UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 1, 2017
Eagle Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Maryland |
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0-25923 |
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52-2061461 |
(State or other jurisdiction |
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(Commission file number) |
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(IRS Employer |
of incorporation) |
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Number) |
7830 Old Georgetown Road, Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: 301.986.1800
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 8.01. Other Events.
On December 1, 2017 and December 3, 2017, Eagle Bancorp, Inc. (the Company), issued the press releases attached as Exhibit 99.1 and 99.2, respectively, to this report. On December 4, 2017, EagleBank, the wholly owned subsidiary of the Company, released the letter to customers included as exhibit 99.3.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. |
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Description |
99.1 |
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99.2 |
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99.3 |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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EAGLE BANCORP, INC. | |
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By: |
/s/ Ronald D. Paul |
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Ronald D. Paul, President, Chief Executive Officer |
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Dated: December 4, 2017 |
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For Immediate Release
December 1, 2017
Eagle Bancorp, Inc. Denies Allegations In Deceptive And Misleading Report
BETHESDA, MD. Early this morning, Aurelius Valuean anonymous online firm that supports short-sellerspublished a deceptive and materially misleading piece about Eagle Bancorp (Eagle). Eagle categorically rejects the assertions and implications in the piece.
Based on a 36 percent increase in short positions month over month leading up to the release of the article, it appears that the goal of this piece was to manipulate and depress Eagles stock price. The piece, which was issued without contacting Eagle for comment, is filled with demonstrable falsehoods and material omissions. For example:
· Selective Quoting of Baseless Allegations from Meritless Lawsuits. The internet piece relies on unsubstantiated claims in two pending lawsuits. Aurelius fails to disclose that Eagle is not even a party to one of them and thus has had no reason to address the allegations. Eagle has moved to dismiss the other lawsuit in its entirety. It is utterly frivolous. While it may further Aurelius financial purpose to selectively quote from these lawsuits and omit material information that investors would surely consider important, such behavior is both disturbing and misleading.
· All Loans Referenced in the Piece Fully Meet Legal Requirements. The only credit issued by Eagle to the identified executive was a line of credit in case of an overdraft; the line never was used and has not been funded. Eagle takes seriously its obligation to comply with all applicable laws and regulations, including Regulation O. Its compliance is regularly examined internally, and is also examined by agency regulators. Contrary to the misrepresentations by Aurelius, the loans identified in the piece were not made to the identified executive, and, in any event, were approved and disclosed (where required) in compliance with Regulation O.
EagleBankCorp.com 301.986.1800
MD | VA | DC
About Eagle Bancorp, Inc. and EagleBank Eagle Bancorp, Inc. is the holding company for EagleBank, which commenced operations in 1998. EagleBank is headquartered in Bethesda, Maryland, and conducts full service commercial banking through 21 offices, located in Montgomery County, Maryland, Washington, D.C. and Northern Virginia. EagleBank focuses on building relationships with businesses, professionals and individuals in its marketplace. |
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· Mischaracterization of Stock Transactions. Contrary to the incorrect assertions in the piece, the referenced stock sales by an Eagle executive constituted only a small fraction of his holdings. The majority of the proceeds of those sales was used to further charitable purposes. There have been no non-routine stock sales by Eagle executive management.
· Falsehoods About Distressed Loans. The pieces claim that two alleged related party loans are distressed is false. Those loans are current and performing.
These are but a few examples of the blatant mischaracterizations, falsehoods, and misleading statements in the Aurelius Value report. Eagle categorically rejects the assertions and implications in the piece.
Eagle was founded on, and remains strongly committed to, abiding by the law and the highest professional and ethical standards.
For Immediate Release
December 3, 2017
Eagle Bancorp Rebuts Claims of Internal Control Weaknesses and Alerts Shareholders and Customers to be Wary of Unscrupulous Short Seller Tactics
BETHESDA, MD. Trading activity in Eagle Bancorp stock (Nasdaq: EGBN) last Friday was extreme and related to a very large short sale position and an internet piece floated by someone who goes by the pseudonym Aurelius Value, which pushed the closing stock price lower by more than 24%. The Company issued a responding Press Release late Friday evening (press release) which identified numerous misleading statements and factual errors in the internet piece.
A short sale involves the selling of shares that are not owned in the hopes of repurchasing those shares at a lower price. The persons involved in the short sale, who hide behind the anonymous name Aurelius Value, released a piece on the internet last Friday claiming that Eagle has engaged in excessive amounts of improper loans to insiders. By extension, the short seller argued that the Companys system of controls was lacking and that its financial health is weaker than the market generally perceives. We summarily reject the allegations.
We are the latest prey of the short seller, and so are those of you who were shareholders prior to last Friday. There is a long list of successful banks and other public companies that this short seller has attacked recently in order to make a fast buck. Companies that have been attacked have asserted that the short seller and its cohorts have misrepresented the facts and are attempting to illegally manipulate the market. It should not go unnoted that in order to read the Aurelius piece, one must first click on a disclaimer that says do not take anything in the piece as being accurate and that the reader should not rely on what it says.
It is against the law for a short seller to manipulate the market by intentionally spreading false rumors about a public company. All appropriate government authorities should act swiftly and decisively against those who seek to profit by disseminating false information in the marketplace. And readers should be wary of any further releases by the short seller or its cohorts as they are intent on continuing to manipulate the market for their own financial gain.
EagleBankCorp.com 301.986.1800
MD | VA | DC
About Eagle Bancorp, Inc. and EagleBank Eagle Bancorp, Inc. is the holding company for EagleBank, which commenced operations in 1998. EagleBank is headquartered in Bethesda, Maryland, and conducts full service commercial banking through 21 offices, located in Montgomery County, Maryland, Washington, D.C. and Northern Virginia. EagleBank focuses on building relationships with businesses, professionals and individuals in its marketplace. |
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If you research the name of the alleged perpetrator, you will find no fingerprints: no list of directors, officers, principals, or agents. Nothing. If you go to our website www.EagleBankCorp.com or that of the SEC www.sec.gov, you will find everything you need to know about us, and our management and Board, to make informed investment decisions.
Eagle Bancorp stock is listed on Nasdaq. As such, we report our activities and financial condition to the SEC. Our bank is subject to annual examinations from the Federal Reserve and the state. We certify our financial statements and our financial controls. An independent public accounting firm audits us annually, and is required to attest to our financial controls.
Board governance at Eagle is very detailed and comprehensive. Board members are both in control of policies and practices and receive detailed reporting on all aspects of Bank activities. Regulation O loans to insiders must receive approval of the Company Audit Committee and the full Board of the Bank.
The vast majority of the trading volume last Friday occurred late afternoon and by end of the normal trading day at 4:00 p.m. amounted to almost 5 million shares, as compared to normal daily volume of about 140,000 shares. The release on the internet just prior to a weekend seems particularly designed to place particular pressure on the stock price.
We note that many details in the article derived from papers filed by one side in pending litigation that involves a bank executives independent investments. No evidence has yet been submitted to the court, nor has any finding been made. And the Company has moved to dismiss in its entirety the one case in which it is a party because the case filings fail to even state a cause of action under law.
In most banks, you will find that the making of loans to insiders is not just present but desired. This is especially the case at community banks, where directors bring in those they know to the bank, whether as friends, business partners or peers in the community. There are required disclosures of loans to insiders (as defined in Regulation O), both in annual filings with the Securities and Exchange Commission and in quarterly Bank regulatory reports. The filings by the Company have always been complete, receiving the attention of monthly Board meetings, the Banks Compliance team, the internal Disclosure Controls Committee and the Audit Committee of the Board. In addition, there are external independent auditor reviews. In all such cases, the loans are made on market-rate, not preferential, rates and terms. The Bank treats insider and related party loans exactly the same as borrowers who have no director or officer relationship with the Bank.
On top of that, insider loan transactions receive added scrutiny in annual regulatory examinations - - by both the Federal Reserve, which is the Banks primary federal regulator, and the State of Maryland, where the bank is chartered. Furthermore, all insider loans receive scrutiny by the Banks Audit and Compliance areas (so as to assure that terms and conditions are not more favorable than for so called arms-length transactions). Such loans must be approved by the Audit Committee and also must be approved by the full Bank Board of Directors (those directors who are not involved in the transaction). This goes beyond the normal approval process by the applicable Board Committee for loans not involving insiders.
Eagles portfolio of loans to insiders is part of the Banks long successful history, and is not a recent change in practice. Eagle has always been a business-oriented community bank with significant commercial real estate lending. The vast majority of board members have a deep understanding of the market and the risk in this area. In fact, that significant background and knowledge of effective underwriting, market conditions and market participants has resulted in the Company experiencing low levels of credit losses over the Banks entire 19 year history. We have been an institution that has weathered the various business cycles better than most (including during the 2007-2009 down cycle) and that includes construction type lending.
Identifying well structured loan opportunities and participating in the growth of the local community is what community banks do. So long as lending relationships involving Board Members and Executive Officers are underwritten well, monitored, reported in accordance with disclosure requirements and fall below regulatory limits, they are appropriate and encouraged. Eagles public filings discuss in detail the risk elements of all types of lending. The 19-year history of Eagle has demonstrated a high degree of lending success, with a low level of credit issues.
In fact, the stock markets regard for Eagle and its favorable stock price (absent the event of last Friday) is predicated in part on the Companys consistent and stable financial performance over a long period and not any short-term positives or negatives. This long-term performance includes lower credit losses and better yields on the banks loan portfolio (as compared to area and peer size banks), which negates the unfounded assertion expressed by the short seller that the Bank is generally providing preferential loan rates as a quid pro quo. It is not.
The Board of Directors at Eagle is quite strong in both background and knowledge of the local real estate market and its participants. The Board consists of the CEO, the COO and independent directors; members have broad business knowledge and success. The Board requires and receives significant reporting on all areas of enterprise risk, most especially the quality of the loan portfolio. Our internal controls are strong and all required disclosures, including loans to insiders, have been met.
The allegations intimated last Friday by the short seller who calls himself or herself Aurelius Value that Eagles pricing, underwriting, internal controls and/or its disclosures are somehow lacking are totally unfounded.
Please do not allow anonymous fast buck artists to rattle your confidence in us, and our systems, our controls, our regulators, and our success.
Eagle Bancorp is accountable to shareholders and customers. The short sellers behind the apparent libel and defamation are not. The Board of Directors stand behind the Companys proven success and deserved reputation of integrity and discipline.
Dear Friend,
At EagleBank our relationships with our customers come first. With that in mind, we wanted to provide you with accurate information in response to false and misleading statements contained in a piece about Eagle Bancorp and EagleBank that was floated on the internet on Friday. It was sent out by a predatory short seller writing with a self-interest in seeing EGBN stock drop.
This short seller has a history of attacking successful banks and other companies in order to manipulate stock prices and to profit from the trades that benefitted from the manipulations. We do not intend to let the manipulator get away with this illegal activity.
The short seller alleged that EagleBank and its directors and officers acted improperly in making loans to insiders. EagleBank categorically rejects this deceptive and misleading allegation and has responded accordingly in the two press releases that follow this letter. We will not repeat the responses here; I encourage you to read the next few pages.
Your bank is as strong today as it was a week ago. The same directors and executives with the same high level of integrity and attention to detail continue to supervise and manage what has become the areas largest and Marylands most profitable local community bank. We founded EagleBank in 1998. We now have well over $7 billion in assets. For just the first nine months of the year, Eagle Bancorp reported net income of over $84 million another record for us. (In fact, we have reported record earnings each quarter for the last 35 quarters). Our capital base is over $900 million.
Our credit quality remains pristine. Nonperforming assets and more than 90 day past due loans are only .24% of assets as of September 30, 2017. Eagle Bancorps capital exceeds regulatory requirements. These are strong numbers.
As evidenced by the tiny percentage of non-performing assets, EagleBank adheres to sound underwriting practices which are internally and independently reviewed. Any loans subject to Regulation O (the regulation that addresses the rules and processes for making loans to insiders) have been made, approved and disclosed in compliance with that regulation. EagleBank is proud of its history and culture of compliance, which includes rigorous regulatory review by its compliance department and audit executives and active board oversight.
Further, as a publicly traded company, Eagle Bancorp files certified periodic financial reports with the SEC. They are publicly available on our website and on the SECs website. EagleBank and Eagle Bancorp are both highly regulated, and are supervised by both the Federal Reserve and the State of Maryland. The bank is subject to annual examinations.
Eagle Bancorps fundamentals are strong. The numbers speak for themselves. The truth is in our financials, not in some anonymous internet piece by a known short-seller who preys on others by issuing false and misleading statements about us and other companies to produce outsized returns for itself and its cohorts. The truth is supported by our consistent outstanding performance and the hard won integrity of our Board and executive management. You should view very skeptically the false information being circulated by Aurelius Value and its ilk.
EagleBank and its holding company were founded on, and remain strongly committed to, the highest professional and ethical standards. Our focus will continue to be on fueling the success of our customers, our employees, our shareholders and our community.
We value your business and our relationship. There is no there there in the internet piece. But please, should you have any questions, do not hesitate to contact us. We are here for you, as we always have been. And as we always will be.
With best regards,
Ronald D. Paul
Chairman and Chief Executive Officer
Susan G. Riel
Chief Operating Officer
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