SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
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EAGLE BANCORP
(Name of Registrant as Specified in its Charter)
----------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
EAGLE BANCORP
1400 Prospect Avenue
Helena, Montana 59601
(406) 442-3080
September 19, 2005
Dear Stockholder:
You are invited to attend the 2005 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 20, 2005, at 11:00 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 that 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 20, 2005
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 20,
2005, at 11:00 a.m. Montana time, for the following purposes, as more completely
set forth in the accompanying Proxy Statement:
I. To elect two (2) 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, 2006.
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 Tuesday,
September 6, 2005, 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 19, 2005
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
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 20, 2005
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 2005 Annual Meeting of Stockholders ("Annual Meeting")
to be held on Thursday, October 20, 2005, at the home office of American Federal
Savings Bank located at 1400 Prospect Avenue, Helena, Montana at 11:00 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 19, 2005.
This Proxy Statement and proxy card are being sent to holders of the Common
Stock on or about September 19, 2005. A copy of Eagle's Annual Report on Form
10-KSB for the year ended June 30, 2005, 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 the nominees of the
Board of Directors, Larry A. Dreyer and Lynn E. Dickey, 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.
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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 6, 2005 (the "Record Date"), will be entitled
to notice of and to vote at the Annual Meeting. On the Record Date there were
1,099,272 shares of Common Stock issued and outstanding and 648,493 shares of
Common Stock, or 58.99% 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, 2006, 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, 2005, is mailed herewith to
stockholders. Eagle has filed its annual 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.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of June 30, 2005, 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 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 58.74%
Helena, MT 59601
Jeffrey S. Halis 500 Park Avenue, Fifth Floor 80,900 6.80%
New York, NY 10022
American Federal Savings Bank 1400 Prospect Avenue 23,006 2.08%
Employee Stock Ownership Plan Helena, MT 59601
Robert L. Pennington Chairman of the Board 7,650(3)(4)(7) *
Charles G. Jacoby Vice Chairman of the Board 14,900(7) 1.35%
Don O. Campbell Director 7,400(7)(10) *
Larry A. Dreyer Director, President and Chief 1.67%
Executive Officer 18,423(4)(7)(8)(9)
Teresa L. Hartzog Director 10,720(7) *
James A. Maierle Director 14,900(5)(7) 1.35%
Thomas J. McCarvel Director 8,900(7) *
Peter J. Johnson Senior Vice President/Treasurer 14,735(4)(6)(7)(8) 1.33%
Michael C. Mundt Senior Vice President/Lending 7,727(4)(7)(8) *
Joanne Y. Sanderson Senior Vice President/Operations 13,508(4)(7)(8) 1.22%
Directors and Executive Officers as a
group (10 persons) N/A 118,863 10.77%
--------------------
(footnotes continued on next page)
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(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.
(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 in the Bank's
Non-Contributory Profit Sharing Plan. (footnotes continued on next page)
(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.
(10) Includes 690 shares held by revocable trust in wife's name. Mr. Campbell
retains voting control.
* Represents less than 1% of outstanding shares.
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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.
Two directors will be elected at the Annual Meeting. The Board of Directors
has nominated current director Larry A. Dreyer for re-election. Ms. Hartzog will
be retiring, as her age exceeds the maximum set forth in Eagle's by-laws. Mr.
Lynn Dickey has been nominated to fill the vacancy created by Ms. Hartzog's
retirement (see page 5 for more information on Mr. Dickey). If elected, Messrs.
Dreyer and Dickey will each serve as director for a three year term expiring at
the Annual Meeting to be held in 2008.
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, 2005,
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
--------------
Larry A. Dreyer 59 1990 2008
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.
Lynn E. Dickey 58 - 2008
Mr. Dickey recently retired from Galusha Higgins and Galusha PC, a
public accounting firm in Helena. He worked for Galusha for 36 years
and was active in the state CPA society. He has served on the boards
of numerous civic and charitable organizations.
DIRECTORS CONTINUING IN OFFICE
------------------------------
Thomas J. McCarvel 56 1998 2006
Mr. McCarvel has served as a Vice President of Carroll College in
Helena since December 1991. From 1998 to 1991 he was the Chief
Operating Officer of Anderson ZurMuehlen & Co., P.C., a public
accounting firm in Helena and American Federal's independent auditors.
James A. Maierle 57 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)
---- --- -------- -----------------
Robert L. Pennington 73 1973 2007
Mr. Pennington is the Chairman of Eagle. He was previously the
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.
Charles G. Jacoby 73 1979 2007
Mr. Jacoby is retired. He formerly owned a retail clothing
establishment in Helena. He serves as Vice Chairman of the Board.
Don O. Campbell 71 1994 2007
Mr. Campbell is a retired certified public accountant and previously
served as Vice President and Controller of Capri, Inc., and investment
management company located in Helena.
--------------------
(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 regular monthly meetings and may have additional meetings as
circumstances warrant. During the fiscal year ended June 30, 2005 the Board of
Eagle met eight times and the Board of the Bank met twelve times. All Directors
who served as directors during the fiscal year ended June 30, 2005, 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, McCarvel and Dickey 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
eleven (11) times during the fiscal year ended June 30, 2005. 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
6
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 written charter which is available on
Eagle's website at www.americanfederalsavingsbank.com. The charter was included
as an appendix to the proxy statement for the 2004 Annual Meeting of
Shareholders. 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;
o Oversight and review of the system of internal controls and
safeguards;
o Review with the independent auditor, the internal auditor and
management the adequacy of Eagle's internal controls and any material
weaknesses, any findings or recommendations from the independent
auditor, 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 auditors and to 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
2005 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.
7
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, 2005, to be filed with the SEC.
Members of the Audit Committee
Don O. Campbell, Chairman
Charles G. Jacoby
Robert L. Pennington
Audit, Audit-Related Fees, Tax Fees, All Other Fees and Auditor Independence
For the year ended June 30, 2005, Eagle paid its independent auditors
Anderson ZurMuehlen & Co., P.C., and related affiliates, approximately $30,500
for audit fees, $9,300 for audit-related fees, $7,000 for tax fees and $10,395
for all other fees. For the year ended June 30, 2004 those fees were $33,800 for
audit fees, $8,700 for audit-related fees, $6,500 for tax fees and $12,440 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 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, 2005
and June 30, 2004, 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 once in fiscal 2005.
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. Messrs. Jacoby and Maierle and Ms. Hartzog served
on the Nominating Committee in fiscal 2005. Each member is "independent" in
accordance with the requirements for companies quoted on The Nasdaq Stock
Market. The Committee's charter is available on Eagle's website at
www.americanfederalsavingsbank.com.
The Nominating Committee met twice in fiscal year 2005, and on June 16,
2005 nominated 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 Eagle's 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 on 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,
8
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, 2005.
The Asset Liability Management Committee. The Asset Liability Management
Committee (ALCO) was expanded in fiscal year 2005. The board's committee
consists of Directors Pennington and Dreyer, executive officers Johnson,
Sanderson and Mundt, along with other bank officers. Previously it consisted of
only Directors Pennington and Dreyer and executive officers Johnson and Mundt.
It meets at least quarterly to review American Federal's policies concerning
interest rate risk and loan and deposit rates. It met five (5) times during the
year ended June 30, 2005. A management ALCO was formed during the year to meet
on an as-needed basis to review new product offerings and other current topics.
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 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 but expects
all Board members to attend such meetings. Last year, all seven members of the
Board attended the annual meeting.
Code of Ethics
In 1992 the Board of Directors of the Bank first adopted a Code of Ethics
and Conflict of Interest Policy. It is reviewed and approved annually and
modified as necessary. The most recent approval was on May 20, 2004. The Code of
Ethics and Conflict of Interest 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 Code of Ethics and Conflict of Interest Policy is available on Eagle's
website at www.americanfederalsavingsbank.com. Persons may also receive a copy
of the Code of Ethics and Conflict of Interest Policy 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 and Conflict of Interest Policy was filed with the SEC as an
exhibit to Eagle's Annual Report on Form 10-KSB in 2004.
Directors' Compensation
During fiscal 2005, 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, 2005, were $103,500. 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.
9
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 2005 $127,000 $12,700 $12,000 $0 $45,416
President and Chief 2004 $124,500 $17,119 $12,000 $0 $44,310
Executive Officer 2003 $122,000 $18,300 $12,000 $0 $42,632
Peter J. Johnson 2005 $96,700 $9,670 $0 $0 $17,016
Sr.VP/Treasurer and 2004 $94,000 $12,925 $0 $0 $16,551
Chief Financial Officer 2003 $85,000 $12,750 $0 $0 $15,821
--------------------
(1) Represents compensation for serving on the board of directors of Eagle
Bancorp.
(2) For fiscal 2005 Other Compensation for Dreyer consists of employer
contribution to profit sharing of $8,289, $2,750 for employer 401(k)
payments, $27,494 for employer deferred compensation payments, $1,303 for
ESOP stock, and $5,580 for various medical and life insurance payments. For
fiscal 2005 Other Compensation for Johnson consists of employer
contribution to profit sharing plan of $6,350, $300 for employer 401(k)
payments, $3,137 for employer deferred compensation payments, $1,303 for
ESOP stock, and $6,226 for various medical and life insurance payments.
--------------------
Option Grants in Last Fiscal Year. There were no options granted in fiscal
2005 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 a current
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.
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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, 2005, the Board
authorized profit sharing contributions to Mr. Dreyer of $8,289 and to Mr.
Johnson of $6,350, and total contribution expense was $143,336 for the year
ended June 30, 2005.
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 $14,000 for calendar 2005), 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, 2005, the Bank contributed
$2,750 and $300 to Mr. Dreyer's and Mr. Johnson's 401(k) programs, respectively,
and $39,534 in total expense 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
four 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, 2005, the total expenses were $92,006.
Split-Dollar Benefit Plan. On October 21, 2004, the Bank entered into
agreements with three insurance companies for the purpose of establishing a
split-dollar benefit plan. The Bank purchased life insurance policies on twelve
officers of the Bank, including the Bank's four executive officers. The plan
provides for the officers to receive life insurance benefits ranging from
$50,000 to $75,000, provided they meet the eligibility requirements of the plan.
The remainder of the life insurance benefits accrues to the Bank.
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, 2005 American Federal
Savings Bank paid total bonuses of $153,402. Mr. Dreyer's bonus during this
period was $12,700. Mr. Johnson's bonus was $9,670.
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, 2005, the ESOP held 23,006 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
11
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 is a member 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, 2004 and June 30, 2005. 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, 2005, the aggregate principal balance of loans outstanding to all
directors, executive officers and immediate family members of such individuals
was approximately $148,411.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCES
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, 2005, 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.
12
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, 2004 and
2005. The Board has determined to reappoint Anderson ZurMuehlen & Co., P.C. to
act as independent auditors for the fiscal year ending June 30, 2006. 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 2006 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 2006 Annual
Meeting of stockholders must be received by Eagle by May 15, 2006, 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 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 19, 2005
13
[X]PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE EAGLE BANCORP
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF EAGLE BANCORP TO BE USED AT THE ANNUAL
MEETING OF STOCKHOLDERS ON OCTOBER 20, 2005
The undersigned being a stockholder of Eagle Bancorp hereby appoints Thomas
J. McCarvel and James A. Maierle, or each of them, with full power of
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 11:00 a.m., Montana Time, on October 20, 2005, at 1400 Prospect
Avenue, Helena, Montana 59601, and any adjournments thereof. The undersigned
stockholder hereby revokes any proxy or proxies heretofore given.
With- For All
1. Election of two directors for three For hold Except
year terms each. |_| |_| |_|
Nominees: Larry A. Dreyer and Lynn E. Dickey
INSTRUCTION: To withold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. Ratification of the appointment of For Against Abstain
Anderson ZurMuehlen & Co., P.C., Certified |_| |_| |_|
Public Accountants, as Eagle Bancorp's
independent auditors for the fiscal
year ending June 30, 2006.
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 | Date |
this Proxy in the box below. | |
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| |
| |
| |
|____ Stockholder sign above __________ Co-holder (if any) sign above __________
+ +
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^ ^
| 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
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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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