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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933



Eagle Bancorp, Inc.
(Exact name of registrant as specified in its charter)

Maryland
(State or Other Jurisdiction
of Incorporation or Organization)
  6022
(Primary Standard
Industrial Classification Code Number)
  52-2061461
(I.R.S. Employer
Identification Number)

7830 Old Georgetown Road, Third Floor
Bethesda, Maryland 20814
(301) 986-1800

(Address, including zip code and telephone number, including area code, of registrant's principal executive offices)

Ronald D. Paul
President and Chief Executive Officer
Eagle Bancorp, Inc.
7830 Old Georgetown Road, Third Floor
Bethesda, Maryland 20814
(301) 986-1800

(Name, address, including zip code and telephone number, including area code, of agent for service)

Copies to:

Noel M. Gruber, Esquire
BuckleySandler LLP
1250 24th Street, NW
Washington, D.C. 20037
(202) 349-8043

 

Kevin M. Houlihan
Holland & Knight LLP
800 17th Street, NW, Suite 1100
Washington, D.C. 20006
(202) 469-5269

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

          If securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

          If this Form is being filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number in the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number in the earlier effective registration statement for the same offering.    o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer ý   Non-accelerated filer o   Smaller reporting company o

          If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

          o    Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

          o    Exchange Act Rule 144-1(d) (Cross-Border Third-Party Tender Offer)

CALCULATION OF REGISTRATION FEE

               
 
Title of each class of securities
to be registered

  Amount to be
registered(1)

  Proposed maximum
offering price per
unit(2)

  Proposed maximum
aggregate offering
price(2)

  Amount of
registration fee

 

Common Stock, $0.01 Par Value

  5,171,147   $27.53   $142,361,677   $18,336.19

 

(1)
Represents the maximum number of shares of Eagle Bancorp, Inc., or "Eagle," common stock issuable in connection with the merger in exchange for shares of Virginia Heritage Bank, or "Virginia Heritage," common stock, based on 19.9% of the outstanding shares of Eagle common stock.

(2)
Estimated solely for purposes of calculating the registration fee in accordance with Rules 457(f)(1) and 457(c) under the Securities Act of 1933, as amended, based upon the average of the high and low sales prices of Virginia Heritage common stock on OTCQB market on July 23, 2014.

          THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

   


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Information contained herein is not complete and may be changed. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

PRELIMINARY PROXY STATEMENT/PROSPECTUS
DATED July 29, 2014, SUBJECT TO COMPLETION

LOGO

Dear Fellow Shareholders:

         On June 9, 2014, Virginia Heritage Bank, or Virginia Heritage, entered into an agreement and plan of reorganization with Eagle Bancorp, Inc., or Eagle, and its wholly-owned subsidiary EagleBank, which is referred to as the merger agreement, pursuant to which Virginia Heritage will merge with and into EagleBank, with EagleBank being the surviving institution. The merger agreement will be voted upon at a Special Meeting of Shareholders of Virginia Heritage, or the special meeting, to be held on                        , 2014 at    :      .m., local time, at [                        ].

         If the merger agreement is approved and the merger is completed, each outstanding share of Virginia Heritage common stock will be converted into the right to receive a combination of shares of Eagle common stock and cash in amounts based on the average closing price of a share of Eagle common stock over a 20 trading day period ending five trading days prior to closing, or the Eagle average price, as set forth below:

         Because the per share merger consideration will fluctuate based on the Eagle average price, as discussed in the bullet points above and in greater detail below in this proxy statement/prospectus, the amount of consideration you will receive will not be known at the time you vote on the merger agreement. Eagle common stock is listed on The NASDAQ Capital Market under the symbol "EGBN" and Virginia Heritage common stock is quoted under the symbol "VGBK" on the OTCQB marketplace. You should obtain current market quotations for the Eagle common stock and Virginia Heritage common stock.

         The Virginia Heritage board of directors has unanimously determined that the merger agreement and the transactions contemplated thereby are fair to and in the best interests of Virginia Heritage and its shareholders, has approved and adopted the merger agreement and the transactions contemplated thereby and unanimously recommends that you vote "FOR" the proposal to approve the merger agreement as described in this proxy statement/prospectus. Consummation of the merger is conditioned upon the receipt of the requisite bank regulatory approvals and the approval of the merger agreement by the holders of at least a majority of the outstanding shares of Virginia Heritage common stock. Please carefully review the proxy statement/prospectus, which explains the merger in detail. In particular, you should carefully consider the discussion in the section entitled "Risk Factors" at page 23 of the proxy statement/prospectus.

         It is important that your shares of Virginia Heritage common stock are represented at the special meeting, whether or not you plan to attend the special meeting. Abstentions and failures to vote, including by failing to instruct your broker how to vote shares you hold in "street name," will have the same effect as votes against the merger agreement.

         Your vote is important regardless of the number of shares of Virginia Heritage common stock you own. Please complete and return your proxy card in the enclosed envelope, or follow the instructions on your proxy card to vote your shares by telephone or over the internet. You may attend the special meeting and vote your shares in person if you wish, even though you have previously submitted your proxy. If you are the beneficial owner of shares held in "street name" through a broker or other nominee, you should instruct your broker or nominee how to vote on your behalf, or, if you plan to attend the special meeting and wish to vote in person, you should bring with you a signed proxy from your broker or nominee confirming your right to vote the shares.

         If you have any questions about how to vote your shares, please call [                        ] the firm assisting us with the solicitation of proxies, [            ], toll free at ([        ]) [                ]].

         We look forward to seeing you at the special meeting, and we appreciate your continued support.

Sincerely,

David P. Summers
Chief Executive Officer and Chairman of the Board

         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the securities to be issued under this proxy statement/prospectus, or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

         Shares of Eagle common stock are not savings or deposit accounts or other obligations of any bank or savings association, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

         This proxy statement/prospectus is dated                        , 2014, and is first being mailed to shareholders of Virginia Heritage on or about                        , 2014.


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LOGO

VIRGINIA HERITAGE BANK


NOTICE OF 2014 SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
                        , 2014

To the Shareholders of Virginia Heritage Bank:

         Virginia Heritage Bank will hold a special meeting of shareholders on                        ,                         , 2014 at    :      .m. local time, at [        ], for the following purposes:

         Shareholders of record as of the close of business on [                ], 2014 are entitled to receive notice of the special meeting and to vote at the special meeting and any adjournment or postponement thereof. If you are the beneficial owner of shares held in "street name" through a broker or other nominee, you should instruct your broker or nominee how to vote on your behalf, or, if you plan to attend the special meeting and wish to vote in person, you should bring with you a signed proxy from your broker or nominee confirming your right to vote the shares.

         Under Virginia law, Virginia Heritage shareholders do not have the right to assert appraisal rights with respect to the merger or demand that EagleBank, as the surviving institution in the merger, pay the fair value of their shares of Virginia Heritage common stock in cash.

         We cannot complete the merger unless the merger agreement is approved by the affirmative vote of at least a majority of the outstanding shares of Virginia Heritage common stock entitled to vote at the special meeting. The proxy statement/prospectus accompanying this notice explains the merger, the merger agreement, the proposals to be considered at the special meeting and specific information concerning the special meeting. Please review this proxy statement/prospectus carefully.

         The Virginia Heritage board of directors has unanimously determined that the merger and the other transactions contemplated by the merger agreement are in the best interests of Virginia Heritage and its shareholders, has adopted the merger agreement and recommends that Virginia Heritage shareholders vote "FOR" approval of the merger agreement.

         The proxy statement/prospectus follows this notice, and a proxy card is enclosed. The proxy card includes instructions for voting your shares of Virginia Heritage common stock by returning a signed proxy card or voting by telephone or over the internet. To ensure that your vote is counted, please complete and return the proxy card in the enclosed, postage-paid return envelope, or follow the instructions on the proxy card to vote your shares of Virginia Heritage common stock by telephone or over the internet, whether or not you plan to attend the special meeting in person. If you attend the special meeting, you may revoke your proxy and vote your shares in person. However, attendance at the special meeting will not of itself revoke a proxy.

 

By Order of the Board of Directors

 

Charles C. Brockett, Secretary

                        , 2014

Please complete and sign the enclosed proxy and return it promptly in the envelope provided, or vote your shares by telephone or over the internet, whether or not you plan to attend the special meeting.


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TABLE OF CONTENTS

 
  Page  

Additional Information

    1  

Questions and Answers About the Special Meeting and the Merger

    2  

Summary

    8  

Risk Factors

    23  

Selected Consolidated Financial Data of Eagle

    29  

Selected Consolidated Financial Data Virginia Heritage

    32  

Comparative Per Share Data

    34  

Comparative Stock Prices and Dividends

    35  

Forward-Looking Statements

    37  

The Special Meeting

    38  

Date, Time and Place of Meeting

    38  

Purpose of the Meeting

    38  

Record Date and Outstanding Shares

    38  

Quorum; Abstentions and Broker Non-Votes

    39  

Votes Required for Approval

    39  

Voting by Directors

    39  

Voting and Revocation of Proxies

    39  

Solicitation of Proxies and Expenses

    40  

Virginia Heritage Board of Directors' Recommendation

    41  

Proposal No. 1—The Merger

    41  

Structure of the Merger

    41  

Merger Consideration

    42  

Treatment of Virginia Heritage Options

    44  

Treatment of Virginia Heritage Preferred Stock

    45  

Background of the Merger

    45  

Virginia Heritage's Reasons for the Merger and Recommendation of the Board of Directors of Virginia Heritage

    48  

Opinion of Virginia Heritage's Financial Advisor

    49  

Eagle's Reasons for the Merger

    59  

Surrender of Certificates Representing Virginia Heritage Common Stock

    60  

Support Agreements

    61  

Non-Competition, Non-Solicitation and Non-Disparagement Agreements

    62  

Effectiveness of the Merger

    63  

Material United States Federal Income Tax Consequences

    63  

Interests of Certain Persons in the Merger

    66  

Accounting Treatment

    68  

Regulatory Approvals Required for the Merger

    68  

Conditions to the Merger

    69  

Representations and Warranties

    70  

Conduct of Business Pending the Effective Time

    71  

Termination and Termination Payments

    79  

Amendment and Waiver

    82  

Appraisal Rights

    82  

Unaudited Pro Forma Combined Financial Information

    83  

Unaudited Pro Forma Combined Balance Sheet as of March 31, 2014

    84  

Unaudited Pro Forma Combined Income Statement for the Three Months Ended March 31, 2014

    85  

Unaudited Pro Forma Combined Income Statement for the Year Ended December 31, 2013

    86  

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  Page  

Notes to Unaudited Pro Forma Combined Financial Information

    87  

Information About Eagle

    91  

Information About Virginia Heritage

    95  

Management's Discussion and Analysis of Financial Condition and Results of Operations of Virginia Heritage

    98  

Certain Beneficial Ownership of Virginia Heritage Common Stock

    125  

Comparative Rights of Shareholders

    127  

Proposal No. 2—Adjournment of the Special Meeting

    137  

Other Business

    137  

Legal Matters

    137  

Experts

    137  

Where You Can Find More Information

    137  

Commission Position on Indemnification for Securities Act Liabilities

    138  

Index to Consolidated Financial Statements of Virginia Heritage

    F-1  

Annex A—Agreement and Plan of Reorganization

    A-1  

Annex B—Form of Support Agreement

    B-1  

Annex C—Fairness Opinion of Sandler O'Neill & Partners, L.P. 

    C-1  

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ADDITIONAL INFORMATION

        This document is the proxy statement of Virginia Heritage Bank for its special meeting of shareholders, or the special meeting, to consider and vote on a proposal to approve the agreement and plan of reorganization, as described in this document. This document is also the prospectus of Eagle Bancorp, Inc. for the shares of its common stock to be issued in connection with the consummation of the transactions contemplated by the agreement and plan of reorganization. In this proxy statement/prospectus Virginia Heritage Bank is referred to as "Virginia Heritage," Eagle Bancorp, Inc. is referred to as "Eagle" and its wholly-owned subsidiary EagleBank is referred to as "EagleBank." Except as the context may otherwise clearly require, references to "Eagle" mean Eagle and its subsidiaries on a consolidated basis. Also, throughout this proxy statement/prospectus, the agreement and plan of reorganization, dated as of June 9, 2014, among Eagle, EagleBank and Virginia Heritage, is referred to as the "merger agreement." The merger of Virginia Heritage with and into EagleBank is referred to as the "merger." This proxy statement/prospectus incorporates important business and financial information about Eagle from documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference in this proxy statement/prospectus by requesting them in writing or by telephone from Eagle at 7830 Old Georgetown Road, Third Floor, Bethesda, Maryland 20814, Attention: Jane Cornett, Secretary, (301) 986-1800.

        If you would like additional copies of this proxy statement/prospectus, please contact:

[            ]
Shareholders may call toll free: ([            ]) [            ]
Banks and brokers may call collect: ([            ]) [            ]

        To obtain timely delivery of any documents, your request must be made no later than five business days prior the special meeting. Accordingly, if you would like to request documents, please do so by [                    ], 2014 in order to receive them before the special meeting.

        See "Where You Can Find More Information" at page 137 for further information.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

        The following are some questions that you may have regarding the merger and the special meeting, and brief answers to those questions. Eagle and Virginia Heritage advise you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger and the special meeting.

Q: Why am I receiving this proxy statement/prospectus?

A: You are receiving this proxy statement/prospectus because you are a shareholder of Virginia Heritage as of [                    ], 2014, the record date for Virginia Heritage's special meeting. This proxy statement/prospectus is being used by the board of directors of Virginia Heritage to solicit your proxy for use at the special meeting. This proxy statement/prospectus also serves as the prospectus for shares of Eagle common stock to be issued in exchange for shares of Virginia Heritage common stock in the merger.


The Merger and the Special Meeting

Q: What matters will be considered at the special meeting?

A: At the special meeting, Virginia Heritage shareholders will be asked to vote on: (i) the merger agreement pursuant to which Virginia Heritage will merge with and into EagleBank, with EagleBank surviving the merger, and (ii) a proposal, if necessary, to adjourn the special meeting to a later date or dates to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to achieve a quorum or approve the merger agreement. The merger agreement is included in this proxy statement/prospectus as Annex A.

Q: What shareholder vote is necessary?

A: The affirmative vote of the holders of at least a majority of the outstanding shares of Virginia Heritage common stock entitled to vote at the special meeting is required to approve the merger agreement. The affirmative vote of a majority of the shares voted on such proposal, if necessary, is required to adjourn the special meeting to permit further solicitation of proxies. Directors of Virginia Heritage having or sharing the power to vote approximately 23.93% of the outstanding shares of Virginia Heritage common stock as of the record date for the special meeting have entered into support agreements with Eagle pursuant to which they have agreed to vote their shares of Virginia Heritage common stock for approval of the merger agreement. The form of this "support agreement" is included in this proxy statement/prospectus as Annex B.

Q: What vote does the Virginia Heritage board of directors recommend?

A: Virginia Heritage's board of directors unanimously recommends that Virginia Heritage shareholders vote "FOR" approval of the merger agreement, and "FOR" the proposal, if necessary, to adjourn the special meeting to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to achieve a quorum or approve the merger agreement.

Q: What was the opinion of Virginia Heritage's financial advisor?

A: Sandler O'Neill & Partners, L.P., or "Sandler O'Neill," presented an opinion to the board of directors of Virginia Heritage to the effect that, as of June 9, 2014, and based upon the assumptions made, the matters it considered and the limitations on its review as set forth in its opinion, the merger consideration provided for in the merger agreement is fair to the shareholders of Virginia Heritage from a financial point of view.

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Q: Who is entitled to vote at the special meeting?

A: Holders of Virginia Heritage common stock at the close of business on [                    ], 2014, the record date for the special meeting, are entitled to receive notice of the special meeting and to vote their shares at the special meeting and any related adjournment or postponement.

Q: Why is my vote important?

A: The merger agreement must be approved by the affirmative vote of the holders of at least a majority of the outstanding shares of Virginia Heritage common stock entitled to vote at the special meeting. Therefore, the failure of a Virginia Heritage shareholder to vote, by proxy or in person, will have the same effect as a vote against the merger agreement. In addition, if you do not return your proxy card or vote your shares by telephone or over the internet at or before the special meeting, it will be more difficult for Virginia Heritage to obtain the necessary quorum to hold the special meeting.

Q: What do I need to do now?

A: After you have carefully read this proxy statement/prospectus, please use one of the proxy voting methods to indicate how you want your shares voted with respect to each proposal as soon as possible so that your shares will be represented and voted at the special meeting. If you are a shareholder of record, you may complete, sign, date and mail the proxy card in the enclosed postage-paid return envelope. You may also vote your shares by telephone or over the internet. Instructions for voting by returning a signed proxy card and for voting by telephone or over the internet are on the proxy card enclosed with this proxy statement/prospectus. If you vote your shares by returning a signed proxy card, do not send your Virginia Heritage stock certificates with your proxy card.

If your shares are held in "street name," please follow the voting instructions provided by your broker or nominee to vote your shares as soon as possible.

Q: How will my shares be voted?

A: If you are a shareholder of record and submit a valid proxy, the persons named as proxies will vote your shares of Virginia Heritage common stock at the special meeting as you direct. If you submit a valid proxy but do not indicate how you want your shares voted, the persons named as proxies will vote your shares (i) "FOR" approval of the merger agreement, and (ii) "FOR" the proposal, if necessary, to adjourn the special meeting to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to achieve a quorum or approve the merger agreement.

Q: How do I change my vote after I have submitted my proxy?

A: If you are a shareholder of record, you may change your vote at any time before your proxy is voted at the special meeting by revoking your proxy in any of the following ways:

The inspectors of election will honor the proxy card, or telephone or internet vote, with the latest date.

If your shares are held in "street name," you will need to follow the voting instructions from your broker or nominee in order to change your vote.

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If your shares are held in "street name," you will need a signed proxy from your broker or nominee in order to attend the special meeting and vote in person, as discussed in the answer to the question "If my shares are held in "street name" by my broker, will my broker vote my shares for me?"

Q: If my shares are held in "street name" by my broker, will my broker vote my shares for me?

A: No. If you hold your shares in a brokerage account or through a bank or other nominee, you are considered the beneficial owner of shares held in "street name," and these materials are being forwarded to you by your broker or nominee, which is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker or nominee how to vote and you also are invited to attend the special meeting. However, because you are not the shareholder of record, you may not vote these shares in person at the special meeting unless you obtain a signed proxy from the shareholder of record giving you the right to vote the shares. Your broker or nominee has enclosed or provided a voting instruction form for you to use to direct your broker or nominee how to vote these shares.

If you do not provide your broker with specific instructions on how to vote your shares held in "street name," your broker will not be permitted to use its discretion to vote your shares on the proposal to approve the merger agreement, or on the adjournment of the special meeting, each of which are considered non-routine. You should therefore instruct your broker how to vote your shares on each proposal. Your failure to instruct your broker to vote your shares of Virginia Heritage common stock will be the equivalent of voting against the approval of the merger agreement.

Q: What if I abstain from voting?

A: An abstention will count as present and entitled to vote for purposes of determining quorum. If a Virginia Heritage shareholder abstains from voting on the merger agreement, it will have the same effect as a vote against the merger agreement but will have no effect on the other proposal.

Q: Can I attend the special meeting and vote my shares in person?

A: All shareholders are invited to attend the special meeting. Shareholders of record at the close of business on [                    ], 2014, the record date for the special meeting, can vote in person at the special meeting. If a broker or nominee holds your shares in "street name," then you are not the shareholder of record and you must ask your broker or nominee for a signed proxy to enable you to vote in person at the special meeting.

Q: How can I obtain directions to the special meeting?

A: To obtain directions to attend the special meeting in person, please contact Virginia Heritage's Secretary, Charles C. Brockett, at (703) 277-2200.

Q: What are the deadlines for voting?

A: If you are a shareholder of record:

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If your shares are held in "street name," you must vote your shares in accordance with the voting instruction form by the deadline set by your broker or nominee.

Q: What are the quorum requirements for the special meeting?

A: The presence in person or by proxy of shareholders owning shares of Virginia Heritage common stock representing a majority of the total votes entitled to be cast by shareholders of Virginia Heritage common stock at the special meeting will constitute a quorum. Your shares of Virginia Heritage common stock will be counted as present at the special meeting for purposes of determining whether there is a quorum if you are present and vote in person at the special meeting or if a proxy has been properly submitted by you or on your behalf for the special meeting, without regard to whether the proxy is marked as casting a vote or abstaining from voting.

Q: Am I entitled to dissenters' or appraisal rights?

A: No. Virginia law does not provide dissenters' or appraisal rights in connection with the merger.

Q: When do you expect to complete the merger?

A: The parties presently expect to complete the merger during the fourth quarter of 2014. However, there can be no assurance when or if the merger will occur. Shareholders of Virginia Heritage holding at least a majority of the outstanding shares of Virginia Heritage common stock must first approve the merger agreement at the special meeting, bank regulatory approvals must be obtained and other conditions specified in the merger agreement must be satisfied.

Q: Is completion of the merger subject to any conditions?

A: Yes. In addition to the shareholder approval being sought at the special meeting, completion of the merger requires the receipt of the necessary regulatory approvals, and the satisfaction of other conditions specified in the merger agreement. See "Proposal No. 1—The Merger—Regulatory Approvals Required for the Merger" at page 68 and "Proposal No. 1—The Merger—Conditions to the Merger" at page 69.


Merger Consideration

Q: What will Virginia Heritage shareholders receive in the merger?

A: As a result of the merger, each share of Virginia Heritage common stock will be converted into the right to receive a combination of shares of Eagle common stock and cash. The number of shares of Eagle common stock constituting a portion of the merger consideration will not be determined until shortly before closing of the merger. So long as the average closing price of a share of Eagle common stock, or Eagle average price, over a 20 trading day period ending five trading days prior to closing, or the price determination period, is at least $29.00 and not more than $35.50, then each share of Virginia Heritage common stock would be converted into the right to receive shares of Eagle common stock having a value, based on the Eagle average price, of $21.50 per share, and cash of $7.50 per share, for aggregate consideration of $29.00 per share. If the Eagle average price is greater than $35.50, the number of shares of Eagle common stock issuable in exchange for each share of Virginia Heritage common stock will be fixed at 0.6056 shares, and the amount of cash will increase. If the Eagle average price is less than $29.00, then, generally, each share of Virginia Heritage common stock would be converted into the right to receive $7.50 in cash and shares of Eagle common stock having a value equal to the Eagle average price less $7.50. Please refer to "Proposal No. 1—The Merger—Merger Consideration—Calculation of the Exchange Ratio" and "—Calculation of the Cash Consideration" at page 42.

Any change in the price of Eagle common stock prior to completion of the merger will affect the number and value of the shares of Eagle common stock that Virginia Heritage shareholders will have the right to

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receive upon completion of the merger and could affect the amount of cash they have the right to receive upon completion to the merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in Eagle's business, operations and prospects, and regulatory considerations. Many of these factors are beyond Eagle's or Virginia Heritage's control. Accordingly, at the time of the special meeting, Virginia Heritage shareholders will not be able to determine the exact number of, or the value of, shares of Eagle common stock or the exact amount of cash that they may receive upon completion of the merger.

The merger will not result in any change to the shares of Eagle common stock outstanding immediately prior to the merger.

Q: Do I have the right to receive fractional shares of Eagle common stock in the merger?

A: No. Cash will be provided in lieu of fractional shares.

Q: What are the tax consequences of the merger to me?

A: The merger is intended to constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the "Internal Revenue Code." Accordingly, U.S. holders, as defined in this proxy statement/prospectus, of Virginia Heritage common stock generally will not recognize gain or loss on the receipt of Eagle common stock in exchange for Virginia Heritage common stock in the merger, except with respect to cash received in connection with the conversion of each share of Virginia Heritage common stock and in lieu of fractional shares of Eagle common stock.

Eagle and Virginia Heritage will have no obligation to complete the merger until they have received the opinion of counsel to the effect that, for United States federal income tax purposes the merger will be a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

We urge you to consult your personal tax advisor to gain a full understanding of the tax consequences of the merger to you. Tax matters are very complicated, and in many cases, the tax consequences of the merger will depend on your particular facts and circumstances.

For a more detailed discussion of the U.S. federal income tax consequences of the merger, please see the section entitled "Proposal No. 1—The Merger—Material United States Federal Income Tax Consequences" at page [          ].

Q: When should I send in my stock certificates?

A: Do not send in your certificates representing shares of Virginia Heritage common stock with your proxy card. Within 10 days after the mailing of this proxy statement/prospectus holders of Virginia Heritage common stock will be sent a letter of transmittal and instructions on how to submit their Virginia Heritage common stock certificates in exchange for shares of Eagle common stock and cash consideration.

Q: What will happen to my Virginia Heritage stock options?

A: Each option to acquire shares of Virginia Heritage common stock under Virginia Heritage's stock option plans that is outstanding immediately prior to the effective time of the merger will be converted into an option to purchase shares of Eagle common stock. The number of shares of Eagle common stock that may be acquired pursuant to each Virginia Heritage option will be determined by dividing the final exchange ratio by 0.741321 (rounded to four decimal places), or the option exchange ratio, provided that the option exchange ratio will not exceed 1.0000 or be less than 0.8169, and then multiplying the option exchange ratio by the number of shares of Virginia Heritage common stock subject to such option, rounded down to the nearest whole share. The exercise price per share of Eagle common stock will be equal to the exercise price per share of Virginia Heritage common stock divided by the option exchange

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ratio, rounded up to the nearest cent. See "Proposal No. 1—The Merger—Treatment of Virginia Heritage Options" at page 44.

Q: Is there other information about Eagle that I should consider that is not included in this proxy statement/prospectus?

A: Yes. Much of the business and financial information about Eagle that may be important to you is not included in this proxy statement/prospectus. Instead, that information is "incorporated by reference" to documents separately filed by Eagle with the Securities and Exchange Commission, or SEC. This means that Eagle may satisfy its disclosure obligations to you by referring you to one or more documents separately filed by it with the SEC. See "Where You Can Find More Information" at page 137 for a list of documents that Eagle has incorporated by reference into this proxy statement/prospectus and for instructions on how to obtain copies of those documents. The documents are available to you without charge.

Q: Who can answer my questions about the merger?

A: If you need additional copies of this proxy statement/prospectus, have questions about voting your shares or have other questions about the merger, call:

[                    ]
Shareholders may call toll free: ([          ]) [                    ]
Banks and brokers may call collect: ([          ]) [                    ]

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SUMMARY

        This summary highlights the material information about the merger in this proxy statement/prospectus. It does not contain all of the information that is important to you. We urge you to read the entire proxy statement/prospectus carefully and the other documents to which we refer to understand fully the merger. See "Where You Can Find More Information" at page 137.


Information about Eagle and Virginia Heritage (See page 91 and page 95, respectively)

        Eagle, organized in 1997 under Maryland law, is the registered bank holding company for EagleBank, Bethesda, Maryland, a Maryland chartered commercial bank which is a member of the Federal Reserve System. Eagle is a growth oriented institution, providing a high level of service and developing deep relationships with our customers. Eagle offers a broad range of commercial banking services to its business and professional clients as well as full service consumer banking services to individuals living and/or working primarily in our service area. EagleBank was organized as an alternative to the super-regional financial institutions which dominate our market area. EagleBank's philosophy is to provide superior, personalized service to our customers. EagleBank focuses on relationship banking, providing each customer with a number of services, becoming familiar with and addressing the customer's needs in a proactive personalized fashion. EagleBank currently operates from 18 branch offices, seven in Montgomery County, Maryland, five in the District of Columbia, and six offices in Northern Virginia

        Eagle's common stock is listed for trading on The NASDAQ Capital Market, or NASDAQ, under the symbol "EGBN." As of June 30, 2014, there were 25,985,659 shares of Eagle common stock outstanding.

        At March 31, 2014, Eagle had total assets of $3.80 billion, net loans of approximately $3.02 billion, total deposits of approximately $3.27 billion, total shareholders' equity of approximately $410.4 million, and total common shareholders' equity of approximately $353.8 million. At March 31, 2014, its nonperforming assets (consisting of nonaccrual loans, loans past due 90 or more days, restructured loans and other real estate owned) were approximately $45.1 million, or 1.19% of total assets. For the three months ended March 31, 2014, Eagle had earnings of $0.47 per diluted share.

        Organized in 2005, Virginia Heritage is a Virginia chartered commercial bank with six branches in the Northern Virginia market, and is a member of the Federal Reserve System.

        At March 31, 2014, Virginia Heritage had total assets of approximately $917.4 million; net loans of approximately $715.8 million, total deposits of approximately $737.1 million, total shareholders' equity of approximately $100.2 million, and total common shareholders' equity of approximately $84.9 million. At March 31, 2014, its nonperforming assets (consisting of nonaccrual loans, troubled debt restructurings and other real estate owned) were approximately $2.7 million or 0.30% of total assets. For the three months ended March 31, 2014, Virginia Heritage had net income of approximately $0.35 per diluted share.

 

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Meeting of Shareholders (See page 38)

        The special meeting of Virginia Heritage shareholders will be held at    :      .m., local time, on                        , 2014, at [        ]. At the special meeting, Virginia Heritage shareholders will be asked to vote to approve:

        You can vote at the special meeting if you were a record holder of Virginia Heritage common stock at the close of business on [        ], 2014, the record date for the special meeting. As of that date, there were [6,020,301] shares of Virginia Heritage common stock outstanding and entitled to be voted at the special meeting. Approval of the merger agreement requires the affirmative vote of the holders of at least a majority of the shares of Virginia Heritage common stock outstanding at the record date. Assuming a quorum, which is a majority of the outstanding shares of Virginia Heritage common stock, is present, the affirmative vote of a majority of the shares present or represented at the special meeting is required to adjourn the special meeting to permit further solicitation of proxies. Directors of Virginia Heritage having or sharing the power to vote approximately 23.93% of the outstanding shares of Virginia Heritage common stock as of the record date have agreed to vote their shares to approve the merger agreement.


The Merger (See page 41)

        Eagle, EagleBank and Virginia Heritage have entered into the merger agreement which provides for the merger of Virginia Heritage with and into EagleBank with EagleBank continuing as the surviving institution. A copy of the merger agreement is included as Annex A to this proxy statement/prospectus. You should read the merger agreement because it is the legal document that governs the merger.

        The merger of Virginia Heritage with and into EagleBank will occur shortly after all of the conditions to its completion have been satisfied or waived. Currently, the parties anticipate that the merger will be completed in the fourth quarter of 2014. However, we cannot assure you when or if the merger will occur.


What Virginia Heritage Shareholders Will Receive in the Merger (See page 42)

        At the effective time of the merger, each issued and outstanding share of Virginia Heritage common stock will be converted into the right to receive a combination of shares of Eagle common stock and cash. The number of shares of Eagle common stock constituting a portion of the merger consideration will not be determined until shortly before closing of the merger. So long as the Eagle average price during the price determination period is at least $29.00 and not more than $35.50, then each share of Virginia Heritage common stock will be converted into the right to receive shares of Eagle common stock having a value, based on the Eagle average price, of $21.50 per share, and cash of $7.50 per share, for aggregate consideration of $29.00 per share. If the Eagle average price is greater than $35.50, the number of shares of Eagle common stock issuable in exchange for each share of Virginia Heritage common stock will be fixed at 0.6056 shares, and the amount of cash will increase. If the Eagle average price is less than $29.00, then, generally, each share of Virginia Heritage common stock will be converted into the right to receive $7.50 in cash and shares of Eagle common stock having a value equal to the Eagle average price less $7.50. Please refer to "Proposal No. 1—The Merger—Merger Consideration—Calculation of the Exchange Ratio" and "—Calculation of the Cash Consideration" at page 42.

 

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        The number of shares of Eagle common stock to be received in exchange for each share of Virginia Heritage common stock will be determined as follows:

        The cash consideration is subject to increase or decrease as follows:

        Merger Consideration Examples.    The following examples illustrate what the aggregate per share merger consideration, the related per share stock consideration and the per share cash consideration would amount to depending upon changes to the Eagle average price during the price determination period. By way of example and for illustrative purposes only, if the Eagle average price is $33.00, the aggregate per share merger consideration will amount to $29.00, consisting of $7.50 in cash and $21.50 in Eagle common stock, with the exchange ratio equal to 0.6515 shares ($21.50/$33.00 = 0.6515). If the Eagle average price is $27.00, the aggregate per share merger consideration would amount to $27.00, consisting of $7.50 in cash and $19.50 in Eagle common stock, with the exchange ratio equal to 0.7222 shares ($19.50/$27.00 = 0.7222). If the Eagle average price is $36.00, the aggregate per share merger consideration would amount to $29.41, consisting of $7.61 (($36.00 × 0.8169) × 0.258621) in cash and $21.80 ($36.00 × 0.6056) in Eagle common stock.

        Notwithstanding the foregoing, (i) if (A) Eagle issues or sells any shares of Eagle common stock or securities convertible into shares of Eagle common stock (other than shares of Eagle common stock issuable upon exercise of warrants, options, rights, convertible securities or other arrangements outstanding as of the date of the merger agreement, or Eagle stock options issued after the date hereof in the ordinary course of business), and (B) the Eagle average share price is less than $28.00, each share of Virginia Heritage common stock issued and outstanding immediately prior to the time the merger becomes effective, shall be converted into, and shall be canceled in exchange for, the right to receive (a) $7.50 in cash and (b) the number of shares of Eagle common stock equal to the quotient of $20.50 divided by the Eagle average price (rounded to four decimal places); provided, however, that in no case shall Eagle issue a number of shares of Eagle common stock which exceeds 19.9% of the number of shares of Eagle common stock outstanding immediately prior to such issuance; and (ii) if at the time of the closing of the merger, the value of stock consideration issuable to all holders of the Virginia Heritage common stock in the aggregate is less than 45% of the aggregate value of the cash consideration and stock consideration payable to all such holders of Virginia Heritage common stock, then the cash portion of the merger consideration shall be reduced by the amount necessary to cause the aggregate value of such cash consideration to equal 55% of the aggregate merger consideration, and the exchange ratio shall be increased by the number of shares necessary to cause the aggregate value of such stock consideration to equal 45% of the aggregate merger consideration.

 

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        No assurance can be given that the current market price of Eagle common stock will be equal to the market price of Eagle common stock on the date that stock is received by a Virginia Heritage shareholder or at any other time. The market price of Eagle common stock when received by a Virginia Heritage shareholder may be higher or lower than the current market price of Eagle common stock.


Treatment of Virginia Heritage Options (See page 44)

        As of the effective time of the merger, each outstanding but unvested option to acquire Virginia Heritage common stock will become fully vested and exercisable, and all outstanding options to acquire shares of Virginia Heritage common stock will be converted into options to purchase shares of Eagle common stock. Eagle will assume each Virginia Heritage option in accordance with the terms and conditions of the applicable Virginia Heritage equity incentive plan pursuant to which the option was issued, the agreement evidencing the grant of the option, and any other agreement between Virginia Heritage and the holder of the option, except that:


Treatment of Virginia Heritage Preferred Stock (See page 45)

        Virginia Heritage has issued 15,300 shares of its Senior Non-Cumulative Perpetual Preferred Stock, Series A, liquidation amount $1,000 per share, or Series A Preferred Stock, to the Secretary of the Treasury under the Small Business Lending Fund Program, or SBLF. Pursuant to the merger agreement, each share of Series A Preferred Stock will automatically be assumed by Eagle and converted into the right to receive one share of a new series of preferred stock of Eagle, to be designated as Eagle's Senior Non-Cumulative Perpetual Preferred Stock, Series C, liquidation amount $1,000 per share, or Series C Preferred Stock, which will rank equally with Eagle's 56,600 shares of currently outstanding preferred stock issued pursuant to the SBLF. No vote or consent of Treasury is required to approve the merger agreement or the conversion of the Series A Preferred Stock.


Nonsolicitation of Acquisition Proposals (See page 62)

        Under the merger agreement, Virginia Heritage agreed that it will not, and that its directors, officers, employees, advisers and agents will not, except as expressly permitted by the merger agreement, (i) solicit, initiate or knowingly encourage any "acquisition proposal," (ii) enter into, or otherwise participate in any discussions (except to notify such person of the existence of the prohibitions regarding acquisition proposals) or negotiations regarding any acquisition proposal, (iii) furnish to any person any information concerning Virginia Heritage, or any access to the properties, books and records of Virginia Heritage in connection with any acquisition proposal, or (iv) propose, agree or publicly announce an intention to take any of the foregoing actions or any other action which would reasonably be expected to lead to an acquisition proposal.

 

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Virginia Heritage's Board of Directors Unanimously Recommends Shareholder Approval of the Merger (See page 48)

        Virginia Heritage's board of directors determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are in the best interests of Virginia Heritage and its shareholders. Accordingly, Virginia Heritage's board unanimously approved the merger agreement and unanimously recommends that shareholders vote "FOR" approval of the merger agreement.

        The affirmative vote of the holders of at least a majority of the outstanding shares of Virginia Heritage common stock is required to approve the merger agreement.

        As of the record date, the directors of Virginia Heritage had or shared the power to vote 1,440,831 shares of Virginia Heritage common stock, which represents 23.93% of the outstanding shares of Virginia Heritage common stock as of the record date. The directors have entered into agreements with Eagle under which they have agreed to vote all of the shares as to which they have or share voting power to approve the merger agreement.


Virginia Heritage's Reasons for the Merger (See page 48)

        Based on Virginia Heritage's reasons for the merger described herein, including the fairness opinion of Sandler O'Neill, the Virginia Heritage board of directors believes that the merger is fair to Virginia Heritage shareholders and in their best interests, and unanimously recommends that Virginia Heritage shareholders vote "FOR" approval of the merger agreement. For a discussion of the circumstances surrounding the merger and the factors considered by Virginia Heritage's board of directors in approving the merger agreement, see "Proposal No. 1—The Merger—Virginia Heritage's Reasons for the Merger and Recommendation of the Board of Directors of Virginia Heritage" at page 48.


Opinion of Virginia Heritage's Financial Advisor (See page 49)

        Sandler O'Neill has served as financial advisor to Virginia Heritage in connection with the merger and has given its opinion to Virginia Heritage's board of directors that, as of June 9. 2014, the merger consideration was fair to Virginia Heritage shareholders from a financial point of view. A copy of the opinion delivered by Sandler O'Neill is included in this proxy statement/prospectus document as Annex C. Sandler O'Neill's opinion is summarized under the caption "The Merger—Opinion of Virginia Heritage's Financial Advisor", beginning on page 49 of this proxy statement/prospectus. Virginia Heritage shareholders should read the opinion carefully and completely. The opinion outlines the assumptions made, matters considered and limitations of the review undertaken by Sandler O'Neill in providing its opinion. Sandler O'Neill also has been engaged as underwriter in connection with certain Eagle securities offerings. The Virginia Heritage board of directors was aware of this relationship at the time it authorized the engagement of Sandler O'Neill.


Eagle's Reasons for the Merger (See page 59)

        In reaching its decision to approve the merger agreement, the Eagle board of directors, in consultation with management and its financial and legal advisors, considered numerous factors. In determining that the merger was in the best interest of Eagle and its shareholders, the board considered that the merger will significantly expand EagleBank's business and presence in the attractive Northern Virginia market, including key sub-markets which it does not currently serve; the quality of Virginia Heritage's deposit accounts; the expectation that the merger will be accretive to Eagle's earnings within one year of closing; the expectation that the merger will result in substantial cost savings and operating efficiencies; the higher legal lending limit and greater capacity to service larger loans and customers which Eagle will have after the merger; and the enhanced position and reputation Eagle will occupy in the Washington, D.C. metropolitan area as a result of the merger. The board of directors also considered the risks related to the proposed merger.

 

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Material United States Federal Income Tax Consequences (See page 63)

        The merger is intended to constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. Accordingly, U.S. holders of Virginia Heritage common stock generally will not recognize gain or loss on the receipt of Eagle common stock in exchange for Virginia Heritage common stock in the merger, except with respect to the cash portion of the merger consideration and cash received in lieu of fractional shares of Eagle common stock. It is a condition to the obligations of Virginia Heritage and Eagle to complete the merger that they receive a legal opinion from counsel that for U.S. federal income tax purposes, the merger will be a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

        The U.S. federal income tax consequences described above may not apply to all holders of Virginia Heritage common stock, including certain holders specifically referred to at page 63. Your tax consequences will depend on your own situation. You should consult your tax advisor to determine the particular tax consequences of the merger to you. For a more detailed discussion of the U.S. federal income tax consequences of the merger to you, please see the section entitled "Proposal No. 1—The Merger—Material United States Federal Income Tax Consequences."


Virginia Heritage Officers and Directors Have Some Interests in the Merger That Are Different Than or In Addition To Their Interests As Shareholders (See page 66)

        In addition to their interests as shareholders, certain directors, executive officers or employees of Virginia Heritage may have interests in the merger that are different from or in addition to your interests. These interests relate to or arise from, among other things:

        Virginia Heritage's board of directors was aware of these interests and took them into account in its decision to approve and adopt the merger agreement and the transactions contemplated by the merger agreement. For information concerning these interests, please see the discussion under the caption "Proposal No. 1—The Merger—Interests of Certain Persons in the Merger" at page 66.


The Merger Will Be Accounted for under the Acquisition Method of Accounting (See page 68)

        The merger will be accounted for under the acquisition method of accounting, as such term is used under accounting principles generally accepted in the United States of America.


We May Not Complete the Merger Without All Required Regulatory Approvals (See page 68)

        The merger requires the receipt of certain regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System, which we refer to as the "Federal Reserve" or the "Federal Reserve Board," the Maryland Commissioner of Financial Regulation and the Virginia State Corporation Commission. We have made filings and notifications for these purposes. We expect to obtain all necessary regulatory approvals, although we cannot be certain if or when we will obtain them.

 

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Completion of the Merger Is Subject to Certain Conditions (See page 69)

        Completion of the merger is subject to a number of conditions, including the approval of the merger agreement by Virginia Heritage shareholders, and the receipt of necessary regulatory approvals. Certain conditions to the merger may be waived by Eagle or Virginia Heritage, as applicable.


Termination of the Merger Agreement (See page 79)

        Termination Events.    The merger agreement may be terminated, and the merger abandoned, at any time prior to the effectiveness of the merger, even after Virginia Heritage shareholder approval has been obtained at the special meeting, in the following circumstances:

 

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Virginia Heritage Must Pay Eagle a Termination Fee under Certain Circumstances (See page 81)

        Virginia Heritage must pay Eagle a termination fee of $7.25 million if the merger agreement is terminated under specified circumstances. Virginia Heritage agreed to this termination fee arrangement in order to induce Eagle to enter into the merger agreement. This arrangement could have the effect of discouraging other companies from trying to acquire Virginia Heritage.


Appraisal Rights (See page 82)

        Virginia Heritage shareholders are not entitled to exercise dissenters' or appraisal rights with respect to the merger.


Support Agreements (See page 61)

        In connection with the merger agreement, each director of Virginia Heritage has entered into support agreements pursuant to which he/she agrees to vote all of the shares of Virginia Heritage common stock over which he/she has or shares voting and dispositive authority in favor of the merger agreement. The shares subject to these support agreements represent 23.93% of the outstanding shares of Virginia Heritage common stock.

 

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Effect of Merger on Rights of Virginia Heritage Shareholders (See page 127)

        The rights of Virginia Heritage shareholders are governed by Virginia law, and by Virginia Heritage's articles of incorporation and bylaws. After completion of the merger, the rights of the former Virginia Heritage shareholders receiving Eagle common stock in the merger will be governed by Maryland law and Eagle's articles of incorporation and bylaws. There are substantive and procedural differences between Virginia Heritage's and Eagle's articles of incorporation and bylaws that will affect the rights of Virginia Heritage shareholders.


Market Price Information

        The following table sets forth the closing sale price per share of Eagle common stock as reported on NASDAQ, and Virginia Heritage common stock as reported on the OTCQB market, on June 6, 2014 (the last full trading day before the public announcement of the merger agreement), and as of                , 2014, the most recent practicable trading day prior to the date of this proxy statement/prospectus.

 
  Eagle
Common Stock
  Virginia
Heritage
Common Stock
  Pro Forma Equivalent for
Virginia Heritage Common
Stock(1)
 

June 6, 2014

  $ 32.92   $ 21.66   $ 29.00  

                        , 2014

  $            $            $           

(1)
Pro forma equivalent for Virginia Heritage common stock determined by multiplying the price of Eagle common stock by the exchange ratio of 0.6531, the exchange ratio which would be in effect if the Eagle average price were the same as the closing price on June 6, 2014, plus cash consideration of which $7.50 per share which would have been payable as of such date. The actual exchange ratio, and the actual amount of cash consideration may be higher or lower. See "Proposal No. 1—The Merger—Merger Consideration—Calculation of the Exchange Ratio" and "—Calculation of the Cash Consideration" at page 42.

        The market price of Eagle common stock will fluctuate prior to the merger. You should obtain current market quotations for Eagle common stock.


Recent Developments

        Second Quarter Results—Eagle.    On July 22, 2014, Eagle issued its earnings release for the three and six month periods ended June 30, 2014. At June 30, 2014, Eagle had total assets of approximately $3.91 billion, a 14.8% increase from June 30, 2013; net loans of approximately $3.24 billion, a 22.0% increase over June 30, 2013, total deposits of approximately $3.37 billion, an increase of 16.6% over June 30, 2013, total shareholders' equity of approximately $426.8 million a 15.5% increase over 2013, and total common shareholders' equity of approximately $370.2 million, an 18.4% increase over June 30, 2013. At June 30, 2014, Eagle's nonperforming assets (consisting of nonaccrual loans, loans past due 90 or more days and other real estate owned) were approximately $31.3 million, or 0.80% of total assets. Eagle's net income for the three and six months periods ended June 30, 2014 were approximately $12.9 million and $25.4 million, respectively, including the effect of approximately $576 thousand of merger related expenses, representing increases of 10.9% and 9.4% over net income for the same periods in 2013. For the three and six months ended June 30, 2014, Eagle had earnings of $0.48 and $0.95 per diluted common share, representing increases of 9.1% and 8.0%, respectively, over the same periods in 2013. Excluding the effect of the merger related expenses, adjusted earnings were approximately $13.4 million and $25.7 million, respectively, for the three and six month periods, or $0.50 and $0.97 per diluted common share.

        The following table sets forth selected financial highlights data for Eagle as of and for each of the three and six month periods ended June 30, 2014 and 2013. You should read this table together with the historical consolidated financial information contained in Eagle's consolidated financial statements and

 

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related notes and the "Management's Discussion and Analysis of Financial Condition and Results of Operation" included in Eagle's Annual Report on Form 10-K for the year ended December 31, 2013 and in Eagle's Quarterly Report on Form 10-Q for the three months ended March 31, 2014, incorporated by reference herein, as well as the additional financial information and analysis which are contained in Eagle's Current Report on Form 8-K filed on July 23, 2014, which is also incorporated by reference herein. Information for the three and six month periods ended June 30, 2014 and 2013 is derived from unaudited interim financial statements and has been prepared on the same basis as Eagle's audited financial statements and includes, in the opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the data for such period. The results of operations for the three and six month periods ended June 30, 2014 do not necessarily indicate the results which may be expected for any future period or for the full year.

 

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  Six months ended June 30,  
(dollars in thousands except per share data)
  2014   2013  

Balance Sheets—Period End

             

Securities

  $ 378,990   $ 335,779  

Loans held for sale

    35,411     104,767  

Loans

    3,279,429     2,691,358  

Allowance for credit losses

    43,552     39,640  

Intangible assets, net

    3,379     3,690  

Total assets

    3,914,444     3,410,568  

Deposits

    3,367,927     2,888,236  

Borrowings

    99,946     136,627  

Total liabilities

    3,487,623     3,041,178  

Preferred shareholders' equity

    56,600     56,600  

Common shareholders' equity

    370,221     312,790  

Total shareholders' equity

    426,821     369,390  

Tangible common equity(1)

    366,842     309,100  

Interest income

  $ 87,596   $ 75,918  

Interest expense

    5,569     6,545  

Provision for credit losses

    5,068     5,722  

Noninterest income

    8,274     15,176  

Noninterest expense(1)

    45,233     41,382  

Income before taxes

    40,000     37,445  

Income tax expense

    14,557     14,198  

Net income(1)

    25,443     23,247  

Preferred dividends

    283     283  

Net income available to common shareholders

    25,160     22,964  

Per Common Share Data

   
 
   
 
 

Net income, basic(1)

  $ 0.97   $ 0.90  

Net income, diluted(1)

    0.95     0.88  

Book value

    14.25     12.14  

Tangible book value(2)

    14.12     12.00  

Common shares outstanding

    25,985,659     25,764,542  

Weighted average common shares outstanding, basic

    25,954,912     25,641,067  

Weighted average common shares outstanding, diluted

    26,599,594     26,234,030  

Ratios

   
 
   
 
 

Net interest margin

    4.47 %   4.23 %

Efficiency ratio(1)(3)

    50.09 %   48.94 %

Return on average assets(1)

    1.35 %   1.40 %

Return on average common equity(1)

    14.23 %   15.01 %

Tier 1 capital (to average assets)

    12.71 %   12.53 %

Tier 1 capital (to risk weighted assets)

    11.29 %   11.12 %

Total capital (to risk weighted assets)

    10.89 %   10.81 %

Tangible common equity(2)

    9.38 %   9.07 %

Asset Quality

   
 
   
 
 

Nonperforming assets and loans 90+ past due

  $ 31,350   $ 35,720  

Nonperforming assets and loans 90+ past due to total assets

    0.80 %   1.05 %

Allowance for credit losses to loans

    1.33 %   1.47 %

Allowance for credit losses to nonperforming loans

    193.50 %   168.63 %

Net charge-offs

  $ 2,436   $ 3,574  

Net charge-offs (annualized) to average loans

    0.16 %   0.28 %

(1)
The reported figures include the effect of approximately $576 thousand of merger related expenses. As the magnitude of these merger related expenses distorts the operational results of the Company, we present in the reconciliation below and in the accompanying discussion certain performance metrics excluding the effect of the merger expenses during the three and six months ended June 30, 2014.

 

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  Six months
ended
  Three months
ended
 
GAAP Reconciliation (Unaudited)
(dollars in thousands except per share data)
  June 30, 2014   June 30, 2014  

Net income

  $ 25,443   $ 12,944  

Adjustments to net income

             

Merger-related expenses

    576     576  
           

Operating net income

  $ 26,019   $ 13,520  
           
           

Net income available to common shareholders

  $ 25,160   $ 12,802  

Adjustments to net income available to common shareholders

             

Merger-related expenses

    576     576  
           

Operating earnings

  $ 25,736   $ 13,378  
           
           

Earnings per weighted average common share, basic

  $ 0.97   $ 0.49  

Adjustments to earnings per weighted average common share, basic

             

Merger-related expenses

    0.02     0.02  
           

Operating earnings per weighted average common share, basic

  $ 0.99   $ 0.51  
           
           

Earnings per weighted average common share, diluted

  $ 0.95   $ 0.48  

Adjustments to earnings per weighted average common share, diluted

             

Merger-related expenses

    0.02     0.02  
           

Operating earnings per weighted average common share, diluted

  $ 0.97   $ 0.50  
           
           

Summary Operating Results:

             

Noninterest expense

  $ 45,233   $ 22,135  

Merger-related expenses

    576     576  
           

Adjusted noninterest expense

  $ 44,657   $ 21,559  
           
           

Adjusted efficiency ratio

    49.45 %   47.04 %

Adjusted noninterest expense as a % of average assets

    2.37 %   2.24 %

Return on average assets

             

Net income

  $ 25,443   $ 12,944  

Adjustments to net income

             

Merger-related expenses

    576     576  
           

Operating net income

    26,019   $ 13,520  
           
           

Adjusted return on average assets

    1.38 %   1.41 %

Return on average common equity

             

Net income available to common shareholders

  $ 25,160   $ 12,802  

Adjustments to net income available to common shareholders

             

Merger-related expenses

    576     576  
           

Operating earnings

  $ 25,736   $ 13,378  
           
           

Adjusted return on average common equity

    14.56 %   14.72 %
(2)
The selected financial highlights contain certain financial information determined by methods other than in accordance with generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures are "tangible common equity," defined as total common shareholders' equity reduced by goodwill and other intangible assets, and "tangible book value per common share," is defined as tangible common shareholders' equity divided by total common share outstanding. Eagle's management uses these non-GAAP measures in its analysis of Eagle's performance because it believes these measures are material and will be used as a measure of Eagle's performance by investors. These disclosures should not be considered in isolation or as a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures which may be presented by other bank holding companies. Eagle's management compensates for these limitations by providing detailed reconciliations between GAAP information and the non-GAAP financial measures. A reconciliation of these non-GAAP measures to their GAAP equivalents is set forth below.

 

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  June 30,  
GAAP Reconciliation
(dollars in thousands except per share data)
  2014   2013  

Common shareholders' equity

  $ 370,221   $ 312,790  

Less: Intangible assets

    (3,379 )   (3,690 )
           

Tangible common equity

  $ 366,842   $ 309,100  
           
           

Book value per common share

  $ 14.25     12.14  

Less: Intangible book value per common share

    (0.13 )   (0.14 )
           

Tangible book value per common share

  $ 14.12   $ 12.00  
           
           

Total Assets

  $ 3,914,444   $ 3,410,568  

Less: Intangible Assets

    (3,379 )   (3,690 )
           

Tangible assets

  $ 3,911,065   $ 3,406,878  
           
           

Tangible common equity ratio

    9.38 %   9.07 %
(3)
Computed by dividing noninterest expense by the sum of net interest income and noninterest income.

        Second Quarter Results—Virginia Heritage.    On July 25, 2014, Virginia Heritage issued its earnings release for the three and six month periods ended June 30, 2014. At June 30, 2014, Virginia Heritage had total assets of approximately $955.7 million, a 6.8% increase from December 31, 2013, gross loans of approximately $755.1 million, a 7.0% increase over December 31, 2013, total deposits of approximately $776.1 million, an increase of 9.1% over December 31, 2013, total shareholders' equity of approximately $103.3 million, a 7.4% increase over December 31, 2013, and total common shareholders' equity of approximately $88.0 million, an 8.8% increase over December 31, 2013. At June 30, 2014, Virginia Heritage's nonperforming assets (consisting of nonaccrual loans, troubled debt restructured loans, loans past due 90 days or more and still accruing interest and other real estate owned) were approximately $4.1 million, or 0.42% of total assets. Virginia Heritage's net income available to common stockholders for the three and six months periods ended June 30, 2014 were approximately $2.0 million and $4.2 million, respectively, including the effect of approximately $440 thousand of merger related expenses, or $0.33 and $0.68 per diluted common share, respectively. Excluding the effect of the merger related expenses, adjusted earnings were approximately $2.5 million and $4.7 million, respectively, for the three and six month periods, or $0.40 and $0.75 per diluted common share.

        The following table sets forth selected financial highlights for Virginia Heritage as of and for each of the three and six month periods ended June 30, 2014 and 2013. Information for the three and six month periods ended June 30, 2014 and 2013 is derived from unaudited interim financial statements and includes, in the opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the data for such period. The results of operations for the three and six month periods ended June 30, 2014 do not necessarily indicate the results which may be expected for any future period or for the full year.

 

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  At or for the six months
ended June 30,
 
(Dollars in thousands, except per share data)
  2014   2013  
 
  (Unaudited)
 

Statement of Operations Data:

             

Interest income

  $ 18,579   $ 16,455  

Interest expense

    2,650     2,670  
           

Net interest income

    15,929     13,785  
           

Provision for loan losses

    760     1,152  

Total noninterest income

    3,501     6,952  

Total noninterest expense(1)

    11,982     12,844  
           

Net income before taxes

    6,688     6,741  

Income tax expense

    2,402     2,207  
           

Net income after taxes

    4,286     4,534  

Preferred dividends paid

    76     76  
           

Net income available to common shareholders(1)

  $ 4,210   $ 4,458  
           
           

Per Share Data and Shares Outstanding:

             

Net income (basic)(1)

  $ 0.70   $ 1.01  

Net income (diluted)(1)

    0.68     0.98  

Common equity book value at period end

    14.62     12.91  

Weighted average shares (basic)

    6,016,572     4,413,319  

Weighted average shares (diluted)

    6,231,350     4,540,416  

Shares outstanding at period end

    6,020,301     5,783,209  

Balance Sheet Data:

   
 
   
 
 

Assets

  $ 955,685   $ 847,753  

Loans, net

    744,765     619,692  

Loans held for sale

    21,471     28,550  

Securities available for sale, at fair value

    114,256     123,248  

Deposits

    776,116     729,530  

Preferred stockholders' equity

    15,300     15,300  

Common stockholders' equity

    88,004     74,640  

Total stockholders' equity

    103,304     89,940  

Performance Ratios:

   
 
   
 
 

Annualized return on average assets

    0.93 %   1.15 %

Annualized return on average common stockholders' equity

    9.87 %   15.67 %

Net interest rate spread

    3.33 %   3.26 %

Net interest margin

    3.58 %   3.57 %

Efficiency ratio(1)

    61.67 %   61.94 %

Asset Quality Ratios:

   
 
   
 
 

Nonperforming assets to total assets(2)

    0.42 %   0.65 %

Total allowance for loan losses to total loans outstanding(3)

    1.37 %   1.49 %

Annualized net loan charge-offs to average loans outstanding

    0.05 %   0.01 %

Capital Ratios:

   
 
   
 
 

Total risk-based capital ratio

    14.62 %   15.60 %

Tier 1 risk-based capital ratio

    13.37 %   14.35 %

Leverage ratio

    11.32 %   11.62 %

Other Data:

   
 
   
 
 

Number of banking offices

    6     5  

(1)
The selected financial highlights contain certain non-GAAP financial measures that Virginia Heritage believes, when considered together with GAAP financial measures, provide investors with important information regarding its operational performance. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. Adjusted operating earnings is a non-GAAP financial measure that reflects net income available to common stockholders excluding merger related expenses and certain other non-recurring items. These excluded items are difficult to predict and Virginia Heritage believes that adjusted operated earnings provides Virginia Heritage and its investors with a valuable measure of Virginia Heritage's operational performance and a

 

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    valuable tool to evaluate its financial results. The calculations of adjusted operating earnings for the three and six months ended June 30, 2014, respectively, are as follows (dollars amounts in thousands except per share data):

 
  Six months
ended
  Three months
ended
 
GAAP Reconciliation (Unaudited)
(dollars in thousands except per share data)
  June 30, 2014   June 30, 2014  

Net income available to common stockholders

  $ 4,210   $ 2,044  

Adjustments to net income available to common stockholders:

             

Merger related expenses

    440     440  
           

Adjusted operating earnings

  $ 4,650   $ 2,484  
           
           

Earnings per common share—basic

  $ 0.70   $ 0.34  

Adjustments to earnings per common share—basic:

             

Merger related expenses

    0.07     0.07  
           

Adjusted operating earnings per common share—basic

  $ 0.77   $ 0.41  
           
           

Earnings per common share—diluted

  $ 0.68   $ 0.33  

Adjustments to earnings per common share—diluted:

             

Merger related expenses

    0.07     0.07  
           

Adjusted operating earnings per common share—diluted

  $ 0.75   $ 0.40  
           
           

    The adjusted efficiency ratio is a non-GAAP financial measure that is computed by dividing noninterest expense excluding merger related expenses and certain other non-recurring items, by the sum of net interest income and noninterest income. Virginia Heritage believes that this measure provides investors with important information about our operating efficiency. Calculation of the adjusted efficiency ratio for the three and six months ended June 30, 2014, respectively, are as follows (dollar amounts in thousands):

 
  Six months
ended
  Three months
ended
 
GAAP Reconciliation (Unaudited)
(dollars in thousands except per share data)
  June 30, 2014   June 30, 2014  

Summary Operating Results

             

Noninterest expense

  $ 11,982   $ 6,516  

Merger related expenses

    440     440  
           

Adjusted noninterest expense

  $ 11,542   $ 6,076  
           
           

Total net interest and noninterest income

  $ 19,430   $ 10,145  

Efficiency ratio, adjusted

    59.40 %   59.89 %
(2)
Nonperforming assets nonaccrual loans, troubled debt restructured loans and loans past due 90 days or more and still accruing interest and other real estate owned. Nonperforming assets for the six months ended June 30, 2013 have been restated to include performing troubled debt restructured loans.

(3)
Excludes loans held for sale.

 

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RISK FACTORS

        In addition to the other information contained or incorporated by reference in this proxy statement/prospectus, the following factors should be considered carefully when evaluating this transaction and the proposal to approve the merger agreement at the special meeting. You should read these risk factors together with the risk factors contained in Eagle's Annual Report on Form 10-K for the year ended December 31, 2013, or the Annual Report, and any changes to those risk factors included in Eagle's Quarterly Reports on Form 10-Q, or other documents filed with the SEC, after the date of the Annual Report.

         The exchange ratio, the number of shares of Eagle common stock and amount of cash which holders of Virginia Heritage common stock will receive in the merger will be based on the Eagle average price determined following the price determination period. As a result, at the time of the special meeting, Virginia Heritage shareholders cannot be sure of the total value of the merger to Virginia Heritage shareholders, the number of shares of Eagle common stock or the amount of cash such holders will be entitled to receive or the value of the shares of the Eagle common stock issuable in connection with the merger.

        At the effective time of the merger, each issued and outstanding share of Virginia Heritage common stock will be converted into the right to receive a combination of shares of Eagle common stock and cash. The number of shares of Eagle common stock and the amount of cash comprising the merger consideration will not be determined until shortly before the closing of the merger. So long as the Eagle average price during the price determination period is at least $29.00 and not more than $35.50, then each share of Virginia Heritage common stock will be converted into the right to receive shares of Eagle common stock having a value, based on the Eagle average price, of $21.50 per share, and cash of $7.50 per share, for aggregate consideration of $29.00 per share. If the Eagle average price is greater than $35.50, the number of shares of Eagle common stock issuable in exchange for each share of Virginia Heritage common stock will be fixed at 0.6056 shares, and the amount of cash will increase. If the Eagle average price is less than $29.00, then, generally, each share of Virginia Heritage common stock will be converted into the right to receive $7.50 in cash and shares of Eagle common stock having a value equal to the Eagle average price less $7.50. The calculation of the exchange ratio is automatic, and Virginia Heritage does not have a right to terminate the merger agreement as a result of changes to the exchange ratio or changes in the aggregate value of the shares of Eagle common stock and cash to be received by Virginia Heritage shareholders, except in certain limited circumstances. Please refer to "Proposal No. 1—The Merger—Merger Consideration—Calculation of the Exchange Ratio" at page 42.

        Any change in the price of Eagle common stock prior to completion of the merger will affect the number and value of the shares of Eagle common stock that Virginia Heritage shareholders will have the right to receive upon completion of the merger and could affect the amount of cash they have the right to receive upon completion to the merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in Eagle's business, operations and prospects, and regulatory considerations. Many of these factors are beyond Eagle's or Virginia Heritage's control.

        Accordingly, at the time of the special meeting, Virginia Heritage shareholders will not be able to determine the exact number of, or the value of, shares of Eagle common stock or the exact amount of cash that they may receive upon completion of the merger.

         The fairness opinion obtained by Virginia Heritage from its financial advisor, Sandler O'Neill, will not reflect changes in circumstances between the date of the merger agreement and the completion of the merger.

        Changes in the operations and prospects of Virginia Heritage or Eagle, general market and economic conditions and other factors that may be beyond the control of Virginia Heritage and Eagle, and on which the fairness opinion delivered by Sandler O'Neill to Virginia Heritage was based, may alter the value of Virginia Heritage or Eagle or the market price for shares of Virginia Heritage common stock or Eagle common stock by the time the merger is completed. The fairness opinion does not speak as of any date

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other than the date of such opinion, which was June 9, 2014, and the fairness opinion does not address the fairness of the merger consideration, from a financial point of view, at the time Virginia Heritage shareholders will be voting at the special meeting or upon completion of the merger. The merger agreement does not require that the fairness opinion of Sandler O'Neill be updated as a condition to the completion of the merger, and Virginia Heritage does not intend to request that the fairness opinion be updated. The fairness opinion is attached as Annex C to this proxy statement/prospectus. For a description of the opinion that Virginia Heritage received from Sandler O'Neill, see "The Merger—Opinion of Virginia Heritage's Financial Advisor" at page 49. For a description of the other factors considered by Virginia Heritage's board of directors in determining to approve the merger, see "Proposal No. 1—The Merger—Virginia Heritage's Reasons for the Merger and Recommendation of the Board of Directors of Virginia Heritage" at page 48.

         The market price of the shares of Eagle common stock may be affected by factors different from those affecting the shares of Virginia Heritage common stock.

        Upon completion of the merger, holders of Virginia Heritage common stock will become holders of Eagle common stock. Some of Eagle's current businesses and markets differ from those of Virginia Heritage and, accordingly, the results of operations of Eagle after the merger may be affected by factors different from those currently affecting the results of operations of Virginia Heritage. For further information on the businesses of Eagle and Virginia Heritage and the risk factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under "Where You Can Find More Information" at page 137 and the information contained under "Information About Virginia Heritage" at page 95.

         Eagle may fail to realize the cost savings, revenue enhancements and other benefits it estimates for the merger.

        The success of the merger will depend, in part, on Eagle's ability to realize the cost savings, revenue enhancements and other benefits it estimates will be achieved from combining the businesses of Eagle and Virginia Heritage. While Eagle believes, as of the date of this proxy statement/prospectus, that these estimated cost savings, revenue enhancements and other benefits are achievable, it is possible that the potential cost savings, revenue enhancements and other benefits could turn out to be more difficult to achieve than anticipated. These estimates also depend on Eagle's ability to combine the businesses of Eagle and Virginia Heritage in a manner that permits those cost savings, revenue enhancements and other benefits to be realized. Eagle's ability to realize increases in revenue will depend, in part, on Eagle's ability to retain customers, employees and deposits, and to capitalize on existing Virginia Heritage relationships for the provision of additional products and services. If these estimates turn out to be incorrect or Eagle is not able to successfully combine the two institutions, the anticipated cost savings and increased revenues may not be realized fully or at all, or may take longer to realize than expected.

         Combining the two institutions may be more difficult, costly or time-consuming than expected, or could result in the loss of customers.

        Eagle and Virginia Heritage have operated, and until the completion of the merger will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each institution's ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect each institution's ability to maintain relationships with customers and employees or to achieve the anticipated benefits of the merger. As with any merger of banking institutions, there also may be disruptions that cause the loss of customers or cause customers to withdraw their deposits, which could negatively affect the performance and earnings of the combined institution. Although Eagle does not currently plan to close any branches immediately upon completion of the merger, Eagle expects that it may consolidate or sell branches in the future. Certain customers' branches may be consolidated with other branches in the market area resulting in new office locations and new banking

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associates serving such customers. There can be no assurance that customers will readily accept changes to their banking arrangements after the merger.

         Results after the merger may materially differ from the pro forma information presented in this proxy statement/prospectus.

        Results after the merger of Virginia Heritage with and into Eagle may be materially different from those shown in the unaudited pro forma combined financial information contained in this proxy statement/prospectus which only shows a combination of historical results from Eagle and Virginia Heritage. The unaudited pro forma combined financial information is presented for illustrative purposes only, and makes assumptions about the exchange ratio and merger consideration based on the closing price of Eagle common stock on June 6, 2014. The exchange ratio and merger consideration may vary based on the Eagle average price during the price determination period. The unaudited pro forma combined financial information contained in this proxy statement/prospectus does not indicate the financial results of the combined institution had they actually been combined at the beginning of the periods presented and had the impact of possible revenue enhancements and expense efficiencies, among other factors, been considered. Any potential decline in the combined company's financial condition or results of operations may cause significant variations in the stock price of the combined institution.

         The merger with Virginia Heritage may distract management of Eagle from its other responsibilities.

        The merger will cause the management of Eagle to focus a portion of its time and energies on matters related to the merger that otherwise would be directed to the business and operations of Eagle. Any such distraction on the part of management, if significant, could affect its ability to service existing business and develop new business and adversely affect the financial condition and results of operations of Eagle.

         The shares of Eagle common stock to be received by shareholders of Virginia Heritage as a result of the merger will have different rights from the shares of Virginia Heritage common stock.

        Following completion of the merger, holders of Virginia Heritage common stock will no longer be shareholders of Virginia Heritage, but will instead be shareholders of Eagle. The rights associated with Virginia Heritage common stock are different from the rights associated with Eagle common stock. See "Comparative Rights of Shareholders" at page 127.

         Virginia Heritage's shareholders will have less influence on management and policies as shareholders of Eagle than as shareholders of Virginia Heritage.

        Upon completion of the merger, Virginia Heritage's shareholders will own proportionately fewer shares of Eagle common stock, as compared to all issued and outstanding shares of Eagle, than they do with respect to all issued and outstanding shares of Virginia Heritage common stock. As a result, Virginia Heritage's shareholders will have less influence on the management and policies of Eagle than they now have on the management and policies of Virginia Heritage.

         The merger is subject to the receipt of approvals from regulatory authorities that may impose conditions that could have an adverse effect on Eagle.

        Before the merger may be completed, various approvals or consents must be obtained from the Federal Reserve Board and state bank regulatory authorities. These regulatory authorities may impose conditions on the completion of the merger or require changes to the terms of the merger. Although Eagle and Virginia Heritage do not currently expect the imposition of any conditions or changes, there can be no assurance that such conditions or changes will not be imposed. Such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of Eagle following the merger, any of which might have a material adverse effect on Eagle. Furthermore,

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Eagle is not obligated to complete the merger if the regulatory approvals received in connection with the merger include any conditions that in the good faith judgment of Eagle would have a material adverse effect on the value of the merger to Eagle, or would require Eagle enter into any regulatory agreements.

         The merger will not be completed unless important conditions are satisfied.

        Specified conditions set forth in the merger agreement must be satisfied or waived to complete the merger. If the conditions are not satisfied or waived, to the extent permitted by law, the merger will not occur or will be delayed, and each of Eagle and Virginia Heritage may lose some or all of the intended benefits of the merger. The following conditions, in addition to other closing conditions set forth in the merger agreement, must be satisfied or waived, before Eagle and Virginia Heritage are obligated to complete the merger:

        In addition, the merger agreement may be terminated in certain circumstances if the merger is not consummated on or before March 31, 2015.

         Eagle and Virginia Heritage will incur significant transaction and merger-related integration costs in connection with the merger.

        Eagle and Virginia Heritage expect to incur significant costs associated with completing the merger and integrating the operations of the two companies, which must be expensed as incurred under GAAP. Eagle and Virginia Heritage are continuing to assess the impact of these costs. Although Eagle believes that the elimination of duplicate costs, the realization of other efficiencies related to the integration of the businesses of Eagle and Virginia Heritage, and revenue enhancement opportunities, will offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term, or at all.

         Failure to complete the merger could negatively affect the market price of Virginia Heritage's common stock.

        If the merger is not completed for any reason, Virginia Heritage will be subject to a number of material risks, including the following:

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         Eagle and Virginia Heritage will be subject to business uncertainties and contractual restrictions while the merger is pending.

        Uncertainties about the effect of the merger on the respective businesses, employees or customers of Eagle and Virginia Heritage may have an adverse effect on the financial condition and results of operations of Eagle and Virginia Heritage. These uncertainties also may impair Virginia Heritage's ability to attract, retain and motivate strategic personnel until the merger is completed, and could cause its customers and others that deal with it to seek to change their existing business relationships, which could have a negative impact on Eagle's financial condition and results of operations following completion of the merger. Also, experienced employees in the financial services industry are in high demand, and there can be a high level of competition for their talents. Employees of Virginia Heritage may experience uncertainty about their future role with Eagle until, or even after, strategies with regard to the combined institution are announced or executed. If Virginia Heritage employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Eagle, Eagle's business following the merger could be harmed. In addition, the merger agreement restricts Virginia Heritage from taking certain actions without Eagle's consent until the merger is completed. These restrictions may prevent Virginia Heritage from pursuing or taking advantage of attractive business opportunities that may arise prior to the completion of the merger.

         The merger agreement limits Virginia Heritage's ability to pursue alternatives to the merger with Eagle.

        The merger agreement contains terms and conditions that make it more difficult for Virginia Heritage to engage in a business combination with a party other than Eagle. Subject to limited exceptions, Virginia Heritage's board of directors is required to recommend that Virginia Heritage shareholders approve the merger agreement. If the Virginia Heritage board of directors determines to accept an acquisition proposal from a third party or, in certain circumstances, Virginia Heritage completes a merger with a party other than Eagle or conducts another extraordinary transaction within nine months of termination of the merger agreement, Virginia Heritage may be obligated to pay a $7.25 million termination fee to Eagle. A third party may be discouraged from considering or proposing an acquisition of Virginia Heritage, including an acquisition on better terms than those offered by Eagle, due to the termination fee and Virginia Heritage's obligations under the merger agreement. Further, the termination fee might result in a potential third party acquiror proposing a lower per share price than it might otherwise have proposed to acquire Virginia Heritage. See "Proposal No. 1—The Merger—Termination and Termination Payments—Effect of Termination; Termination Expenses" at page 81.

         Certain officers and directors of Virginia Heritage have interests in the merger that are in addition to or different than the interests of Virginia Heritage shareholders.

        Directors and officers have interests in the merger as individuals that are in addition to, or different from, their interests as Virginia Heritage shareholders. Certain officers, directors and employees of Virginia Heritage will become officers, directors or employees of Eagle and/or EagleBank and will be subject to employment or other service agreements with Eagle and/or EagleBank after completion of the merger. Other interests include, but are not limited to, severance arrangements that the officers entered into with Virginia Heritage, and rights to indemnification and directors and officers insurance for Virginia Heritage directors and officers following the merger. These interests of Virginia Heritage's directors and officers may cause some of these persons to view the proposed transaction differently than you view it, as a shareholder. Although the members of each of Virginia Heritage's and Eagle's board of directors knew about these additional interests and considered them when they approved the merger agreement and the

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merger, you should consider these interests in conjunction with the recommendation of the Virginia Heritage board of directors with respect to the approval of the merger agreement. See "Proposal No. 1—The Merger—Interests of Certain Persons in the Merger" and "Proposal No. 1—The Merger—Support Agreements" at pages 66 and 61, respectively.

         Eagle may not be able to manage future growth and competition in the Northern Virginia market.

        The merger will result in a significant acceleration of Eagle's expansion in the Northern Virginia market, where it currently operates six branches. Although Eagle has hired a number of lending and business development officers with experience in the Northern Virginia market, there can be no assurance that it will be able to successfully compete in this highly competitive market, or that it will be able to successfully manage additional growth.

        Eagle has grown rapidly in the past several years, through acquisition and through organic growth. Eagle can provide no assurance that it will continue to be able to maintain its rate of growth at acceptable risk levels and upon acceptable terms, while managing the costs and implementation risks associated with its growth strategy. Eagle may be unable to continue to increase its volume of loans and deposits or to introduce new products and services at acceptable risk levels for a variety of reasons, including an inability to maintain capital and liquidity sufficient to support continued growth. If Eagle is successful in continuing its growth, it cannot assure you that further growth would offer the same levels of potential profitability, or that it would be successful in controlling costs and maintaining asset quality. Accordingly, an inability to maintain growth, or an inability to effectively manage growth, could adversely affect Eagle's results of operations, financial condition and stock price.

         If the merger does not constitute a reorganization under Section 368(a) of the Internal Revenue Code, then Virginia Heritage shareholders may be responsible for payment of U.S. federal income taxes.

        The U.S. Internal Revenue Service, or Internal Revenue Service, may determine that the merger does not qualify as a reorganization under Section 368(a) of the Internal Revenue Code. In that case, each Virginia Heritage shareholder would recognize a gain or loss equal to the difference between (i) the fair market value of the Eagle common stock and cash received by the shareholder in the Merger and (ii) the shareholder's adjusted tax basis in the shares of Virginia Heritage common stock exchanged therefor. In any event, Virginia Heritage shareholders may be required to recognize gain or loss in connection with the cash portion of the merger consideration and cash in lieu of fractional shares of Eagle common stock.

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SELECTED CONSOLIDATED FINANCIAL DATA OF EAGLE

        The following table sets forth selected historical consolidated financial data for Eagle as of and for each of the five years ended December 31, 2013 (which has been derived from Eagle's audited consolidated financial statement), and as of and for the three months ended March 31, 2014 and 2013. You should read this table together with the historical consolidated financial information contained in Eagle's consolidated financial statements and related notes, and the "Management's Discussion and Analysis of Financial Condition and Results of Operation" included in Eagle's Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, which have been filed with the SEC and are incorporated by reference in this proxy statement/prospectus. Information for the three month periods ended March 31, 2014 and 2013 is derived from unaudited interim financial statements and has been prepared on the same basis as Eagle's audited financial statements and includes, in the opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the data for such period. The results of operations for the three month period ended March 31, 2014 do not necessarily indicate the results which may be expected for any future period or for the full year.

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  At or for the three
months ended
March 31,
  At or for the year ended December 31,  
(dollars in thousands except per share data)
  2014   2013   2013   2012   2011   2010   2009  
 
  (Unaudited)
   
   
   
   
   
 

Balance Sheets—Period End

                                           

Securities

  $ 398,389   $ 329,585   $ 389,405   $ 310,514   $ 324,053   $ 237,576   $ 245,644  

Loans held for sale

    21,862     132,698     42,030     226,923     176,826     80,571     1,550  

Loans

    3,063,975     2,548,024     2,945,158     2,493,095     2,056,256     1,675,500     1,399,311  

Allowance for credit losses

    42,018     38,811     40,921     37,492     29,653     24,754     20,619  

Intangible assets, net

    3,482     3,659     3,510     3,785     4,145     4,188     4,379  

Total assets

    3,803,952     3,324,865     3,771,503     3,409,441     2,831,255     2,089,370     1,805,504  

Deposits

    3,273,689     2,812,930     3,225,414     2,897,222     2,392,095     1,726,798     1,460,274  

Borrowings

    105,737     131,964     119,771     140,638     152,662     146,884     150,090  

Total liabilities

    3,393,570     2,963,013     3,377,640     3,059,465     2,564,544     1,884,654     1,617,183  

Preferred shareholders' equity

    56,600     56,600     56,600     56,600     56,600     22,582     22,612  

Common shareholders' equity

    353,782     305,252     337,263     293,376     210,111     182,134     165,709  

Total shareholders' equity

    410,382     361,852     393,863     349,976     266,711     204,716     188,321  

Tangible common equity(1)

    350,300     301,593     333,753     289,591     205,966     177,946     161,330  

Statements of Operations

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Interest income

  $ 42,837   $ 37,933   $ 157,294   $ 141,943   $ 119,124   $ 96,658   $ 84,338  

Interest expense

    2,830     3,424     12,504     14,414     20,077     19,832     24,809  

Provision for credit losses

    1,934     3,365     9,602     16,190     10,983     9,308     7,669  

Noninterest income

    4,463     8,111     24,716     21,364     13,501     9,242     7,297  

Noninterest expense

    23,098     20,697     84,579     76,531     63,276     51,005     42,773  

Income before taxes

    19,438     18,558     75,325     56,172     38,289     25,755     16,384  

Income tax expense

    6,939     6,986     28,318     20,883     13,731     9,098     5,965  

Net income

    12,499     11,572     47,007     35,289     24,558     16,657     10,419  

Preferred dividends

    141     141     566     566     1,511     1,299     2,307  

Net income available to common shareholders

    12,358     11,431     46,441     34,723     23,047     15,358     8,112  

Per Common Share Data(2)

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Net income, basic

  $ 0.48   $ 0.45   $ 1.81   $ 1.50   $ 1.05   $ 0.71   $ 0.50  

Net income, diluted

    0.47     0.44     1.76     1.46     1.04     0.70     0.50  

Book value

    13.62     11.86     13.03     11.62     9.57     8.41     7.71  

Tangible book value(1)

    13.49     11.72     12.89     11.47     9.38     8.21     7.51  

Common shares outstanding(2)

    25,975,186     25,728,162     25,885,863     25,250,378     21,948,128     21,670,426     21,487,649  

Weighted average common shares outstanding, basic(2)

    25,927,888     25,518,523     25,726,062     23,135,886     21,819,087     21,613,450     16,107,623  

Weighted average common shares outstanding, diluted(2)

    26,575,155     26,222,041     26,358,611     23,743,815     22,316,593     22,046,554     16,236,094  

Ratios

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Net interest margin(3)

    4.45 %   4.20 %   4.30 %   4.32 %   3.99 %   4.09 %   3.85 %

Efficiency ratio(4)

    51.94 %   48.56 %   49.90 %   51.40 %   56.22 %   59.26 %   64.01 %

Return on average assets

    1.36 %   1.39 %   1.37 %   1.18 %   0.97 %   0.86 %   0.65 %

Return on average common equity

    14.38 %   15.29 %   14.60 %   14.14 %   11.71 %   8.74 %   6.52 %

Total capital (to risk weighted assets)

    13.04 %   12.50 %   13.01 %   12.20 %   11.84 %   11.64 %   13.57 %

Tier 1 capital (to risk weighted assets)

    11.57 %   11.08 %   11.53 %   10.80 %   10.33 %   9.91 %   11.82 %

Tier 1 capital (to average assets)

    10.83 %   10.39 %   10.93 %   10.44 %   8.21 %   9.32 %   10.29 %

Tangible common equity(1)

    9.22 %   9.08 %   8.86 %   8.50 %   7.29 %   8.53 %   8.96 %

Asset Quality

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Nonperforming assets and loans 90+ past due

  $ 45,135   $ 37,365   $ 33,927   $ 35,983   $ 36,019   $ 31,988   $ 27,131  

Nonperforming assets and loans 90+ past due to total assets

    1.19 %   1.12 %   0.90 %   1.06 %   1.27 %   1.53 %   1.50 %

Allowance for credit losses to loans

    1.37 %   1.52 %   1.39 %   1.50 %   1.44 %   1.48 %   1.47 %

Allowance for credit losses to nonperforming loans

    115.67 %   137.80 %   165.66 %   122.19 %   90.42 %   97.18 %   93.62 %

Net charge-offs

  $ 837   $ 2,046   $ 6,173   $ 8,351   $ 6,084   $ 5,173   $ 5,453  

Net charge-offs (annualized) to average loans

    0.11 %   0.33 %   0.23 %   0.37 %   0.32 %   0.35 %   0.42 %

(1)
The Selected Financial Data contains certain non-GAAP financial measures: "tangible common equity," defined as total common shareholders' equity reduced by goodwill and other intangible assets, and "tangible book value per common share," defined as tangible common shareholders' equity divided by total common share outstanding. Eagle's management uses these non-GAAP measures in its analysis of Eagle's performance because it believes these measures are material and will be used as a measure of Eagle's performance by investors. These disclosures should not be considered in isolation or as a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures which may be presented by other bank holding companies. Eagle's management compensates for these limitations by providing detailed reconciliations between GAAP information and the non-GAAP financial measures. A reconciliation of these non-GAAP measures to their GAAP equivalents is set forth below.

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Table of Contents

 
  At or for the three
months ended
March 31,
  At or for the year ended December 31,  
GAAP Reconciliation
(dollars in thousands except per share data)
  2014   2013   2013   2012   2011   2010   2009  

Common shareholders' equity

  $ 353,782   $ 305,252   $ 337,263   $ 293,376   $ 210,111   $ 182,134   $ 165,709  

Less: Intangible assets

    (3,482 )   (3,659 )   (3,510 )   (3,785 )   (4,145 )   (4,188 )   (4,379 )
                               

Tangible common equity

  $ 350,300   $ 301,593   $ 333,753   $ 289,591   $ 205,966   $ 177,946   $ 161,330  
                               
                               

Book value per common share

  $ 13.62   $ 11.86   $ 13.03   $ 11.62   $ 9.57   $ 8.41   $ 7.71  

Less: Intangible book value per common share

    (0.13 )   (0.14 )   (0.14 )   (0.15 )   (0.19 )   (0.20 )   (0.20 )
                               

Tangible book value per common share

  $ 13.49   $ 11.72   $ 12.89   $ 11.47   $ 9.38   $ 8.21   $ 7.51  
                               
                               

Total Assets

  $ 3,803,952   $ 3,324,865   $ 3,771,503   $ 3,409,441     2,831,255     2,089,370     1,805,504  

Less: Intangible Assets

    (3,482 )   (3,659 )   (3,510 )   (3,785 )   (4,145 )   (4,188 )   (4,379 )
                               

Tangible assets

  $ 3,800,470   $ 3,321,206   $ 3,767,993   $ 3,405,656   $ 2,827,110   $ 2,085,182   $ 1,801,125  
                               
                               

Tangible common equity ratio

    9.22 %   9.08 %   8.86 %   8.50 %   7.29 %   8.53 %   8.96 %
(2)
Presented giving retroactive effect to the 10% stock dividend paid on the common stock on June 14, 2013.

(3)
The reported figure includes the effect of a $618 million deposit, or the settlement deposit, received on September 13, 2011 in connection with a class action settlement, which was disbursed by year end. The deposit was invested in excess reserves at the Federal Reserve Bank. As the magnitude of the settlement deposit distorts Eagle's operational results, the GAAP reconciliation below presents certain performance ratios excluding the effect of the settlement deposit, notably the net interest margin and the return on average assets which resulted in approximately $326,000 of interest income and $170,000 of income, net of tax, during the twelve month period ended December 31, 2011. Eagle believes this information is important to enable shareholders and other interested parties to assess eagle's core operational performance.

 
  At or for the year ended December 31,  
 
  2012   2011  
GAAP Reconciliation (Unaudited)
(dollars in thousands except per share data)
  Average
Balance
  Interest   Average
Yield/Rate
  Average
Balance
  Interest   Average
Yield/Rate
 

Total earning assets

  $ 2,953,417   $ 141,943     4.81 % $ 2,482,625   $ 119,124     4.80 %

Less: settlement deposit

                (117,990 )   (326 )   (0.28 )%
                           

Adjusted earning assets

  $ 2,953,417   $ 141,943     4.81 % $ 2,364,635   $ 118,798     5.02 %
                           
                           

Total interest bearing liabilities

  $ 1,903,453   $ 14,414     0.76 % $ 1,679,855   $ 20,077     1.20 %

Adjusted interest spread

                4.05 %               3.82 %

Adjusted interest margin

                4.32 %               4.17 %

 
  At or for the year
ended December 31,
 
GAAP Reconciliation (Unaudited)
(dollars in thousands except per share data)
  2012   2011  

Net income

  $ 35,289   $ 24,558  

Less: settlement deposit

        (170 )
           

Adjusted net income

  $ 35,289   $ 24,388  
           
           

Average total assets

  $ 2,997,994   $ 2,523,592  

Less: settlement deposit

        (117,990 )
           

Adjusted average total assets

  $ 2,997,994   $ 2,405,602  
           
           

Adjusted return on average assets

    1.18 %   1.01 %
(4)
Computed by dividing noninterest expense by the sum of net interest income and noninterest income.

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SELECTED HISTORICAL FINANCIAL DATA OF VIRGINIA HERITAGE

        The following table sets forth selected historical consolidated financial data for Virginia Heritage as of and for each of the five years ended December 31, 2013 (which has been derived from Virginia Heritage's audited consolidated financial statement), and as of and for the three months ended March 31, 2014 and 2013. You should read this table together with the historical consolidated financial information contained in Virginia Heritage's consolidated financial statements and related notes which are included as part of this proxy statement/prospectus. Information for the three month periods ended March 31, 2014 and 2013 is derived from Virginia Heritage's unaudited interim financial statements and has been prepared on the same basis as its audited financial statements and includes, in the opinion of Virginia Heritage's management, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the data for such period. The results of operations for the three month period ended March 31, 2014 do not necessarily indicate the results which may be expected for any future period or for the full year.

 
  At or for the
three months ended
March 31,
  At or for the year ended December 31,  
(Dollars in thousands,
except per share data)

  2014   2013   2013   2012   2011   2010   2009  
 
  (Unaudited)
   
   
   
   
   
 

Statement of Operations Data:

                                           

Interest income

  $ 9,204   $ 8,114   $ 33,937   $ 30,814   $ 26,140   $ 21,479   $ 15,753  

Interest expense

    1,322     1,353     5,240     6,147     6,895     6,463     5,164  
                               

Net interest income

    7,882     6,761     28,697     24,667     19,245     15,016     10,589  
                               

Provision for loan losses

    456     634     1,764     3,410     2,037     2,002     2,021  

Total noninterest income

    1,402     3,323     10,676     14,641     7,141     5,609     4,280  

Total noninterest expense

    5,465     6,366     24,263     24,627     16,610     14,105     11,346  
                               

Net income before taxes

    3,363     3,084     13,346     11,271     7,739     4,518     1,502  

Income tax expense (benefit)

    1,159     1,042     4,346     3,625     2,601     (629 )    
                               

Net income after taxes

    2,204     2,042     9,000     7,646     5,138     5,147     1,502  

Preferred dividends paid

    38     38     153     289     77          
                               

Net income available to common shareholders

  $ 2,166   $ 2,004   $ 8,847   $ 7,357   $ 5,061   $ 5,147   $ 1,502  
                               
                               

Per Share Data and Shares Outstanding:

                                           

Net income (basic)

  $ 0.36   $ 0.46   $ 1.70   $ 1.70   $ 1.17   $ 1.33   $ 0.40  

Net income (diluted)

    0.35     0.45     1.65     1.68     1.17     1.32     0.40  

Common equity book value at period end

    14.10     12.82     13.45     12.47     10.89     9.55     8.18  

Weighted average shares (basic)

    6,014,801     4,333,209     5,217,531     4,333,209     4,333,209     3,881,896     3,791,633  

Weighted average shares (diluted)

    6,208,605     4,457,935     5,359,521     4,371,355     4,337,566     3,885,276     3,795,768  

Shares outstanding at period end

    6,016,801     4,333,209     6,014,801     4,333,209     4,333,209     4,333,209     3,791,633  

Balance Sheet Data:

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Assets

  $ 917,409   $ 804,829   $ 894,841   $ 781,573   $ 578,087   $ 452,507   $ 341,034  

Loans, net

    715,781     594,259     696,097     579,284     434,294     362,451     296,750  

Loans held for sale

    13,975     31,909     10,730     48,136     16,861     11,366     5,699  

Securities available for sale, at fair value

    134,900     127,747     126,834     118,629     98,821     40,340     17,912  

Deposits

    737,062     696,091     711,400     660,138     491,713     381,426     258,458  

Preferred stockholders' equity

    15,300     15,300     15,300     15,300     15,300          

Common stockholders' equity

    84,862     55,560     80,906     54,017     47,176     41,371     31,020  

Total stockholders' equity

    100,162     70,860     96,206     69,317     62,476     41,371     31,020  

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Table of Contents

 
  At or for the
three months ended
March 31,
  At or for the year ended December 31,  
(Dollars in thousands,
except per share data)

  2014   2013   2013   2012   2011   2010   2009  
 
  (Unaudited)
   
   
   
   
   
 

Performance Ratios:

                                           

Annualized return on average assets

    0.97 %   1.05 %   1.10 %   1.13 %   1.00 %   1.29 %   0.51 %

Annualized return on average common stockholders' equity

    10.36 %   14.62 %   12.91 %   14.50 %   11.46 %   14.81 %   4.94 %

Net interest rate spread(1)

    3.33 %   3.25 %   3.25 %   3.33 %   3.47 %   3.43 %   3.32 %

Net interest margin(2)

    3.59 %   3.57 %   3.56 %   3.69 %   3.79 %   3.81 %   3.21 %

Annualized income as a percentage of average assets(3)

    4.65 %   5.87 %   5.45 %   6.71 %   6.48 %   6.77 %   6.86 %

Annualized noninterest income as a percentage of average assets

    0.61 %   1.71 %   1.31 %   2.16 %   1.39 %   1.40 %   1.47 %

Annualized noninterest expense to average assets

    2.40 %   3.27 %   2.97 %   3.63 %   3.23 %   3.53 %   3.89 %

Efficiency ratio(4)

    58.86 %   63.13 %   61.62 %   62.65 %   62.95 %   68.39 %   76.31 %

Asset Quality Ratios:

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Nonperforming assets to total assets

    0.30 %   0.57 %   0.19 %   0.23 %   0.30 %   0.31 %   0.72 %

Total allowance for loan losses to total loans outstanding

    1.39 %   1.47 %   1.39 %   1.41 %   1.39 %   1.31 %   1.18 %

Annualized net loan charge-offs to average loans outstanding

    0.11 %   0.03 %   0.04 %   0.24 %   0.18 %   0.21 %   0.29 %

Capital Ratios:(5)

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Total risk-based capital ratio

    14.76 %   12.45 %   14.86 %   12.06 %   13.90 %   12.29 %   11.29 %

Tier 1 risk-based capital ratio

    13.51 %   11.20 %   13.61 %   10.81 %   12.72 %   11.04 %   10.13 %

Leverage ratio

    11.28 %   9.17 %   11.72 %   9.28 %   10.87 %   9.08 %   9.35 %

Stockholders' equity to total assets ratio

    10.92 %   8.80 %   10.76 %   8.87 %   10.81 %   9.14 %   9.10 %

Other Data:

   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Number of banking offices

    5     5     5     5     5     4     4  

Full-time equivalent employees

    138     127     137     124     103     99     81  

(1)
Net interest spread is the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(2)
Net interest margin is net interest income divided by average earning assets.

(3)
Income consists of interest income and noninterest income.

(4)
Efficiency ratio is noninterest expense divided by the sum of net interest income and noninterest income.

(5)
Capital ratios are calculated in accordance with regulatory accounting principles specified by regulatory agencies for supervisory reporting purposes.

33


Table of Contents


COMPARATIVE PER SHARE DATA

        The following table shows certain historical per share data for Eagle and Virginia Heritage for the periods indicated, and pro forma combined information for Eagle and pro forma equivalent per share data for Virginia Heritage, assuming the effectiveness of the merger on June 6, 2014 at the exchange ratio of 0.6531, and assuming an Eagle average price of $32.92, the closing price on that date, which is collectively referred to as "comparative pro forma information." In presenting the comparative pro forma information for the periods shown, we assumed that we had been combined throughout those periods. The merger will be accounted for under the "acquisition" method of accounting. Under the acquisition method of accounting, the assets and liabilities of the company not surviving a merger are, as of the completion date of the merger, recorded at their respective fair values and added to those of the surviving company. Financial statements of the surviving company issued after completion of the merger reflect such values and are not restated retroactively to reflect the historical financial position or results of operations of the company not surviving. The operating results of Virginia Heritage will be reflected in Eagle's consolidated financial statements from and after the date the merger is completed.

        We expect that we will incur reorganization and restructuring expenses as a result of combining our two institutions. While we hope that the merger also will provide the combined institution with financial benefits that include reduced operating expenses and the opportunity to earn more revenue, the pro forma combined information does not reflect these expenses or benefits and does not attempt to predict or suggest future results.

        The final allocation of the purchase price will be determined after the merger is completed and after completion of thorough analyses to determine the fair values of Virginia Heritage's tangible and identifiable intangible assets and liabilities as of the date the merger is completed. In addition, estimates of merger-related charges are subject to final decisions related to combining the companies. Any change in the fair value of the net assets of Virginia Heritage will change the amount of the purchase price allocable to goodwill. Additionally, changes to Virginia Heritage's shareholders' equity, including net income, and changes in the market value of Eagle's common stock through the date the merger is completed, will also change the amount of goodwill recorded. As a result, the final adjustments may be materially different from the unaudited pro forma adjustments used in preparing the comparative pro forma information presented herein. The comparative pro forma information should not be relied upon as being indicative of the historical results the combined institution that would have been achieved had the merger been effective before the periods presented, or the results of operations that the combined institution may expect to achieve after the merger.

        The information in the following table is based on, and should be read together with, the historical financial information of Virginia Heritage that is included in this proxy statement/prospectus, and Eagle's prior filings with the SEC which are incorporated into this proxy statement/prospectus by reference. See "Where You Can Find More Information" at page 137. The pro forma combined data per share has been computed based on the number of shares of Eagle common stock adjusted for the additional shares to be issued in connection with the merger. The pro forma equivalent per share data for Virginia Heritage was obtained by multiplying the pro forma combined amounts by the exchange ratio of 0.6531 shares of Eagle common stock for each share of Virginia Heritage common stock. The resulting products were rounded to the nearest cent. The actual exchange ratio could be higher or lower.

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Table of Contents

 
  Three months ended
March 31, 2014
  Year ended
December 31, 2013
 

Earnings (Loss) Per Common Share:

             

Basic

             

Eagle

  $ 0.48   $ 1.81  

Virginia Heritage

  $ 0.36   $ 1.70  

Pro forma combined

  $ 0.49   $ 1.86  

Pro forma equivalent for one share of Virginia Heritage

  $ 0.31   $ 1.21  

Diluted

   
 
   
 
 

Eagle

  $ 0.47   $ 1.76  

Virginia Heritage

  $ 0.35   $ 1.65  

Pro forma combined

  $ 0.48   $ 1.82  

Pro forma equivalent for one share of Virginia Heritage

  $ 0.31   $ 1.19  

Cash Dividends Per Common Share

   
 
   
 
 

Eagle

         

Virginia Heritage

         

Pro forma combined

         

Pro forma equivalent for one share of Virginia Heritage

         

Book Value Per Common Share

   
 
   
 
 

Eagle

  $ 13.62   $ 13.03  

Virginia Heritage

  $ 14.10   $ 13.45  

Pro forma combined

  $ 16.44   $ 15.93  

Pro forma equivalent for one share of Virginia Heritage

  $ 10.74   $ 10.40  


COMPARATIVE STOCK PRICES AND DIVIDENDS

        Eagle's common stock is listed on NASDAQ under the symbol "EGBN" and Virginia Heritage's common stock is listed under the symbol "VGBK" on the OTCQB marketplace. The following table sets forth, for the periods indicated, the high and low sales prices per share for Eagle common stock and Virginia Heritage common stock as reported on NASDAQ and OTCQB, respectively. Neither Eagle nor Virginia Heritage has declared or paid a cash dividend on its common stock in any period shown in the table below. Prices for Eagle common stock have been adjusted to reflect a 10% stock dividend paid on June 14, 2013.

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Table of Contents

 
  Eagle   Virginia Heritage  
 
  High   Low   High   Low  

Quarter Ended:

                         

September 30, 2014 (through                        , 2014)

  $ [        ]   $ [        ]   $ [        ]   $ [        ]  

June 30, 2014

  $ 36.40   $ 32.22   $ 27.56   $ 20.00  

March 31, 2014

  $ 37.00   $ 29.24   $ 21.00   $ 18.00  

December 31, 2013

 
$

33.25
 
$

26.04
 
$

17.92
 
$

15.90
 

September 30, 2013

  $ 28.45   $ 22.29   $ 17.00   $ 15.15  

June 30, 2013

  $ 23.21   $ 18.13   $ 15.25   $ 14.10  

March 31, 2013

  $ 20.91   $ 18.18   $ 15.50   $ 12.70  

December 31, 2012

 
$

19.60
 
$

15.25
 
$

13.25
 
$

10.95
 

September 30, 2012

  $ 16.53   $ 14.28   $ 10.98   $ 10.05  

June 30, 2012

  $ 16.31   $ 13.96   $ 11.00   $ 9.56  

March 31, 2012

  $ 16.06   $ 13.32   $ 10.50   $ 8.77  

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FORWARD-LOOKING STATEMENTS

        Eagle and Virginia Heritage make forward-looking statements in this proxy statement/prospectus and their public documents within the meaning of and pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. A forward-looking statement encompasses any estimate, prediction, opinion or statement of belief in this proxy statement/prospectus and the underlying management assumptions. These "forward-looking statements" can be identified by words such as "believes," "expects," "anticipates," "intends" and similar expressions. Forward-looking statements appear in the discussions of matters such as the benefits of the merger between Virginia Heritage and Eagle, including future financial and operating results and cost saving enhancements to revenue that may be realized from the merger, and Eagle's and Virginia Heritage's plans, objectives, expectations and intentions and other statements contained in this proxy statement/prospectus that are not historical facts. These statements are based upon the current reasonable expectations and assessments of the respective managements of Eagle and Virginia Heritage and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

        In addition to factors that we have previously disclosed in Eagle's reports filed with the SEC which are incorporated by reference into this proxy statement/prospectus, and those that we discuss elsewhere in this proxy statement/prospectus, the following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

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        The forward-looking statements are made as of the date of the applicable document and, except as required by applicable law, Eagle and Virginia Heritage assume no obligation to update these forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. You should consider these risks and uncertainties in evaluating forward-looking statements and you should not place undue reliance on these statements.


THE SPECIAL MEETING

        This proxy statement/prospectus is being provided to holders of Virginia Heritage common stock as Virginia Heritage's proxy statement in connection with the solicitation of proxies by and on behalf of its board of directors to be voted at the special meeting of Virginia Heritage shareholders to be held on                        , 2014, and at any adjournment or postponement of the special meeting. This proxy statement/prospectus is also being provided to you as Eagle's prospectus in connection with the offer and sale by Eagle of its shares of common stock as a result of the proposed merger.


Date, Time and Place of Meeting

        The special meeting is scheduled to be held as follows:


Purpose of the Meeting

        At the special meeting, Virginia Heritage shareholders will be asked to:


Record Date and Outstanding Shares

        Virginia Heritage's board of directors has fixed the close of business on [                        ], 2014 as the record date for the meeting. Only shareholders of record of Virginia Heritage common stock at the close of business on the record date are entitled to notice of, and to vote at, the special meeting. Each holder of record of Virginia Heritage common stock at the close of business on the record date is entitled to one vote for each share of Virginia Heritage common stock then held on each matter voted on by shareholders at the special meeting. At the close of business on the record date, there were [6,020,310] shares of Virginia

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Heritage common stock issued and outstanding and entitled to vote, held by approximately 373 shareholders of record.


Quorum; Abstentions and Broker Non-Votes

        Holders of a majority of the issued and outstanding shares of Virginia Heritage common stock entitled to vote at the special meeting must be present in person or represented by proxy to constitute a quorum for the transaction of business at the special meeting. If a share is represented for any purpose at the special meeting, it is deemed to be present for the transaction of all business. Abstentions are counted for purposes of determining whether a quorum exists. Notwithstanding the foregoing, pursuant to Virginia Heritage's bylaws, the special meeting may be adjourned by the affirmative vote of at least a majority of votes cast on the proposal.

        If you hold your shares of Virginia Heritage common stock in "street name" through a broker or other nominee, generally the nominee may only vote your shares in accordance with your instructions. However, if your nominee has not timely received your instructions, such nominee may vote on matters for which it has discretionary voting authority. Brokers will not have discretionary voting authority to vote on the proposal to approve the merger agreement, or on the proposal to adjourn the special meeting. If a nominee cannot vote on a matter because the shareholder has not provided voting instructions and it does not have discretionary voting authority, this is a "broker non-vote" with respect to that matter. Shares held in "street name" that are not voted on specific matters at the special meeting will, however, be counted as shares present or represented at the meeting for purposes of determining whether a quorum exists. In the event that a quorum is not present at the special meeting, it is expected that the meeting will be adjourned or postponed to permit further solicitation of proxies.


Votes Required for Approval

        The affirmative vote of the holders of at least a majority of the outstanding shares of Virginia Heritage common stock entitled to vote at the special meeting is required to approve the merger agreement, if a quorum is present. The affirmative vote of a majority of the shares voted on the proposal, if necessary, is required to adjourn the special meeting to permit further solicitation of proxies.

        Abstentions and broker non-votes will have no effect on the proposal, if necessary, to adjourn the special meeting to permit further solicitation of proxies. For purposes of the vote with respect to the merger agreement, a failure to vote, an abstention and a broker non-vote will each have the same legal effect under Virginia law as a vote against approval of the merger agreement.


Voting by Directors

        As of the record date, Virginia Heritage's directors had or shared the power to vote 1,440,831 outstanding shares of Virginia Heritage common stock, or approximately 23.93% of the shares entitled to vote at the special meeting. The directors, in their capacity as shareholders, have entered into support agreements with Eagle pursuant to which they have agreed, among other things, to vote the shares over which they have or share voting power for approval of the merger agreement at the special meeting. The form of the support agreement is included in this proxy statement/prospectus as Annex B. The directors were not paid any additional consideration in connection with their entry into the support agreements. The support agreements terminate upon any termination of the merger agreement. See "Proposal No. 1—The Merger—Support Agreement" at page 61.


Voting and Revocation of Proxies

        If you are a shareholder of record, after carefully reading and considering the information presented in this proxy statement/prospectus, you should vote your shares of Virginia Heritage common stock by completing, dating, signing and promptly returning the enclosed proxy card in the enclosed

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postage-prepaid envelope, or follow the instructions on the proxy card to vote your shares by telephone or over the internet, so that your shares are represented at the special meeting. You also can vote in person at the special meeting, but we encourage you to submit your proxy now in any event by returning a completed proxy card or by voting by telephone or over the internet. If you hold your shares through a broker or other nominee, you are considered the beneficial owner of shares held in "street name," and the proxy statement/prospectus is being forwarded to you by your broker or nominee, which is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker or nominee how to vote your shares at the special meeting, and you also are invited to attend the special meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the special meeting unless you obtain a signed proxy from the shareholder of record giving you the right to vote the shares. Your broker or nominee has enclosed or provided a voting instruction form for you to use to direct your broker or nominee how to vote your shares.

        All shares of Virginia Heritage common stock represented by each properly submitted proxy received before the meeting will be voted in accordance with the instructions given with the proxy. If a Virginia Heritage shareholder submits a valid proxy without giving instructions, the shares of Virginia Heritage common stock represented by that proxy will be voted "FOR" approval of the merger agreement, and "FOR" the proposal, if necessary, to adjourn the special meeting to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to achieve a quorum or approve the merger agreement. Proxies will extend to, and be voted at, an adjournment or postponement of the special meeting.

        If you are a shareholder of record, you may change your vote at any time before your proxy is voted at the special meeting by revoking your proxy in any of the following ways:

        If your shares are held in "street name," you will need to follow the voting instructions from your broker or nominee in order to change your vote. If your shares are held in "street name," you also will need a signed proxy from your broker or nominee in order to attend the special meeting and vote in person.

        The inspectors of election appointed by the Virginia Heritage board of directors for the special meeting will determine the presence of a quorum and will tabulate the votes cast at the special meeting. Abstentions will be treated as present for purposes of determining a quorum, but as unvoted for purposes of determining the approval of any matter submitted to the vote of shareholders. If a broker or nominee indicates that it does not have discretionary authority to vote any shares on a particular matter, such shares will be treated as present for general quorum purposes, but will not be considered as present or voted with respect to that matter.


Solicitation of Proxies and Expenses

        The accompanying proxy for the special meeting is being solicited by Virginia Heritage's board of directors, and Virginia Heritage will pay for the entire cost of the solicitation, other than certain costs of preparing and filing this proxy statement/prospectus with the SEC, which are being borne by Eagle. In addition to the use of the mail, proxies may be solicited personally or by telephone, facsimile or other means of communication by Virginia Heritage's directors, officers and regular employees. These

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individuals will receive no additional compensation for these services, but will be reimbursed for any expenses incurred by them in connection with these services.

        To assist in the solicitation of proxies in connection with the special meeting, Virginia Heritage has retained                        as its proxy solicitor for a fee of                        , in addition to reimbursement of certain out-of-pocket expenses. The proxy solicitor may contact Virginia Heritage shareholders personally or by telephone, facsimile or other means of communication. Virginia Heritage and its proxy solicitor may also request banks, brokers and other intermediaries holding shares of Virginia Heritage common stock beneficially owned by others to forward this proxy statement/prospectus to, and obtain proxies from, the beneficial owners and Virginia Heritage will, if requested, reimburse the record holders for their reasonable out-of-pocket expenses in doing so. Virginia Heritage has agreed to indemnify and hold harmless the proxy solicitor and its subsidiaries (and their respective directors, officers, employees and agents) against various liabilities and expenses arising out of or related to the rendering of services by the proxy solicitor in connection with the solicitation of proxies with respect to the special meeting. The cost of the proxy solicitation firm will be paid by Virginia Heritage.


Virginia Heritage Board of Directors' Recommendation

        Virginia Heritage's board of directors unanimously determined that the merger agreement is in the best interests of Virginia Heritage and its shareholders. Accordingly, Virginia Heritage's board of directors unanimously approved and adopted the merger agreement and the transactions contemplated by the merger agreement, including the merger, and unanimously recommends that Virginia Heritage's shareholders vote "FOR" the proposal to approve the merger agreement, and "FOR" the proposal, if necessary, to adjourn the special meeting to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to achieve a quorum or approve the merger agreement.

        The merger is of great importance to the shareholders of Virginia Heritage. You are urged to read and carefully consider the information presented in this proxy statement/prospectus. If you are a shareholder of record, you are urged to complete, date, sign and promptly return the enclosed proxy card in the enclosed postage-prepaid envelope or follow the instructions on the enclosed proxy card to vote your shares by telephone or over the internet. If you hold your shares through a broker or nominee, you are urged to follow the voting instructions provided by your broker or nominee.


PROPOSAL NO. 1—THE MERGER

        Set forth on the following pages is a summary of the material terms and conditions of the merger agreement. This summary may not contain all the information about the merger agreement that is important to you. This summary is qualified in its entirety by reference to the merger agreement included as Annex A to this proxy statement/prospectus. We encourage you to read the merger agreement in its entirety.


Structure of the Merger

        The merger agreement provides for Eagle's acquisition of Virginia Heritage through a merger of Virginia Heritage with and into EagleBank, with EagleBank being the surviving institution in the merger. As a result of the merger, each share of Virginia Heritage common stock, other than shares of Virginia Heritage common stock held by Virginia Heritage, Eagle or any of their respective subsidiaries, other than in a fiduciary capacity, will be converted into the right to receive a combination of shares of Eagle common stock and cash. The exact number of shares of Eagle common stock and amount of cash to be received in exchange for each share of Virginia Heritage common stock will be dependent on the Eagle average price calculated during the price determination period. See "—Merger Consideration," below. After completion of the merger, Eagle will be the direct holder of all of the outstanding shares of EagleBank, which will have the assets and liabilities of the combined banks.

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        The articles of incorporation and bylaws of Eagle will be the articles of incorporation and bylaws governing the rights of holders of Eagle common stock after completion of the merger.

        David P. Summers, Chief Executive Officer and Chairman of Virginia Heritage, will join the board of directors of Eagle and EagleBank upon effectiveness of the merger. The executive officers of Eagle and EagleBank following the merger will be the persons who are currently the executive officers of Eagle and EagleBank. Certain of the executive officers of Virginia Heritage may join EagleBank, as discussed under "—Interests of Certain Persons in the Merger" at page 66.


Merger Consideration

        At the effective time of the merger, each issued and outstanding share of Virginia Heritage common stock will be converted into the right to receive a combination of shares of Eagle common stock and cash, the exact number of shares and amount of cash being dependent on the Eagle average price during the price determination period. The number of shares of Eagle common stock constituting a portion of the merger consideration will not be determined until shortly before the closing of the merger. So long as the Eagle average price during the price determination period is at least $29.00 and not more than $35.50, then each share of Virginia Heritage common stock would be converted into the right to receive shares of Eagle common stock having a value, based on the Eagle average price, of $21.50 per share, and cash of $7.50 per share, for aggregate consideration of $29.00 per share. If the Eagle average price is greater than $35.50, the number of shares of Eagle common stock issuable in exchange for each share of Virginia Heritage common stock will be fixed at 0.6056 shares, and the amount of cash will increase. If the Eagle average price is less than $29.00, then, generally, each share of Virginia Heritage common stock would be converted into the right to receive $7.50 in cash and shares of Eagle common stock having a value equal to the Eagle average price less $7.50.

        Based on the closing price of Eagle common stock on June 6, 2014 of $32.92, Virginia Heritage shareholders would have received 0.6531 shares of Eagle common stock and $7.50 in cash, for an aggregate value per share of $29.00, together with cash in lieu of any fractional share of Eagle common stock to which a shareholder would be entitled.

        The number of shares of Eagle common stock and amount of cash constituting the merger consideration is dependent on the Eagle average price calculated during the price determination period. As a result, Virginia Heritage shareholders cannot be sure of the total value of the merger to holders of Virginia Heritage common stock, the number of shares of Eagle common stock or the amount of cash such holders will receive, or the value of the shares of the Eagle common stock received. There can be no assurance that the exchange ratio will not be higher or lower than the 0.6531 shares based on the closing price on June 6, 2014, or that the amount of cash will not be higher or lower than $7.50 per share. See "Risk Factors" at page 23 of this proxy statement/prospectus for additional discussion of the risks associated with the changes in the Eagle average price.

        Calculation of the Exchange Ratio.    The exchange ratio will be determined as follows:

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        Calculation of the Cash Consideration.    The cash consideration is subject to increase or decrease as follows:

        By way of example and for illustrative purposes only, the following table demonstrates the adjustments to the stock consideration and cash consideration for each share of Virginia Heritage common stock:

 
  Eagle
Average
Price
  Exchange
Ratio
  Total Consideration
Per Share of
Virginia Heritage
Common Stock
  Value of Shares of Eagle
Common Stock Per Share
of Virginia Heritage
Common Stock
  Cash Consideration
Per Share of
Virginia Heritage
Common Stock
 

  $ 25.00     0.7000   $ 25.00   $ 17.50   $ 7.50  

  $ 26.00     0.7115   $ 26.00   $ 18.50   $ 7.50  

  $ 27.00     0.7222   $ 27.00   $ 19.50   $ 7.50  

  $ 28.00     0.7321   $ 28.00   $ 20.50   $ 7.50  

  $ 29.00     0.7414   $ 29.00   $ 21.50   $ 7.50  

  $ 30.00     0.7167   $ 29.00   $ 21.50   $ 7.50  

  $ 31.00     0.6936   $ 29.00   $ 21.50   $ 7.50  

  $ 32.00     0.6719   $ 29.00   $ 21.50   $ 7.50  

  $ 32.92     0.6531   $ 29.00   $ 21.50   $ 7.50  

  $ 33.00     0.6515   $ 29.00   $ 21.50   $ 7.50  

  $ 34.00     0.6324   $ 29.00   $ 21.50   $ 7.50  

  $ 35.00     0.6143   $ 29.00   $ 21.50   $ 7.50  

  $ 35.50     0.6056   $ 29.00   $ 21.50   $ 7.50  

  $ 36.00     0.6056   $ 29.41   $ 21.80   $ 7.61  

  $ 37.00     0.6056   $ 30.23   $ 22.41   $ 7.82  

  $ 38.00     0.6056   $ 31.04   $ 23.01   $ 8.03  

  $ 39.00     0.6056   $ 31.86   $ 23.62   $ 8.24  

  $ 40.00     0.6056   $ 32.68   $ 24.23   $ 8.45  

        The merger consideration received by Virginia Heritage shareholders will be subject to adjustment in the following circumstances:

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        The exchange ratio and any amounts dependent on the exchange ratio will be adjusted for dividends on Eagle common stock payable in shares of Eagle common stock or any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment of the Eagle common stock, the record date for which is after the date of the merger agreement but prior to the completion of the merger.

        The exchange ratio also may be adjusted if Virginia Heritage elects to exercise its right to terminate the merger agreement because of both (i) a significant decline in Eagle's stock price from $32.92, which was the closing price per share of Eagle common stock on the trading day prior to the date of the merger agreement and (ii) the significant underperformance of Eagle common stock, as compared to the NASDAQ Bank Index. In that event, Eagle would have the option to increase the consideration to be received by the holders of Virginia Heritage common stock, by increasing the exchange ratio to the extent necessary to provide Virginia Heritage shareholders with consideration equal to that which they would have received if one of those two conditions were not met. See "—Termination and Termination Payments" at page 79 for a detailed discussion of this termination right.

        No Fractional Shares.    Eagle will not issue any fractional shares of Eagle common stock in the merger. Virginia Heritage shareholders will receive cash in lieu of any fractional shares of Eagle common stock owed to them in an amount based on the Eagle average share price (rounded to the nearest whole cent, with one-half cent being rounded upward).

        No Election; Fluctuating Value of Transaction.    All holders of Virginia Heritage common stock will have the right to receive a combination of shares of Eagle common stock and cash as a result of the merger. Holders of Virginia Heritage common stock do not have the option to elect to receive all cash or all stock for their shares of Virginia Heritage common stock.

        The value of shares of Eagle common stock will fluctuate based on factors relating to Eagle's performance, market conditions and perceptions and other factors, many of which are beyond the control of Eagle and Virginia Heritage. There can be no assurance as to the value of the shares of Eagle common stock that will be issued to holders of Virginia Heritage common stock upon completion of the merger. The value of the Eagle shares into which Virginia Heritage common stock is converted may be higher or lower than the aggregate value of stock and cash of $29.00, which is the value of 0.6531shares of Eagle common stock and $7.50 in cash based on the Eagle closing price on June 6, 2014.


Treatment of Virginia Heritage Options

        As of the effective time of the merger, each outstanding but unvested option to purchase shares of Virginia Heritage common stock will become fully vested and exercisable, and each outstanding option to acquire shares of Virginia Heritage common stock will be converted into an option to purchase shares of Eagle common stock. Eagle will assume each Virginia Heritage option in accordance with the terms and conditions of the Virginia Heritage plan pursuant to which the option was issued, the agreement

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evidencing the grant of the option, and any other agreement between Virginia Heritage and the holder of the option, except that:


Treatment of Virginia Heritage Preferred Stock

        Pursuant to the merger agreement, each share of Series A Preferred Stock will automatically be assumed by Eagle and converted into the right to receive one share of Series C Preferred Stock, which will rank equally with Eagle's 56,600 shares of currently outstanding preferred stock issued pursuant to the SBLF. No vote or consent of Treasury is required to approve the merger agreement or the conversion of the Series A Preferred Stock.


Background of the Merger

        As part of its ongoing consideration and evaluation of Virginia Heritage's long-term prospects and strategy, the board of directors and senior management of Virginia Heritage periodically reviewed and assessed strategic opportunities and challenges facing Virginia Heritage. In connection with the development of Virginia Heritage's Strategic Plan for 2014, referred to as the strategic plan, during January 2014, a variety of strategies intended to enable Virginia Heritage to maintain an independent course and obtain meaningful organic growth and increased profitability, were identified, including branch expansion, increased hiring, expanded banking and nonbanking product offerings and increased efficiencies, while maintaining a high level of customer service, financial discipline and credit quality. The Virginia Heritage board of directors also recognized the challenges to successful implementation of the strategic plan, including an extremely competitive market for banking services and quality personnel, high compliance and technology costs, and mixed economic conditions.

        The strategic plan considerations also included a potential strategy of growth by acquisition of smaller banks within Virginia Heritage's primary market area, which might enable Virginia Heritage to build scale while achieving cost savings associated with an in-market transaction. The Virginia Heritage board of directors recognized the difficulty in successfully effecting such a transaction in light of the limited number of available franchises, the complex social issues involved in an acquisition of a smaller institution and the high level of competition for such an acquisition.

        While the Virginia Heritage board of directors did not consider the company for sale during the time the strategic plan was being developed in early 2014, and was not actively seeking a merger partner or acquiror, the strategic plan also addressed the potential for a merger of Virginia Heritage with another banking institution, and set out certain parameters which the board would expect from any proposed acquiror.

        On December 3, 2013, David Summers, Chairman of the Board of Virginia Heritage, had a lunch meeting with the Chief Executive Officer, or CEO, of a larger, local bank (herein defined as "Company A"). The meeting was primarily a social event, although the cultures, footprints and customers of each institution were discussed, as were issues facing the banking industry in general. No proposal for a

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merger was made or solicited at the meeting, however, Company A's CEO did indicate that his bank would like to buy Virginia Heritage.

        On February 20, 2014, Virginia Heritage held its annual strategic planning retreat. A representative of Sandler O'Neill was invited to attend the meeting, as in years past. Mr. Summers relayed the conversation that he had with the CEO of Company A, including the fact that Company A would like to acquire Virginia Heritage. Sandler O'Neill made a presentation covering the following: current industry trends, an overview of the merger and acquisition market for banking institutions, a list of potential acquirors of Virginia Heritage, an estimate of the valuation that might be achieved by Virginia Heritage if Virginia Heritage decided to pursue a sale, and an overview of the marketing options available if the board decided to pursue a sale. The meeting was ultimately adjourned due to the fact that an economist from the Federal Reserve Bank of Richmond was scheduled to make a presentation to the board, senior management, and clients of Virginia Heritage as part of the strategic planning retreat.

        On March 12, 2014, Virginia Heritage held a special meeting of its board of directors to continue the discussion from the annual strategic planning retreat. A representative of Sandler O'Neill was present, and on the telephone was a representative of Virginia Heritage's outside legal counsel. Counsel provided a detailed overview of what the board's fiduciary obligation was to its shareholders in light of the approach made by Company A. During the conversation, the board discussed that the sale of Virginia Heritage might be premature, particularly in light of the fact that Virginia Heritage raised capital during June 2013 and was in the process of growing the balance sheet supported by the new capital. In addition, the board was concerned about Company A's ability to pay a price that the board would be willing to accept. The board was concerned that the board's price expectations might not be able to achieved by any potential acquiror, therefore if Virginia Heritage was to embark on an effort to sell Virginia Heritage the board wanted to ensure the confidentiality of the process in case the board decided to terminate the process and continue to run Virginia Heritage on an independent basis.

        On March 12, 2014, the board authorized Mr. Summers to engage Sandler O'Neill to act as financial advisor to the board. In selecting Sandler O'Neill, the board considered Sandler O'Neill's extensive experience and capabilities relating to combinations involving financial institutions in the United States and its reputation as a leading investment banker in the financial services area. Sandler O'Neill, as part of its investment banking business, is regularly engaged in the evaluation of businesses and securities in connection with mergers and acquisitions, as well as private placements of listed and unlisted securities. Sandler O'Neill is familiar with the market for common stock of publicly and privately traded banks, thrifts, and bank and thrift holding companies. The board authorized the engagement of Sandler O'Neill to pursue a process to sell Virginia Heritage but limited the number of potential buyers to be contacted to only those potential acquirors that could afford to pay an attractive price. The list of approved potential acquirors to be contacted included Company A, Eagle, and two other companies, identified as Company B and Company C. Consistent with the authority given by the board, Mr. Summers executed an engagement letter with Sandler O'Neill on March 24, 2014. In authorizing the engagement of Sandler O'Neill, the Virginia Heritage board of directors was aware that Sandler O'Neill had been engaged by Eagle as underwriter for a proposed public offering of securities.

        Sandler O'Neill worked with senior management of Virginia Heritage and Virginia Heritage's legal counsel to prepare due diligence materials in an online data room, a confidentiality agreement, a confidential information memorandum, the bidding instructions, and an initial draft of the merger agreement. During the week of April 7, 2014, Sandler O'Neill contacted Company A, Eagle, Company B, and Company C to make them aware that the board of Virginia Heritage had retained Sandler O'Neill to pursue a sale of Virginia Heritage. Company A, Eagle, and Company B executed the confidentiality agreement, received the confidential information memorandum, were granted access to the due diligence materials in the online data room, received a copy of the bidding instructions and the draft of merger agreement. Company C declined to execute the confidentiality agreement, therefore they were not invited to continue in the process. As outlined in the bidding instructions, the bid due date was May 15, 2014.

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        On May 5, 2014, Mr. Summers, Mr. Brockett, Virginia Heritage's Chief Operating Officer, a representative of Sandler O'Neill and the CEO and the Chief Financial Officer, or CFO, of Company A met to allow Company A to ask questions and to further get to know Mr. Summers and Mr. Brockett.

        On May 7, 2014, Mr. Summers, Mr. Brockett, a representative of Sandler O'Neill and the CEO and CFO of Company B met for lunch to allow Company B to ask questions and to get to know Mr. Summers and Mr. Brockett.

        On May 9, 2014, Mr. Summers, Mr. Brockett, a representative of Sandler O'Neill and the CEO and Vice Chairman of Eagle and a representative of their financial advisor, Houlihan Lokey Capital, Inc., met to allow Eagle to ask questions and to further get to know Mr. Summers and Mr. Brockett.

        On May 15, 2014, bids were received from Company A and Eagle. Company B was interested in pursuing a transaction with Virginia Heritage but wanted to pursue a combination later in 2014.

        On May 19, 2014, Virginia Heritage held a special meeting of its board of directors. A representative of Sandler O'Neill presented the offers provided by Company A and Eagle along with the general financial terms of a proposed merger with Virginia Heritage. A representative of Virginia Heritage's legal counsel provided an overview of the comments on the draft merger agreement received from Company A and Eagle. At the conclusion of the presentation and after much discussion, the Board authorized management to advance the merger discussions with Eagle. In authorizing merger discussions with Eagle, the Virginia Heritage board of directors was aware that Sandler O'Neill was proposed to be an underwriter in Eagle's offering of subordinated debt proposed to be consummated prior to the closing of the merger, and would receive compensation for its services in that capacity. Sandler O'Neill requested, and Virginia Heritage provided, a letter confirming that Virginia Heritage did not object to Sandler O'Neill acting in such capacity.

        On May 22, 2014, a representative of Sandler O'Neill met with senior management of Eagle to discuss the structure of the collar and the exact amount of cash the Virginia Heritage shareholders would receive. Later that day, a special meeting of the Virginia Heritage board of directors was called to discuss the structure of the collar. An agreement was not reached at that time. Representatives of Virginia Heritage and Eagle worked over Memorial Day weekend to reach an agreement on the structure of the collar and the cash portion of the consideration. Ultimately, an agreement was reached on the structure of those two items.

        On May 31 and June 1, 2014, Eagle conducted on site due diligence at Virginia Heritage. On June 3, 2014, Virginia Heritage and its advisors conducted due diligence at Eagle.

        On June 9, 2014, Eagle held a special board meeting at which it received an update from Eagle's senior management on the status of the Virginia Heritage transaction. Also at the meeting, representatives of Keefe Bruyette & Woods, reviewed its financial analysis of the fairness of the terms of the merger to Eagle, including the merger consideration to be paid by Eagle to holders of Virginia Heritage common stock. A representative of BuckleySandler LLP, Eagle's legal counsel, reviewed in detail the proposed merger agreement and related agreements. Following this discussion, Eagle's board of directors unanimously voted to approve the merger agreement.

        Later that day, the board of Virginia Heritage met with representatives of its financial and legal advisors to discuss the proposed transaction. During this meeting, the Virginia Heritage board of directors evaluated the fairness of the proposed transaction with Eagle to the Virginia Heritage shareholders from a financial point of view. At the meeting, Sandler O'Neill provided its oral opinion that, based upon and subject to the assumptions, limitations, qualifications and conditions set forth in its written opinion, that as of the date of the meeting, the merger consideration to be paid to the holders of Virginia Heritage common stock was fair to the holders of Virginia Heritage common stock from a financial point of view. A representative of Virginia Heritage's legal counsel advised the Virginia Heritage board of directors regarding the legal structure and terms of the proposed transaction, the proposed merger agreement and

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the directors' fiduciary duties. After detailed discussion and careful deliberation, the Virginia Heritage board of directors unanimously (i) determined that the merger agreement and the transactions contemplated thereby were advisable, and fair to and in the best interests of Virginia Heritage, (ii) approved and adopted the merger agreement and approved the merger and the other transactions contemplated thereby, and (iii) recommended the approval and adoption of the merger agreement and the transactions contemplated thereby by Virginia Heritage shareholders.

        After approval of the merger agreement by both the Eagle board of directors and the Virginia Heritage board of directors, Eagle and Virginia Heritage executed the merger agreement. Later that night on June 9, 2014, Eagle and Virginia Heritage issued a joint press release announcing the execution of the merger agreement and the terms of the merger.


Virginia Heritage's Reasons for the Merger and Recommendation of the Board of Directors of Virginia Heritage

        In reaching its conclusion to proceed with the merger and recommend adoption of the merger agreement to its shareholders, Virginia Heritage's board of directors considered information and advice from its financial advisor and its legal counsel. All material factors considered by the Virginia Heritage board of directors have been disclosed herein. In approving the merger agreement, the board of directors of Virginia Heritage considered a number of factors including the following, without assigning any specific or relative weights to the factors:

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        The Virginia Heritage board of directors also considered the potential adverse consequences of the proposed merger, including:

        Based on the reasons stated, Virginia Heritage's board of directors believes that the merger is in the best interest of Virginia Heritage and its shareholders and unanimously recommends that the Virginia Heritage shareholders vote "FOR" approval of the merger agreement.


Opinion of Virginia Heritage's Financial Advisor

        By letter dated March 24, 2014, the board of directors of Virginia Heritage retained Sandler O'Neill to act as its financial advisor in connection with a possible business combination transaction. Sandler O'Neill is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Sandler O'Neill is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions

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and other corporate transactions. The board of directors selected Sandler O'Neill to act its financial advisor in connection with a possible business combination based on Sandler O'Neill's qualifications, expertise, reputation and experience in mergers and acquisitions involving financial institutions.

        At the June 9, 2014 meeting of the board of directors of Virginia Heritage, Sandler O'Neill delivered to the board of directors its oral opinion, which was subsequently confirmed in writing, that, as of June 9, 2014, the merger consideration was fair to the holders of Virginia Heritage common stock from a financial point of view. The full text of Sandler O'Neill's opinion is attached as Annex C to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Sandler O'Neill in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Holders of Virginia Heritage common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

        Sandler O'Neill's opinion speaks only as of the date of the opinion. The opinion was directed to the board of directors and is directed only to the fairness of the merger consideration to the holders of Virginia Heritage common from a financial point of view. It does not address the underlying business decision of Virginia Heritage to engage in the merger or any other aspect of the merger and is not a recommendation to any holder of Virginia Heritage common stock as to how such holder of Virginia Heritage common stock should vote at the special meeting with respect to the merger agreement or any other matter. Sandler O'Neill did not express any opinion as to the fairness of the amount or nature of the compensation to be received in connection with the merger by Virginia Heritage's officers, directors, or employees, or any class of such persons, relative to the merger consideration to be received in the merger by any other shareholders of Virginia Heritage.

        In connection with rendering its opinion on June 9, 2014, Sandler O'Neill reviewed and considered, among other things:

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        Sandler O'Neill also discussed with certain members of the senior management of Virginia Heritage the business, financial condition, results of operations and prospects of Virginia Heritage and held similar discussions with the senior management of Eagle regarding the business, financial condition, results of operations and prospects of Eagle.

        In performing its review, Sandler O'Neill has relied upon the accuracy and completeness of all of the financial and other information that was available to Sandler O'Neill from public sources, that was provided to it by Virginia Heritage or Eagle or their respective representatives or that was otherwise reviewed by Sandler O'Neill and assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Sandler O'Neill relied, at the direction of Virginia Heritage, without independent verification or investigation, on the assessments of the management of Virginia Heritage as to its existing and future relationships with key employees and partners, clients, products and services and Sandler O'Neill assumed, with Virginia Heritage's consent, that there would be no developments with respect to any such matters that would affect its analyses or opinion. Sandler O'Neill further relied on the assurances of the respective managements of Virginia Heritage and Eagle that they were not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Sandler O'Neill has not been asked to and has not undertaken an independent verification of any of such information and Sandler O'Neill does not assume any responsibility or liability for the accuracy or completeness thereof. Sandler O'Neill did not make an independent evaluation or appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of Virginia Heritage and Eagle or any of their respective subsidiaries, nor has Sandler O'Neill been furnished with any such evaluations or appraisals. Sandler O'Neill renders no opinion or evaluation on the collectability of any assets or the future performance of any loans of Virginia Heritage or Eagle. Sandler O'Neill did not make an independent evaluation of the adequacy of the allowance for loan losses of Virginia Heritage or Eagle, or the combined entity after the merger and Sandler O'Neill has not reviewed any individual credit files relating to Virginia Heritage and Eagle.

        In performing its analyses and in rendering its opinion, Sandler O'Neill received and used in its analyses certain projections of transaction costs, accounting adjustments, issuance of subordinated debt by Eagle prior to consummation of the merger, expected cost savings and other synergies which were prepared by and reviewed with the senior management of Eagle. With respect to the Virginia Heritage Forecasts as well as those projections, estimates and judgments, cost savings and other synergies of Eagle that were provided by senior management of Eagle, and the publicly available median analyst estimates for Eagle, the respective managements of Virginia Heritage and Eagle confirmed to Sandler O'Neill that those projections, estimates and judgments reflected the best currently available estimates and judgments of those respective managements of the future financial performance of Virginia Heritage and Eagle, respectively, and Sandler O'Neill assumed that such performance would be achieved. Sandler O'Neill expressed no opinion as to such estimates or the assumptions on which they are based. Sandler O'Neill assumed that there had not been any material change in the respective assets, financial condition, results of operations, business or prospects of Virginia Heritage or Eagle since the date of the most recent financial data made available to Sandler O'Neill. In addition, Sandler O'Neill assumed in all respects material to its review and analysis that Virginia Heritage and Eagle would remain as a going concern for all periods relevant to its analyses. Sandler O'Neill expressed no opinion as to the trading values at which the common

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stock of Virginia Heritage or Eagle may trade at any time. Sandler O'Neill expressed no opinion as to any of the legal, accounting and tax matters relating to the merger and any other transaction contemplated in connection therewith. Sandler O'Neill's opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Sandler O'Neill as of, the date of its opinion. Events occurring after the date thereof could materially affect Sandler O'Neill's opinion. Sandler O'Neill has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date of its opinion.

        In rendering its June 9, 2014 opinion, Sandler O'Neill performed a variety of financial analyses. The following is a summary of the material analyses performed by Sandler O'Neill, but it is not a complete description of all the analyses underlying Sandler O'Neill's opinion. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Sandler O'Neill believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Sandler O'Neill's comparative analyses described below is identical to Virginia Heritage or Eagle and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or merger transaction values, as the case may be, of Virginia Heritage and Eagle and the companies to which they are being compared.


Transaction Multiples

        Sandler O'Neill reviewed the financial terms of the proposed transaction. As described in the merger agreement, holders of Virginia Heritage common stock have the right to receive consideration consisting of (i) shares of Eagle common stock having a value of $21.50 per share, assuming that the average closing price of a share of Eagle common stock over a 20 trading day period ending five trading days prior to closing is between $29.00 and $35.50 per share, and (ii) cash of $7.50 per share. If the average trading price for Eagle common stock, calculated as described above, is higher than $35.50, then each share of Virginia Heritage common stock would be converted into the right to receive 0.6056 shares of Eagle common stock, and cash consideration in an amount equal to the product of 0.8169 multiplied by the average trading price for Eagle common stock, multiplied by 0.258621. If the average trading price for Eagle common stock, calculated as described above, is less than $29.00, then each share of Virginia Heritage common stock would be converted into the right to receive $7.50 in cash and shares of Eagle common stock having a value equal to the average trading price minus $7.50.

        Based upon Eagle's share price of $32.92 as of June 6, 2014, Sandler O'Neill calculated a purchase price per share of $29.00 per share. Based upon (i) 6,016,801 shares of Virginia Heritage common stock outstanding, (ii) the exchange of outstanding Virginia Heritage stock options for Eagle stock options, and (iii) Eagle's share price of $32.92 as of June 6, 2014, Sandler O'Neill calculated an aggregate merger

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consideration value of approximately $182.9 million. Based upon financial information as of the period ended March 31, 2014, Sandler O'Neill calculated the following transaction ratios:

Pricing Multiples
  Value  

Price/Book Value

    206 %

Price/Tangible Book Value

    206 %

Price/Last Twelve Months Earnings Per Share

    18.1x  

Price/2014 Estimated Earnings Per Share

    17.9x  

Core Deposit Premium

    20.5 %

Market Premium (June 6, 2014)

    33.9 %


Comparable Company Analysis

        Sandler O'Neill used publicly available information to compare selected financial information for Virginia Heritage and a group of financial institutions selected by Sandler O'Neill based on Sandler O'Neill's professional judgment and experience. The peer group consisted of publicly-traded banks and thrifts headquartered in Maryland, Virginia or Washington, D.C. with total assets between $650 million and $1.25 billion.

        The following financial institutions were selected for the comparison:

Middleburg Financial Corporation   Old Line Bancshares, Inc.
National Bankshares, Inc.   Community Bankers Trust Corporation
Franklin Financial Corporation   Eastern Virginia Bankshares, Inc.
Shore Bancshares, Inc.   Monarch Financial Holdings, Inc.,
Community Financial Corporation   Access National Corporation
Old Point Financial Corporation   Valley Financial Corporation
Severn Bancorp, Inc.   Southern National Bancorp of Virginia, Inc.
New Peoples Bankshares, Inc.   John Marshall Bank
Xenith Bankshares, Inc.   Chesapeake Financial Shares, Inc.

        The analysis compared publicly available financial information for Virginia Heritage and the high, mean, median and low financial and market trading data for the peer group as of or for the last twelve month period ended March 31, 2014 with pricing data as of June 6, 2014. The results of these analyses are summarized in the following table.

 
  Virginia Heritage   Comparable Company Ranges

Total Assets ($ in millions)

  $ 917   $1,208 - $669

Tangible Common Equity/Tangible Assets

    9.25 % 22.20% - 5.76%

Leverage Ratio

    11.28 % 18.68% - 7.30%

Total Risk-Based Capital Ratio

    14.76 % 29.74% - 11.68%

Return on Average Assets

    1.08 % 1.64% - 0.18%

Return on Average Common Equity

    10.00 % 12.64% - 2.07%

Net Interest Margin

    3.57 % 4.70% - 2.71%

Efficiency Ratio

    60.8 % 91.1% - 43.8%

Loan Loss Reserve/Gross Loans(1)

    1.36 % 2.53% - 0.57%

Non-Performing Assets(2)/Total Assets

    0.30 % 7.04% - 0.32%

Net Charge Offs/Average Loans

    0.10 % 0.92% - (0.08)%

Price/Tangible Book Value

    154 % 168% - 63%

Price/ Last 12 Months Earnings Per Share

    13.5x   37.5x - 8.9x

Market Value ($ in millions)

    130   $244 - $25

(1)
Gross loans include loans held for sale.

(2)
Non-performing assets includes nonaccrual loans and leases, restructured loans, leases and other real estate owned.

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Analysis of Selected Merger Transactions

        Sandler O'Neill reviewed regional transactions that consisted of all bank and thrift transactions in Washington, D.C., Maryland or Virginia since January 1, 2011, with disclosed deal values that were greater than $20 million. The group was composed of the following transactions:

Buyer / Target
   
F.N.B. Corp./OBA Financial Services Inc.    
MVB Financial Corp/CFG Community Bank    
Cardinal Financial Corporation/United Financial Banking Companies, Inc.    
F.N.B. Corp./BCSB Bancorp Inc.    
United Bankshares, Inc./Virginia Commerce Bancorp, Inc.    
Union First Market Bankshares Corp./StellarOne Corp.    
F.N.B. Corp./Annapolis Bancorp. Inc.    
Old Line Bancshares Inc./WSB Holdings Inc.    
City Holding Co./Community Financial Corp.    
Washington First Bankshares Inc./Alliance Bankshares Corp.    
First Community Bankshares Inc./Peoples Bank of Virginia    
Sandy Spring Bancorp, Inc./CommerceFirst Bancorp, Inc.    

        Sandler O'Neill then reviewed the following multiples for each of the transactions: transaction price to last twelve months' earnings; transaction price to book value; transaction price to tangible book value; and core deposit premium. Sandler O'Neill then calculated the imputed per share valuation for the high, low, mean and median data for the transactions. The results of these analyses are summarized in the following tables.

 
  Regional M&A
Transactions
 
  (Ranges)

Price / Last 12 Months Earnings

  23.9x - 16.4x

Price / Book Value

  196% - 66%

Price / Tangible Book Value

  196% - 66%

Core Deposit Premium

  11.2% - (4.1)%

One Day Market Premium

  75% - 15.2%

 

 
  Imputed Per Share Valuation
for Precedent Regional M&A
Transactions (Ranges)

Price / Last 12 Months Earnings

  $38.18 - $26.22

Price / Book Value

  $27.69 - $9.28

Price / Tangible Book Value

  $27.69 - $9.28

Core Deposit Premium

  $23.02 - $10.86

Market Premium

  $37.90 - $24.95

 

 
  Virginia Heritage Financials as of March 31, 2014  
 
  Last 12 Months
Earnings Per Share
  Book Value
Per Share
  Tangible Book
Value
Per Share
  Core
Deposits
  Closing
Price
 
    $ 1.60   $ 14.10   $ 14.10   $ 477,469   $ 19.80  


Virginia Heritage—Net Present Value Analysis

        Sandler O'Neill performed an analysis that estimated the net present value per share of Virginia Heritage common stock through December 31, 2018.

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        Sandler O'Neill based the analysis on Virginia Heritage's management budget for 2014 - 2016 and management guidance thereafter, which assumed (i) tangible book value as of December 31, 2014 of $15.41 per share, (ii) a discount rate of 15.32%, and (iii) 6,233,000 estimated diluted shares of common stock.

        To approximate the terminal value of Virginia Heritage's common stock at December 31, 2018, Sandler O'Neill applied price to earnings multiples of 12.0x to 20.0x and multiples of tangible book value ranging from 100% to 180% as determined by Sandler O'Neill in its professional judgment and experience. Sandler O'Neill selected the price to earnings multiples based on price to earnings multiples of Virginia Heritage's peer group. Sandler O'Neill selected the tangible book value multiples based on tangible book value multiples of the Virginia Heritage peer group.

        The income streams and terminal values were then discounted to present values using different discount rates ranging from 10.0% to 16.0%, which were assumed deviations, both up and down, as selected by Sandler O'Neill based on the Virginia Heritage discount rate of 15.32% as determined by Sandler O'Neill. Sandler O'Neill determined the discount rate based on the 10-year treasury bond yield of 2.61%, an equity risk premium of 5.70%, a size premium of 3.81%, and an industry premium of 3.20%. These analyses resulted in the following reference ranges of implied present values per share of Virginia Heritage common stock:

Range of Implied Earnings Per Share
Based on Price/Earnings
 
Range of Implied Tangible Book Value Per
Share Based on Tangible Book Value
$14.58 - $31.27   $11.97 - $30.82

        Sandler O'Neill also considered and discussed with the Virginia Heritage's board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O'Neill performed a similar analysis assuming Virginia Heritage's net income varied from 25% above projections to 25% below projections. Using a discount rate of 13.0% for this analysis, Sandler O'Neill noted a range of $12.38 - $34.40 per share of Virginia Heritage common stock.

        During the June 9, 2014 meeting of Virginia Heritage's board of directors, Sandler O'Neill noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.


Eagle Comparable Company Analysis

        Sandler O'Neill used publicly available information to compare selected financial information for Eagle and a group of financial institutions selected by Sandler O'Neill based on Sandler O'Neill's professional judgment and experience. The peer group consisted of publicly-traded banks and thrifts headquartered in Maryland, Virginia or Washington, D.C. with total assets between $1 and $10 billion and non-performing assets/assets less than 3.0%.

        The following financial institutions were selected for the comparison:

Union Bankshares Corporation   Washington First Bankshares, Inc.
TowneBank   Middleburg Financial Corporation
Carter Bank and Trust   Old Line Bancshares, Inc.
Cardinal Financial Corp.   National Bancshares, Inc.
First Community Bankshares Inc.   Community Bankers Trust Corporation
Burke & Herbert Bank & Trust Company   Eastern Virginia Bankshares, Inc.
C&F Financial Corporation   Monarch Financial Holding, Inc.
American National Bankshares, Inc.   Community Financial Corporation

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        The analysis compared publicly available financial information for Eagle and the high, mean, median and low financial and market trading data for the peer group as of or for the last twelve month period ended March 31, 2014 with pricing data as of June 6, 2014. The results of these analyses are summarized in the following table.

 
  Eagle   Comparable
Company Ranges

Total Assets ($ in millions)

  $ 3,804   $7,295 - $1,017

Tangible Common Equity/Tangible Assets

    9.22 % 13.04% - 6.68%

Leverage Ratio

    10.83 % 14.24% - 6.79%

Total Risk-Based Capital Ratio

    13.04 % 24.51% - 11.77%

Return on Average Assets

    1.36 % 1.64% - 0.55%

Return on Average Common Equity

    12.42 % 12.06% - 5.65%

Net Interest Margin

    4.41 % 7.11% - 2.17%

Efficiency Ratio

    50.1 % 83.5% - 43.8%

Loan Loss Reserve/Gross Loans(1)

    1.36 % 4.12% - 0.57%

Non-Performing Assets(2)/Total Assets

    1.40 % 2.90% - 0.22%

Net Charge Offs/Average Loans

    0.11 % 1.64% - (0.08)%

Price/Tangible Book Value

    244 % 186% - 95%

Price/ Last 12 Months Earnings Per Share

    18.3x   24.7x - 9.3x

Price/ 2014 Consensus Estimated Earnings Per Share

    16.4x   19.6x - 10.9x

Current Dividend Yield

    0.0 % 4.1% - 0.0%

Market Value ($ in millions)

  $ 855   $1,198 - $80

(1)
Gross loans include loans held for sale.

(2)
Non-performing assets includes nonaccrual loans and leases, restructured loans, leases and other real estate owned.


Eagle—Net Present Value Analysis

        Sandler O'Neill also performed an analysis that estimated the net present value of Eagle through December 31, 2018.

        Sandler O'Neill based the analysis on Eagle's projected earnings stream as derived from median publicly available analyst earnings estimates for Eagle for the years ending December 31, 2014 through December 31, 2015, and earnings estimates for the years ending December 31, 2015 through December 31, 2018 based on asset and earnings per share growth rates provided by senior management of Eagle, which assumed (i) tangible book value per share of $15.07 as of December 31, 2014, (ii) discount rate of 13.36% and (iii) estimated diluted shares of Eagle common stock of 26,575,000.

        To approximate the terminal value of Eagle's common stock at December 31, 2018, Sandler O'Neill applied price to earnings multiples of 12.0x to 20.0x and multiples of tangible book value ranging from 120% to 200% as determined by Sandler O'Neill in its professional judgment and experience. Sandler O'Neill selected the price to earnings multiples based on the range of data derived from trading multiples Eagle's peer group. The income streams and terminal values were then discounted to present values using different discount rates ranging from 9.0% to 14.0%, which were assumed deviations, both up and down, as selected by Sandler O'Neill based on the Eagle discount rate of 13.36% as determined by Sandler O'Neill in its professional judgment and experience. Sandler O'Neill determined the discount rate based on the 10-year treasury bond yield of 2.61%, an equity risk premium of 5.70%, a size premium of 1.85%, and an

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industry premium of 3.20%. These analyses resulted in the following reference ranges of implied earnings per share and implied tangible book value per share of Eagle common stock:

Range of Implied Earnings Per Share
Based on Price/Earnings
  Range of Implied Tangible Book Value Per Share
Based on Tangible Book Value
$20.61 - $42.51   $16.89 - $34.83

        Sandler O'Neill also considered and discussed with the Virginia Heritage board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to net income. To illustrate this impact, Sandler O'Neill performed a similar analysis assuming Eagle's net income varied from 25% above median publicly available analyst estimates and long-term earnings growth rate for the years ending 2014 through 2018 to 25% below median publicly available analyst estimates and long-term earnings growth rate for the years ending 2014 through 2018. Using a discount rate of 11.0% for this analysis, Sandler O'Neill noted a range of $17.55 - $48.74 per share of Eagle common stock.

        At the June 9, 2014 meeting of the Virginia Heritage board of directors, Sandler O'Neill noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.


Pro Forma Results

        Sandler O'Neill analyzed certain potential pro forma effects of the merger, assuming the following: (i) the merger closes in the fourth quarter of 2014; (ii) per share merger consideration value of $29.00 per share in the aggregate, comprised of $7.50 per share in cash and 0.6531 shares of Eagle common stock; (iii) outstanding options to buy Virginia Heritage common stock are converted into options to buy Eagle common stock; (iv) Virginia Heritage's performance is consistent with the financial forecasts and estimates prepared by its management; (v) Eagle's performance is consistent with median publicly available analyst estimates and long-term earnings growth rate provided by Eagle's management; (vi) certain purchase accounting adjustments, including a loan credit mark equal to negative $13.6 million (1.6% of gross loans), a loan interest rate mark equal to negative $2.0 million, and a deposit interest rate mark equal to negative $2.9 million (accreted over two years); (vii) no change to Virginia Heritage's estimated provision expense; (viii) SBLF preferred stock remains outstanding for both Virginia Heritage and Eagle until December 31, 2015; (ix) core deposit intangibles constitute 1.3% of Virginia Heritage's non-time deposits, amortized on a straight-line basis over a ten-year period; (x) cost savings of 35% of Virginia Heritage's estimated non-interest expense, fully realized by 2016; (xi) pre-tax merger related expenses of $7.3 million; (xii) pre-tax cash opportunity cost of 1.5%; and (xiii) a $45 million offering of subordinated debt with a 7% interest rate between announcement of the transaction and closing. The actual results achieved by the combined company, however, may vary from projected results and the variations may be material.

        The table below shows Sandler O'Neill's projected accretion/dilution percentages for Eagle as of closing and for each of the years 2014-2017.

 
  Closing
12/31/2014
  Year
Ending
12/31/2015
  Year
Ending
12/31/2016
  Year
Ending
12/31/2017
 

Eagle Earnings Per Share Accretion/(Dilution)—Excluding Transaction Expenses

        3.7 %   2.6 %   2.9 %

Eagle Tangible Book Value Accretion/(Dilution)

    (4.9 )%   (3.4 )%   (2.3 )%   (1.4 )%

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Other Information Reviewed By Sandler O'Neill

Stock Price Performance

        Sandler O'Neill also reviewed for informational purposes the publicly reported trading prices of Virginia Heritage's common stock for the one-year period ended June 4, 2014. Sandler O'Neill then compared the relationship between the movements in the price of Virginia Heritage's common stock against the movements in the prices of publicly-traded banks and thrifts headquartered in Maryland, Virginia or Washington, D.C. with total assets between $650 million and $1.25 billion ("Virginia Heritage Peers"), the NASDAQ Bank Index and the S&P 500.


One-Year Comparative Stock Performance

 
  Beginning Value   Ending Value  

Virginia Heritage

    100 %   164.9 %

Virginia Heritage Peers

    100 %   112.3 %

NASDAQ Bank Index

    100 %   117.6 %

S&P 500

    100 %   118.2 %

        Sandler O'Neill also reviewed for informational purposes the publicly reported trading prices of Eagle's common stock for the one-year period ended June 4, 2014. Sandler O'Neill then compared the relationship between the movements in the price of Eagle's common stock against the movements in the prices of publicly-traded banks and thrifts headquartered in Maryland, Virginia or Washington, D.C. with total assets between $1 and $10 billion and Non-Performing Assets/Assets less than 3.0% ("Eagle Peers"), the NASDAQ Bank Index and the S&P 500.


One-Year Comparative Stock Performance

 
  Beginning Value   Ending Value  

Eagle

    100 %   142.2 %

Eagle Peers

    100 %   107.4 %

NASDAQ Bank Index

    100 %   117.6 %

S&P 500

    100 %   118.2 %


Miscellaneous

        Sandler O'Neill acted as financial advisor to the Virginia Heritage board of directors in connection with the merger and received a fee associated with the delivery of its fairness opinion from Virginia Heritage in the amount of $150,000, which amount will be credited towards an additional fee of 1% of the aggregate transaction value that Sandler O'Neill will be entitled to receive if the merger is consummated. Virginia Heritage has also agreed to reimburse Sandler O'Neill's reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify Sandler O'Neill and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons against certain expenses and liabilities, including liabilities under the securities laws. Virginia Heritage has paid Sandler O'Neill $[            ] for other services during the last two years.

        In the ordinary course of its respective broker and dealer businesses, Sandler O'Neill may purchase securities from and sell securities to Virginia Heritage and Eagle and their respective affiliates. Sandler O'Neill may also actively trade the debt and/or equity securities of Virginia Heritage or Eagle or their respective affiliates for their own accounts and for the accounts of their customers and, accordingly may at any time hold a long or short position in such securities. In addition, Sandler O'Neill acted as underwriter or sales agent for offerings of Eagle securities in the last two years, for which it received commissions, discounts or placement fees aggregating approximately $1.5 million, in addition to reimbursement of

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certain out-of-pocket expenses, and has been engaged by Eagle to act as underwriter in connection with its proposed offering of subordinated debt.


Eagle's Reasons for the Merger

        In reaching its determination to approve and adopt the merger agreement and the transactions contemplated thereby, the Eagle board of directors, in consultation with management and its financial and legal advisors, considered numerous factors. In determining that the merger was in the best interest of Eagle and its shareholders, Eagle considered that the merger had numerous positive aspects, including but not limited to the following:

        Eagle also considered certain risks associated with the merger, including but not limited to the risks that:

        The above discussion of the information and factors considered by Eagle's board of directors is not meant to be exhaustive, but indicates the material matters considered by the board. In reaching its determination to approve the merger agreement and the transactions which it contemplates, the board did not quantify, rank or assign any relative or specific weight to any of the foregoing factors, and individual directors may have considered various factors differently. Eagle's board of directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. There can be no assurance that the merger will be effected

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and the integration of the two institutions completed in the manner expected by the Eagle board, or that the expected benefits to Eagle and its shareholders will be realized.


Surrender of Certificates Representing Virginia Heritage Common Stock

        Upon effectiveness of the merger, certificates which formerly represented shares of Virginia Heritage common stock will represent the number of shares of Eagle common stock into which such shares have been converted, except that until exchanged for Eagle common stock, the holders of Virginia Heritage common stock certificates will not be entitled to receive payment of dividends or other distributions or payments on Eagle common stock. The exchange agent shall receive and hold all dividends or other distributions paid or distributed with respect to shares of Eagle common stock for the account of the persons entitled thereto.

        Eagle has appointed its transfer agent, Computershare Shareholder Services, as the exchange agent with respect to the merger. Within ten business days following the mailing of this proxy statement/prospectus, the exchange agent will mail to each registered holder of Virginia Heritage common stock a letter of transmittal and instructions for use in the exchange of shares of Virginia Heritage common stock for a combination of shares of Eagle common stock and cash (including the cash in lieu of fractional shares), including procedures to be followed, including, in part, the posting of a bond in the event that certificates representing Virginia Heritage common stock have been lost or destroyed. Holders of Virginia Heritage common stock should not deliver their certificates until they have received transmittal forms, and should not return certificates with the enclosed form of proxy. For those holders of Virginia Heritage common stock who have not surrendered a properly completed letter of transmittal and certificated shares or book-entry shares evidencing the shares of Virginia Heritage common stock prior to the effective date of the merger, the exchange agent will send such holders another letter of transmittal promptly following the closing of the merger.

        Upon the closing, each holder of certificated shares or book-entry shares who has surrendered such certificated or book-entry shares of Virginia Heritage common stock to the exchange agent will, upon acceptance thereof by the exchange agent, be entitled to evidence of issuance in book-entry form, or upon written request of such holder a certificate or certificates representing, the number of whole shares of Eagle common stock and the amount of cash into which the aggregate number of shares of Virginia Heritage common stock previously represented by such certificated shares or book-entry shares surrendered shall have been converted, in each case, without interest. The exchange agent shall accept such certificated shares or book-entry shares of Virginia Heritage common stock upon compliance with such reasonable terms and conditions as the exchange agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. If a holder of Virginia Heritage common stock surrenders certificated shares and/or book-entry shares and a properly executed letter of transmittal to the exchange agent at least five business days prior to the closing date of the merger, then the exchange agent will deliver, within five business days following the closing date of the merger, to such holder, the merger consideration into which the shares of Virginia Heritage common stock represented thereby have been converted. If a holder of Virginia Heritage common stock surrenders such certificated shares and/or book-entry shares and a properly executed letter of transmittal to the exchange agent at any time after five business days prior to the closing date of the merger, then the exchange agent will promptly, but in no event later than five business days following receipt of such certificated shares and/or book-entry shares and properly executed letter of transmittal, deliver to such holder the merger consideration into which the shares of Virginia Heritage common stock represented thereby have been converted.

        Each outstanding certificated share or book-entry share which is not surrendered to the exchange agent in accordance with the procedures shall, except as set forth below, until duly surrendered to the exchange agent, be deemed to evidence ownership of the number of shares of Eagle common stock and/or the right to receive the amount of cash into which such Virginia Heritage common stock shall have been converted. After the effective time of the merger, there shall be no further transfer on the records of

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Virginia Heritage of certificated shares or book-entry shares and, if such certificated shares or book-entry shares are presented to Virginia Heritage for transfer, they shall be cancelled against delivery of certificates for Eagle common stock and/or cash into which such Virginia Heritage common stock shall have been converted.

        Any portion of the merger consideration that remains unclaimed by the shareholders of Virginia Heritage for six months after the effective time of the merger (as well as any proceeds from any investment thereof) will be delivered by the exchange agent to Eagle. In the event that any former shareholder of Virginia Heritage has not properly surrendered his or her shares of Virginia Heritage common stock within such six-month period, the shares of Eagle common stock that would otherwise have been issued to such shareholder may, at the option of Eagle, be sold and the net proceeds of such sale, together with any cash in respect of fractional shares and any previously accrued dividends, and the cash consideration in respect of such holder's shares of Virginia Heritage common stock, will be held by Eagle for such shareholder's benefit in a non-interest bearing deposit account at EagleBank or another depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation, or the FDIC, chosen by Eagle in its discretion, and the sole right of such shareholder shall be the right to receive any certificates for Eagle common stock which have not been so sold, and to collect cash in such account, without interest. Subject to all applicable laws of escheat, such amounts will be paid to such former shareholder of Virginia Heritage, without interest, upon proper surrender of his or her shares of Virginia Heritage common stock. Eagle and the exchange agent shall be entitled to rely upon the stock transfer books of Virginia Heritage to establish the identity of those persons entitled to receive the merger consideration. In the event of a dispute with respect to ownership of stock represented by any share of Virginia Heritage common stock, Eagle and the exchange agent shall be ent