep relationships are transferring business to EGBN at a strong and sustained pace. Yet, average loan sizes remain small and focused below the radar-screen of regional & national bank competitors."

"Average [commercial and industrial] loans are still just $600k and CRE loans are $1.2 million," Marinac said, adding that "a lack of attention to smaller borrowers by larger banks still benefits EGBN even though it is moving up the size ladder to from the past."

With the company's success in its at-the-market share offerings, which dilute shareholders less than traditional discounted offerings, Marinac said that "concern of a persistent 'overhang' of ATM shares should subside and boost the valuation of EGBN."

FIG Partners estimates that Eagle Bancorp will earn $1.75 a share in 2013.

EGBN Chart EGBN data by YCharts

Interested in more on Eagle Bancorp? See TheStreet Ratings' report card for this stock.
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