EAGLE BANCORP
1400 Prospect Avenue
Helena, Montana 59601
(406) 442-3080
September 17, 2004
Dear Stockholder:
You are invited to attend the 2004 Annual Meeting of Stockholders (the
"Annual Meeting") of Eagle Bancorp, the federally chartered stock holding
company for American Federal Savings Bank (the "Bank"). The Annual Meeting is
scheduled to be held on Thursday, October 21, 2004, at 10:00 a.m., Montana time
at the main office of the Bank, located at 1400 Prospect Avenue, Helena,
Montana.
The attached Notice of Annual Meeting and Proxy Statement describe the
proposals to be voted on at the Annual Meeting. The Board of Directors of Eagle
Bancorp ("Board") has determined the approval of the proposals is in the best
interests of Eagle Bancorp and its stockholders. Therefore, the Board
unanimously recommends that you vote in favor of all proposals and in favor of
the Board's nominees for director. Members of the Board and officers of Eagle
Bancorp and Eagle Bancorp's independent auditors will be present at the Annual
Meeting to respond to any questions that you may have regarding the agenda for
the Annual Meeting.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR
COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK OUTSTANDING MUST
BE REPRESENTED EITHER IN PERSON OR BY PROXY TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS AT THE ANNUAL MEETING.
On behalf of the Board of Directors and all of the employees of Eagle
Bancorp, I wish to thank you for all your support and interest. We look forward
to seeing you at the Annual Meeting.
Sincerely yours,
/s/ Larry A. Dreyer
---------------------
Larry A. Dreyer
President and CEO
EAGLE BANCORP
1400 Prospect Avenue
Helena, MT 59601
(406) 442-3080
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 21, 2004
TO THE SHAREHOLDERS OF EAGLE BANCORP:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Eagle
Bancorp ("Eagle") will be held at the home office of American Federal Savings
Bank located at 1400 Prospect Avenue, Helena, Montana on Thursday, October 21,
2004, at 10:00 a.m. Montana time, for the following purposes, as more completely
set forth in the accompanying Proxy Statement:
I. To elect three (3) directors of Eagle for three year terms.
II. To ratify the appointment by Eagle's Board of Directors of the firm
of Anderson ZurMuehlen & Co, P.C. as independent public accountants for Eagle
for the fiscal year ending June 30, 2005.
III. To transact such other business as may properly come before the
meeting. Except with respect to procedural matters incident to the conduct of
the meeting, management of Eagle is not aware of any matters other than those
set forth above which may properly come before the meeting.
The Board of Directors of Eagle has fixed the close of business on
Wednesday, September 8, 2004, as the voting record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement of the Annual Meeting. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Larry A. Dreyer
---------------------
Larry A. Dreyer
President & CEO
September 17, 2004
Helena, Montana
YOUR VOTE IS IMPORTANT. YOU ARE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED, WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU ATTEND THE ANNUAL MEETING YOU
MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY
YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. PROXIES
MUST BE RECEIVED PRIOR TO THE COMMENCEMENT OF THE MEETING. IF YOUR SHARES ARE
NOT REGISTERED IN YOUR NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER IN ORDER TO VOTE IN PERSON AT THE MEETING.
EAGLE BANCORP
---------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 2004
This Proxy Statement is being furnished to the holders of the common
stock, par value $0.01 per share ("Common Stock"), of Eagle Bancorp ("Eagle"),
in connection with the solicitation of proxies by the Board of Directors of
Eagle ("Board") for use at the 2004 Annual Meeting of Stockholders ("Annual
Meeting") to be held on Thursday, October 21, 2004, at the home office of
American Federal Savings Bank located at 1400 Prospect Avenue, Helena, Montana
at 10:00 a.m., Montana time, for the purposes set forth in the attached Notice
of Annual Meeting of Stockholders. This Proxy Statement is first being mailed to
stockholders on or about September 17, 2004.
This Proxy Statement and proxy card are being sent to holders of the
Common Stock on or about September 17, 2004. A copy of Eagle's Annual Report on
Form 10-KSB for the year ended June 30, 2004, which includes our audited
financial statements, also accompanies this Proxy Statement.
MATTERS TO BE CONSIDERED AND ACTED UPON AT THE ANNUAL MEETING
Each proxy solicited hereby, if properly signed and returned to Eagle
and not revoked prior to its use, will be voted in accordance with the
instructions indicated on the proxies. If no contrary instructions are given,
each signed proxy received will be voted in favor of the election of Mr.
Campbell, Mr. Jacoby and Mr. Pennington, in favor of the ratification of
Anderson ZurMuehlen & Co., P.C. and in the discretion of the proxy holder, as to
any other matter which may properly come before the Annual Meeting or any
adjournment or postponement of the Annual Meeting. Only proxies that are
returned can be counted and voted at the Annual Meeting.
SOLICITATION OF PROXIES
All costs of the solicitation of proxies will be borne by Eagle. In
addition, directors, officers and other employees of Eagle or American Federal
Savings Bank (the "Bank" or "American Federal") may solicit proxies personally
or by telephone or other means and will not receive any special compensation for
their services. Eagle will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in sending
proxy materials to the beneficial owners of Common Stock.
REVOCATION OF PROXIES
A stockholder who has given a proxy may revoke it at any time prior to
its exercise at the Annual Meeting by (i) giving written notice of revocation to
the Secretary of Eagle, (ii) properly submitting to Eagle a duly-executed proxy
bearing a later date, or (iii) attending the Annual Meeting and voting in
person. All written notices of revocation and other communications with respect
to revocation of proxies should be addressed as follows: Eagle Bancorp, 1400
Prospect Avenue, Helena, Montana 59601, Attention: Terey Artz. Proxies solicited
hereby may be exercised only at the Annual Meeting and will not be used for any
other meeting.
1
VOTING SECURITIES
The securities that may be voted at the Annual Meeting consists of
shares of Common Stock, with each share entitling its owner to one vote on all
matters to be voted on at the Annual Meeting. Only holders of record of Common
Stock at the close of business on September 8, 2004 (the "Record Date"), will be
entitled to notice of and to vote at the Annual Meeting. On the Record Date
there were 1,190,372 shares of Common Stock issued and outstanding and 648,493
shares of Common Stock, or 54.5% of the issued and outstanding Common Stock, are
held by Eagle Financial MHC, Eagle's mutual holding company. Eagle had no other
class of securities outstanding at this time.
The presence in person or by proxy of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. With respect to any
matter, any shares for which a broker indicates on the proxy that it does not
have discretionary authority as to such shares to vote on such matter ("Broker
Non-Votes") will be considered present for the purposes of determining whether a
quorum is present. In the event there are not sufficient votes for a quorum or
to approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting shall be adjourned in order to permit further solicitation of proxies.
VOTING PROCEDURES
Once a quorum has been established, the affirmative vote of a majority
of the outstanding shares of Common Stock present or represented by proxy at the
Annual Meeting is required to approve the proposals described in this Proxy
Statement, except as described below. Additionally, directors can be elected by
a plurality of stockholders. Stockholders are not permitted to cumulate their
votes for the election of directors or any other purpose. Votes may be cast for
or withheld from each nominee for election as directors. Votes that are withheld
and Broker Non-Votes will have no effect on the outcome of the election for
directors because directors will be elected by a plurality of votes cast.
With respect to the other proposals to be voted upon at the Annual
Meeting, stockholders may vote for or against a proposal and may abstain from
voting. Ratification of Anderson ZurMuehlen & Co., P.C. as independent auditors
for the fiscal year ending June 30, 2005, will require the affirmative vote of a
majority of the outstanding shares of Common Stock present in person or by proxy
at the Annual Meeting and entitled to vote. Abstentions and Broker Non-Votes
will have the same effect as a vote against this proposal.
Eagle's Annual Report to Stockholders, which includes its annual report
on Form 10-KSB for its fiscal year ended June 30, 2004, is mailed herewith to
stockholders. Eagle has filed this report with the Securities and Exchange
Commission (the "SEC"). Stockholders may obtain, free of charge, an additional
copy of the annual report on Form 10-KSB by requesting it from Terey Artz in
writing at Eagle Bancorp, 1400 Prospect Avenue, Helena, Montana 59601, or by
calling her at (406) 442-3080.
Executed, unmarked proxies will be voted FOR all proposals. Except for
procedural matters incidental to conduct of the Annual Meeting, Eagle knows of
no other matters expected to come before the meeting.
Proxies solicited hereby are to be returned to Eagle's transfer agent,
Registrar & Transfer Company. The Board of Directors has designated Terey Artz,
corporate secretary, to act as Inspector of Election and tabulate votes at the
Annual Meeting. After the final adjournment of the Annual Meeting, the proxies
will be returned to Eagle.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of June 30, 2004, except
as specifically noted, with respect to ownership of Eagle's Common Stock by: (i)
Eagle Financial MHC, Eagle's mutual holding company; (ii) the American Federal
Savings Bank Employee Stock Ownership Plan (the "ESOP"); (iii) the executive
officers and directors of Eagle; and (iv) all the directors and executive
officers of Eagle as a group. Except for those listed
2
below, Eagle has no knowledge of any other person (including any "group" as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) who owns beneficially more than 5% of the Common Stock.
Common Stock
Beneficially Owned(1)
---------------------
Name Title or Address Number(2) Percent
---- ---------------- ------ -------
Eagle Financial MHC 1400 Prospect Avenue 648,493 54.48%
Helena, MT 59601
Jeffrey S. Halis 500 Park Avenue, Fifth Floor 81,000 6.80%
New York, NY 10022
Kenneth R. Lehman and Joan Abercrombie 1408 N. Abingdon Street 84,630 7.11%
Lehman Arlington, VA 22207
American Federal Savings Bank Employee 1400 Prospect Avenue 27,606 2.32%
Stock Ownership Plan Helena, MT 59601
Robert L. Pennington Chairman of the Board *
7,950(3)(4)(7)
Charles G. Jacoby Vice Chairman of the Board 14,900(7) 1.25%
Don O. Campbell Director 7,400(7) *
Larry A. Dreyer Director, President and Chief 1.49%
Executive Officer 17,707(4)(7)(8)(9)
Teresa L. Hartzog Director 10,950(7) *
James A. Maierle Director 14,900(5)(7) 1.25%
Thomas J. McCarvel Director 8,900(7) *
Peter J. Johnson Senior Vice President/Treasurer 1.15%
13,796(4)(6)(7)(8)
Michael C. Mundt Senior Vice President/Lending *
7,392(4)(7)(8)
Joanne Y. Sanderson Senior Vice President/Operations 1.49%
17,790(4)(7)(8)
Directors and Executive Officers as a
group (10 persons) N/A 121,685 10.22%
--------------------
(1) Except as otherwise noted, all beneficial ownership by directors and
executive officers is direct and each director or executive officer
exercises sole voting and investment power over the shares.
(2) Reflects information provided by these persons, filings made by these
persons with the Securities and Exchange Commission, and other
information known to Eagle.
(footnotes continued on next page)
3
(footnotes continued from previous page)
(3) Includes 1,940 shares held jointly by Mr. Pennington and his spouse.
Mr. Pennington has shared voting and investment power over these 1,940
shares.
(4) Includes Common Stock held by each Executive Officer and Mr. Pennington
in the Bank's Non-Contributory Profit Sharing Plan.
(5) Includes 5,000 shares held by Rosmar, Inc. for which Mr. Maierle, as
President of Rosmar, Inc., has shared voting and investment power.
(6) Includes 50 shares held by children.
(7) Includes total shares awarded under Eagle's Stock Incentive Plan
approved by shareholders on October 19, 2000. Shares were awarded
January 2001 and vest evenly over a five year period.
(8) Includes Common Stock held in the Bank's ESOP.
(9) Includes 375 shares held by wife for which Mr. Dreyer disclaims
beneficial ownership.
* Represents less than 1% of outstanding shares.
---------------
PROPOSAL I - ELECTION OF DIRECTORS
Eagle's Bylaws provide that the Board of Directors be composed of seven
(7) members, whose terms are divided into three approximately equal classes. The
members of each class are elected for a term of three years. One class is
elected annually.
Three directors will be elected at the Annual Meeting. The Board of
Directors has nominated current directors Don O. Campbell, Charles G. Jacoby and
Robert L. Pennington for re-election. If elected, Messrs. Campbell, Jacoby and
Pennington will each serve as director for a three year term expiring at the
Annual Meeting to be held in 2007.
The Board's Nominating Committee determines nominees for election as
directors. The Bylaws also allow stockholders to submit nominations in writing
directly to the Corporate Secretary (see "Stockholder Proposals and
Nominations"). No stockholder nominations have been received by Eagle as of the
date of this Proxy Statement. There are no arrangements known to management
between the persons named and any other person pursuant to which such nominees
were selected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES FOR DIRECTOR UNDER THIS PROPOSAL I.
The persons named in the enclosed proxy intend to vote for the election
of the named nominees, unless the proxy is marked by the stockholder to the
contrary. Eagle Financial MHC, which owns a majority of Eagle's common stock,
also intends to vote its shares in favor of the named nominee. If any nominee is
unable to serve, all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend. The Board of Directors knows
of no reason why any nominee might be unable to serve.
The following table sets forth certain information as of June 30, 2004,
with respect to each nominee, and each director continuing in office.
4
DIRECTOR NEW OR CURRENT
NAME AGE SINCE(1) TERM TO EXPIRE(2)
---- --- ----- --------------
BOARD NOMINEES
Don O. Campbell 70 1994 2007
Mr. Campbell is a retired certified public accountant and previously served as
Vice President and Controller of Capri, Inc., an investment management company
located in Helena.
Charles G. Jacoby 72 1979 2007
Mr. Jacoby is retired. He formerly owned a retail clothing establishment in
Helena. He serves as Vice Chairman of the Board.
Robert L. Pennington
Mr. Pennington is the Chairman of Eagle. He was previously the 72 1973 2007
President and Chief Executive Officer of American Federal Savings
Bank from 1974 through 1995, when he retired. He has served as
Chairman of American Federal since 1993.
DIRECTORS CONTINUING IN OFFICE
Larry A. Dreyer 58 1990 2005
Mr. Dreyer is currently President (since 1993) and Chief Executive Officer
(since 1995) of American Federal. He is also President and CEO of Eagle. He
joined American Federal Savings Bank in 1973, serving as its Controller. He is a
member and past president of the Downtown Helena Kiwanis Club and past chairman
of both the St. Peter's Hospital Foundation and Diocese of Helena Finance
Council. He is also a member of the Independent Community Bankers of America,
National Bank Services Committee.
Thomas J. McCarvel 55 1998 2006
Mr. McCarvel has served as a Vice President of Carroll College in Helena since
December 1991. He was the Chief Operating Office of Anderson ZurMuehlen & Co.,
P.C., a public accounting firm in Helena and American Federal's independent
auditors from 1988 to 1991.
James A. Maierle 56 1997 2006
Mr. Maierle currently serves as President of Morrison-Maierle, Inc., a civil
engineering corporation, headquartered in Helena.
5
DIRECTOR NEW OR CURRENT
NAME AGE SINCE(1) TERM TO EXPIRE(2)
---- --- ----- --------------
Teresa L. Hartzog 73 1993 2005
Ms. Hartzog is retired. She was formerly employed by the Leaphart law firm where
she served as office manager and a legal secretary.
--------------------
(1) Includes prior service on the Board of Directors of American Federal Savings
Bank.
(2) All terms expire on the date of the Annual Meeting.
---------------
BOARD MEETINGS AND COMMITTEES
The business of Eagle's and the Bank's Board of Directors is conducted
through meetings once a month and may have additional meetings. During the
fiscal year ended June 30, 2004 the Board of Eagle met seven times and the Board
of the Bank met twelve times. All Directors who served as directors during the
fiscal year ended June 30, 2004, attended at least 75% of Board meetings. All
committee members attended at least 75% of the meetings of their respective
committees. A majority of the Board of Directors is comprised of independent
directors, in accordance with the requirements of NASDAQ. The Board of Directors
has determined that Messrs. Pennington, Jacoby, Campbell, Maierle, and McCarvel
and Ms. Hartzog are independent. Certain of the standing committees are
discussed below. Eagle has a separately-designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee consists of three (3) non-employee directors and
met eight (8) times during the fiscal year ended June 30, 2004. The Audit
Committee chairmanship is rotated between Mr. Jacoby and Mr. Campbell in
alternating years. The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its responsibility for oversight of the quality
and integrity of Eagle's financial reporting process. Mr. Pennington also serves
on the Audit Committee. Each member is "independent", in accordance with the
requirements for companies quoted on The Nasdaq Stock Market. The Board of
Directors has determined that Mr. Campbell meets the requirements of "audit
committee financial expert", as defined by the Securities and Exchange
Commission (SEC). The Board believes that the other members of the Audit
Committee are qualified to serve based on their experience and background.
The Audit Committee has adopted a charter which is attached to this
Proxy Statement as Exhibit A. The charter is also available on Eagle's website
at www.americanfederalsavingsbank.com. The charter describes the Committee's
principal duties and responsibilities including, but not limited to:
o Oversight and review of the annual financial reporting process and
adequacy and integrity of Eagle's financial information (including
corporate accounting, financial reporting practices, and the quality of
the financial reports of Eagle);
o Oversight and review of the legal and regulatory requirements of Eagle;
o Oversight and review of the independent auditors qualifications and
independence;
o Oversight and review of the performance of Eagle's internal audit
function and the independent accountants and other mandated Audit
Committee duties;
6
o Oversight and review of the system of internal controls and safeguards;
o Review with the independent accountant, the internal auditor and
management the adequacy of Eagle's internal controls and any material
weaknesses, any findings or recommendations from the independent
accountant, all critical accounting policies and all other materials
matters relating to the audit procedures;
o Review of related party transactions, legal and regulatory matters
material to the financial statements and the compliance programs of
Eagle;
o Maintenance of an open avenue of communication between the Board of
Directors, senior management, internal auditors, and Eagle's
independent public accountants and permit auditors and internal
auditors to meet with the Audit Committee without the presence of
management; and
o Oversight, review and approval of audit, audit-related, tax, and all
other fees.
The Audit Committee is independent in accordance with the amended
issuer rules of the NASD. The Audit Committee Charter is reviewed annually. In
addition, the Audit Committee has taken the following actions:
o Reviewed and discussed Eagle's audited financial statements for the
2004 fiscal year with the management of Eagle.
o Discussed with Eagle's independent auditors the matters required to be
discussed under SAS 61, as may be modified or supplemented
(Codification of Statements on Auditing Standards).
o Received written disclosures and the letter from its independent
auditors required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, "Independence Discussions
With Audit Committees), as may be modified or supplemented, and has
discussed with the independent accountant the independent accountant's
independence.
Based upon these reviews and discussions, the Audit Committee has
recommended to the Board of Directors that the audited financial statements be
included in Eagle's Annual Report on Form 10-KSB for the fiscal year ended June
30, 2004, to be filed with the SEC.
Members of the Audit Committee
Charles G. Jacoby, Chairman
Don O. Campbell
Robert L. Pennington
AUDIT, AUDIT-RELATED FEES, TAX FEES, ALL OTHER FEES AND AUDITOR INDEPENDENCE
For the year ended June 30, 2004, Eagle paid its independent auditors
Anderson ZurMuehlen & Co., P.C., and related affiliates, approximately $33,800
for audit fees, $8,700 for audit-related fees, $6,500 for tax fees and $12,440
for all other fees. For the year ended June 30, 2003 those fees were $30,725 for
audit fees, $7,000 for audit-related fees, $6,275 for tax fees and $10,530 for
all other fees. The Audit Committee has concluded that the providing of these
non-audit services did not adversely impact the independence of Anderson
ZurMuehlen & Co., P.C. The Audit Committee shall not approve any non-audit
service engagement where the provision of such service by the independent
accountants is prohibited by applicable law, the regulations of the SEC or the
Listing Standards. Pre-approval is not required if (a) the aggregate amount of
all such non-audit services provided to Eagle constitutes not more than five
percent of the total amount of revenues paid by Eagle to its independent
auditors during the fiscal year in which the non-audit services are provided;
(b) such services were not recognized by Eagle at the time of the engagement to
be non-audit services; and (c) the non-audit services are promptly brought to
the attention of the
7
Audit Committee and approved by them, or by one or more of the members of the
Committee to whom authority to grant such approval has been delegated, prior to
completion of the audit. For the years ended June 30, 2004 and June 30, 2003,
the Audit Committee has pre-approved all fees paid to Anderson ZurMuehlen & Co.,
P.C. and its related affiliates.
Compensation Committee. The Compensation Committee met three (3) times
in fiscal 2004. It reviews and discusses employee performance and prepares
recommendations for annual salary adjustments and bonuses. This committee
currently consists of Messrs. Pennington and Campbell and Ms. Hartzog.
The Nominating Committee. The Nominating Committee was formalized in
August 2004. Previously, the entire Board of Directors (excluding the directors
up for re-election) served as the nominating committee. Messrs. Jacoby and
Maierle and Ms. Hartzog serve on the Nominating Committee. Each member is
"independent" in accordance with the requirements for companies quoted on The
Nasdaq Stock Market. The Committee's charter will be approved by the Board at
its September 2004 Board meeting, after which it will be available on Eagle's
website at www.americanfederalsavingsbank.com. The Nominating Committee's
charter is also attached to this Proxy Statement as Exhibit B.
The Nominating Committee met August 19, 2004 to nominate directors for
election at the Annual Meeting. Only those nominations made by the Nominating
Committee or properly presented by shareholders will be voted upon at the Annual
Meeting. In its deliberations for selecting candidates for nominees as director,
the Nominating Committee considers the candidate's knowledge of the banking
business and involvement in community, business and civic affairs, and also
considers whether the candidate would provide for adequate representation of its
market area. Any nominee for director made by the Nominating Committee must be
highly qualified with regard to some or all these attributes. In searching for
qualified director candidates to fill vacancies in the Board, the Nominating
Committee solicits its current Board of Directors for names of potentially
qualified candidates. Additionally, the Nominating Committee may request that
members of the Board pursue their own business contacts for the names of
potentially qualified candidates. The Nominating Committee would then consider
the potential pool of director candidates, select the candidate the Nominating
Committee believes best meets the then-current needs of the Board, and conduct a
thorough investigation of the proposed candidate's background to ensure there is
no past history, potential conflict of interest or regulatory issue that would
cause the candidate not to be qualified to serve as a director of Eagle. The
Nominating Committee will consider director candidates recommended by Eagle's
stockholders. If a stockholder submits a proposed nominee, the Nominating
Committee would consider the proposed nominee, along with other proposed
nominees recommended by members of Eagle's Board of Directors, in the same
manner in which the Nominating Committee would evaluate its nominees for
director. For a description of the proper procedure for stockholder nominations,
see "Stockholder Proposals and Nominations" in this Proxy Statement.
The Investment Committee. The Investment Committee consists of
Directors Dreyer, Jacoby and Maierle, as well as executive officers Johnson and
Mundt. The Investment Committee meets at least quarterly in order to review
investment performance and strategy. The Investment Committee met four (4) times
during the year ended June 30, 2004.
The Asset Liability Management Committee. The Asset Liability
Management Committee consists of Directors Pennington and Dreyer as well as
executive officers Johnson and Mundt. The Asset Liability Management Committee
meets at least quarterly to review American Federal's policies concerning
interest rate risk and loan and deposit rates. It met four (4) times during the
year ended June 30, 2004.
BOARD POLICIES REGARDING COMMUNICATIONS WITH THE BOARD OF DIRECTORS AND
ATTENDANCE AT ANNUAL MEETINGS
The Board of Directors maintains a process for stockholders to
communicate with the Board. Stockholders wishing to communicate with the Board
of Directors should send any communications to Terey Artz, Secretary, Eagle
Bancorp, P.O. Box 4999, Helena, Montana 59604. Any communication must state the
number of shares beneficially owned by the stockholder making the communication.
The Secretary will forward such communication
8
to the full Board of Directors or to any individual director or directors to
whom the communication is directed unless the communication is unduly hostile,
threatening, illegal or similarly inappropriate, in which case the Secretary has
authority to discard the communication or take appropriate legal action. Eagle
does not have a policy regarding Board member attendance at annual meetings of
stockholders. Last year, all seven members of the Board attended the annual
meeting.
CODE OF ETHICS
In 1992 the Board of Directors of the Bank adopted the Code of Ethics
and Conflict of Interest Policy. It is reviewed and approved annually, with the
most recent approval on May 20, 2004. The Policy is applicable to each of
Eagle's directors, officers and employees, including the principal executive
officer, principal financial officer and principal accounting officer, and
requires individuals to maintain the highest standards of professional conduct.
A copy of the Policy is available on Eagle's website at
www.americanfederalsavingsbank.com. Persons may also receive a copy of the Code
of Ethics free of charge by requesting it in writing from Pete Johnson at Eagle
Bancorp, 1400 Prospect Avenue, Helena, Montana 59601, or by calling him at (406)
442-3080. A copy of the Code of Ethics will be filed with the SEC as an exhibit
to Eagle's Annual Report on Form 10-KSB.
DIRECTORS' COMPENSATION
During fiscal 2004, each director, except for the Chairman of the
Board, was paid an annual fee of $12,000. The Chairman of the Board receives an
annual fee of $21,000. Also, each non-employee director, other than the Chairman
of the Board, was paid $175 for each committee meeting attended. The total fees
paid to the directors of Eagle for the year ended June 30, 2004, were $100,700.
Eagle has no other director compensation plans or director deferred compensation
plans other than the Stock Incentive Plan approved at the annual meeting in
2000. Each director of Eagle also serves as a director of American Federal and
Eagle Financial MHC. Directors do not receive additional compensation for their
service on the boards of American Federal or Eagle Financial MHC.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Chief Executive Officer and
Chief Financial Officer in each of the last three fiscal years. No other
executive officer of Eagle or American Federal served as President or earned a
total salary and bonus in excess of $100,000 during the last three fiscal years.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------------------- -------------
YEAR ENDED OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND POSITION JUNE 30 SALARY BONUS COMPENSATION(1) STOCK AWARDS COMPENSATION(2)
----------------- ------- ------ ----- ------------ ------------ ---------------
Larry A. Dreyer 2004 $124,500 $17,119 $12,000 $0 $44,310
President and Chief 2003 $122,000 $18,300 $12,000 $0 $42,632
Executive Officer 2002 $115,700 $9,835 $12,000 $0 $40,001
Peter J. Johnson 2004 $94,000 $12,925 $0 $0 $16,551
Sr.VP/Treasurer and 2003 $85,000 $12,750 $0 $0 $15,821
Chief Financial Officer 2002 $80,600 $6,851 $0 $0 $14,652
----------------
(1) Represents compensation for serving on the board of directors of Eagle
Bancorp.
(2) For fiscal 2004 for Dreyer consists of employer contribution to profit
sharing of $10,090, $2,870 for employer 401(k) payments, $25,262 for
employer deferred compensation payments, $1,320 for ESOP stock, and
$4,768 for various medical and life insurance payments. For fiscal 2004
for Johnson consists of
9
employer contribution to profit sharing plan of $7,176, $300 for
employer 401(k) payments, $2,880 for employer deferred compensation
payments, $1,320 for ESOP stock, and $4,875 for various medical and
life insurance payments.
--------------------
Option Grants in Last Fiscal Year. There were no options granted in
fiscal 2004 to Messrs. Dreyer or Johnson or any other employees or directors.
Employment Agreement. American Federal entered into an Employment
Agreement with its President, Larry A. Dreyer, effective January 1, 2000 and
amended effective as of June 1, 2004. The amended Employment Agreement has an
initial term ending September 30, 2006. The Employment Agreement is terminable
by the Bank for cause as defined in the Employment Agreement. If Mr. Dreyer is
terminated without cause, he will be entitled to a continuation of his salary
plus bonuses and deferred compensation from the date of termination through the
remaining term of the Employment Agreement. The aggregate payment made to Mr.
Dreyer would be an expense to the Bank and would result in reductions to net
income and capital. The Employment Agreement may be extended or renewed annually
by the board of directors after a determination of the satisfactory performance
of Mr. Dreyer in the Board's sole discretion. If Mr. Dreyer becomes disabled
during the term of the Employment Agreement, he would continue to receive
payment of 75% of the base salary until he returns to full-time employment at
American Federal, reaches age 65, accepts another full-time position with
another employer, or upon his death. Such payments shall be reduced by any other
benefit payments made under a disability plan in effect for Mr. Dreyer and the
Bank's other employees.
Non-Contributory Profit Sharing Plan. Neither Eagle nor American
Federal has a pension plan for employees. Instead, the Bank has established a
non-contributory profit sharing plan for eligible employees who have completed
one year of service with American Federal. The non-contributory plan enables
American Federal to contribute up to 15% of qualified salaries each year.
Typically 6% is contributed. The percentage amount of the contribution is
determined by the board of directors each year and is based primarily on
profitability for the past year. For the year ended June 30, 2004, the Board
authorized profit sharing contributions to Mr. Dreyer of $10,090 and to Mr.
Johnson of $7,176, and total contributions are $148,309 as of June 30, 2004.
The Non-Contributory Profit Sharing Plan also allows employees to make
contributions to a tax-qualified defined contribution savings plan or an
employee owned 401(k) plan. Employees can contribute a portion of their
salaries, (up to a maximum of $1x,000 for calendar 2004), to a 401(k) plan.
Eagle's Board has the authority to match up to a maximum of 50% of an employee's
contribution provided that the matching amount does not exceed 2.0% of such
employee compensation. For the year ended June 30, 2004, the Bank contributed
$2,870 and $300 to Mr. Dreyer's and Mr. Johnson's 401(k) programs, respectively,
and $38,302 in total to the 401(k) program.
Salary Continuation Agreement. Another benefit offered by American
Federal is a program to increase overall retirement benefits for employees to
levels which more closely approximate those in comparable businesses. American
Federal consulted with independent compensation consultants and developed a plan
to supplement retirement benefits. The plan American Federal adopted covers
eight of its senior officers, including Mr. Dreyer and all senior vice
presidents and vice presidents. It is a non-qualified retirement plan which is
designated the American Federal Savings Bank Salary Continuation Agreement (the
"Salary Continuation Agreement"). Under the Salary Continuation Agreement, each
officer receives a fixed retirement benefit based on his or her years of service
with American Federal. This plan is funded by insurance policies owned by
American Federal. It also provides for partial payments in the event of early
retirement, death or disability. In Mr. Dreyer's case, if he retires at age 65,
the Salary Continuation Agreement provides for a lump sum payment of $414,000,
or an annual payment for life of $45,000. In Mr. Johnson's case, if he retires
at age 65, the Salary Continuation Agreement provides for a lump sum payment of
$151,800, or an annual payment for life of $16,500. American Federal has
purchased life insurance contracts for each covered executive to fund the
payments. American Federal Savings Bank recognizes expenses to maintain the
plan. For the year ended June 30, 2004, the total expenses were $87,039.
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Bonus Plan. American Federal also provides a discretionary bonus
program ("Bonus Program") for all eligible employees. The Bonus Program is based
on the after-tax net profitability of American Federal and is linked
specifically to the Bank's return on assets. In the case of non-officer
employees, bonus amounts are based on salary levels. Under the Bonus Program,
the Bank's return on assets for the period from January through October is used
to determine the bonus levels of Bank officers. Officers' bonuses are directly
linked to the return on assets. For example, if American Federal Savings Bank
produces a return on assets of .90%, then each officer would receive a bonus of
9% of annual base salary. Executive officers' bonuses are based on a formula of
1.25 times the Bank's return on assets. For the year ended June 30, 2004,
American Federal Savings Bank paid total bonuses of $190,442. Mr. Dreyer's bonus
during this period was $17,119. Mr. Johnson's bonus was $12,925.
Employee Stock Ownership Plan. In connection with its reorganization to
the mutual holding company form of organization, the Bank established the ESOP
for employees age 21 or older who have at least one year of credited service
with the Bank.
As of June 30, 2004, the ESOP held 27,606 shares of Common Stock. These
shares represent shares purchased by the ESOP in the offering. Shares of Common
Stock purchased by the ESOP were funded by funds borrowed from Eagle. Shares
purchased in the reorganization by the ESOP will be allocated to participants'
accounts over ten (10) years.
The ESOP is administered by an unaffiliated corporate trustee in
conjunction with the ESOP Committee of the Bank. The ESOP trustee must vote all
allocated shares held by the ESOP in accordance with the instructions of
participating employees. Shares for which employees do not give instructions
will be voted by the ESOP trustee.
GAAP requires that any third party borrowing by the ESOP be reflected
as a liability on Eagle's statement of financial condition. Since the ESOP is
borrowing from Eagle, such obligation is eliminated in consolidation. However,
the cost of unallocated shares is treated as a reduction of shareholders'
equity.
Contributions to the ESOP and shares released from the suspense account
are allocated among ESOP participants on the basis of participants' compensation
as it relates to total participant compensation. Employees are fully vested upon
completion of seven (7) years of service. Benefits may be payable upon
retirement, early retirement, disability, death or separation from service.
The ESOP is subject to the requirements of ERISA and regulations of the
IRS and the United States Department of Labor.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee determines compensation policy and consists
of Directors Pennington, Campbell and Hartzog. Mr. Pennington was formerly
Chairman and Chief Executive Officer of the Bank. None of the above are members
of a compensation committee of the Board of Directors of any Company.
CERTAIN TRANSACTIONS
No directors, executive officers or immediate family members of such
individuals were engaged in transactions with Eagle, American Federal or any
subsidiary involving more than $60,000 (other than through a loan) during the
fiscal years ended June 30, 2003 and June 30, 2004. Furthermore, Eagle has no
"interlocking" relationships in which any executive officer is a member of the
board of directors of another entity, one of whose executive officers are a
member of American Federal's board of directors.
American Federal has followed the policy of offering residential
mortgage loans for the financing of personal residences, and consumer loans to
its officers, directors and employees. Loans are made in the ordinary course of
business. They are also made on substantially the same terms and conditions,
including interest rate and collateral, as those of comparable transactions
prevailing at the time with other persons. These loans do not include more than
the normal risk of collectibility or present other unfavorable features. As of
June 30, 2004, the aggregate
11
principal balance of loans outstanding to all directors, executive officers and
immediate family members of such individuals was approximately $126,102.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCES
Other than as described below, to the knowledge of the Board and based
upon a review of Forms 3 and 4 and amendments thereto furnished to Eagle
pursuant to Rule 16a-3(e) during the fiscal year ended June 30, 2003, no person
who is a director, officer or beneficial owner of 10% of the Common Stock failed
to file on a timely basis, the reports required by Section 16(a) of the
Securities Exchange Act. Ms. Sanderson sold 1,500 shares of Company stock in
April 2004. Due to a miscommunication between Eagle and Ms. Sanderson's broker,
the Form 4 was filed one day late.
PROPOSAL II - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The firm of Anderson ZurMuehlen & Co., P.C., Certified Public
Accountants, acted as independent auditors for Eagle for fiscal years ended June
30, 2003 and 2004. The Board has determined to reappoint Anderson ZurMuehlen &
Co., P.C. to act as independent auditors for the fiscal year ending June 30,
2005. A representative of Anderson ZurMuehlen & Co., P.C. will be present at the
Annual Meeting, will be given an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
Eagle Financial MHC intends to vote its shares of Common Stock in favor of the
ratification of the appointment of Anderson ZurMuehlen & Co., P.C.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF Anderson ZurMuehlen & Co., P.C. AS EAGLE'S INDEPENDENT AUDITORS
FOR FISCAL 2004 UNDER THIS PROPOSAL II.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of Eagle
knows of no matters to be brought before the Annual Meeting other than
procedural matters incident to the conduct of the Annual Meeting. If further
business is properly presented, the proxy holders will vote proxies, as
determined by a majority of the Board of Directors.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Pursuant to the proxy solicitation regulations of the Securities and
Exchange Commission (the "SEC"), any shareholder proposal intended for inclusion
in Eagle's Proxy Statement and form of proxy related to Eagle's 2005 Annual
Meeting of stockholders must be received by Eagle by May 16, 2005, pursuant to
the proxy solicitation regulations of the Securities and Exchange Commission.
Nothing in this paragraph shall be deemed to require Eagle to include in its
Proxy Statement and form of proxy any stockholder proposal which does not meet
the requirements of the Securities and Exchange Commission in effect at that
time.
Eagle's by-laws provide that in order for a stockholder to make
nominations for the election of directors, a stockholder must deliver notice in
writing of such nominations to the Secretary not less than 30 nor more than 60
days prior to the date of the Annual Meeting; provided that if less than 31
days' notice of the Annual Meeting is given to stockholders, such notice must be
delivered not later than the close of the tenth day following the day on which
notice of the Annual Meeting was mailed to stockholders. The notice of
nominations for election of directors must set forth certain information
regarding each nominee for election as a director, including such person's
written
12
consent to being named as a nominee and to serving as a director, if elected,
and certain information regarding the stockholder giving such notice.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE
URGED TO RETURN YOUR PROXY CARD PROMPTLY. IF YOU ARE THEN PRESENT AT THE ANNUAL
MEETING AND WISH TO VOTE YOUR SHARES IN PERSON, YOUR ORIGINAL PROXY MAY BE
REVOKED BY VOTING AT THE ANNUAL MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE
SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED APPROPRIATE
DOCUMENTATION FROM YOUR RECORDHOLDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Larry A. Dreyer
-------------------------
Larry A. Dreyer
President and CEO
Helena, Montana
September 17, 2004
13
EXHIBIT A
EAGLE BANCORP
AUDIT COMMITTEE CHARTER
ORGANIZATION
The Board of Directors of Eagle Bancorp ("Eagle") shall annually
designate an Audit Committee, which shall be composed of at least three
directors, all of whom have no relationship to Eagle or its subsidiaries that
may interfere with the exercise of their independence from management and Eagle
or its subsidiaries. In determining the independence of members of the Audit
Committee, the Board shall meet current standards of independence established
for service on the Audit Committee by applicable law, including the laws and
regulations of the Securities Exchange Commission, Federal Deposit Insurance
Corporation ("FDIC") and the Office of Thrift Supervision and other applicable
laws and regulations.
Each member of the Audit Committee shall be financially literate, as
such qualification is interpreted by the Board of Directors in its business
judgment, or must become financially literate within a reasonable period of time
after his or her appointment to the Audit Committee.
At least one member of the Audit Committee must have accounting or
related financial management expertise, as the Board of Directors interprets
such qualification in its business judgment.
STATEMENT OF POLICY
The primary function of the Audit Committee is to provide assistance to
the Board of Directors in fulfilling its responsibility to Eagle and its
shareholders relating to (i) its oversight of management and its auditors in
respect of corporate accounting, financial reporting practices, and the quality
and integrity of the financial reports of Eagle, (ii) the compliance of Eagle
with legal and regulatory requirements, (iii) the independent auditors
qualifications and independence, and (iv) the performance of Eagle's internal
audit function and independent accountants and performance of the other duties
of the Audit Committee specified by federal securities laws and regulations,
applicable banking regulations, or the listing standards of The Nasdaq Stock
Market, Inc. OTC Bulletin Board or other securities exchange or market on which
Eagle's securities are listed or eligible for trading (as applicable, the
"Listing Standards").
It is not the role of the Audit Committee to guarantee the accuracy or
quality of Eagle's financial statements but to oversee the work of management,
the independent auditors and internal auditors. The Audit Committee does not
have responsibility for planning or conducting the audit of Eagle 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 accountants, rather than the
Audit Committee. The Audit Committee also is not responsible for ensuring
compliance with laws or regulations. In so doing, it is the responsibility of
the Audit Committee to maintain open communication between the directors, the
independent auditors, the internal auditors, and the financial management of
Eagle.
The outside auditor for Eagle is ultimately accountable to the Board of
Directors and Audit Committee of Eagle. The Audit Committee and Board of
Directors have the ultimate authority and responsibility to select, evaluate
and, where appropriate, replace the outside auditor (or to nominate the outside
auditor to be proposed for shareholder approval in any proxy statement).
The Audit Committee is responsible for obtaining from the outside
auditor on a periodic basis a formal written statement delineating all
relationships between the auditor and Eagle and its subsidiaries. The Audit
Committee shall be responsible for conferring with the outside auditor with
respect to any disclosed relationships or services that may affect the
objectivity and independence of the outside auditor and for recommending to the
Board of Directors such appropriate action as may be necessary to satisfy itself
as to the independence of the outside auditor.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee policies and
procedures should remain flexible in order to best react to changing conditions
and to oversee management's implementation of prudent corporate accounting and
reporting policies.
In carrying out these responsibilities, the Audit Committee will:
General Responsibilities:
o The Audit Committee will meet at least four times each year or more
frequently when and if required as circumstances dictate. An Audit
Committee member should not vote on any matter in which he or she is
not independent. The Audit Committee may ask members of management or
others to attend a particular meeting and is authorized to receive all
pertinent information from management.
o The Audit Committee shall establish procedures for the (a) receipt,
retention and treatment of complaints received by Eagle regarding
accounting, internal accounting controls or auditing matters and (b)
confidential, anonymous submission by Eagle's employees of concerns
regarding questionable accounting or auditing matters.
o The Audit Committee shall regularly report on its activities to the
Board and shall provide the Board of Directors with such information as
the Board of Directors may request, and shall make such recommendations
as the Audit Committee shall deem appropriate.
o The Audit Committee shall fulfill such other duties and
responsibilities as are required by applicable law, the regulations of
the Securities and Exchange Commission, or the Listing Standards, and
as assigned to the Audit Committee from time to time by the Board of
Directors.
2
o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of Eagle and its divisions
and subsidiaries, including American Federal Savings Bank.
Responsibilities for Audits and Review of Quarterly and Annual
Financial Statements:
o The Audit Committee will have sufficient contact with the independent
accountant and the independent auditors will be required to treat the
relationship with the Audit Committee such that it will be able to
fulfill its obligations and be available to the full Board of Directors
at least annually and that it will provide the Audit Committee with a
timely analysis of significant financial reporting issues.
o The Audit Committee will discuss with management, the internal auditor
and the independent accountant significant risks and exposures and will
assess management's steps to minimize them.
o Meet with the independent auditors and financial management of Eagle to
review the scope of the proposed audit for the current year and the
audit procedures to be utilized, and at the conclusion thereof review
such audit, including any comments or recommendations of the
independent auditors.
o Obtain from the independent auditors a written statement detailing all
relationships between the auditors and Eagle, discuss any such
relationships with the auditors, and recommend appropriate action to
satisfy itself as to the auditors' independence.
o Review the internal audit function of Eagle including the independence
and authority of its reporting obligations, the proposed audit plans
for the coming year, and the coordination of such plans with the
independent auditors.
o Review all examiner's reports, and correspondence thereto including
responses of Eagle.
o Receive prior to or at each meeting a summary of findings from
completed internal audits and a progress report on the proposed
internal audit plan, as appropriate, with explanations for changes from
the original plan.
o Review with management and the independent auditors the financial
statements contained in the annual report to shareholders to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders. Changes in accounting principles also should be reviewed.
o Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the Audit Committee without
members of management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of Eagle financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors receive during the course of the audit.
3
o The Audit Committee shall be solely responsible for determining and
approving fees and other terms for engagements, including budget and
staffing of the internal audit services function.
o Notwithstanding the foregoing, the Audit Committee shall not approve
any non-audit service engagement where the provision of such service by
the independent accountants is prohibited by applicable law, the
regulations of the Securities Exchange Commission or the Listing
Standards, and the independent auditor shall not provide any such
prohibited service.
o Notwithstanding the foregoing, pre-approval is not required with
respect to the provision of non-audit services if: (a) the aggregate
amount of all such non-audit services provided to Eagle constitutes not
more than five percent of the total amount of revenues paid by Eagle to
its independent auditors during the fiscal year in which the non-audit
services are provided; (b) such services were not recognized by Eagle
at the time of the engagement to be non-audit services; and (c) the
non-audit services are promptly brought to the attention of the Audit
Committee and approved by the Audit Committee, or by one or more
members of the Audit Committee to whom authority to grant such approval
has been delegated, prior to the completion of the audit.
o The Audit Committee will review the following with the independent
accountant, the internal auditor and management:
a. The adequacy of Eagle's internal controls, including computerized
information system controls and security; and the resolution of identified
material weaknesses and reportable conditions in internal controls;
b. Any fraud that involves management or other employees who have a
significant role in Eagle's internal controls;
c. Any significant findings and recommendations made by the independent
accountant or internal auditing, together with management's responses to them;
d. All critical accounting policies and practices and any other
material components of Eagle's financial statements involving management's
judgment or estimates, and about the quality of accounting principals and the
clarity of financial disclosure practices used or proposed to be used by Eagle;
e. The alternative treatments of financial information within generally
accepted accounting principles that have been discussed with management
officials, ramifications of the use thereof, and the treatment preferred by the
independent accountants, as well as any required or suggested changes in
auditing or accounting practices or principles;
f. Material off-balance sheet transactions, arrangements, obligations
and other relationships of Eagle with unconsolidated entities or others that may
have a material current or future effect on Eagle's financial condition, changes
in financial condition, results of operations,
4
liquidity, capital expenditures, capital resources of significant components of
revenue or expenses;
g. Any material changes in accounting policies or practices and the
impact thereof on Eagle's financial statements;
h. The annual audited financial statements and quarterly financial
statements, including Eagle's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations";
i. Any report or recommendations of the independent accountants;
j. Anything else about the audit procedures or findings that GAAP
requires the accountants to discuss with the Committee.
k. Disclosures made by the CEO and CFO during the Forms 10-KSB and
10-QSB certification process about significant deficiencies in the design or
operation of internal controls; and
l. Any difficulties or disputes encountered with management while
conducting audits, including any restrictions on the scope of their work or
access to required information.
o The Audit Committee will review annual filings with the SEC and other
published documents containing Eagle's financial statements and will
consider whether the information in the filings is consistent with the
information in the financial statements. The Audit Committee shall
discuss earnings press releases (particularly use of "pro forma," or
"adjusted" non-GAAP information). Such matters may be discussed
generally (e.g., types of information and presentations) and need not
include specific releases or guidance.
o The Audit Committee will determine that the quarterly financial
statements have been reviewed by the independent accountants in
accordance with SAS 100 before those interim statements are released to
the public or filed with the Securities Exchange Commission.
o The Audit Committee shall prepare, or cause to be prepared by
management, 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 Eagle's annual report on Form 10-KSB.
5
Ongoing Responsibilities:
o The Audit Committee shall conduct an appropriate review of all related
party transactions for potential conflicts of interest and all such
transactions shall be approved by the Committee to the extent required
by applicable law.
o In performing its duties hereunder, the Audit Committee shall have the
authority to conduct or authorize investigations, to retain and
terminate such outside legal, accounting or other advisors as it shall
deem necessary, without seeking further approval of the Board of
Directors, and Eagle shall provide for appropriate funding therefore.
The Committee may utilize, consult with and engage the members and
resources of the Audit Committee in the discharge of its duties.
o Review legal and regulatory matters that may have a material effect on
Eagle's financial statements, compliance policies and programs and
reports from regulators.
o The Audit Committee shall review and assess at least annually its
performance, and the adequacy of this Charter in light of applicable
law and regulations.
o The Audit Committee shall discuss Eagle's policies with respect to risk
assessment and risk management, including legal and ethical compliance
programs.
o Review the matters discussed at each committee meeting with the Board
of Directors.
o Investigate any matter brought to its attention within the scope of its
duties to the extent and in such manner as it considers appropriate.
6
EXHIBIT B
CHARTER OF THE NOMINATING
COMMITTEE OF THE BOARD OF DIRECTORS
OF EAGLE BANCORP
I. THE COMMITTEE'S PURPOSE. The Nominating Committee ("Committee") is
appointed by the Board of Directors (Board) of Eagle Bancorp ("Eagle")
for the primary purpose of:
- identifying diverse individuals qualified to become members of the
Board;
- recommending to the Board the director nominees for the next annual
meeting of shareholders;
- consider nominees proposed by shareholders of Eagle; and
- evaluation of the Board and its members.
II. COMMITTEE COMPOSITION AND MEETINGS.
The Committee shall be comprised of three or more independent
directors, all of whom must qualify as independent directors under the
listing standards of The Nasdaq Stock Market, Inc. In addition, each
member shall be free from any relationship that, in the opinion of the
Board, would interfere with the exercise of his or her independent
judgment.
The members shall be appointed annually to one-year terms by the Board.
The Committee shall designate one member of the Committee as
Chairperson. The members shall serve until their resignation,
retirement, removal by the Board or until their successors shall be
appointed. No member of the Committee shall be removed except by
majority vote of the independent directors of the Board then in office.
The Committee shall fix its own rules of procedure, which shall be
consistent with the Bylaws of Eagle and this Charter.
The Committee shall meet at least twice annually and more frequently as
circumstances require or dictate. The Committee Chair must approve an
agenda in advance of each meeting.
The Chairperson of the Committee or a majority of the members of the
Committee may call a special meeting of the Committee.
A majority of the members of the Committee shall constitute a quorum.
The Committee may request that any directors, officers or employees of
Eagle, or other persons whose advice and counsel are sought by the
Committee, attend any meeting of the Committee to provide such
pertinent information as the Committee requests.
Following each of its meetings, the Committee shall deliver a report on
the meeting to the Board, including a description of all actions taken
by the Committee at the meeting.
The Committee shall keep written minutes of its meetings, which shall
be maintained with the books and records of Eagle.
III. COMMITTEE DUTIES AND RESPONSIBILITIES.
BOARD VACANCIES. When a vacancy occurs on the Board by reason of
disqualification, resignation, retirement, death or an increase in the
size of the Board, the Committee shall nominate a replacement director
for the Board.
ASSESS BOARD MEMBERSHIP NEEDS AND NOMINATE DIRECTORS. Determine what
types of backgrounds are needed to help strengthen and balance the
Board and to nominate appropriate candidates to fill vacancies
accordingly.
- Select, or recommend to the Board, director nominees to fill
vacancies on the Board as necessary.
- Be constantly alert to the needs of the Board and maintain an active
file of suitable candidates for consideration as nominees to the
Board, which candidates may include, if the Committee deems it
advisable, those recommended by the Chief Executive Officer and
other members of the Board. In compiling the file, the Committee
shall consider, where appropriate, the independence of each
candidate.
- Consider the candidate's knowledge of the banking business and
involvement in the community, business and civic affairs, and also
consider whether the candidate would provide for adequate
representation of its market area. Any nominee for director made by
the Committee must be highly qualified with regard to some or all
these attributes. The Committee will not recommend that the stock
ownership, without the other reasons named above, be a basis for the
selection of a director or nominee. In searching for qualified
director candidates to fill vacancies in the Board, the Committee
solicits its current Board of Directors for names of potentially
qualified candidates. Additionally, the Committee may request that
members of the Board pursue their own business contacts for the
names of potentially qualified candidates. The Committee would then
consider the potential pool of director candidates, select the
candidate the Committee believes best meets the then-current needs
of the Board, and
conduct an investigation of the proposed candidate's background to
ensure there is no past history, potential conflict of interest or
regulatory issue that would cause the candidate not to be qualified
to serve as a director of Eagle. The Committee will consider
director candidates recommended by Eagle's stockholders. If a
stockholder submits a proposed nominee, the Committee would consider
the proposed nominee, along with any other proposed nominees
recommended by members of Eagle's Board of Directors, in the same
manner in which the Committee would evaluate its nominees for
director.
- Conduct director evaluations upon renomination for election every
three years.
- Nominate directors to be elected by the shareholders and any
directors to be elected by the Board to fill vacancies.
- Review periodically the membership of each committee of the Board
and recommend committee assignments to the Board, including
rotation, reassignment or removal of any committee member.
BOARD SIZE. Make recommendations to the Board about exercising the
Board's authority to determine the number of its members.
BOARD SELF-EVALUATION. Conduct an annual evaluation of the
performance of the full Board and report its conclusion to the
Board. The Committee's report should generally include an assessment
of the Board's compliance with the principles set forth in these
guidelines and the Code of Ethics Policy, as well as identification
of areas in which the Board could improve its performance.
DIRECTOR REMOVAL. Recommend to the Board the removal of a director
where Appropriate.
DIRECTOR INDEPENDENCE. Recommend to the Board the standards for
director independence, in addition to those required by Nasdaq.
SHAREHOLDER COMMUNICATION. Ensure that the Board maintains a process
for shareholders to communicate with the Board. Shareholders wishing
to communicate with the Board should send any communication to the
Secretary, Eagle Bancorp. If an individual director or directors
receives communication from shareholders, such communication shall
be forwarded to the Secretary. Any communication must state the
number of shares beneficially owned by the shareholder making the
communication. The Secretary will forward such communication to the
Chairman of the Nominating Committee. The Secretary has the
authority to discard any
communication or take appropriate legal action with any
communication that is unduly hostile, threatening, illegal or
similarly inappropriate.
CHARTER. To maintain and update, as appropriate, this Charter, which
will be published on Eagle's website.
IV. AUTHORITY TO RETAIN EXPERTS. The Committee has the authority to retain,
direct and if appropriate, terminate any search firm used to identify
candidates for Board membership (or to establish other procedures to
develop potential candidates for consideration) as well as any such
other experts as it deems necessary in the performance of its duties.
As part of this authority, the Committee has the authority, to the
extent it deems necessary or appropriate, to retain independent legal,
accounting or other advisors. In addition, the Committee has the
authority, to the extent it deems necessary or appropriate, to ask
Eagle to provide support and funding in carrying out its duties.
/X/ PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE EAGLE BANCORP
With- For All
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF For hold Except
DIRECTORS OF EAGLE BANCORP TO BE USED AT THE ANNUAL 1. Election of two directors for three / / / / / /
MEETING OF STOCKHOLDERS ON OCTOBER 21, 2004 year terms each.
The undersigned being a stockholder of Eagle Bancorp
hereby appoints Thomas J. McCarvel and James A. NOMINEES: DON O. CAMPBELL, CHARLES G. JACOBY AND
Maierle, or each of them, with full power of ROBERT L. PENNINGTON
substitution in each, as proxies to cast all votes
which the undersigned stockholder is entitled to cast
at the Annual Meeting of Stockholders to be held at INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
10:00 a.m., Montana Time, on October 21, 2004, at INDIVIDUAL NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE
1400 Prospect Avenue, Helena, Montana 59601, and any THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
adjournments thereof. The undersigned stockholder
hereby revokes any proxy or proxies heretofore given. -------------------------------------------------------------------
For Against Abstain
2. Ratification of the appointment / / / / / /
of Anderson ZurMuehlen & Co., P.C.,
Certified Public Accountants,
as Eagle Bancorp's independent
auditors for the fiscal year
ending June 30, 2005.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND -----------> / /
THE MEETING.
In their discretion the proxies are authorized to vote with
respect to approval of the minutes of the last meeting of
stockholders, matters incident to the conduct of the meeting, and
upon such other matters as may properly come before the meeting.
IF SIGNED AND RETURNED THIS PROXY WILL BE VOTED AS DIRECTED OR,
IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR THE NOMINEES UNDER
PROPOSAL I AND FOR THE AUDITORS UNDER PROPOSAL II.
Please be sure to sign and date ------------------------
this Proxy in the box below. Date
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----Stockholder sign above---Co-holder (if any) sign above----
^ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. ^
EAGLE BANCORP
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Please date this Revocable Proxy and sign, exactly as your
name(s) appears on your stock certificate. If signing as a
fiduciary, please give your full title. If you receive more than
one proxy card, please sign and return all cards in the
accompanying envelope. Please check your mailing address as it
appears on this Revocable Proxy. If it is inaccurate, please
include your correct address below.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE
SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN
THE ENVELOPE PROVIDED.
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