SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] 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)) [X] [ ] 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) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1. Title of each class of securities to which transaction applies: ----------------------------------------------------------------------- 2. Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------- 3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------------------------------------------- 4. Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------- 5. Total Fee Paid: ----------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials: [ ] 1 Check box if any part of the fee is offset as provided by Exchange Act Rule 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: 2. Form, Schedule or Registration Statement No.: 3 Filing Party: 4. Date Filed: EAGLE BANCORP, INC. NOTICE OF ANNUAL MEETING AND PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS MAY 24, 2000 EAGLE BANCORP, INC. 7815 WOODMONT AVENUE BETHESDA, MARYLAND 20814 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 24, 2000 TO THE SHAREHOLDERS OF EAGLE BANCORP, INC.: The Annual Meeting of Shareholders of Eagle Bancorp, Inc., a Maryland corporation (the "Company"), will be held at the Bethesda Marriott Hotel, 5151 Pooks Hill Road, Bethesda, Maryland 20814, on Wednesday, May 24, 2000 at 3:00 p.m. for the following purposes: 1. To elect six (6) directors to serve until the next Annual Meeting of Shareholders and until their successors are duly elected and qualified; 2. To ratify the appointment of Stegman and Company as the auditors for the Company; and 3. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. Shareholders of record as of the close of business on April 14, 2000 are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. By Order of the Board of Directors Michele Midlo, Corporate Secretary April 19, 2000 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. EAGLE BANCORP, INC. 7815 WOODMONT AVENUE BETHESDA, MARYLAND 20814 ----------------------------- ANNUAL MEETING OF SHAREHOLDERS PROXY STATEMENT ----------------------------- INTRODUCTION This Proxy Statement is furnished 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 3:00 p.m. on Friday, May 24, 2000 (the "Annual Meeting"), and at any adjournment or postponement thereof, for the purposes of (1) electing six (6) directors to serve until the next Annual Meeting of Shareholders and until their successors are duly elected and qualified; (2) ratifying the appointment of Stegman and Company as the Company's auditors; and (3) transacting such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. The Annual Meeting will be held at the Bethesda Marriott Hotel, 5151 Pooks Hill Road, Bethesda, Maryland 20814. This Proxy Statement and the accompanying form of proxy are being sent to shareholders of the Company on or about April 19, 2000. A copy of the Company's Annual Report to Shareholders for the year ended December 31, 1999 also accompanies this Proxy Statement. The cost of this proxy solicitation is being borne 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 be compensated for any such 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 14, 2000 (the "Record Date"), will be entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. On that date, the Company had outstanding 2,062,500 shares of common stock, par value $.01 per share (the "Common Stock"), the only class of stock outstanding, and held by approximately 490 shareholders of record and 750 beneficial shareholders. 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. Nominees receiving a plurality of the votes cast at the Annual Meeting in the election of directors will be elected as director, in the order of the number of votes received. 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 Annual Meeting. Members of the Board of Directors of the Company having the power to vote or direct the voting of 270,937 (13.14%) of the outstanding shares of Common Stock have indicated their intention to vote "FOR" the election of all of the nominees for election as director and "FOR" the ratification of Stegman and Company as the Company's auditors. PROXIES Shares represented by proxies received by the Company will be voted in accordance with the instructions contained therein. Shares represented by proxies for which no instruction is given will be voted FOR the election of the directors specified herein, FOR the ratification of Stegman and Company as the Company's auditors, and in the discretion of the holders of the proxies on all other matters properly brought before the meeting and any adjournment or postponement thereof. The judges of election appointed by the Board of Directors for the Annual Meeting will determine the presence of a quorum and will tabulate the votes cast at the Annual 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 as to 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 such 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 prior to its being voted at the Annual Meeting by granting a later proxy with respect to the same shares, 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 by voting in person at the Annual Meeting. Attendance at the Annual 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. 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, 2000 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) - ---------------------------------- ------- ----------------------------------- --------------------- ------------------ Chairman of Board of Company; Leonard L. Abel 73 Director of Bank 93,250(2) 4.45% Dudley C. Dworken 50 Director of the Company and Bank 37,780(3) 1.83% Eugene F. Ford, Sr. (3) 70 Director of Company 31,312(4) 1.51% William S. Korer 80 Director of Company and Bank 87,781(5) 4.21% Ronald D. Paul 44 Vice Chairman, President and 113,281(6) 5.43% Treasurer of Company; Chairman of Board of Bank H.L. Ward 53 Executive Vice President and Director 22,000(7) 1.06% of Company; President, Chief Executive Officer and Director of Bank Thomas D. Murphy 52 Executive Vice President, Chief Operating 12,250(8) 0.59% Officer and Director of Bank All directors and executive officers of Company as a group (10 persons) 414,211(9) 18.83% ===================== =============== All directors and executive officers of Company and Bank as a group (20 persons) 611,800(10) 27.30% ===================== =============== (1) Represents percentage of 2,062,500 shares issued and outstanding as of April 1, 2000, except with respect to individuals holding options exercisable within 60 days of said date, in which event, represents percentage of shares issued and outstanding plus the number of the number of shares with respect to which such person holds options exercisable within 60 days of April 1, 2000, 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 the number of shares with respect to which all such persons hold options exercisable within 60 days of April 1, 2000. (2) Includes warrants to purchase 31,250 shares of Common Stock. (3) Includes 31,250 shares held in a trust of which Mr. Dworken is beneficiary and options to purchase 6,468 shares of Common Stock (footnotes continued on following page) 2 (footnotes continued from prior page) (4) Includes warrants to purchase 12,562 shares of Common Stock. Eugene F. Ford, Sr. is the father of Eugene F. Ford, Jr., a director of the Bank. Beneficial ownership for Mr. Ford, Sr. does not include beneficial ownership by Mr. Ford, Jr. (5) Includes warrants to purchase 25,281 shares of Common Stock. (6) Includes 81,250 shares held in trust for Mr. Paul's children. Includes options to purchase 25,781 shares of Common Stock. Does not include options to acquire 25,000 shares of Common Stock which are subject to vesting in equal installments in December 2000 and 2001. (7) Includes warrants to purchase 13,125 shares of Common Stock. (8) Includes warrants to purchase 11,250 shares of Common Stock. (9) Includes options and warrants to purchase 136,967 shares of Common Stock. (10) Includes options and warrants to purchase 178,650 shares of common stock. ELECTION OF DIRECTORS The size of the Company's Board of Directors is currently set at six (6) directors. The Board of Directors has nominated six (6) persons for election as director at the Annual Meeting, for a one-year period until the 2001 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 proxy holders named therein. 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 1994, 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. 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 April 1997, Curtis Chevrolet filed a petition under Section 11 of the Bankruptcy Code as a protection against potential liability resulting from a jury verdict in excess of the damages sought, against that company. Curtis Chevrolet emerged from bankruptcy protection in January 2000. In November 1999, 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 3 10b-5 under that act. The order was issued in connection with an investigation of him in respect of trading in the shares of Allegiance Banc Corporation by his uncle 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. William A. Koier. Mr. Koier has served as a director of the Company since its organization. Mr. Koier is a private investor involved in the ownership, development and management of real estate properties, as well as investment in debt and equity instruments. Mr. Koier served as a director of Allegiance 1987 until October 1997, and Allegiance Banc Corporation from 1987 until its acquisition. He also served as a director of Central National Bank of Maryland until its acquisition by Citizens Bank of Maryland (now Sun Trust Banks, Inc.). 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 is engaged in the business of real estate development and management activities. Mr. Paul is also active in private investments. Mr. Paul was a director of Allegiance from 1990 until September 1997, and a director of Allegiance Banc Corporation from 1990 until its acquisition, 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. 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, 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 29 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. Koier, 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, 58, 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, 40, 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. Eugene F. Ford, Jr. Mr. Ford, 47, engages in the business of property management and apartment development. He has been president of Van Buren Corporation, an apartment developer, since 1984, Chairman of Edgewood Management Company, a property management company, and president of Mid-City Financial Corporation, an apartment developer, since 1995. From 1992 to 1994, Mr. Ford was a physical therapist with George Washington University Ambulatory Care. 4 Harvey M. Goodman. Mr. Goodman, 44, has been with The Goodman, Gable, Gould Company, the Maryland based public insurance adjusting firm where he serves as President, since 1977. He is the current President of the National Association of Public Insurance Adjusters, and is a director and principal of Adjusters International, a national public adjusting firm. Benson Klein. Mr. Klein, 54, 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 for the Washington, D.C./Montgomery County area. David H. Lavine. Mr. Lavine, 41, has been President and Chief Executive Officer of The American Bagel Company, Inc., franchisor of the Chesapeake Bagel Bakery chain, and its related retail store operator since March 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 development, private investment 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. Thomas D. Murphy. Mr. Murphy, 52, 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 29 years experience in the commercial banking industry. Jan R. Phillips. Ms. Phillips, 53, is a Founding Director of Phillips International, Inc. (publishing company) and currently serves as Corporate Secretary. Ms. Phillips is a graduate of the Abbott-Northwestern Hospital School of nursing in Minneapolis. She is a past President of the Woman's Club of Potomac, Inc. and has served on the Board of Directors of the Montgomery County Federation of Women's Clubs, Inc. and on the Board of Governors of Over 60 Counseling and Employment Service. Ms. Phillips also is a member of the Potomac Women's Republican Club and former President of the Potomac Commons Garden Club. Ms. Phillips served for seven years on the Parents Council of Georgetown University. Ms. Phillips is a member of the Handbell Choir at Emmanuel Lutheran Church in Bethesda, Maryland. Donald R. Rogers. Mr. Rogers, 53, 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, 48, an attorney engaged in private practice since 1979, has been a partner in Shulman, Rodgers, 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, Meyers 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, 37, 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. 5 COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS The Board of Directors of the Company met twelve (12) times during 1999. 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 1999 fiscal year or any portion thereof, except for Mr. Koier, who was out of the country. 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 recommends the annual appointment of such auditors. The Audit Committee is currently comprised of Mr. Lavine, the Chairman, and Messrs. Abel, Paul, Blitz and Ford, Jr. Mr. Murphy and Ms. Riel also serve on the committee as non-voting members. During the 1999 fiscal year, the Audit Committee met four (4) times. The Board of Directors does not have a standing Nominating Committee or Compensation Committee, the functions of which are performed by the full Board of Directors. DIRECTORS' COMPENSATION Director Compensation. Mr. Paul, President of the Company and Chairman of the Board of Directors of the Bank, is entitled to receive an annual salary of $18,000 from the Company in lieu of regular director fees from the Company. In 1999, Mr. Paul also received an annual payment of $18,000 in lieu of regular director fees from the Bank. Beginning in 2000, Mr. Paul will instead receive options to purchase 781.25 (as adjusted for the 25% stock split paid on March 31, 2000) options per quarter in lieu of regular directors fees from the Bank. Mr. Abel, the Chairman of the Board of Directors of the Company is entitled to receive an annual payment of $24,000 in lieu of regular director fees from the Company and the Bank. In 1999, each other director of the Company received a fee of $200 for each meeting of the Board of Directors attended. Directors of the Company did not receive any fee for committee meetings. In 1999, Bank directors who are not employees received fees of $200 per meeting of the Board or its committees. Beginning in 2000, each other director will receive options to purchase 31.25 shares (as adjusted for the 25% stock split paid on March 31, 2000) 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. All options granted for meeting attendance or in lieu of regular directors fees are issued under the Company's Option Plan, have a term of ten years and an exercise price equal to the fair market value of the Common Stock at the end of the quarter with respect to which they are granted. Directors of both the Company and the Bank are eligible to receive grants of warrants or options under the Company's Option Plan. In December 1999, Mr. Dworken was granted options to purchase 6,250 shares of Common Stock (as adjusted) and the non-employee directors of the Bank were granted options to purchase an aggregate of 40,000 shares of Common Stock (as adjusted). EXECUTIVE COMPENSATION The following table sets forth a comprehensive overview of the compensation for Mr. Paul, the President of the Company, and executive officers of the Company (including offices of the Bank) who received total salary and bonuses of $100,000 or more during the fiscal year ended December 31, 1999. 6 SUMMARY COMPENSATION TABLE Long-term Annual Compensation Compensation Awards ---------------------------------------------- --------------------- Securities Underlying All Other Name and Principal Position Year Salary Bonus Options(1) Compensation($) Ronald D. Paul, President 1999 $36,000(2) $0 0 $0 1998 $18,000(3) $0 50,000(4) $0 1997 $0 $0 $0 $0 H.L. Ward, President and Chief Executive Officer of the Bank, Executive Vice President of the Company 1999 $165,784 $16,000 3,750 $14,700(5) 1998 $149,212 $16,000 9,375 $10,900(6) 1997 $ 26,196 $0 0 $1,200(7) Thomas D. Murphy, Executive Vice President- Chief Operating Officer of the Bank 1999 $132,956 $19,333 3,750 $13,463(8) 1998 $122,151 $11,555 7,500 $9,126(9) 1997 $23,615 $0 0 $1,000(7) (1) As adjusted to reflect the 25% stock split in the form of a dividend paid on March 31, 2000. (2) Represents payments in lieu of directors fees. (3) Includes $16,500 of payments in lieu of director fees. (4) Mr. Paul's options vest over a period of four years. (5) Includes $7,200 car allowance, $2,500 insurance premiums, and $5,000 401(k) matching contribution. (6) Includes $7,200 car allowance, $2,500 insurance premiums, and $1,200 401(k) matching contribution. (7) Represents car allowance. (8) Includes $6,000 car allowance, $2,151 insurance premiums, and $5,312 401(k) matching contribution. (9) Includes $6,000 car allowance, $2,151 insurance premiums, $975 401(k) matching contribution. OPTION GRANTS IN LAST FISCAL YEAR Percent of Total Number of Securities Options Granted to Underlying Options Employees in Fiscal Exercise Price Per Name Granted(1) Year Share(1) Expiration Date - -------------------- ------------------------- ----------------------- ---------------------- ------------------ Ronald D. Paul 0 N/A N/A N/A H.L. Ward 3,750 50% $8.00 December 15, 2009 Thomas D. Murphy 3,750 50% $8.00 December 15, 2009 - -------------------- (1) Adjusted to reflect the 25% stock split in the form of a dividend paid on March 31, 2000 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR AND OPTION VALUES Number of Securities Underlying Unexercised Value of Unexercised Options at December 31, In-The-Money Options at Shares Acquired on 1999 December 31, 1999 (1)(2) Name Exercise Value Realized Exercisable/Unexercisable(1)Exercisable/Unexercisable - -------------------- ------------------------- --------------- --------------------------- ------------------------- Ronald D. Paul 0 $0 25,000/25,000 $25,000/$25,000 H.L. Ward 0 $0 13,125/0 $13,125/$0 Thomas D. Murphy 0 $0 11,250/0 $11,250/$0 - -------------------- (1) Adjusted to reflect the 25% stock split in the form of a dividend paid on March 31, 2000 (2) Based on the average of the inside bid and inside ask price on December 31, 1999 Employment Agreements. Mr. Ward and Mr. Murphy each has an employment agreement with the Company pursuant to which they serve as President and Chief Executive Officer of the Bank and Executive Vice 7 President and Chief Operating Officer of the Bank, respectively. Mr. Ward, pursuant to his agreement, which commenced as of October 1997 and runs until December 31, 2000, is entitled to a current annual base salary of $177,500. He is also entitled to a bonus, payable over three years, in the amount of $30,000, $750,000 of Bank paid life insurance (at standard rates), a $7,200 annual car allowance, warrants, exercisable for a 5 year term to purchase, at $10.00 per share, 7,500 shares of Common Stock ("Warrants"), 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. Mr. Murphy, pursuant to his agreement, which commenced as of October 1997 and runs until October 20, 2000, is entitled to a current annual base salary of $145,000. He is also entitled to a bonus, payable over three years, in the amount of $30,000, $600,000 of Bank paid life insurance (at standard rates), a $6,000 annual car allowance, and Warrants to purchase 6,000 shares of Common Stock, 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. 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, 309,375 shares of common stock (as adjusted for the 25% stock split in the form of a dividend paid on March 31, 2000), are available for issuance pursuant to 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, the option price of an ISO 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 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, 8 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, 1999, the Company had Options for the purchase of 218,750 shares of Common Stock issued and outstanding under the Option Plan (as adjusted for the 25% stock split). Subsequent to December 31, 1999, Options to purchase 781.25 shares of Common Stock, at an exercise price of $8.00 per share, were granted to Mr. Paul, and Options to purchase an aggregate of 2,250 shares of Common Stock, at an exercise price of $8.00 per share, were issued to non-employee directors of the Company and Bank. As of the date hereof, options to acquire 87,593.75 shares of Common Stock are subject to 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. For information regarding Mr. Ward, please see "Nominees For Election as Director" at page 3. For information for Mr. Murphy, please see "Election of Directors of the Bank" at page 4. 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, 50, Senior Vice President - Senior 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 23 years of experience in the commercial banking industry. Wilmer L. Tinley, Jr. Mr. Tinley, 61, Senior 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. Foulon-Tonat, 44, Senior 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. Foulon-Tonat served at various commercial banks in the area. She has over 19 years experience in the commercial banking industry. 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 during 1999 amounted to $3,127,893, representing approximately 23% of the Company's total shareholders' equity at December 31, 1999. 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, 1999, $1,656,032 of loans were outstanding to individuals who, during 1999, 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. During the organization of the Company and the Bank, certain of the organizing directors of the Company made advances to the Company in the aggregate amount of $475,000, which were repaid, with interest at the prime rate (an aggregate of $5,010), from the proceeds of the offering. A portion of the loans were converted to 9 subscriptions for Common Stock in the offering. No interest was paid on these funds. Certain directors also guaranteed a bank loan to the Company in the aggregate amount of $350,000. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors has selected Stegman & Company, independent public accountants, to audit the Company's financial statements for the fiscal year ending December 31, 2000. Stegman & Company has audited the financial statements of the Company since its organization. Representatives of Stegman & 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. FORM 10-KSB 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 1999 Annual Report on Form 10-KSB 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 Annual 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 21, 2000. By Order of the Board of Directors Michele Midlo, Corporate Secretary April 19, 2000 10 FRONT 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 Jan R. Phillips, 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 24, 2000 and at any adjournment or postponement thereof. ELECTION OF DIRECTORS |_| FOR all nominees listed below (except as noted to the contrary below) |_| WITHHOLD AUTHORITY to vote for all nominees listed below Nominees: Leonard L. Abel, Dudley C. Dworken, Eugene F. Ford, Sr., William A. Koier, 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.) RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS |_| FOR |_| AGAINST |_| ABSTAIN the proposal to ratify the appointment of Stegman and Company. 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 and FOR the proposal to ratify Stegman and Company as the Company's auditors. 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 Annual Meeting or any adjournment or postponement thereof. BACK 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: , 2000 ------------------------------------- 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.