SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
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|_| Preliminary Proxy Statement Confidential, for Use of the
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|_| 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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1. Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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|_| Fee paid previously with preliminary materials:
|_| 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 23, 2001
EAGLE BANCORP, INC.
7815 WOODMONT AVENUE
BETHESDA, MARYLAND 20814
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2001
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 23, 2001 at 3:00 p.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;
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 12, 2001
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 18, 2001
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
------------------------------------
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 Wednesday, May 23,
2001 (the "Annual Meeting"), and at any adjournment or postponement thereof, for
the purposes of:
1. electing five (5) 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 18, 2001. A copy of the
Company's Annual Report to Shareholders for the year ended December 31, 2000
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 12, 2001
(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 2,062,474 shares of common stock, par value $.01 per share (the
"Common Stock"), the only class of stock outstanding, and held by approximately
460 shareholders of record and approximately 1,125 total 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 208,437 shares of Common Stock, or 10.11%
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 in time to be
voted at the Annual Meeting will be voted in accordance with the shareholder's
instructions. 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
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 Annual 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;
o 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.
2
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
SECURITIES OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of April 12, 2001
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 74 Director of Bank 93,250(2) 4.45%
Dudley C. Dworken 51 Director of the Company and Bank 39,785(3) 1.92%
Eugene F. Ford, Sr. 71 Director of Company 31,593(4) 1.52%
Ronald D. Paul 45 Vice Chairman, President and 128,859(5) 6.12%
Treasurer of Company; Chairman of
Board of Bank
H.L. Ward 54 Executive Vice President and 22,000(6) 1.06%
Director of Company; President,
Chief Executive Officer and
Director of Bank
Thomas D. Murphy 53 Executive Vice President, Chief 12,250(7) 0.59%
Operating Officer and Director of
Bank
Susan G. Riel 51 Senior Vice President, Senior 9,375(8) 0.45%
Operations Officer of Bank
==================== ===============
All directors and executive officers of
Company as a group (9 persons) 350,794(9) 15.96%
==================== ===============
All directors and executive officers of
Company and Bank as a group (20 persons) 513,193(10) 23.24%
==================== ===============
<FN>
(1) Represents percentage of 2,062,474 shares issued and outstanding as of April 12, 2001, 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 shares with respect to which such person holds options exercisable within 60 days of April
12, 2001, 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 with respect to
which all such persons hold options exercisable within 60 days of April 12, 2001.
(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 8,473 shares of Common
Stock.
(4) Includes options and warrants to purchase 12,843 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 81,250 shares held in trust for Mr. Paul's children. Includes options to purchase 40,625 shares of Common Stock.
Does not include options to acquire 12,500 shares of Common Stock which are subject to vesting in December 2001.
(6) Includes options to purchase 13,125 shares of Common Stock.
(7) Includes options to purchase 11,250 shares of Common Stock.
(8) Includes options to purchase 6,250 shares of Common Stock.
(9) Includes options and warrants to purchase 136,050 shares of Common Stock.
(10) Includes options and warrants to purchase 146,081 shares of Common Stock.
</FN>
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 Annual Meeting, for a one-year period until the 2002
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 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.
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
4
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, including
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, 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 30 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, 59, 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, 41, 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, 48, 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.
Harvey M. Goodman. Mr. Goodman, 45, 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.
Benson Klein. Mr. Klein, 55, 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, 42, 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, 37, 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.
5
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 immediate 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.
Philip N. Margolius. Mr. Margolius, 61, 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, 53, 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 30 years
experience in the commercial banking industry.
Donald R. Rogers. Mr. Rogers, 54, 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, 49, 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, 38, 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.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met twelve (12) times during
2000. 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. 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. Blitz, Klein, Rogers and Talcott. The Audit Committee has
adopted a charter, a copy of which is attached to this Proxy Statement as
Appendix A. Each of the members of the Audit Committee is independent, as
determined under the definition of independence adopted by the National
Association of Securities Dealers. During the 2000 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.
6
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-KSB;
(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-KSB for the year ended December 31, 2000. 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
Arthur H. Blitz
Benson Klein
Donald R. Rogers
Worthington H. Talcott, Jr.
DIRECTORS' COMPENSATION
During 2000, each non-employee director other than Mr. Abel received
options to purchase 31.25 shares 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 2000, options
to purchase an aggregate of 13,125 shares of Common Stock, at exercise prices
ranging from $7.75 to $8.00 per share, were issued to non-employee directors of
the Company and the Bank.
During 2000, Mr. Abel, the Chairman of the Board of Directors of the
Company received an annual payment of $24,000 in lieu of regular director fees
from the Company and the Bank. In January 2001, the Company and Mr. Abel entered
into a consulting agreement governing his service and compensation as Chairman.
The initial term of Mr. Abel's consulting agreement expires on December 31,
2003. 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 of $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.
7
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 officers of the Bank) who received total salary and
bonuses of $100,000 or more during the fiscal year ended December 31, 2000.
SUMMARY COMPENSATION TABLE
Long-term
Compensation
Annual Compensation Awards
---------------------------------------------- ------------------- ------------------
Securities All Other
Name and Principal Position Year Salary Bonus Underlying Options Compensation($)
- ---------------------------------- -------------- --------------- --------------- ------------------- ------------------
Ronald D. Paul, President 2000 $18,000 $0 3,125(1) $0
1999 $36,000(2) $0 -0- $0
1998 $18,000(3) $0 50,000(1)(4) $0
H.L. Ward, President and Chief 2000 $177,500 $30,000 -0- $15,025(5)
Executive Officer of the Bank,
Executive Vice President of the 1999 $165,784 $16,000 3,750(1) $14,700(6)
Company
1998 $149,212 $16,000 9,375(1) $10,900(7)
Thomas D. Murphy, Executive Vice 2000 $145,000 $21,111 -0- $12,840(8)
President- Chief Operating
Officer of the Bank 1999 $132,956 $19,333 3,750(1) $13,463(9)
1998 $122,151 $11,555 7,500(1) $9,126(10)
Susan G. Riel, Senior Vice 2000 $100,000 $8,500 2,500 $2,880(11)
President - Senior Operations
Officer of Bank 1999 $80,000 $6,000 -0- $2,400(11)
1998 $80,000 $4,000 3,750(1) $300(11)
<FN>
(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 director fees.
(3) Includes $16,500 of payments in lieu of director fees.
(4) These options vest over a period of four years.
(5) Includes $7,200 car allowance, $2,275 insurance premiums and $5,325 401(k) matching contribution.
(6) Includes $7,200 car allowance, $2,500 insurance premiums, and $5,000 401(k) matching contribution.
(7) Includes $7,200 car allowance, $2,500 insurance premiums, and $1,200 401(k) matching contribution.
(8) Includes $6,000 car allowance, $2,190 insurance premiums, and $4,650 401(k) matching contribution.
(9) Includes $6,000 car allowance, $2,151 insurance premiums, and $5,312 401(k) matching contribution.
(10) Includes $6,000 car allowance, $2,151 insurance premiums, $975 401(k) matching contribution.
(11) Represents 401(k) matching contributions.
</FN>
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 Year Share Expiration Date
- -------------------- ------------------------- ----------------------- ---------------------- ------------------
Ronald D. Paul 3,125 28.09% Varied(1) Varied(1)
H.L. Ward -0- N/A N/A/ N/A
Thomas D. Murphy -0- N/A N/A N/A
Susan G. Riel 2,500 22.47% $8.25 12/08
- --------------------
<FN>
(1) Mr. Paul's options are granted at the end of each calendar quarter. During 2000, Mr. Paul received options to purchase
781.25 shares at an exercise price of $7.75 per share and options to purchase 2,343.75 shares at an exercise price of $8.00
per share
</FN>
8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options at December 31, In-The-Money Options at
Name Shares Acquired on Value Realized 2000 December 31, 2000
Exercise Exercisable/Unexercisable Exercisable/Unexercisable(1)
- -------------------- ------------------------- --------------- --------------------------- ----------------------------
Ronald D. Paul -0- -0- 40,625/12,500 $40,820/$12,500
H.L. Ward -0- -0- 13,125/0 $13,125/$0
Thomas D. Murphy -0- -0- 11,250/0 $11,250/$0
Susan G. Riel -0- -0- 6,250/0 $5,625/$0
- --------------------
<FN>
(1) Based on the average of the inside bid and inside ask price on December 29, 2000.
</FN>
Employment Agreements.
During 2000, Mr. Paul, President of the Company and Chairman of the
Board of Directors of the Bank, received an annual salary of $18,000 from the
Company in lieu of regular director fees from the Company. In 2000, Mr. Paul
also received options to purchase 781.25 options per quarter in lieu of regular
directors fees from the Bank. In January 2001, the Company and Mr. Paul entered
into an employment agreement governing his service and compensation as President
of the Company. The initial term of Mr. Paul's employment agreement expires on
December 31, 2003. On each December 31, the term of the agreement automatically
extends for one additional year, unless Mr. Paul has given notice of his
intention not to renew the term. Under his agreement, Mr. Paul is entitled to
receive an annual base salary of $50,000, subject to periodic increase. Mr. Paul
is also entitled to receive options to purchase shares of Common Stock having an
aggregate exercise price, determined at fair market value on the date of grant,
of $25,000 per year, payable quarterly. 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 plus the dollar value of his
then current option compensation, 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.
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 $195,250, $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."
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 $160,000, $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
9
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."
Ms. Riel has an employment agreement with EagleBank pursuant to which
she serves as Senior Vice President and Senior Operating Officer of the Bank. Ms
Riel, pursuant to her agreement, which expires December 31, 2003, is entitled to
a current annual base salary of $115,000 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."
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.
10
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 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, 2000, the Company had Options for the purchase of
238,441 shares of Common Stock issued and outstanding under the Option Plan.
Subsequent to December 31, 2000, Options to purchase 735 shares of Common Stock,
at an exercise price of $8.50 per share, were granted to Mr. Paul, and options
to purchase an aggregate of 2,471 shares, at an exercise price of $8.50 per
share, were granted to other non-employee directors of the Company and the Bank.
As of the date hereof, options to acquire 67,728 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 4. For information
for Mr. Murphy, please see "Election of Directors of the Bank" at page 5. 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, 51, 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, 62, 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, 45, 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 at December 31, 2000 amounted
to $3,912,380, representing approximately 27.8% of the Company's total
shareholders' equity at December 31, 2000. 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, 2000,
$2,111,005 of loans were outstanding to individuals who, during 2000, were
officers, directors or affiliates of the
11
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.
RATIFICATION OF 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, 2001. 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, 2000, and for review of the financial statements
included in the Company' quarterly reports on Form 10-QSB filed during 2000 was
$29,100.
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, 2000 was
$4,000. None of such amount was for services relating to the design or
implementation of the Company's financial information systems.
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 2000 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.
12
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 19, 2001. 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 17, 2002. 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 18, 2001
13
APPENDIX A
AUDIT COMMITTEE CHARTER
GOALS AND OBJECTIVES
The primary function of the audit committee is to assist the board of directors
in fulfilling its oversight responsibilities by reviewing the financial
information that will be provided to the shareholders and others, the systems of
internal controls management and the board of directors have established and all
audit processes.
GENERAL RESPONSIBILITIES
>> The audit committee provides open avenues of communication among the
internal auditor, the independent accountant and the board of
directors.
>> The audit committee must report committee actions to the full board of
directors and may make appropriate recommendations.
>> The audit committee has the power to conduct or authorize
investigations into matters within the committee's scope of
responsibilities. The committee is authorized to retain independent
counsel, accountants or others it needs to assist in an investigation.
>> The committee will meet at least four times each year, or more
frequently if the committee determines that it is advisable. The audit
committee chairman has the power to call a committee meeting whenever
he thinks there is a need. An audit committee member should not vote on
any matter in which he or she is not independent. The committee may ask
members of management or others to attend the meeting and is authorized
to receive all pertinent information from management.
>> The committee will do whatever else the law, the bank's charter or
bylaws or the board of directors requires.
MEMBERSHIP
>> The committee shall consist of three or more directors, appointed by
the Board on an annual basis. At least a majority of the directors
appointed shall be independent and free from any relationship that, in
the opinion of the Board, would interfere with the exercise of his or
her independent judgment as a member of the committee. In determining
the independence of members of the committee, the Board shall consider,
at a minimum, the then current standards of independence established by
The Nasdaq Stock Market and the Federal Deposit Insurance Corporation.
All committee members shall have (1) the ability to read and understand
fundamental financial statements, including a Company's balance sheet,
income statement, cash flow statement, and key performance indicators:
(2) the ability to understand key business and financial risks, related
controls and control processes. At least one member of the committee
shall have accounting or related financial management expertise. The
committee members shall appoint the committee chairperson.
RESPONSIBILITIES OF MANAGEMENT AND INDEPENDENT AUDITORS.
>> While the committee has the review, oversight, and reporting
responsibilities set forth in this charter, it does not have
responsibility for planning or conducting audits or for determining
that the financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. Those are
responsibilities of management and the independent auditors, rather
than the committee. The committee also is not responsible for ensuring
compliance with laws or regulations, or for resolving disagreements, if
any, between management and the independent auditor.
Responsibilities for engaging independent accountants and appointing the
internal auditor
>> The audit committee will recommend the selection of the independent
accountants for company audits. The committee's selection is subject to
approval by the full board of directors. The audit committee also will
review
A-1
and set any fees paid to the independent accountants and review and
approve dismissal of the independent accountants.
>> The audit committee will review and have veto power over the
appointment, replacement, reassignment or dismissal of the internal
auditor.
>> The audit committee will confirm and assure the independence of the
internal auditor and the independent accountant, including a review of
management consulting services provided by the independent accountant
and the fees paid for them. On an annual basis, the committee shall
receive from the independent accountants the written disclosures and
letter required to be provided, and review and discuss with the
accountants all significant relationships the accountants have with the
Company to determine the accountants' independence.
>> Reviewing the provision of non-audit services by the independent
auditors, and considering whether the provision of such services is
compatible with the auditor's independence.
>> The audit committee will consider, in consultation with the independent
accountant and the internal auditor, the audit scope and procedural
plans made by the internal auditor and the independent accountant.
>> The audit committee will listen to management and the primary
independent auditor if either thinks there might be a need to engage
additional auditors. The audit committee will decide whether to engage
an additional firm and, if so, which one.
>> The audit committee will review and discuss with the internal auditor
and the independent accountant their plans to coordinate the internal
and external audits. The purpose of coordinating these efforts is to
assure completeness of coverage, reduce redundancy and use audit
resources effectively.
RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT AND
THE REVIEW OF QUARTERLY AND ANNUAL FINANCIAL STATEMENTS
>> The audit committee will ascertain that the independent accountant
views the Bank as its client, that it will be available to the full
board of directors at least annually and that it will provide the
committee with a timely analysis of significant financial reporting
issues.
>> The audit committee will ask management, the internal auditor and the
independent accountant about significant risks and exposures and will
assess management's steps to minimize them.
>> The audit committee will review the following with the independent
accountant and the internal auditor:
a. The adequacy of the bank's internal controls, including
computerized information system controls and security.
b. Any significant findings and recommendations made by the
independent accountant or internal auditing, together with
management's responses to them.
>> Shortly after the annual audit is completed, the audit committee will
review the following with management and the independent accountant:
a. The bank's annual financial statements and related footnotes.
b. The independent accountant's audit of and report on the
financial statements.
c. The auditor's qualitative judgments about the appropriateness,
not just the acceptability, of accounting principles and
financial disclosures and how aggressive (or conservative) the
accounting principles and underlying estimates are.
d. Any serious difficulties or disputes with management
encountered during the course of the audit.
A-2
e. Anything else about the audit procedures or findings that GAAS
requires the auditors to discuss with the committee.
>> The audit committee will consider and review with management and the
internal auditor:
a. Any significant findings during the year and management's
responses to them .
b. Any difficulties the internal auditor encountered while
conducting audits, including any restrictions on the scope of
their work or access to required information.
c. Any changes to the planned scope of management's internal
audit plan that the committee thinks advisable.
d. The internal auditing department's budget and staffing.
e. The internal auditing department's charter.
>> The audit committee will review annual filings with the SEC and other
published documents containing the bank's financial statements and will
consider whether the information in the filings is consistent with the
information in the financial statements.
>> The audit committee will determine that the quarterly financial
statements have been reviewed by the independent accountants in
accordance with SAS 71 before those interim statements are released to
the public or filed with the SEC.
Prepare a report for inclusion in the proxy statement that describes
the committee's composition and responsibilities, and how they were
discharged, including a statement regarding their review and discussion
of the annual financial statements, review of the independence of the
independent accountants, and discussions with the independent
accountants, and a statement that based on the foregoing, the committee
recommended that the annual financial statements be included in the
Company's annual report on Form10-K.
PERIODIC RESPONSIBILITIES
>> Review, at least annually, and update the committee's charter as
appropriate.
>> Review policies and procedures covering officers' expense accounts and
perquisites, including their use of corporate assets, and consider the
results of any review of those areas by the internal auditor or the
independent accountant.
>> Review legal and regulatory matters that may have a material effect on
the organization's financial statements, compliance policies and
programs and reports from regulators.
>> Meet with the internal auditor, the independent accountant and
management in separate executive sessions to discuss any matters the
committee or these groups believe should be discussed privately with
the audit committee.
A-3
REVOCABLE PROXY
EAGLE BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby makes, constitutes and appoints David H. Lavine
and Bruce H. Lee, 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 23, 2001 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.,
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: _________________, 2001
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.