SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2) [ ]
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Eagle Bancorp, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Fee paid previously with preliminary materials:
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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4. Date Filed:
EAGLE BANCORP, INC.
7815 WOODMONT AVENUE
BETHESDA, MARYLAND 20814
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 2003
TO THE SHAREHOLDERS OF EAGLE BANCORP, INC.:
The Annual Meeting of Shareholders of Eagle Bancorp, Inc. (the
"Company"), will be held at
The Bethesda Marriott Hotel
5151 Pooks Hill Road
Bethesda, Maryland 20814
on Tuesday, May 20, 2003 at 10:00 A.M. for the following purposes:
1. To elect five (5) directors to serve until the next Annual
Meeting of Shareholders and until their successors are duly
elected and qualified; and
2. To transact any other business that may properly come before
the meeting or any adjournment or postponement of the meeting.
Shareholders of record as of the close of business on April 1, 2003 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement of the meeting.
By Order of the Board of Directors
Michele Midlo, Corporate Secretary
April 17, 2003
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE
MEETING, YOU MAY, IF YOU DESIRE, REVOKE YOUR PROXY AND VOTE IN PERSON.
IF YOUR SHARES ARE NOT REGISTERED IN YOUR NAME, YOU WILL NEED
ADDITIONAL DOCUMENTATION FROM YOUR RECORDHOLDER IN ORDER TO VOTE IN
PERSON AT THE MEETING.
EAGLE BANCORP, INC.
7815 Woodmont Avenue
Bethesda, Maryland 20814
-----------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
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INTRODUCTION
This Proxy Statement is being sent to shareholders of Eagle Bancorp,
Inc., a Maryland corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders, to be held at 10:00 A.M. on Tuesday, May 20,
2003 (the "Meeting"), and at any adjournment or postponement of the Meeting. The
purposes of the Meeting are:
1. electing five (5) directors to serve until the next Annual
Meeting of Shareholders and until their successors are duly
elected and qualified; and
2. transacting any other business that may properly come before
the Meeting or any adjournment or postponement of the Meeting.
The Meeting will be held at:
The Bethesda Marriott Hotel
5151 Pooks Hill Road
Bethesda, Maryland 20814
This proxy statement and proxy card are being sent to shareholders of
the Company on or about April 17, 2003. A copy of the Company's Annual Report to
Shareholders for the year ended December 31, 2002 also accompanies this proxy
statement.
The cost of this proxy solicitation is being paid by the Company. In
addition to the use of the mail, proxies may be solicited personally or by
telephone by officers, regular employees or directors of the Company or its
subsidiary, EagleBank (the "Bank"), who will not receive any special
compensation for their services. The Company may also reimburse brokers,
custodians, nominees and other fiduciaries for their reasonable out-of-pocket
and clerical costs for forwarding proxy materials to their principals.
VOTING RIGHTS AND PROXIES
VOTING RIGHTS
Only shareholders of record at the close of business on April 1, 2003
(the "Record Date"), will be entitled to notice of and to vote at the Meeting or
any adjournment or postponement of the Meeting. On that date, the Company had
2,900,474 shares of common stock, par value $.01 per share (the "Common Stock")
outstanding, held by approximately 943 total beneficial shareholders, including
approximately 420 shareholders of record. The Common Stock is the only class of
the Company's stock of which shares are outstanding. Each share of Common Stock
is entitled to one vote on all matters submitted to a vote of the shareholders.
Shareholders do not have the right to cumulate votes in the election of
directors. The presence, in person or by proxy, of not less than a majority of
the total number of outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting.
PROXIES
Properly executed proxies received by the Company in time to be voted
at the Meeting will be voted as specified by shareholders. In the absence of
specific instructions, proxies received will be voted FOR the election of the
nominees for election as directors. Management does not know of any matters that
will be brought before the Meeting, other than as described in this proxy
statement. If other matters are properly brought before the Meeting,
the persons named in the proxy intend to vote the shares to which the proxies
relate in accordance with their best judgment.
The judges of election appointed by the Board of Directors for the
Meeting will determine the presence of a quorum and will tabulate the votes cast
at the Meeting. Abstentions will be treated as present for purposes of
determining a quorum, but as unvoted for purposes of determining the approval of
any matter submitted to the vote of shareholders. If a broker indicates that he
or she does not have discretionary authority to vote any shares of Common Stock
on a particular matter, such shares will be treated as present for general
quorum purposes, but will not be considered as present or voted with respect to
that matter.
Please sign, date, mark and return promptly the enclosed proxy in the
postage paid envelope provided for this purpose in order to assure that your
shares are voted. You may revoke your proxy at any time before it is voted at
the Meeting:
o by granting a later proxy with respect to the same shares;
o by sending written notice to Michele Midlo, Corporate Secretary
of the Company, at the address noted above, at any time prior to
the proxy being voted; or
o by voting in person at the Meeting.
Attendance at the Meeting will not, in itself, revoke a proxy. If your
shares are held in the name of your bank or broker, you will need additional
documentation to vote in person at the meeting. Please see the voting form
provided by your recordholder for additional information regarding the voting of
your shares.
Many shareholders whose shares are held in an account at a brokerage
firm or bank will have the option to submit their proxies or voting instructions
electronically through the Internet or by telephone. Shareholders should check
the voting form or instructions provided by their recordholder to see which
options are available. Shareholders submitting proxies or voting instructions
electronically should understand that there may be costs associated with
electronic access, such as usage charges from Internet access providers and
telephone companies, that would be borne by the shareholder. To revoke a proxy
previously submitted electronically, a shareholder may simply submit a new proxy
at a later date before the taking of the vote at the Meeting, in which case, the
later submitted proxy will be recorded and the earlier proxy will be revoked.
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VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
SECURITIES OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of April 1, 2003
concerning the number and percentage of whole shares of the Company's Common
Stock beneficially owned by its directors, nominees for director, executive
officers whose compensation is disclosed, and by its directors and all executive
officers as a group, as well as information regarding each other person known by
the Company to own in excess of 5% of the outstanding Common Stock. Except as
otherwise indicated, all shares are owned directly, and the named person
possesses sole voting and sole investment power with respect to all such shares.
Except as set forth below, the Company knows of no other person or persons, who
beneficially own in excess of 5% of the Company's Common Stock. Further, the
Company is not aware of any arrangement which at a subsequent date may result in
a change of control of the Company.
Name Age Position Number of Shares Percentage(1)
-------------------- ---- -------------------------------- ---------------- -------------
Leonard L. Abel 76 Chairman of Board of Company; 130,550(2) 4.43%
Director of Bank
Dudley C. Dworken 53 Director of Company and Bank 56,973(3) 1.94%
Eugene F. Ford, Sr. 73 Director of Company 61,733(4) 2.12%
Ronald D. Paul 47 Vice Chairman, President and 204,684(5) 6.86%
Treasurer of Company; Chairman
of Board of Bank
H.L. Ward 56 Executive Vice President and 43,550(6) 1.49%
Director of Company; President,
Chief Executive Officer and
Director of Bank
Thomas D. Murphy 55 Executive Vice President, Chief 29,050(7) 0.99%
Operating Officer and Director of
Bank
Susan G. Riel 53 Executive Vice President, Senior 20,525(8) 0.70%
Operations Officer of Bank
Martha Foulon-Tonat 47 Executive Vice President - Chief 16,850(9) 0.58%
Lending Officer of Bank ------- -----
All directors and executive officers of 581,269(10) 18.38%
Company as a group (9 persons) ======= =====
All directors and executive officers of 938,876(11) 28.99%
Company and Bank as a group (20 persons) ======= =====
(1) Represents percentage of 2,900,474 shares issued and outstanding as of
April 1, 2003, except with respect to individuals holding options
exercisable within 60 days of that date, in which event, represents
percentage of shares issued and outstanding plus the number of shares
for which that person holds options exercisable within 60 days of April
1, 2003, and except with respect to all directors and executive
officers of the Company and the Company and the Bank as groups, in
which case represents percentage of shares issued and outstanding plus
the number of shares for which those persons hold options exercisable
within 60 days of April 1, 2003.
(2) Includes warrants to purchase 43,750 shares of Common Stock.
(3) Includes 43,750 shares held in a trust of which Mr. Dworken is
beneficiary and options and warrants to purchase 12,851 shares of
Common Stock.
(4) Includes options and warrants to purchase 18,233 shares of Common Stock
and 21,875 shares held by Mr. Ford's spouse.
(5) Includes 113,750 shares held in trust for Mr. Paul's children. Includes
options to purchase 82,484 shares of Common Stock.
(6) Includes options to purchase 30,775 shares of Common Stock.
(7) Includes options to purchase 27,650 shares of Common Stock. Also
includes 400 shares held by his spouse for their minor child.
(8) Includes options to purchase 16,150 shares of Common Stock.
(9) Includes options to purchase 16,150 shares of Common Stock.
(10) Includes options and warrants to purchase 262,783 shares of Common
Stock.
(11) Includes options and warrants to purchase 337,698 shares of Common
Stock.
3
ELECTION OF DIRECTORS
The size of the Company's Board of Directors is currently set at five
(5) directors. The Board of Directors has nominated five (5) persons for
election as director at the Meeting, for a one-year period until the 2004 Annual
Meeting of Shareholders and until their successors have been elected and
qualified. Each of the nominees for election as a director currently serves as a
member of the Board of Directors. Unless authority is withheld, all proxies in
response to this solicitation will be voted for the election of the nominees
listed below. Each nominee has indicated a willingness to serve if elected.
However, if any nominee becomes unable to serve, the proxies received in
response to this solicitation will be voted for a replacement nominee selected
in accordance with the best judgment of the persons named as proxies.
Vote Required and Board Recommendation. Nominees receiving a plurality
of the votes cast at the Meeting in the election of directors will be elected as
director, in the order of the number of votes received. Members of the Board of
Directors of the Company having the power to vote or direct the voting of
309,647 shares of Common Stock, or approximately 11% of the shares of Common
Stock outstanding on the Record Date, have indicated their intention to vote
"FOR" the election of all of the nominees for election as director. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE NOMINEES TO THE
COMPANY'S BOARD OF DIRECTORS.
NOMINEES FOR ELECTION AS DIRECTORS
Set forth below is certain information as of the Record Date concerning
the nominees for election as director of the Company. Except as otherwise
indicated, the occupation listed has been such person's principal occupation for
at least the last five years. Each of the directors of the Company, other than
Mr. Ford, also currently serves as a director of the Bank.
Leonard L. Abel. Mr. Abel is Chairman of the Board of Directors of the
Company, and has served in that position since the organization of the Company.
Until retiring in 1993, Mr. Abel was partner-in-charge of the certified public
accounting firm of Kershenbaum, Abel, Kernus and Wychulis, Rockville, Maryland
with which he served for forty-five years. From October 1996, until resigning in
September 1997, Mr. Abel was a member of the Board of Directors of F&M National
Corporation (NYSE) and its wholly owned subsidiary, F&M Bank - Allegiance,
Bethesda, Maryland, and prior to that time was Chairman of the Board of
Allegiance Bank, N.A. (collectively with F&M Bank - Allegiance, "Allegiance")
and its holding company Allegiance Banc Corporation, from their organization
until their acquisition by F&M National Corporation, which was subsequently
acquired by BB&T Corporation ("F&M"). Mr. Abel was also Chairman of the Board of
Directors of Central National Bank of Maryland from 1968 until its acquisition
in 1986 by Citizens Bank of Maryland (now Sun Trust Banks, Inc.).
Dudley C. Dworken. Mr. Dworken has served as a director of the Company
since August 1999. Mr. Dworken is the owner of Curtis Chevrolet-Geo, an
automobile dealership in Washington, D.C. Mr. Dworken was a Director of
Allegiance from 1987 until October 1997, and a director of Allegiance Banc
Corporation from 1988 until its acquisition by F&M. In November 1998, Mr.
Dworken consented to the entry of an order permanently enjoining him from
violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5 under
that act. The order was issued in connection with an investigation of him in
respect of trading by his uncle in the shares of Allegiance Banc Corporation
during the period during which Allegiance Banc Corporation was involved in
merger negotiations with F&M. Mr. Dworken is an active member of numerous
community, business, charitable and educational institutions in the Washington
D.C./Montgomery County area.
Eugene F. Ford, Sr. Mr. Ford has served as a director of the Company
since its organization. Mr. Ford is engaged in the business of property
management and development as Chairman of Mid-City Financial Corporation, an
apartment developer, of which he was also president until 1995. He is Chairman
of the Community Preservation and Development Corporation, a non-profit
organization in the business of preserving public purpose housing complexes and
providing social program support for residents thereof. Through his ownership of
Mid-City Financial, Mr. Ford is the largest owner of assisted housing units in
Maryland and the Washington metropolitan area. Mr. Ford has received numerous
awards for his work in the housing development field.
Ronald D. Paul. Mr. Paul is President and Vice Chairman of the Board of
Directors of the Company and Chairman of the Board of Directors of the Bank, and
has served in such positions since the organization of the Company and the Bank.
Mr. Paul is President of Ronald D. Paul Companies and RDP Management, which are
engaged in the
4
business of real estate development and management activities. Mr. Paul is also
active in private investments, including as Chairman of Bethesda Investments,
Inc., a private venture capital fund. Mr. Paul was a director of Allegiance from
1990 until September 1997, and a director of Allegiance Banc Corporation from
1990 until its acquisition by F&M, including serving as Vice Chairman of the
Board of Directors from 1995. Mr. Paul is also active in various charitable
organizations, including serving as Vice Chairman of the Board of Directors of
the National Kidney Foundation from 1996 to 1997, and its Chairman from 2002 to
2003.
H. L. Ward. Mr. Ward has served as a director of the Company since
March 1999. Mr. Ward, the President and Chief Executive Officer of the Bank
since its organization, was President and Chief Executive Officer of Allegiance
from December 1995 to October 1997. Prior to that time he served in various
executive lending positions at Allegiance and its former sister bank Prince
George's National Bank, including Executive Vice President - Chief Lending
Officer, from 1992 to 1995. Mr. Ward has over 31 years of experience in the
commercial banking and real estate development and finance industries.
ELECTION OF DIRECTORS OF THE BANK
If elected, the nominees for election as directors intend to vote for
Mr. Abel, Mr. Dworken, Mr. Paul, Mr. Ward and the following persons to serve as
directors of the Bank, each of whom currently serves as a director of the Bank.
Arthur H. Blitz. Mr. Blitz, 62, an attorney engaged in private practice
since 1971, is a partner in the Bethesda, Maryland law firm of Paley, Rothman,
Goldstein, Rosenberg & Cooper. Mr. Blitz was a director of Allegiance at various
times from 1987 to October 1997.
Steven L. Fanaroff. Mr. Fanaroff, 43, is Vice President - Chief
Financial Officer of Magruder Holdings, Inc., a regional supermarket chain, with
which he has served since 1981. Mr. Fanaroff served on the Board of Directors of
Allegiance from 1990 until October 1997.
Harvey M. Goodman. Mr. Goodman, 47, has been with The Goodman, Gable,
Gould Company, the Maryland based public insurance adjusting firm where he
serves as President, since 1977. He is a director and past president of the
National Association of Public Insurance Adjusters, and is a director and
principal of Adjusters International, a national public adjusting firm.
Neal R. Gross. Mr. Gross, 60, is founder, Chairman and Chief Executive
Officer of Neal R. Gross & Co. which provides court reporting services to
attorneys, the federal government, private organizations and individuals since
1977. Mr. Gross previously served as a director of Century Bancshares, Inc.,
from 1995 until its acquisition by United Bankshares, Inc. in 2001.
Benson Klein. Mr. Klein, 58, has been an attorney in Montgomery County
since 1970, and a principal with Ward & Klein, Chartered, since 1978. Mr. Klein
is also engaged in real estate investment activities in Montgomery County. He
served as a director of F&M Bank - Allegiance from 1996 to 1997 and previously
served as a director of Lincoln National Bank. Mr. Klein is currently, and has
been, a member of a variety of community, business and charitable institutions
in the Washington, D.C./Montgomery County area.
David H. Lavine. Mr. Lavine, 44, owns and operates the local Chesapeake
Bagel Bakery retail chain. He was President and Chief Executive Officer of The
American Bagel Company, Inc. franchisor of the chain until its sale in 1997.
Prior to that time, he was a principal of the public accounting firm of Reznick,
Fedder & Silverman, CPA's, since 1987. Mr. Lavine is also engaged in real
estate, private investments and providing consulting services. Mr. Lavine was a
director of Suburban Bank of Virginia and its holding company, Suburban
Bancshares, Inc., from 1991 to 1994.
Bruce H. Lee. Mr. Lee, 39, is Vice President of Development and a
member of the Board of Directors of Lee Development Group, a closely held family
real estate business founded in 1920 and based in downtown Silver Spring. He is
principal broker of record for Montgomery Land Company, LLC, which specializes
in commercial sales, leasing, and property management and the general partner of
Montgomery Land partnership, LLP. Mr. Lee is past president of the Greater
Silver Spring Chamber of Commerce and was the Chamber's charter president in
1993. Mr. Lee is an elected Council member and current Chairman of the Township
of Chevy Chase View.
5
Philip N. Margolius. Mr. Margolius, 62, a graduate of Dartmouth College
and Yale Law School, is a partner in the law firm of Margolius, Mallios, Davis,
Rider & Tomar, LLP in Washington, D.C. and Largo, Maryland. He specializes in
estate planning, probate, non-profit organizations and non-profit charitable
giving. Mr. Margolius is an adjunct professor of law at the Washington College
of Law at American University and lectures to professional groups in the
community on estate planning. Washingtonian Magazine named him one of the area's
leading estate planners.
Thomas D. Murphy. Mr. Murphy, 55, the Executive Vice President - Chief
Operating Officer of the Bank, served at Allegiance from September 1994,
including as Executive Vice President and Chief Operating Officer from December
1995 until November 1997. Prior to his service at Allegiance, he served in the
same position at First Montgomery Bank from August 1991 until its acquisition by
Sandy Spring National Bank of Maryland in December 1993, and he served as a Vice
President of that organization until September 1994. Mr. Murphy has 31 years
experience in the commercial banking industry.
J. Mitchell Neitzey. Mr. Neitzey 47, is the Vice President and Chief
Financial Officer of EFO Capital Management, Inc. an investment management firm
based in Washington, D.C. EFO directs a diversified portfolio of marketable
securities, venture capital investments and real estate development projects. A
lifelong resident of the Washington area, Mr. Neitzey's professional career
includes senior positions in commercial banking and investment consulting.
Donald R. Rogers. Mr. Rogers, 57, has been engaged in the private
practice of law since 1972 with the Rockville, Maryland based firm Shulman,
Rogers, Gandal, Pordy & Ecker, P.A., of which he is a partner. Mr. Rogers was a
member of the Board of Directors of Allegiance from 1987 until October 1997.
Worthington H. Talcott, Jr. Mr. Talcott, 51, an attorney engaged in
private practice since 1979, has been a partner in Shulman, Rogers, Gandal,
Pordy & Ecker, P.A. since 1998. Previously, he was a shareholder in the Bethesda
law firm of Marsh, Fleischer & Quiggle, Chartered, since 1992, and from 1983 to
1992 was a partner in the firm of Ross, Marsh, Foster, Myers and Quiggle. Mr.
Talcott has been an active member of the Juvenile Diabetes Foundation, serving
as a member of the Board of Directors for the Capital Chapter from 1992 to 1996,
and as President of the Capital Chapter from 1994 to 1995.
Leland M. Weinstein. Mr. Weinstein, 40, has served as president of
Syscom Services, Inc., an e-business workflow and internet consulting firm,
since 1997. Formerly, he spent thirteen years with Automated Digital Systems
(ADS), an integrator of fax technologies, where he rose to president and owner
of the company before joining Syscom, an early spin-off of ADS. Mr. Weinstein
serves on the advisory councils for Intel/Dialogic and AVT/RightFAX. He is a
member of the Inner Circle of the University of Maryland Dingman Center for
Entrepreneurship, and involved with numerous charities.
Eric H. West. Mr. West, 40, is a founding principal of West, Lane &
Schlager/Oncor International, specializing in tenant representation and
strategic real estate consulting in the Washington, D. C. metropolitan area.
Previously, he served for nine years as Senior Vice President at Barrueta &
Associates. During his career, Mr. West has developed a specialty in
not-for-profit organizations and corporations, leading to ongoing relationships
with such diverse groups as The National Council on the Aging, The American
Forest and Paper Association, The American Iron & Steel Institute, among many
others.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met twelve (12) times during
2002. All members of the Board of Directors attended at least 75% of the
meetings held by the Board of Directors and by all committees on which such
member served during the 2002 fiscal year or any portion thereof. The Board of
Directors does not have a standing Audit Committee. The Audit Committee of the
Bank serves as the Audit Committee for the Company. The Audit Committee is
responsible for the review and evaluation of the Company's and Bank's internal
controls and accounting procedures. It also periodically reviews audit reports
with the Company's independent auditors, and is responsible for the annual
appointment of such auditors. The Board of Directors has adopted a written
charter for the Audit Committee. The Audit Committee is currently comprised of
Mr. Lavine, the Chairman, and Messrs. Abel, Blitz, Gross, Klein, and Talcott.
Other than Mr. Abel, all of the members of the audit committee are members of
the board of directors of the Bank only. Each of the members of the Audit
Committee is independent, as determined under the definition of
6
independence adopted by the National Association of Securities Dealers. During
the 2002 fiscal year, the Audit Committee met four (4) times.
The Board of Directors does not have a standing Nominating Committee,
the functions of which are performed by the full Board of Directors. The
Benefits Committee of the Bank, which serves as the compensation committee for
the Company, is comprised of Mr. Blitz, the Chairman, and Messrs. Abel, Paul,
Dworken, Goodman, Lee, Murphy, Ward and, Weinstein. The Benefits Committee is
responsible, together with management, for the adoption of the Company's
personnel policies and establishing salary and compensation guidelines and
levels for all Company officers and personnel. The Benefits Committee recommends
executive compensation levels subject to approval of the EagleBank Board of
Directors. Messrs. Ward and Murphy do not participate in, or remain present
during, Board discussions of their compensation. The Benefits Committee is also
responsible for annually nominating the officers of the Company and Bank and
evaluating the performance thereof. During the 2002 fiscal year, the Benefits
Committee met three (3) times.
AUDIT COMMITTEE REPORT
The Audit Committee has been appointed to assist the Board of Directors
in fulfilling the Board's oversight responsibilities by reviewing the financial
information that will be provided to the shareholders and others, the systems of
internal controls established by management and the Board and the independence
and performance of the Company's audit process.
The Audit Committee has:
(1) reviewed and discussed with management the audited financial
statements included in the Company's Annual Report and Form 10-K;
(2) discussed with Stegman and Company, the Company's independent
auditors, the matters required to be discussed by statement of Auditing
Standards No. 61, and has received the written disclosures and letter from
Stegman and Company, as required by Independence Standards Board Standard No. 1;
and
(3) discussed with Stegman and Company, its independence.
Based on these reviews and discussions, the Audit Committee has recommended to
the Board of Directors that the audited financial statements be included in the
Company's annual report on Form 10-K for the year ended December 31, 2002. The
Audit Committee has also considered whether the amount and nature of non-audit
services provided by Stegman and Company is compatible with the auditor's
independence.
Members of the Audit Committee
David H. Lavine, Chairman Leonard L. Abel
Arthur H. Blitz Neal R. Gross
Benson Klein Worthington H. Talcott, Jr.
DIRECTORS' COMPENSATION
During 2002, each non-employee director other than Mr. Abel and Mr.
Paul, was entitled to elect to receive cash compensation of $200 for each
meeting of the Board of Directors of the Company, the Board of Directors of the
Bank or a committee of the Board of the Company or the Bank, attended or options
to purchase 15 shares of Common Stock, issued as of the end of each calendar
month, for each meeting attended. Additionally, Directors of both the Company
and the Bank are eligible to receive grants of warrants or options under the
Company's Option Plan. In 2002, an aggregate of $51,600 in meeting fees were
paid to members of the Board of Directors of the Company, $148,000 was paid to
members of the Board of Directors of the Bank, and options to purchase an
aggregate of 255 shares of Common Stock, at exercise prices ranging from $11.25
to $15.75 per share, were issued to non-employee directors of the Company and
the Bank.
7
During 2002, Mr. Abel, the Chairman of the Board of Directors of the
Company received an annual payment of $36,000 in lieu of regular director fees
from the Company and the Bank. Mr. Abel and the Company are parties to an
agreement governing his service and compensation as Chairman. The current term
of Mr. Abel's agreement expires on December 31, 2005. On each December 31, the
term of the agreement automatically extends for one additional year, unless Mr.
Abel has given notice of his intention not to renew the term. Under his
agreement, Mr. Abel is entitled to receive an annual fee, currently $36,000,
subject to periodic increase, in lieu of all other fees for service on the
Boards of Directors or any committees of the Company and the Bank. In the event
of termination of Mr. Abel's service for any reason other than for cause (as
defined), Mr. Abel (or his estate), is entitled to receive an amount equal to
2.99 times his then current annual fee, subject to certain limitations in the
event that his termination occurs in connection with a change in control (as
defined) of the Company or the Bank. If Mr. Abel were entitled to receive the
termination benefits as of the date hereof, he would receive approximately
$107,640.
EXECUTIVE COMPENSATION
The following table sets forth a comprehensive overview of the
compensation for Mr. Paul, the President of the Company, and the four most
highly compensated executive officers of the Company (including officers of the
Bank) who received total salary and bonuses of $100,000 or more during the
fiscal year ended December 31, 2002.
SUMMARY COMPENSATION TABLE
Long-term
Annual Compensation Compensation Awards
---------------------------------------------- --------------------------------------
Securities All Other
Name and Principal Position Year Salary Bonus Underlying Options Compensation($)
------------------------------------------------------------------------------------------------------------------------
Ronald D. Paul, President 2002 $ 90,000 $ 0 4,000 $ 0
2001 $ 50,000 $ 0 2,756 $ 0
2000 $ 18,000 $ 0 4,375(1) $ 0
H.L. Ward, President and Chief 2002 $205,250 $ 15,000 -0- $ 17,815(2)
Executive Officer of the Bank, 2001 $195,250 $ 6,755 12,400 $ 16,601(3)
Executive Vice President of the 2000 $177,500 $ 30,000 -0- $ 15,025(4)
Company
Thomas D. Murphy, Executive Vice 2002 170,000 $ 12,500 -0- $ 18,434(5)
President- Chief Operating 2001 $160,000 $ 6,077 11,900 $ 14,300(6)
Officer of the Bank 2000 $145,000 $ 21,111 -0- $ 12,840(7)
Susan G. Riel, Executive Vice 2002 $122,500 $ 12,500 -0- $ 7,735(8)
President - Chief Operations 2001 $115,000 $ 5,212 7,400 $ 7,050(9)
Officer of the Bank 2000 $100,000 $ 8,500 3,500(10) $ 2,880(11)
Martha Foulon-Tonat, Executive 2002 $122,500 $ 12,500 -0- $ 9,675(12)
Vice President-Chief Lending 2001 $115,000 $ 5,212 7,400 $ 9,013(13)
Officer of the Bank 2000 $ 90,000 $ 8,500 3,500 $ 7,500(14)
(1) As adjusted to reflect the 25% stock split in the form of a dividend
paid on March 31, 2000, and the 40% stock split in the form of a
dividend paid on June 15, 2001.
(2) Includes $9,000 car allowance, $3,315 insurance premiums and $5,500
401(k) matching contribution.
(3) Includes $9,000 car allowance, $2,275 insurance premiums and $5,325
401(k) matching contribution.
(4) Includes $7,200 car allowance, $2,275 insurance premiums and $5,325
401(k) matching contribution.
(5) Includes $7,800 car allowance, $5,534 insurance premiums and $5,100
401(k) matching contribution.
(6) Includes $7,800 car allowance, $2,150 insurance premiums and $4,350
401(k) matching contribution.
(7) Includes $6,000 car allowance, $2,190 insurance premiums and $4,650
401(k) matching contribution.
(8) Includes $3,600 car allowance and $3,675 401(k) matching contribution.
(9) Includes $3,600 car allowance and $3,450 401(k) matching contribution.
(10) As adjusted to reflect the 40% stock split in the form of a dividend
paid on June 15, 2001.
(11) Represents 401(k) matching contributions.
(12) Includes $6,000 car allowance and $3,675 401(k) matching contribution.
(13) Includes $6,000 car allowance and $3,013 401(k) matching contribution.
(14) Includes $4,800 car allowance and $2,700 401(k) matching contribution.
8
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
Percent of at Assumed Annual Rate of
Number of Total Options Stock Price Appreciation for
Securities Granted to Exercise Option Term
Underlying Employees in Price Per ------------------------------
Name Options Granted Fiscal Year Share Expiration Date 5% 10%
--------------------- ----------------- ----------------- ---------- --------------- -------------- --------------
Ronald D. Paul 4,000 aggregate (1) 100% (1) (1) $33,664 $85,312
H.L. Ward -0- -0- N/A N/A N/A N/A
Thomas D. Murphy -0- -0- N/A N/A N/A N/A
Susan G. Riel -0- -0- N/A N/A N/A N/A
Martha Foulon-Tonat -0- -0- N/A N/A N/A N/A
---------------------
(1) Mr. Paul's options are issued quarterly and priced at the end of each
month, based on the then current fair market value. During 2002, Mr.
Paul received options as follows:
Number of Securities Exercise Price Per
Underlying Options Granted Share Expiration Date
--------------------------- --------------------- -------------------
333 $12.00 January 31, 2012
333 $13.15 February 28, 2012
334 $15.75 March 31, 2012
333 $15.25 April 30, 2012
333 $15.50 May 31, 2012
334 $14.55 June 30, 2012
333 $11.25 July 31, 2012
333 $12.56 August 31, 2012
334 $12.00 September 30, 2012
333 $12.35 October 31, 2012
333 $12.56 November 30, 2012
334 $13.66 December 31, 2012
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options
Acquired on Options at December 31, 2002 at December 31, 2002
Name Exercise Value Realized Exercisable/Unexercisable Exercisable/Unexercisable (1)
----------------------- --------------- ---------------- ---------------------------- --------------------------
Ronald D. Paul -0- -0- 80,818/-0- $602,352/-0-
H.L. Ward -0- -0- 30,775/-0- $188,241/-0-
Thomas D. Murphy -0- -0- 27,650 $165,568/-0-
Susan G. Riel -0- -0- 16,150/-0- $94,128/-0-
Martha Foulon-Tonat -0- -0- 16,150/-0- $94,128/-0-
-----------------------
(1) Based on the $13.66 closing price on December 31, 2002.
Employment Agreements.
The Company and Mr. Paul are parties to an employment agreement
governing his service and compensation as President of the Company. The current
term of Mr. Paul's employment agreement expires on December 31, 2005. On each
December 31, the term of the agreement automatically extends for one additional
year, unless Mr. Paul has
9
given notice of his intention not to renew the term. Under his agreement, Mr.
Paul is entitled to receive a current annual base salary of $90,000, subject to
periodic increase. Mr. Paul is also entitled to receive options to purchase
4,000 shares of Common Stock per year, vesting in monthly installments, having
exercise prices equal to the fair market value of the underlying Common Stock as
of the end of each such calendar month. Mr. Paul may also receive a bonus in the
discretion of the Board of Directors. The compensation under Mr. Paul's
employment agreement is in lieu of all other fees for service on the Boards of
Directors or any committees of the Company and the Bank. In the event of
termination of Mr. Paul's employment for any reason other than for cause (as
defined), Mr. Paul (or his estate), is entitled to receive and amount in cash
equal to 2.99 times his then current base salary, subject to certain limitations
in the event that his termination occurs in connection with a change in control
(as defined) of the Company or the Bank. If Mr. Paul were entitled to receive
the termination benefits as of the date hereof, he would receive approximately
$269,100.
Mr. Ward has an employment agreement with the Company and the Bank
pursuant to which he serves as Executive Vice President of the Company and
President and Chief Executive Officer of the Bank. Mr. Ward's agreement has a
term which expires December 31, 2003. Under his agreement, Mr. Ward is entitled
to a current annual base salary of $220,000, $750,000 of Bank paid life
insurance (at standard rates), a $9,000 annual car allowance, and participation
in all other health, welfare, benefit, stock, option and bonus plans, if any,
generally available to officers or employees of the Bank or the Company. If Mr.
Ward's employment is terminated without cause for reasons other than death,
disability or in connection with a change in control (as defined), he would be
entitled to receive continued payment of base salary through the end of the term
of his agreement, subject to his compliance with certain noncompete provisions
of the employment agreement. In the event of termination of Mr. Ward's
employment, or reduction in his compensation or position or responsibilities
within 120 days before or after a change in control, or the voluntary
termination of employment within the 30 day period following a change in
control, Mr. Ward would be entitled to receive a lump sum payment equal to 2.99
times his base salary, subject to adjustment to avoid adverse tax consequences
resulting from characterization of such amount for tax purposes as a "parachute
payment." If Mr. Ward were entitled to receive the termination benefits as of
the date hereof, he would receive approximately $657,800.
Mr. Murphy has an employment agreement with EagleBank pursuant to which
he serves as Executive Vice President and Chief Operating Officer of the Bank.
Mr. Murphy, pursuant to his agreement, which expires December 31, 2003, is
entitled to a current annual base salary of $182,500, $600,000 of Bank paid life
insurance (at standard rates), a $7,800 annual car allowance, and participation
in all other health, welfare, benefit, stock, option and bonus plans, if any,
generally available to officers or employees of the Bank or the Company. If Mr.
Murphy's employment is terminated without cause for reasons other than death,
disability or in connection with a change in control (as defined), he would be
entitled to receive continued payment of base salary through the end of the term
of his agreement, subject to his compliance with certain noncompete provisions
of the employment agreement. In the event of termination of Mr. Murphy's
employment, or reduction in his compensation or position or responsibilities
within 120 days before or after a change in control, or the voluntary
termination of employment within the 30 day period following a change in
control, Mr. Murphy would be entitled to receive a lump sum payment equal to
2.99 times his base salary, subject to adjustment to avoid adverse tax
consequences resulting from characterization of such amount for tax purposes as
a "parachute payment." If Mr. Murphy were entitled to receive the termination
benefits as of the date hereof, he would receive approximately $545,675.
Ms. Riel has an employment agreement with EagleBank pursuant to which
she serves as Executive Vice President and Chief Operations Officer of the Bank.
Ms. Riel, pursuant to her agreement, which expires December 31, 2003, is
entitled to a current annual base salary of $135,000, a $3,600 car allowance and
participation in all other health, welfare, benefit, stock, option and bonus
plans, if any, generally available to officers or employees of the Bank or the
Company. If Ms. Riel's employment is terminated without cause for reasons other
than death, disability or in connection with a change in control (as defined),
she would be entitled to receive continued payment of base salary through the
end of the term of her agreement, subject to her compliance with certain
noncompete provisions of the employment agreement. In the event of termination
of Ms. Riel's employment, or reduction in her compensation or position or
responsibilities within 120 days before or after a change in control, or the
voluntary termination of employment within the 30 day period following a change
in control, Ms. Riel would be entitled to receive a lump sum payment equal to
2.00 times her base salary, subject to adjustment to avoid adverse tax
consequences resulting from characterization of such amount for tax purposes as
a "parachute payment." If Ms. Riel were entitled to receive the termination
benefits as of the date hereof, she would receive approximately $270,000.
10
Ms. Tonat has an employment agreement with the Bank pursuant to which
she serves as Executive Vice President and Chief Lending Officer of the Bank.
Ms. Tonat, pursuant to her agreement, which expires December 31, 2003, is
entitled to a current annual base salary of $135,000, a $6,000 car allowance,
and participation in all other health, welfare, benefit, stock, option and bonus
plans, if any, generally available to officers or employees of the Bank or the
Company. If Ms. Tonat's employment is terminated without cause for reasons other
than death, disability or in connection with a change in control (as defined),
she would be entitled to receive continued payment of base salary through the
end of the term of her agreement, subject to her compliance with certain
noncompete provisions of the employment agreement. In the event of termination
of Ms. Tonat's employment, or reduction in her compensation or position or
responsibilities within 120 days before or after a change in control, or the
voluntary termination of employment within the 30 day period following a change
in control, Ms. Tonat would be entitled to receive a lump sum payment equal to
2.00 times her base salary, subject to adjustment to avoid adverse tax
consequences resulting from characterization of such amount for tax purposes as
a "parachute payment." If Ms. Tonat were entitled to receive the termination
benefits as of the date hereof, she would receive approximately $270,000.
Employee Benefit Plans. The Bank provides a benefit program which
includes health and dental insurance, life and long term and short term
disability insurance and a 401(k) plan under which the Company makes matching
contributions up to 3% of an employee's salary, for substantially all full time
employees.
Stock Option Plan. The Company maintains a stock option plan, adopted
by shareholders at the 1999 annual meeting, to attract, retain, and motivate key
officers of the Company and the Bank by providing them with a stake in the
success of the Company as measured by the value of its shares.
The 1998 Stock Option Plan (the "Option Plan") is administered by a
committee (the "Committee"), appointed by the Board of Directors of the Company,
consisting of not less than two (2) members of the Board and up to three (3)
additional members, who may be members of the Board of Directors, members of the
Bank's Board of Directors, or non-director officers of the Company or the Bank.
Members of the Committee may be Employee Directors or Non-Employee Directors,
and serve at the pleasure of the Board of Directors. In the absence at any time
of a duly appointed Committee, the Option Plan will be administered by the full
Board of Directors.
The purpose of the Option Plan is to advance the interests of the
Company by providing directors and selected key employees of the Bank, the
Company, and their affiliates with the opportunity to acquire shares of Common
Stock. By encouraging such stock ownership, the Company seeks to attract, retain
and motivate the best available personnel for positions of substantial
responsibility and to provide additional incentive to directors and key
employees of the Company, the Bank and any affiliate to promote the success of
the business as measured by the value of its shares, and to increase the
commonality of interests among directors, key employees and other shareholders.
Under the Option Plan, 579,025 shares of common stock (as adjusted for
the 25% stock split in the form of a dividend paid on March 31, 2000 and the 40%
stock split in the form of a dividend paid on June 15, 2001), may be issued upon
the exercise of "Options" granted under the Option Plan.
Under the Option Plan, the Committee may grant incentive stock options
("ISOs") or non-incentive stock options ("Non-ISOs") to such key employees as
the Committee may designate, and may grants warrants ("Warrants") and other
Non-ISOs to directors of the Company, the Bank and their affiliates. ISOs,
Non-ISOs and Warrants are collectively referred to as "Options." In the event of
any merger, consolidation, recapitalization, reorganization, reclassification,
stock dividend, split-up, combination of shares or similar event in which the
number or kind of shares is changed without receipt or payment of consideration
by the Company, the Committee will adjust both the number and kind of shares of
stock as to which Options may be awarded under the Option Plan, the affected
terms of all outstanding Options, and the aggregate number of shares of Common
Stock remaining available for grant under the Option Plan. If any Option
expires, becomes unexercisable or is forfeited for any reason without having
been exercised or becoming vested in full, the shares of Common Stock subject to
such Options will be available for the grant of additional Options unless the
Option Plan has expired or otherwise been terminated.
The exercise price of Options may not be less than 100% of the fair
market value of the Common Stock on the date of grant. In the case of an
optionee who owns more than 10% of the outstanding Common Stock on the date of
grant, such option price may not be less than 110% of fair market value of the
shares. As required by federal tax laws, to the extent that the aggregate fair
market value (determined when an ISO is granted) of the Common Stock with
respect
11
to which ISOs are exercisable by an optionee for the first time during
any calendar year (under all plans of the Company and of any subsidiary) exceeds
$100,000, the Options will be treated as Non-ISOs, and not as ISOs. A
Participant may, under the 1998 Option Plan, receive additional options
notwithstanding the earlier grant of options and regardless of their having been
exercised, expired, or surrendered.
The Option Plan has a term of 10 years from December 9, 1998, its
effective date, after which date no Options may be granted. The maximum term for
an Option is 10 years from its date of grant, except that the maximum term of an
ISO may not exceed five years if the optionee owns more than 10% of the Common
Stock on the date of grant.
As of December 31, 2002, the Company had Options for the purchase of
437,967 shares of Common Stock issued and outstanding under the Option Plan. At
December 31, 2002, Options to acquire 130,778 shares of Common Stock remained
available for issuance pursuant to the Option Plan.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is certain information regarding persons who are
executive officers of the Company or the Bank and who are not directors of the
Company or the Bank. Except as otherwise indicated, the occupation listed has
been such person's principal occupation for at least the last five years.
Susan G. Riel. Ms. Riel, 53, Executive Vice President - Chief
Operations Officer of the Bank, previously served as Executive Vice President -
Chief Operating Officer of Columbia First Bank, FSB from 1989 until that
institution's acquisition by First Union Bancorp in 1995. Ms. Riel has over 25
years of experience in the commercial banking industry.
Wilmer L. Tinley, Jr. Mr. Tinley, 64, Executive Vice President and
Chief Financial Officer of the Company and the Bank since June 1998, operated
his own tax, accounting and business services company from 1992 through 1998.
Prior to that time, he served as the President and Chief Executive Officer of
Montgomery National Bank (later Allegiance) from its organization in 1987 until
1992.
Martha Foulon-Tonat. Ms. Tonat, 47, Executive Vice President and Chief
Lending Officer of the Bank, served at Allegiance Bank from January 1990 to
December 1997. Her duties included being Senior Vice President and Chief Lending
Officer. Prior to her service at Allegiance Bank Ms. Tonat served at various
commercial banks in the area. She has over 21 years experience in the commercial
banking industry.
REPORT OF THE COMPENSATION COMMITTEE
The Benefits Committee of the Bank serves as the Compensation Committee
of the Company. The Benefits Committee's duty is to review compensation policies
applicable to executive officers of the Bank; to consider the relationship of
corporate performance to that compensation; to approve salary and bonus levels
for senior officers of the Bank; and to administer various incentive plans of
the Bank.
Under the Bank's compensation policies, which are established by the
Benefits Committee, bonus and incentive compensation is paid, and changes in
base compensation are made, based both on the individual executive officer's
performance, and the performance of the entire Bank. In assessing performance
for purposes of compensation decisions, the Committee considers a number of
factors, including but not limited to salaries paid by financial services
companies with characteristics similar to the Bank's to officers with similar
responsibilities, profits during the past year relative to their profit plans,
reports of federal regulatory examinations of the Bank, growth, business plans
for future periods, regulatory capital levels, and changes in shareholder value.
The Committee assesses individual executive performance based upon its
determination of the officer's contributions to the performance of EagleBank and
the accomplishment of the Bank's strategic goals. In assessing performance for
the purposes of establishing base salaries, the members of the Committee do not
make use of a mechanical formula, but instead weigh the factors described above
as they deem appropriate in the circumstances. The 2002 salary levels of the
Bank's executive officers were established consistent with this compensation
policy.
The compensation of Mr. Paul, the President and Chief Executive Officer
of the Company, represents a negotiated amount recommended by the Chairman of
the Company and approved by the Board of Directors and is
12
paid pursuant to a three year renewable contract, subject to annual increase.
Payments are in lieu of fees for service on the Boards of Directors and
committees of the Company and the Bank. Increases in Mr. Paul's base
compensation, from $18,000 in 2000, to $36,000 in 2001, to $90,000 in 2002, have
been made in recognition of the increased profitability of the Company, the
outstanding results of his efforts in the development of the Bank's business and
promotion of the Bank, and the significant time devoted by Mr. Paul on behalf of
the Company and the Bank. A substantial portion of the compensation paid to Mr.
Paul is in the form of options to purchase common stock. Mr. Paul is entitled to
receive options to purchase 4,000 shares annually, in substantially equal
monthly installments, at the fair market value as of month end.
Executive officers have been granted incentive stock options under
Eagle Bancorp's Stock Option Plans. The purposes of the Stock Option Plans are
to attract, retain, and motivate key officers by providing them with a stake in
the success of Eagle Bancorp as measured by the value of its shares. Options are
granted at exercise prices equal to the fair market value of the shares on the
dates of grant. The Stock Option Committee, which consists of the Chairman of
the Board of Eagle Bancorp, the Chairman of the Board of the Bank, and the
President/CEO of the Bank, has the responsibility for granting stock options to
key employees and administering the plans. The Senior Staff of EagleBank
recommends to the Stock Option Committee the recipients and the amounts and
other terms of options to be granted, other than for the CEO, whose grants are
established in his employment agreement. During 2002, incentive stock options
for 4,000 shares were granted to the Chief Executive Officer at exercise prices
ranging from $11.25 to $15.75 per share, in accordance with the terms of his
compensation agreement. The Committee believes that the granting of stock
options is a most appropriate form of long term compensation for executive
officers, since awards of equity encourage ownership in the success of the
Company. Stock option grants are discretionary and are limited by the terms and
conditions of the Company's Stock Option Plan. No grants were made during 2002
to other executive officers.
The Bank also pays discretionary cash bonuses to executive officers of
the Bank. Annual bonuses are accrued as of the end of the fiscal year and are
paid in January. Bonus amounts are determined in the discretion of the Benefits
Committee following consideration of overall Company performance, individual
performance and planned increases in base compensation.
In conclusion, the Benefits Committee believes that executive
compensation should be competitive yet reasonable, and be reflective of overall
performance of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with some of its and the
Company's directors, officers, and employees and their associates. In the past,
substantially all of such transactions have been on the same terms, including
interest rates, maturities and collateral requirements as those prevailing at
the time for comparable transactions with non-affiliated persons and did not
involve more than the normal risk of collectibility or present other unfavorable
features.
The maximum aggregate amount of loans (including lines of credit) to
officers, directors and affiliates of the Company at December 31, 2002 amounted
to $5,271,030, representing approximately 22% of the Company's total
shareholders' equity at December 31, 2002. In the opinion of the Board of
Directors, the terms of these loans are no less favorable to the Bank than terms
of the loans from the Bank to unaffiliated parties. On December 31, 2002,
$4,535,209 of loans were outstanding to individuals who, during 2002, were
officers, directors or affiliates of the Company. At the time each loan was
made, management believed that the loan involved no more than the normal risk of
collectibility and did not present other unfavorable features. None of such
loans were classified as Substandard, Doubtful or Loss. Mr. Lavine is providing
services to the Company in connection with the work-out and collection of an
impaired loan and for which he will receive a percentage of the amounts
recovered, which compensation may be as much as an aggregate of $75,000. In
2002, Mr. Lavine received approximately $7,300 for his services.
13
STOCK PERFORMANCE COMPARISON
The following table compares the cumulative total return on a
hypothetical investment of $100 in the Company's common stock on July 20, 1998,
the date on which the Common Stock was first issued, through December 31, 2002,
with the hypothetical cumulative total return on the Nasdaq Stock Market Index
(U.S. Companies) and the Nasdaq Bank Index for the comparable period.
[OBJECT OMITTED]
Eagle Bancorp Nasdaq Stock Nasdaq Bank
Date Common Stock Market Stock Index
---------------- ----------------- ------------------ ----------------
July 20, 1998 100.00 100.00 100.00
December 31, 1998 103.15 117.11 90.66
December 31, 1999 105.08 217.33 83.43
December 31, 2000 104.76 131.94 95.67
December 31, 2001 177.76 104.17 105.31
December 31, 2002 239.23 71.32 110.07
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Stegman and Company, independent
public accountants, to audit the Company's financial statements for the fiscal
year ending December 31, 2003. Stegman and Company has audited the financial
statements of the Company since its organization. Representatives of Stegman and
Company are expected to be present at the Annual Meeting and available to
respond to appropriate questions. The representatives also will be provided with
an opportunity to make a statement, if they desire.
FEES PAID TO INDEPENDENT ACCOUNTING FIRM
Audit fees.
The aggregate amount of fees billed by Stegman and Company for services
provided in connection with the audit of the Company's financial statements for
the year ended December 31, 2002, and for review of the financial statements
included in the Company' quarterly reports on Form 10-QSB filed during 2002 was
$30,000.
All Other Fees.
The aggregate amount of fees billed for all other professional services
provided by Stegman and Company during the year ended December 31, 2002 was
$8,500. None of such amount was for services relating to the design or
implementation of the Company's financial information systems.
14
FORM 10-K ANNUAL REPORT
The Company will provide, without charge, to any shareholder of record
entitled to vote at the Annual Meeting or any beneficial owner of Common Stock
solicited hereby, a copy of its 2002 Annual Report on Form 10-K filed with the
Securities and Exchange Commission, upon the written request of such
shareholder. Requests should be directed to Michele Midlo, Corporate Secretary,
at the Company's executive offices, 7815 Woodmont Avenue, Bethesda, Maryland
20814.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission, and
to provide the Company with copies of all Forms 3, 4, and 5 they file.
Based solely upon the Company's review of the copies of the forms which
it has received and written representations from the Company's directors,
executive officers and ten percent shareholders, the Company is not aware of any
failure of any such person to comply with the requirements of Section 16(a).
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
to be presented for action by shareholders at the Meeting. If, however, any
other matters not now known are properly brought before the meeting or any
adjournment thereof, the persons named in the accompanying proxy will vote such
proxy in accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS
All proposals or nominations for election as directors by shareholders,
to be presented for consideration at the next annual meeting and to be included
in the Company's proxy materials must be received by the Company no later than
December 13, 2003. Shareholder proposals for nominations for election as
director which shareholders do not wish to include in the Company's proxy
materials must be received by the Company no later than January 12, 2004. In
order to be eligible for consideration at the next annual meeting of
shareholders, the Company must receive notice of shareholder proposals for
business other than the election of directors to be conducted at the annual
meeting which are not proposed to be included in the Company's proxy materials
not less than thirty and not more than ninety days before the date of the annual
meeting, or if less than forty five days notice of the meeting is given, by the
earlier of two days before the meeting and fifteen days after the notice of the
meeting is mailed.
By Order of the Board of Directors
Michele Midlo, Corporate Secretary
April 17, 2003
15
REVOCABLE PROXY
EAGLE BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby makes, constitutes and appoints Arthur H. Blitz
and Worthington H. Talcott, Jr., and each of them (with the power of
substitution), proxies for the undersigned to represent and to vote, as
designated below, all shares of common stock of Eagle Bancorp, Inc. (the
"Company") which the undersigned would be entitled to vote if personally present
at the Company's Annual Meeting of Shareholders to be held on May 20, 2003 and
at any adjournment or postponement thereof.
Election of Directors
|_| FOR all nominees listed below
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
? FOR all nominees, except as noted
Nominees: Leonard L. Abel, Dudley C. Dworken, Eugene F. Ford, Sr.,
Ronald D. Paul, H.L. Ward
(Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
--------------------------------------------------------------------------
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR all of the nominees set forth above. In addition, this proxy will be
voted at the discretion of the proxy holder(s) upon any other matter which may
properly come before the Meeting or any adjournment or postponement of the
Meeting.
Important: Please date and sign your name as addressed, and return this proxy in
the enclosed envelope. When signing as executor, administrator, trustee,
guardian, etc., please give full title as such. If the shareholder is a
corporation, the proxy should be signed in the full corporate name by a duly
authorized officer whose title is stated.
------------------------------------
Signature of Shareholder
------------------------------------
Signature of Shareholder
Dated: , 2003
----------------------
------------------------------------
Email Address
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
[ ] PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING.