The Case for Eagle Bancorp

There’s a good write-up on Eagle Bancorp (EGBN) at Seeking Alpha. Here’s a sample.

Eagle Bancorp (NASDAQ:EGBN) was smacked hard in July on news of an investigation tied to potential related party transactions involving former CEO Ron Paul, but it seems like the market has calmed down about that issue and instead refocused on what is a pretty high-quality Washington, D.C. area growth story underpinned by healthy loan growth. Although spread compression remains an ongoing risk, the shares are up about 15% from my last article and have recovered about a third of the investigation-driven decline.

I believe Eagle shares are still undervalued, and I’m more comfortable about the possible risk from the investigation, as management has pointed to comprehensive insurance coverage for just such events. While I don’t want to underplay the risk of weaker loan demand, tighter spreads, and a deteriorating credit cycle, those are more industry risks than company-specific risks, and I believe Eagle is still looking at a healthy long-term core earnings growth despite a likely low point in 2020.

Posted by on October 31st, 2019 at 1:27 pm


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