EAGLE BANCORP INC

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ITEM 1A. RISK FACTORS

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Our customers and businesses in the Washington, D.C. metropolitan area in general have been and may continue to be adversely impacted as a result of changes in government spending or the size of the federal workforce and may also be adversely affected by a government shutdown.

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The presidential administration and certain governmental agencies have taken action to reduce government spending, including on government contractors, and the size of the federal government workforce. These announcements have had an adverse effect on the economy of the Washington, D.C. metropolitan area, which in turn could adversely affect the Company and its borrowers.

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In particular, the presidential administration and certain government agencies have taken steps to reduce the real estate footprint of the federal government. Because the federal government occupies a significant amount of real estate in the Washington, D.C. metropolitan area, these actions have adversely affected the commercial real estate market in the metropolitan area. These developments have affected and may continue to affect the appraisals we receive on the real estate collateral underlying certain of our loans and may affect our ability to recover the outstanding balance of a loan secured by real estate that defaults.

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The Washington, D.C. metropolitan area is characterized by a significant number of businesses that are federal government contractors or subcontractors, or which depend on such businesses for a significant portion of their revenues. While the Company does not have a significant level of exposure to federal government contractors or their subcontractors, which as of March 31, 2025 was less than $350 million, the impact of a shutdown of federal government operations, a decline in federal government spending or workforce, a reallocation of government spending to different industries or different areas of the country or a delay in payments to such contractors could have a ripple effect and adversely affect our results of operations and financial condition, including asset quality, financial capital and liquidity levels.

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In addition, federal government employees make up a significant proportion of the population of the Washington, D.C. metropolitan area. Layoffs or reductions in force, staffing freezes, salary reductions or furloughs of government employees or government contractors and other impacts from declining government spending, lapses in appropriations, or changes in fiscal appropriations could have adverse impacts on other businesses in the Company’s market and the general economy of the greater Washington, D.C. metropolitan area and may indirectly lead to a loss of revenues by the Company’s customers, including vendors and lessors to the federal government and government contractors or to their employees, as well as a wide variety of commercial and retail businesses. Accordingly, such potential federal government actions could lead to increases in past due loans, nonperforming loans, credit loss reserves and charge-offs and a decline in liquidity.

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Changes in U.S. trade policies and practices could have an adverse effect on our business, financial position and results of operations.

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The United States recently announced new tariffs and increases in tariffs that represent substantial changes in U.S. trade policies and practices that have the potential to significantly affect the U.S. economy by increasing the cost of imported goods, disrupting supply chains, reducing exports, and slowing or reducing economic growth.

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Prolonged uncertainty or restrictive trade policies could adversely affect the ability of borrowers to repay outstanding loans or the value of collateral securing these loans, and have other negative consequences, including, but not limited to, reduced consumer confidence, reduced employment, adverse conditions in financial markets, and higher, more volatile or persistent inflation.

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Due to the rapidly evolving and changing state of U.S. trade policies and practices, the amount and duration of any tariffs, and the responses of other countries, the ultimate effects of changes in the U.S. trade policies and practices on the Company, its borrowers, financial markets and the overall U.S. economy are highly uncertain and unpredictable. To the extent that risks or developments relating to U.S. trade policies and practices have a negative impact on the financial condition of borrowers, the U.S. economy or financial markets, it could also have an adverse effect on our business, financial condition and results of operations.