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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-03-01 · 15 added, 36 removed, 164 unchanged (24% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures

As described in the Company’s 2019 Annual Report on Form 10-K, filed with the SEC on March 2, 2020, the Company’s Chief Executive Officer and the Chief Financial Officer had previously concluded that, due to the material weakness in the Company’s internal control over financial reporting that stemmed from “tone at the top” issues that contributed to a control environment that was insufficiently tailored to the culture of deference afforded to the former Chairman, President and Chief Executive Officer (the “Material Weakness”), the Company’s disclosure controls and procedures were not effective as of December 31, 2019.

As discussed in further detail below under the heading, “Remediation,” the deficiencies contributing to such Material Weakness were fully remediated as of December 31, 2020.

The Company’s management, under the supervision and with the participation of the Chief Executive Officer, Executive Chairman and Chief Financial Officer, evaluated, as of the last day of the period covered by this report, the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act.

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The independent auditors and the internal auditors have full and unlimited access to the Audit Committee, with or without the presence of management, to discuss the adequacy of internal control over financial reporting, and any other matters which they believe should be brought to the attention of the Audit Committee.

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Management assessed the Company’s system of internal control over financial reporting as of December 31, 2021.

This assessment was conducted based on the COSO of the Treadway Commission “Internal Control – Integrated Framework (2013).” Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020.

The 2020 financial statements have been audited by the independent registered public accounting firm of Dixon Hughes Goodman LLP (“DHG”).

DHG has also issued a report on the effectiveness of internal control over financial reporting.

This assessment was conducted based on the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission “Internal Control – Integrated Framework (2013).” Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2021.

The 2021 financial statements have been audited by the independent registered public accounting firm of Crowe LLP (“Crowe”).

Crowe has also issued a report on the effectiveness of internal control over financial reporting.

That report has also been made a part of this Annual Report.

Changes in Internal Control over Financial Reporting

As described in the Company’s 2019 Annual Report on Form 10-K, management had assessed the Company’s system of internal control over financial reporting as of December 31, 2019 based on the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission “Internal Control – Integrated Framework (2013)” and concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2019 due to the Material Weakness.

During the course of the year ended December 31, 2020, management tested the enhanced controls that had been previously implemented to remediate the deficiencies that contributed to the Material Weakness to determine whether they operate effectively over time.

As previously described in Part I, Item 4 of our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2020 and September 30, 2020, that testing process was completed earlier this year.

As of December 31, 2020, the enhanced controls are operating effectively and the deficiencies that contributed to the Material Weakness have been fully and effectively remediated.

The results of the year-end audit of the Company’s internal control over financial reporting by DHG, the Company’s independent auditors, are set forth in DHG’s report on the effectiveness of internal control over financial reporting, which has been made a part of this Annual Report.

The following contributed to this remediation:

• the split of the roles of Chairman and Chief Executive Officer and the appointment of our current Chairman, Norman R.

Pozez, and our current President and Chief Executive Officer, Susan G.

• the restructuring of the Board of Directors to reduce its size and strengthen its risk and financial reporting oversight functions, including the addition of two new independent directors with extensive experience in risk management and public accounting;

• adjustment of the membership of the committees of the Board of Directors, the appointment of new committee chairs and the establishment of a Risk Committee;

• the process of hiring a new Chief Legal Officer (effective January 2020);

• formalizing the Company’s ethics program, including establishing an Ethics Office and appointing an Ethics officer with accountability to the Audit Committee, and increased ethics training for Company employees;

• the enhancement of the Company’s policies and procedures for the identification, review and reporting of related party transactions;

• the reinforcement of the Company’s risk management function, including the addition of personnel and the enhanced review and monitoring of vendor contracts;

• the active encouragement by management, with the assistance of the Chairman and the rest of the Board, of an open and collaborative culture, to set an appropriate “tone at the top.”

In addition, in the first quarter of 2020, the following further contributed to this remediation:

upon the appointment of our Chairman, Norman R.

Pozez, as Executive Chairman of the Board of Directors, the Board of Directors appointed Theresa G.

LaPlaca as Lead Independent Director of the Board of Directors.

Other than the remediation described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Riel /s/ Charles D.

Levingston /s/ Norman R.

President and Chief Executive Officer of the Company Executive Vice President and Chief Financial Officer of the Company Executive Chairman of the Company

Management has conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2021, utilizing framework established in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.

Based on this assessment, management has determined that the Company's internal control over financial reporting as of December 31, 2021 is effective.

OTHER INFORMATION

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DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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The information required by this Item is incorporated by reference to the material appearing under the caption “Ratification of the Appointment of Independent Registered Public Accounting Firm – Fees Paid to Independent Accounting Firm” in the Proxy Statement.

The Independent Registered Public Accounting Firm for the financial statements as of December 31, 2020 and for the two years then ended was Dixon Hughes Goodman LLP (PCAOB Firm ID No.

57 ) located in Charlotte, North Carolina .

The Independent Registered Public Accounting Firm for the financial statements as of December 31, 2021 and for the year then ended was Crowe LLP (PCAOB Firm ID No.

173 ) located in Chicago, Illinois .

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following financial statements are included in this report

Reports of Dixon Hughes Goodman LLP, Independent Registered Public Accounting Firm

Reports of Crowe LLP, Independent Registered Public Accounting Firm

Report of Dixon Hughes Goodman, LLP Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2021 and 2020

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All financial statement schedules have been omitted as the required information is either inapplicable or included in the Consolidated Financial Statements or related notes.

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Description of Exhibit

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Pozez dated April 2, 2020 (28)

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10.27 + Employment Agreement dated as of March 1, 2021, between EagleBank and Jeffrey M.

16 Letter from Dixon Hughes Goodman LLP to the Securities and Exchange Commission, dated October 7, 2020 (29)

10.28 + 2021 Stock Plan

10.29 + 2021 Employee Stock Purchase Plan

21 Subsidiaries of the Registrant

23.1 Consent of Crowe LLP

23.2 Consent of Dixon Hughes Goodman LLP

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(13) Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on February 3, 2020.

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(14) Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on February 3, 2020.

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(29) Incorporated by reference to Exhibit 16.1 to the Company's Current Report on Form 8-K filed on October 7, 2020.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures