FILE PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-42083
REGISTRATION NO. 333-51197
SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 9, 1998
[EAGLE BANCORP, INC. LOGO]
1,650,000 SHARES COMMON STOCK
($.01 par value)
$10.00 per share
This Supplement to Prospectus (the "Supplement") of Eagle Bancorp,
Inc., a proposed bank holding company organized under the laws of the State of
Maryland (the "Company"), is being sent to subscribers in the Company's offering
(the "Offering") of shares of its common stock, $.01 par value per share (the
"Common Stock") at an offering price of $10.00 per share, pursuant to its
prospectus dated February 9, 1998 (the "Prospectus"), and amends and supplements
the information provided in the Prospectus. To the extent a statement contained
herein modifies or supersedes a statement in the Prospectus, the Prospectus is
hereby deemed to be modified or superseded, and such statement in the Prospectus
shall not be deemed to constitute a part of the Prospectus as amended by this
Supplement.
This Supplement is being issued to reflect the extension of the Offering to
June 9, 1998 (subject to further extension) as described herein, the increase in
the aggregate number of Shares being offered for sale in the Offering by
270,000, from 1,380,000 to 1,650,000, to provide certain information regarding
certain members of the organizing group of the Company and/or Bank and other
information which has developed since the date of the Prospectus, and to offer
subscribers the right to rescind their subscriptions.
Capitalized terms used but not defined herein which are defined in the
Prospectus have the meanings ascribed to them in the Prospectus. If any person
receiving this Supplement has not received a copy of the Prospectus, or wishes
to receive another copy, that person should contact Ronald D. Paul, President of
the Company, by mail at the Company's executive offices, 8101 Glenbrook Road,
Bethesda, Maryland 20814, or by telephone at (301) 986-1800, the Company's new
telephone number.
------------------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE MARYLAND DEPARTMENT OF FINANCIAL
REGULATION OR ANY OTHER FEDERAL OR STATE SECURITIES OR BANK REGULATORY AGENCY,
NOR HAVE ANY OF THE FOREGOING PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF
THE COMPANY'S PROPOSED BANKING SUBSIDIARY, AND ARE NOT, AND WILL NOT BE, INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
-----------------
The date of this Supplement is May 13, 1998.
<PAGE>
FDIC APPROVAL
On April 14, 1998, the Federal Deposit Insurance Corporation approved the
Bank's application for deposit insurance.
EXTENSION OF THE OFFERING AND INCREASE IN THE NUMBER OF SHARES
In accordance with the provisions of the Prospectus, the Company has
elected to extend the Offering period from the original April 10, 1998
termination date. The Offering will expire on Tuesday, June 9, 1998, at 5:00
P.M., eastern time, provided, however, that the Company reserves the right to
further extend the Offering for up to an additional thirty days, to July 9,
1998, in the sole discretion of the Board of Directors.
The Company has also elected to increase the maximum number of Shares
subject to the Offering, including the Shares subject to the Oversubscription
Allotment, from 1,380,000 to 1,650,000. If all of the increased number of shares
are sold, the gross proceeds of the Offering will be $16,500,000. The increase
in the number of Shares is a result of the substantial level of interest in the
Offering, and the Company's desire to accommodate as many subscribers as
possible. As of April 10, 1998, the original Termination Date, and as of May 8,
1998, the Company had received acceptable subscriptions for $15,057,290 and
$15,612,790, respectively. The Company plans to use the additional proceeds of
the Offering for the same purposes, i.e., capital contributions to the Bank,
payment of pre-opening and organizational expenses, to provide working capital
for expansion, to fund lending activities and for general corporate purposes
(including the investment of all or a portion of the working capital funds in
interest-bearing certificates of deposit or other deposits with the Bank or
other types of securities, such as government bonds). The Company may engage in
non-banking activities permissible for bank holding companies, including but not
limited to venture capital and mortgage banking activities.
Set forth below is a tabular presentation reflecting the anticipated
allocation of the net proceeds of the Offering, after deducting estimated
expenses of the Offering of $110,000. The presentation assumes the sale of
1,650,000 Shares, the payment of all pre-opening and organizational costs (other
than Bank premises and equipment expense) by the Company, and the contribution
of $7,750,000 of the proceeds of the Offering to the Bank. The anticipated
contribution to the Bank's capital has been increased to reflect anticipated
increases in the estimated Bank premises expense. Pre-opening expenses will
initially have been funded by organizer advances, which will be repaid from the
proceeds of this Offering. The presentation assumes the direct payment of all
such expenses (other than Bank premises and equipment expense) by the Company.
----------------------------------
Amount % of Proceeds(1)
----------------------------------
THE COMPANY:
Net Proceeds $ 16,390,000 100%
Purchase of Stock of Bank/
Capital Contributions 7,750,000 47.28%
Salary(2)(3) 230,000 1.40%
Other pre-opening expense(3)(4) 150,000 .91%
Interest on organizer advances(5) 16,496 .10%
Working Capital $ 8,243,504 50.29%
THE BANK
Proceeds of Capital Contributions By
Company 7,750,000 47.28%
Premises and equipment expense(3)(6) 1,490,000 9.09%
Working Capital 6,260,000 38.19%
(1) Represents, in case of the Bank, percentage of total net proceeds of
Offering. The Company reserves the right to not contribute to the Bank any
portion of the proceeds of the Offering in excess of $7,750,000.
(footnotes continued on next page)
-2-
<PAGE>
(footnotes continued from prior page)
(2) Represents pre-opening salary and benefits for President and Executive Vice
President of Bank.
(3) All or a portion of such items will be initially funded by organizer
advances. These organizer advances, with interest at the prime rate,
adjusted monthly, will be repaid from the proceeds of the Offering.
Organizer advances amounted to $130,000 at December 31, 1997 and $470,000 at
March 31, 1998. On April 6, 1998 $220,000 principal amount of organizer
advances were converted into stock subscriptions and ceased accruing
interest.
(4) Includes application costs and legal expense not related to the Offering,
and office expense for pre-opening period.
(5) Represents $3,038 interest on organizer advances at a rate of 8.5% for the
period December 1, 1997 to March 31, 1998, and interest at a rate of 8.5% on
$475,000 in organizer advances for the period April 1, 1998 to July 31,
1998.
(6) Represents costs incurred in outfitting main offices of Bank and two
branches. As a result of unexpected delays in construction and revision of
cost estimates, the expenses to be incurred in outfitting the Bank's offices
are anticipated to be higher than originally estimated.
PRO FORMA CAPITALIZATION OF THE COMPANY
The following table sets forth the pro forma consolidated capitalization of
the Company at March 31, 1998, after giving effect to the receipt of the
estimated net proceeds of (i) the sale of the all of the Shares offered hereby,
and (ii) pre-opening expenses (other than premises and equipment expenses for
the Bank, but including expenses of the Offering) of $506,496, and based upon
the assumptions set forth herein.
<TABLE>
<CAPTION>
March 31, 1998
------------------------------------------------
Actual Pro Forma
------------------- ----------------------
Stockholders' equity:
<S> <C> <C>
Common Stock, $.01 par value; shares authorized,
5,000,000; shares outstanding, 1,650,000 pro forma $ 0 $ 16,500
Preferred Stock, $.01 par value; shares authorized,
1,000,000; shares outstanding, 0 pro forma 0 0
Capital surplus 0 16,374,000
Retained earnings (deficit) (267,558) (396,496)
------------------- ----------------------
Total stockholders' equity (deficit) $ (267,558) $ 15,993,504
=================== ======================
Book value per share of common stock(1) N/A $ 9.69
=================== ======================
</TABLE>
(1) Book value per share of common stock is determined by dividing the
Company's pro forma total consolidated equities at March 31, 1998 by
1,650,000 shares issued and outstanding.
The Company expects that it may withdraw from escrow up to $500,000 of
funds representing a portion of the subscription funds of the organizing
directors of the Company, and issue shares of Common Stock to the directors in
respect of their subscriptions, prior to the time it withdraws funds from escrow
with respect to any other subscriptions. The funds of the directors would then
be irrevocably invested in the Company Common Stock. The purpose of withdrawing
the directors' funds from escrow would be to help fund the costs of construction
of the Bank's offices.
DESCRIPTION OF PROPERTIES
The Company has entered into leases with respect to three properties to be
utilized as the main office and branches of the Bank and the executive offices
of the Bank and Company. The main office of the Bank and the executive offices
of the Company and Bank are to be located in a 12,000 square foot, two story,
brick building with full basement, at 7815 Woodmont Avenue, Bethesda, Maryland.
The lease is for a ten year initial term with two five year renewal options, at
an annual initial base rent of $142,500, subject to annual percentage increase.
The Company has undertaken to perform certain renovations and improvements to
the property. The Rockville branch will be located at 110 North Washington
Street, Rockville, Maryland. The space consists of 2,500 square feet in the
first floor of a multi-story office building in the downtown Rockville business
district. The lease is for a five year initial term, with one five year renewal
option, at an initial annual base rent of $34,992, subject to annual percentage
increase. The Silver Spring branch is located at 8677 Georgia Avenue, Silver
Spring, Maryland. The lease is for a five year
-3-
<PAGE>
initial term, with one five year renewal option at an annual initial base rent
of $53,084, subject to annual percentage increase. The space is located in the
first floor of a multi-story office building in the Silver Spring business
district. Each of the leases also requires the Company to pay its proportional
share of building expenses.
MANAGEMENT'S DISCUSSION AND ANALYSIS
As of the date hereof, neither the Company nor the Bank has commenced
operations or engaged in any activities except those related to the organization
of the Company and the Bank and raising capital in this Offering. As such it is
classified as a development stage company. Such limited activities have been
financed solely by advances, in the amount of $470,000 as of March 31, 1998
($130,000 as of December 31, 1997), by certain organizers of the Company. One
organizer has obtained a $350,000 line of credit from an unaffiliated bank, of
which $225,000 has been drawn, for purposes of financing additional advances.
All advances will be repaid from the proceeds of the Offering with interest at
the prime rate, adjusted monthly. If the Offering is not completed, no other
person or entity is obligated to repay the aggregate advances to the organizers.
This temporary funding source is expected to be sufficient to meet the Company's
needs until the sale of Shares pursuant to the Offering is completed.
It is anticipated that the Bank will incur approximately $1,490,000 in
expenses in leasehold improvements for its three planned offices and in
furniture, fixtures and equipment for such offices, including vaults, teller
equipment, computer work stations, furniture for the branch lobbies and
administrative offices, ATM units and other equipment. The Bank will contract
its data processing requirements to an outside vendor. The Company had two full
time employees at March 31, 1998, and expects to have twenty five employees at
the Bank level after all three planned branches have opened.
The Company believes that the proceeds of the Offering, $16,500,000 if the
maximum number of Shares are sold (without deduction for $110,000 estimated
expenses of the Offering), will be sufficient to fund the expenses of
establishing and opening the Bank and to fund the Bank's and Company's
operations for at least twelve months after the Offering. The Company does not
anticipate a need to raise additional capital during that period.
At March 31, 1998, the Company had total assets of $10,162,683, $9,934,300
of which represented escrowed funds in respect of subscriptions for Common Stock
in the Offering, as compared to assets of $11,046 at December 31, 1997. The
Company reported a net loss of $105,355 for the three months ended March 31,
1998, and a net loss of $162,203 for the period from inception to December 31,
1997, resulting in each case from accrued expenses relating to the organization
of the Company and the Bank, principally legal expenses, filing fees and
pre-opening salaries. The Company reported income of $23,446 during the three
months ended March 31, 1998, representing interest on escrowed common stock
subscription funds.
DIRECTORS AND EXECUTIVE OFFICERS - RECENT EVENTS
On April 22, 1998, Dudley C. Dworken resigned from his position as a
director of the Company and the Bank. The Board of Directors has indicated that
it does not plan to appoint another person to fill the vacancies in the Company
and Bank boards at this time. Mr. Dworken has indicated his intention not to
rescind his subscription for Shares in the Offering.
The Company has also been informed by Thomas D. Murphy, the proposed
Executive Vice President--Chief Operating Officer of the Bank, that the
Commission is investigating whether Mr. Murphy made misstatements to the press
in late 1995 and early 1996 regarding the status of merger discussions of
Allegiance Banc Corporation ("Allegiance") prior to its Acquisition. The Company
understands the Commission is also investigating the actions
-4-
<PAGE>
of Allegiance in respect of Mr. Murphy's statements. There can be no assurance
that the scope of the Commission's investigation will not be expanded.
Mr. Murphy has been informed by the Commission that it intends to recommend
an enforcement action against him with regard to matter in question. Although
counsel for Mr. Murphy have advised the Company that they believe that Mr.
Murphy has substantial defenses against the allegations, there is no assurance
that he will avoid becoming the subject of civil penalties or other sanctions.
The Company cannot predict what effect, if any, this investigation or any
resulting charges or other proceedings may ultimately have on the ability of Mr.
Murphy to serve with the Bank and the Company, or on the timing of the receipt
by the Company and the Bank of all necessary regulatory approvals.
The Company is not privy to the correspondence relating to the foregoing
investigations, and in making this disclosure has relied on information provided
to the Company by Mr. Murphy and his counsel.
RIGHT TO RESCIND SUBSCRIPTIONS AND OBTAIN A REFUND
Each Subscriber is hereby being granted the opportunity to terminate his or
her subscription and to obtain a refund of all funds heretofore paid by such
subscriber pursuant to a Subscription Agreement. In order to terminate a
subscription, a Subscriber must deliver written notice of his or her election to
terminate such subscriber's subscription, NO LATER THAN 5:00 P.M., EASTERN TIME,
ON MAY 31, 1998 (17 calendar days after mailing) to the following address:
Koonce Securities, Inc. (Eagle Bancorp, Inc.)
6550 Rock Spring Drive
Suite 600
Bethesda, Maryland 20817
In order to be effective, written notice of rescission must be actually
received at such address on or before May 31, 1998. Subscriptions may be
terminated only in whole, and not in part. Subscribers who terminate their
subscriptions will not be entitled to receive interest on their funds held in
escrow, except as otherwise provided in the Prospectus under the caption "THE
OFFERING -- Escrow Account; Release of Funds."
After May 31, 1998, consistent with the provisions of the original terms of
the Offering, Subscribers will not be able to obtain a refund of their funds
during the Offering period. (See "THE OFFERING --Acceptance and Refunding of
Subscriptions.")
-5-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997
Independent Auditor's Report............................................... F-1
Audited Balance Sheet of the Company at December 31, 1997.................. F-2
Audited Statement of Operations............................................ F-3
Audited Statement of Changes in Stockholders' Deficit...................... F-4
Audited Statement of Cash Flows............................................ F-5
Notes to Audited Financial Statements...................................... F-6
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1998
Unaudited Balance Sheet of the Company at March 31, 1998................... F-8
Unaudited Statement of Operations.......................................... F-9
Unaudited Statement of Changes in Stockholders' Deficit.................... F-10
Unaudited Statement of Cash Flows.......................................... F-11
Notes to Unaudited Financial Statements.................................... F-12
-6-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Eagle Bancorp, Inc.
Bethesda, Maryland
We have audited the accompanying balance sheet of Eagle Bancorp, Inc. (a
Development Stage Company) as of December 31, 1997, and the related statements
of operations, changes in stockholders' deficit and cash flows for the period
October 28, 1997 (date of inception) to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the financial statements provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above presents fairly,
in all material respects, the financial position of Eagle Bancorp, Inc. (a
Development Stage Company) as of December 31, 1997 and the results of operations
and cash flows for the period October 28, 1997 (date of inception) to December
31, 1997 in conformity with generally accepted accounting principles.
/s/ STEGMAN & COMPANY
Baltimore, Maryland
April 14, 1998
F-1
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
Cash and cash equivalents $ 7,214
Equipment - net 3,832
----------
TOTAL ASSETS $ 11,046
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Accounts payable and accrued expenses $ 43,249
Payable to organizers 130,000
----------
Total liabilities 173,249
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par, 5,000,000 shares
authorized, no shares issued and outstanding -
Preferred stock, $.01 par, 1,000,000 shares
authorized, no shares issued and outstanding -
Surplus -
Deficit (162,203)
----------
Total stockholders' deficit (162,203)
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 11,046
=========
F-2
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM OCTOBER 28, 1997
(DATE OF INCEPTION) TO DECEMBER 31, 1997
REVENUES $ -
-----------
EXPENSES:
Depreciation 348
Filing fees 18,354
Interest 1,056
Legal 77,892
Payroll taxes and employee benefits 6,358
Salaries 51,912
Other 6,283
-----------
Total expenses 162,203
LOSS BEFORE INCOME TAX BENEFIT (162,203)
INCOME TAX BENEFIT -
- ------------------ ------------
NET LOSS $(162,203)
=============
F-3
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM OCTOBER 28, 1997
(DATE OF INCEPTION) TO DECEMBER 31, 1997
Common
Stock Surplus Deficit
----- ------- -------
BALANCES AT OCTOBER 28, 1997 $ - $ - $ -
Net loss - - (162,203)
--------- ------------- --------------
BALANCES AT DECEMBER 31, 1997 $ - $ - $(162,203)
========= ============= =============
F-4
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM OCTOBER 28, 1997
(DATE OF INCEPTION) TO DECEMBER 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(162,203)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 348
Increase in accounts payable and accrued expenses 43,249
Net cash used in operating activities (118,606)
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (4,180)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in payable to organizers 130,000
----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,214
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD -
----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 7,214
=========
Supplemental cash flows information:
Interest payments $ -
=========
Income tax payments $ -
=========
F-5
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
Eagle Bancorp, Inc. was incorporated on October 28, 1997 under the laws of
the State of Maryland to operate as a bank holding company. It is intended
that the Company will purchase all the shares of common stock to be issued
by EagleBank (the "Bank"). An application to organize the Bank was filed
with the Maryland Department of Financial Regulation on December 5, 1997.
The Bank has not commenced operations and will not do so unless the public
offering of stock by the Company is completed and the Bank meets the
conditions of the Maryland Department of Financial Regulation to receive
its charter authorizing it to commence operations as a commercial bank, and
has obtained the approval of the FDIC to insure its deposit accounts.
2. DEVELOPMENT STAGE COMPANY
The Company is currently devoting substantially all of its efforts
establishing a new banking business and raising capital, accordingly, the
Company meets the criteria defined by Statement of Financial Accounting
Standards (SFAS) No. 7, "Accounting and Reporting by Development Stage
Enterprises."
3. NEW ACCOUNTING PRONOUNCEMENTS
Effective for periods ending after December 15, 1997, SFAS No. 128,
"Earnings Per Share," is applicable for computing and presenting earnings
per share (EPS) for entities, with publicly held common stock or potential
common stock. This statement simplifies the standards for computing EPS,
making them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation. This accounting pronouncement shall apply to the Company when
and if common stock of the Company is issued. As of December 31, 1997, the
Company had no shares of common stock outstanding.
Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income, was issued in June 1997. This statement establishes
standards for disclosing comprehensive income and its components in a full
set of general-purpose financial statements. Comprehensive income is
defined as the change in equity from transactions and other events and
circumstances from nonowner sources. Comprehensive income includes net
income which is adjusted for items such as unrealized gains and losses on
certain investment securities and minimum pension liability adjustments.
This statement is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods provided
for comparative purposes is required. For the
F-6
<PAGE>
period from October 28, 1997 (date of inception) through December 31, 1997
the Company had no components of other comprehensive income.
Statement of Financial Accounting Standards No. 131, Disclosure about
Segments of an Enterprise and Related Information, was issued in June 1997.
This statement establishes standards for disclosing information about
operating segments in financial statements. Operating segments are
components of a business about which separate financial information is
available that is evaluated by management in deciding how to allocate
resources and in assessing performance. Management has not determined yet
whether additional disclosure will be necessary under the requirements of
SFAS No. 131. For year-end disclosure, this statement is effective for
fiscal years beginning after December 15, 1997. Interim reporting
disclosures would not be required in the first year of adoption, but would
begin the first quarter immediately after the first year of providing
year-end disclosures. For interim reporting, the preceding year's interim
information must be presented on a comparative basis.
4. CASH AND CASH EQUIVALENTS
The Company defines cash and cash equivalents as cash on hand and
short-term investments with original maturities of less than 90 days.
5. PAYABLE TO ORGANIZERS
Organizers of the Company have advanced an aggregate of $130,000 to pay
certain organization expenses (principally legal fees, filing fees and
salaries). These advances are to be repaid with interest at the prime rate
from the proceeds of the common stock offering at the time the Company
opens for business. One organizer has obtained a line of credit in the
amount of $350,000 for the purpose of funding additional expenses of the
Company through additional organizer advances. Organization expenses will
be expensed as incurred.
6. INCOME TAXES
The Company uses the liability method of accounting for income taxes as
required by SFAS No. 109, "Accounting for Income Taxes." Under the
liability method, deferred-tax assets and liabilities are determined based
on differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities (i.e., temporary differences) and
are measured at the enacted rates that will be in effect when these
differences reverse. Deferred income taxes will be recognized when it is
deemed more likely than not that the benefits of such deferred income taxes
will be realized, accordingly, no deferred income taxes or income tax
benefits have been recorded by the Company.
F-7
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
ASSETS
Cash and cash equivalents $10,111,309
Leasehold improvements 24,140
Equipment - net 3,484
Deposits 23,750
TOTAL ASSETS $10,162,683
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Accounts payable and accrued expenses $ 25,941
Common stock subscription funds 9,934,300
Payable to organizers 470,000
-------------
Total liabilities 10,430,241
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par, 5,000,000 shares
authorized, no shares issued and outstanding -
Preferred stock, $.01 par, 1,000,000 shares
authorized, no shares issued and outstanding -
Surplus -
Deficit (267,558)
-------------
Total stockholders' deficit (267,558)
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $10,162,683
===========
F-8
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
REVENUES - Interest income $ 23,446
----------
EXPENSES:
Depreciation 348
Filing fees 1,356
Interest 5,082
Legal 13,888
Accounting 2,000
Payroll taxes and employee benefits 6,068
Salaries 66,696
Other 33,363
-----------
Total expenses 128,801
LOSS BEFORE INCOME TAX BENEFIT (105,355)
INCOME TAX BENEFIT -
NET LOSS $(105,355)
=========
F-9
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
Common
Stock Surplus Deficit
BALANCES AT JANUARY 1, 1998 $ - $ - $(162,203)
Net loss - - (105,355)
----------- ------------ ----------
BALANCES AT MARCH 31, 1998 $ - $ - $(267,558)
=========== ============ ===========
F-10
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (105,355)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 348
Decrease in accounts payable
and accrued expenses (17,308)
------------
Net cash used in operating activities (122,315)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in leasehold improvements (24,140)
Increase in deposits (23,750)
------------
Net cash used in investing activities (47,890)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in payable to organizers 340,000
Increase in common stock subscription funds 9,934,300
------------
Net cash provided by financing activities 10,274,300
------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,104,095
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 7,214
------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $10,111,309
------------
Supplemental cash flows information:
Interest payments $ -
============
Income tax payments $ -
============
F-11
<PAGE>
EAGLE BANCORP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
General - The financial statements of Eagle Bancorp, Inc. (the Company)
included herein are unaudited; however, they reflect all adjustments
consisting only of normal recurring accruals that, in the opinion of
Management, are necessary to present fairly the results for the periods
presented. Certain information and note disclosures normally included in
financial statements prepared in accordance with Generally Accepted
Accounting Principles have been condensed or omitted. The Company believes
that the disclosures are adequate to make the information presented not
misleading. The results of operations for the three months ended March 31,
1998, are not necessarily indicative of the results of operations to be
expected for the remainder of the year. It is suggested that these
financial statements be read in conjunction with the prospectus dated
February 9, 1998.
2. NATURE OF BUSINESS
Eagle Bancorp, Inc. was incorporated on October 28, 1997 under the laws of
the State of Maryland to operate as a bank holding company. It is intended
that the Company will purchase all the shares of common stock to be issued
by EagleBank (the "Bank"). An application to organize the Bank was filed
with the Maryland Department of Financial Regulation on December 5, 1997.
The Bank has not commenced operations and will not do so unless the public
offering of stock by the Company is completed and the Bank meets the
conditions of the Maryland Department of Financial Regulation to receive
its charter authorizing it to commence operations as a commercial bank, and
has obtained the approval of the FDIC to insure its deposit accounts.
3. DEVELOPMENT STAGE COMPANY
The Company is currently devoting substantially all of its efforts
establishing a new banking business and raising capital, accordingly, the
Company meets the criteria defined by Statement of Financial Accounting
Standards (SFAS) No. 7, "Accounting and Reporting by Development Stage
Enterprises."
4. NEW ACCOUNTING PRONOUNCEMENTS
Effective for periods ending after December 15, 1997, SFAS No. 128,
"Earnings Per Share," is applicable for computing and presenting earnings
per share (EPS) for entities, with publicly held common stock or potential
common stock. This statement simplifies the standards for computing EPS,
making them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation. This accounting pronouncement shall
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apply to the Company when and if common stock of the Company is issued. As
of March 31, 1998, the Company had no shares of common stock outstanding.
Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income, was issued in June 1997. This statement establishes
standards for disclosing comprehensive income and its components in a full
set of general-purpose financial statements. Comprehensive income is
defined as the change in equity from transactions and other events and
circumstances from nonowner sources. Comprehensive income includes net
income which is adjusted for items such as unrealized gains and losses on
certain investment securities and minimum pension liability adjustments.
This statement is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods provided
for comparative purposes is required. For the period from October 28, 1997
(date of inception) through March 31, 1998 the Company had no components of
other comprehensive income.
Statement of Financial Accounting Standards No. 131, Disclosure about
Segments of an Enterprise and Related Information, was issued in June 1997.
This statement establishes standards for disclosing information about
operating segments in financial statements. Operating segments are
components of a business about which separate financial information is
available that is evaluated by management in deciding how to allocate
resources and in assessing performance. Management has not determined yet
whether additional disclosure will be necessary under the requirements of
SFAS No. 131. For year-end disclosure, this statement is effective for
fiscal years beginning after December 15, 1997. Interim reporting
disclosures would not be required in the first year of adoption, but would
begin the first quarter immediately after the first year of providing
year-end disclosures. For interim reporting, the preceding year's interim
information must be presented on a comparative basis.
5. CASH AND CASH EQUIVALENTS
The Company defines cash and cash equivalents as cash on hand and
short-term investments with original maturities of less than 90 days.
6. COMMON STOCK SUBSCRIPTION FUNDS
As a result of the Company's prospectus dated February 9, 1998, the
Company, through an escrow agent, has been receiving subscriptions for the
Company's common stock. These funds are invested in U.S. Treasury bills and
repurchase agreements. If the Company or the Bank does not receive all
necessary regulatory approvals, the subscription funds will be returned to
the investors.
7. PAYABLE TO ORGANIZERS
Organizers of the Company have advanced an aggregate of $470,000 to pay
certain organization expenses (principally legal fees, filing fees and
salaries). These advances are to be repaid with interest at the prime rate
from the proceeds of the common stock offering at the time the Company
opens for business. One organizer has obtained a line of credit in the
amount of $350,000 for the purpose of funding additional expenses of the
Company through additional organizer advances. Organization expenses will
be expensed as incurred.
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8. INCOME TAXES
The Company uses the liability method of accounting for income taxes as
required by SFAS No. 109, "Accounting for Income Taxes." Under the
liability method, deferred-tax assets and liabilities are determined based
on differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities (i.e., temporary differences) and
are measured at the enacted rates that will be in effect when these
differences reverse. Deferred income taxes will be recognized when it is
deemed more likely than not that the benefits of such deferred income taxes
will be realized, accordingly, no deferred income taxes or income tax
benefits have been recorded by the Company.
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