Eagle Bancorp Clipped On Spread Pressures And Corruption Worries

It’s been a rough week for Eagle Bancorp’s (EGBN) shareholders. One of the fastest-growing, most profitable commercial banks I know, Eagle saw its share price hammered on a combination of weaker second quarter results and a vague disclosure that Eagle is involved in an investigation tied to the activities of its former CEO Ron Paul, with the latter being the far more surprising and troubling news item.

Valuing Eagle right now is especially difficult. The spread pressures that this spread-based lender are facing are significant, and the company is having to slow down some of its more profitable lending to get its balance sheet in better place. On top of the uncertainty of just how much rate cuts will impact the business and the loan demand outlook in the D.C. area, there’s the open-ended question as to whether Eagle itself is being directly investigated and could face some sort of sanctions down the line. While I do believe the core operations of Eagle are undervalued, the investigation overhang is considerable.

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Eagle Bancorp Clipped On Spread Pressures And Corruption Worries