) --

Eagle Bancorp

(EGBN) - Get Report

of Bethesda, Md., is bucking the trend for many larger competitors, with strong organic growth and an expanding net interest margin.

FIG Partners analyst Christopher Marinac rates Eagle Bancorp "Outperform," and says "the company's fundamentals are doing great," and that "they are in the D.C. market place that is attractive, picking up the business from bigger banks," including

Bank of America

(BAC) - Get Report


Capital One Financial

(COF) - Get Report

, and

PNC Financial Services Group

(PNC) - Get Report


Eagle Bancorp had $3.0 billion in total assets as of June 30, with 17 branches in Montgomery County, Md., Washington, and Arlington and Fairfax Counties in Virginia.

The company reported second-quarter earnings of $7.6 million, or 37 cents a share, increasing from $7.5 million, or 36 cents a share in the first quarter, and $4.9 million, or 24 cents a share, during the second quarter of 2011. The second-quarter return on average assets was 1.08%, and the return on average common equity was 13.52%, which are both good numbers in the current environment for banks.

Eagle Bancorp's net interest margin -- the difference between a bank's average yield on loans and investments and its average cost for deposits and borrowings -- expanded to 4.39%, from 4.11% the previous quarter and 4.32% a year earlier, which is an unusual showing for a bank, as long-term rates continue to decline. Marinac says that the company's margin success shows that it is not only acquiring new customers, it is "doing more business with the same customers," meaning that low-cost checking deposits grow, as the company expands its commercial real estate loan portfolio.

The company's total deposits grew 6% quarter-over-quarter and 30% from a year earlier, to $2.5 billion as of June 30. Meanwhile, coveted noninterest bearing demand deposits increased 12% sequentially and 77% year-over-year, to $773 million.

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Total loans grew 6% during the second quarter and 19% year-over-year, to $2.3 billion as of June 30, with strong growth in commercial real estate loans, as well as in the company's smaller construction loan portfolio.

Commercial real estate made up 53% of total loans as of June 30, which could give some investors pause, since many of the banks that got in trouble during the real estate bubble that popped in 2008 were heavily concentrated in CRE, however, Marinac says that Eagle Bancorp has "had good credit quality all throughout the cycle," and that "they really never got big in construction, so the construction lending they have done has augmented" earnings.

Eagle Bancorp raised $5.6 million in common equity during the second quarter, at an average price of $15.94 a share, as part of the company's strategy to raise $40 million in common equity "at-the-market," or ATM, which Marinac says means less dilution for shareholders than a traditional offering would mean.

The analyst says that "this is incremental capital" for the company as it expands organically, and that stretching out the capital raise and selling the shares at market price, the company hopes to sell the new shares at between $17 and $18 a share, rather than in the $15 range, which would have been necessary if Eagle had raised the capital all at once through a secondary offering earlier this year.

After Eagle Bancorp released its second-quarter results in July, Marinac said "We think there is plenty of fundamental support for EGBN shares to increase in value even as the ATM equity raise continues for another 12 months ahead (or longer)."

Eagle Bancorp's shares closed at $17.16 Monday, returning 18% year-to-date, following a 1% return during 2011.

The shares trade for 1.5 times their reported June 30 tangible book value of $11.15, and for 11 times the consensus 2013 earnings estimate of $1.58, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.50.

Marinac's price target for Eagle Bancorp's shares is $21.25, and he estimates the company will earn $1.70 a share during 2013.

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Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.