EAGLE BANCORP INC 10-Q

Item 4. Controls and Procedures Evaluation of disclosure controls and procedures . 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. Based on that evaluation, the Chief Executive Officer, Executive Chairman and the Chief Financial Officer concluded that the Company's disclosure controls and procedures as of June 30, 2023 were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required and that it is accumulated and communicated to our management, including the Chief Executive Officer, Executive Chairman and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Changes in internal control over financial reporting . There were no changes in our internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) that occurred during the second quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 66 PART II - OTHER INFORMATION Item 1. - Legal Proceedings Refer to "Note 12. Legal Contingencies" of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference. Item 1A. - Risk Factors We are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, which could adversely affect our business, financial performance and results of operations. There have been no material changes to our risk factors from those risks included in our Annual Report on Form 10-K. Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds (a) Sales of Unregistered Securities. None (b) Use of Proceeds. Not Applicable (c) Issuer Purchases of Securities. Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3) March 31, 2023 n/a n/a n/a 1,200,000 April 1 - 30, 2023 400,586 $ 32.26 400,000 800,000 May 1 - 31, 2023 482,760 $ 19.41 480,000 320,000 June 1 - 30, 2023 323,614 $ 22.35 320,000 — Total 1,206,960 $ 24.48 1,200,000 — (1) I ncludes shares of the Company’s common stock acquired by the Company in connection with satisfaction of tax withholding obligations on vested restricted shares or restricted share units and certain forfeitures and terminations of employment-related awards and for potential re-issuance to certain employees under equity incentive plans. (2) Average price paid per share includes commission costs associated with the repurchases. (3) On December 13, 2022, the Company's Board of Directors authorized a new share repurchase program (the "2023 Repurchase Program") to take effect starting January 2, 2023, after the expiration of the previous repurchase program on December 31, 2022. The Board of Directors authorized the repurchase of 1,600,000 shares of common stock, or approximately 5% of the Company's outstanding shares of common stock, under 2023 Repurchase Program, which will expire on December 31, 2023, unless earlier terminated by the Board of Directors. The 2023 Repurchase Program does not limit the number of shares that can be repurchased each quarter. The Company has reached the maximum number of shares that may be purchased under the 2023 Repurchase Program. Item 3. - Defaults Upon Senior Securities None. Item 4. - Mine Safety Disclosures Not Applicable. 67 Item 5. - Other Information Effective September 25, 2023, Eric Newell, age 43, will assume the position of Chief Financial Officer of Eagle Bancorp, Inc. (the "Parent"). Mr. Newell previously served as Executive Vice President, Chief Financial Officer of Equity Bancshares (EQBK) and Equity Bank, a $5.2 billion financial holding company and subsidiary bank headquartered in Wichita, Kansas. Prior to that, Mr. Newell was the Chief Financial Officer of United Bank, a subsidiary of United Financial Bancorp, Inc. (UBNK), a $7.3 billion community bank headquartered in Hartford, Connecticut, from 2014 until it was sold in November 2019. Effective September 25, 2023, Charles Levingston will cease to serve as Executive Vice President, Chief Financial Officer of Parent. Mr. Levingston will continue to serve as Executive Vice President, Chief Financial Officer of EagleBank (the "Bank"). Effective May 18, 2023, Ryan Riel, age 45, assumed the position of Executive Vice President of Parent. Mr. Riel is also Executive Vice President, Chief Real Estate Lending Officer of Bank. Mr. Riel is the son of Susan Riel, our President and Chief Executive Officer. Mr. Riel will report to Norman Pozez, Executive Chairman of Bank and Parent. Mr. Riel joined Bank in 2001 as a Commercial Lender after graduating from West Virginia University with a BA in Economics. During his 22 years at Bank, Mr. Riel has progressed from his original role in Commercial Lending to a Team Leader, Group Leader, Market Executive and now Chief Real Estate Lending Officer, a position he has held since 2020. Any information with respect to Mr. Levingston and Mr. Riel required to be disclosed under Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934 has been included in Parent's definitive proxy statement for its 2023 annual meeting of shareholders, filed on April 5, 2023. In connection with his appointment to the position of Chief Financial Officer of Parent, Mr. Newell entered into an employment agreement with Bank and Parent, effective September 25, 2023. Under the employment agreement, Mr. Newell will receive an annual salary of $475,000, an annual car allowance of $9,000, reimbursement of life insurance premiums, and other benefits generally provided to similarly situated employees. Mr. Newell is eligible to receive a sign-on bonus of $100,000 upon commencement of employment and an additional bonus of $150,000 six months after commencing employment. He is also eligible to receive a one-time payment to cover qualifying moving expenses, up to $50,000. The agreement provides for (x) an initial time-based restricted stock award with a value of $300,000 vesting over three years on the anniversary date of the date of grant and (y) a 2024 annual equity award in February 2024 with a $200,000 value, to be divided equally between time-based restricted stock and performance-based restricted stock units (with the number of units calculated based on the "target" level of performance). There are no family relationships between Mr. Newell and any director or executive officer of Parent or Bank, and there are no related party transactions between Parent or the Bank and Mr. Newell that would require disclosure under Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934. In connection with his transition in duties, Mr. Levingston's employment agreement with the Bank was amended, effective September 25, 2023. Under the amended employment agreement, Mr. Levingston will receive an annual salary of $380,000, an annual car allowance of $9,000, reimbursement of life insurance premiums, and other benefits generally provided to similarly situated employees. In connection with his appointment to the position of Executive Vice President of Parent, Mr. Riel entered into an employment agreement with the Bank and Parent, effective August 9, 2023. Under the employment agreement, Mr. Riel will receive an annual salary of $406,725, an annual car allowance of $12,000, reimbursement of life insurance premiums, and other benefits generally provided to similarly situated employees. Under their employment agreements, upon a termination without cause, Messrs. Newell, Levingston and Riel are entitled to a lump sum cash payment that is intended to represent the cost of continued healthcare coverage for a one-year period. Upon a qualifying termination or resignation in connection with a change in control due to certain material adverse changes (a "Change in Control Termination"), this amount will be increased in order to represent the cost of continued healthcare coverage for a three-year period. 68 In addition, upon a Change in Control Termination, Messrs. Newell and Riel will be eligible for a lump sum cash payment equal to 1.99 times the sum of (x) the executive’s highest salary in effect during the 12 months preceding the termination date, and (y) cash bonuses paid to the executive during the 12 months preceding the termination date. Under Mr. Levingston’s amended employment agreement, upon a Change in Control Termination, he will be entitled to a lump sum cash payment equal to 0.99 times such amount. The above benefits are subject to the executive’s execution of a release of claims. In addition, the executives are subject to standard non-compete and non-solicit covenants during employment and the one-year period following cessation of employment. Messrs. Newell and Riel also entered into non-compete agreements with Bank and Parent in connection with their appointments. Under that agreement, upon a termination without cause or Change in Control Termination, the executive will be entitled to a supplemental payment to be made in installments over a one-year period, equal to the sum of (x) the executive's highest salary in effect during the 12 months preceding the termination date, and (y) cash bonuses paid to the executive during the 12 months preceding the termination date, provided that the executive complies with the non-compete restrictions contained in that agreement. These benefits are subject to the executive’s execution of a release of claims. Mr. Levingston’s non-compete agreement dated January 8, 2020, and previously filed as an exhibit to Parent’s Form 10-K filed March 2, 2020, remains in effect in accordance with its terms. The foregoing summaries are qualified in their entirety by reference to the Employment Agreement with Mr. Newell, Non-Compete Agreement with Mr. Newell, Second Amended and Restated Employment Agreement with Mr. Levingston, Employment Agreement with Mr. Riel and Non-Compete Agreement with Mr. Riel, whi ch are filed as Exhibits 10.1, 10.2, 10.3, 10.4, and 10.5, respectively, to this Form 10-Q. Director and Officer Trading Arrangements: During the three months ended June 30, 2023, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K. 69 Item 6. - Exhibits 10.1+ Employment Agreement effective as of September 25, 2023, between EagleBank, Eagle Bancorp, Inc. and Eric Newell 10.2+ Non-Compete Agreement effective as of September 25, 2023, between EagleBank, Eagle Bancorp, Inc. and Eric Newell 10.3+ Second Amended and Restated Employment Agreement effective as of September 25, 2023, between EagleBank and Charles D. Levingston 10.4+ Employment Agreement dated as of August 9, 2023, between EagleBank, Eagle Bancorp, Inc. and Ryan Riel 10.5+ Non-Compete Agreement dated as of August 9, 2023, between EagleBank, Eagle Bancorp Inc. and Ryan Riel 31.1 Certification of Susan G. Riel 31.2 Certification of Norman R. Pozez 31.3 Certification of Charles D. Levingston 32.1 Certification of Susan G. Riel 32.2 Certification of Norman R. Pozez 32.3 Certification of Charles D. Levingston 101 Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 (ii) Consolidated Statement of Income for the three and six months ended June 30, 2023 and 2022 (iii) Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2023 and 2022 (iv) Consolidated Statement of Changes in Shareholders' Equity for the three and six months ended June 30, 2023 and 2022 (v) Consolidated Statement of Cash Flows for the six months ended June 30, 2023 and 2022 (vi) Notes to the Consolidated Financial Statements 104 The cover page of this Quarterly Report on Form 10-Q, formatted in Inline XBRL (+) Indicates management contract or compensatory plan or arrangement 70 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 thereunto duly authorized. EAGLE BANCORP, INC. Date: August 9, 2023 By: /s/ Susan G. Riel Susan G. Riel, President and Chief Executive Officer of the Company Date: August 9, 2023 By: /s/ Charles D. Levingston Charles D. Levingston, Executive Vice President and Chief Financial Officer of the Company 71