EAGLE BANCORP INC - FORM 8-K/A - EX-99.4 - November 6, 2014

Attached files

file filename
8-K/A - 8-K/A - EAGLE BANCORP INCa2222096z8-ka.htm
EX-23.1 - EX-23.1 - EAGLE BANCORP INCa2222096zex-23_1.htm
EX-99.3 - EX-99.3 - EAGLE BANCORP INCa2222096zex-99_3.htm
EX-99.2 - EX-99.2 - EAGLE BANCORP INCa2222096zex-99_2.htm
EX-99.1 - EX-99.1 - EAGLE BANCORP INCa2222096zex-99_1.htm

QuickLinks -- Click here to rapidly navigate through this document


Exhibit 99.4

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

        The following unaudited pro forma combined financial information and explanatory notes present how the combined financial statements of Eagle Bancorp, Inc. ("Eagle") and Virginia Heritage Bank ("Virginia Heritage") may have appeared had the businesses actually been combined as of the dates indicated. We provide an unaudited pro forma combined balance sheet at June 30, 2014, based upon the actual exchange ratio of 0.6632 and the closing price of Eagle common stock on October 31, 2014 of $35.93. We also provide unaudited pro forma combined income statements for the six months ended June 30, 2014 and the year ended December 31, 2013 based on the actual exchange ratio. The unaudited pro forma combined income statement for the year ended December 31, 2013, and the unaudited pro forma combined income statement for the six months ended June 30, 2014 give effect to the merger as if the merger had been completed on January 1, 2013.

        The unaudited pro forma combined financial information shows the impact of the merger on the combined financial position and the results of operations of Eagle and Virginia Heritage under the acquisition method of accounting with Eagle treated as the acquirer. Under this method of accounting, Eagle will record the assets and liabilities of Virginia Heritage at their estimated fair values as of October 31, 2014, the date the merger was completed.

        The unaudited pro forma combined financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and the related notes of Eagle that are included in its Annual Report on Form 10-K for the year ended December 31, 2014 and its Quarterly Report on Form 10-Q for the period ended June 30, 2014, and the historical consolidated financial statements and the related notes of Virginia Heritage that are included in this Current Report on Form 8-K.

        The unaudited pro forma combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had Eagle and Virginia Heritage the companies 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. In addition, as explained in more detail in the accompanying notes to unaudited pro forma combined financial information, the allocation of the purchase price reflected in the unaudited pro forma combined financial information is subject to adjustment and will vary from the actual purchase price allocation that will be recorded.

1


UNAUDITED PRO FORMA COMBINED BALANCE SHEET

As of June 30, 2014

(dollars in thousands)

 
   Eagle   Virginia
Heritage 		  Pro Forma
Adjustments 		   
   Pro Forma
Combined 		 

ASSETS

                              

Cash and due from banks

   $ 8,602   $ 39,475   $ (153 )     $ 47,924  

Federal funds sold

     9,480     —     —         9,480  

Interest bearing deposits with banks and other short-term investments

     97,400     —     25,000         122,400  

Investment securities available for sale, at fair value

     378,990     114,256     —         493,246  

Federal Reserve and Federal Home Loan Bank stock

     10,626     6,380     —         17,006  

Loans held for sale

     35,411     21,471     —         56,882  

Loans

     3,279,429     755,137     (11,871 ) Note 3     4,022,695  

Less allowance for credit losses

     (43,552 )   (10,372 )   10,372   Note 3     (43,552 )
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Loans, net

     3,235,877     744,765     (1,499 )       3,979,143  

Premises and equipment, net

     17,797     1,778     —         19,575  

Deferred income taxes

     25,586     4,675     (283 )       29,978  

Bank owned life insurance

     40,361     15,640     —         56,001  

Goodwill

     2,163     —     100,181   Notes 1, 3     102,344  

Core deposit and other intangibles, net

     955     —     5,180   Notes 1, 3     6,135  

Other real estate owned

     8,843     136     —         8,979  

Other assets

     42,353     7,109     (2,117 )       47,345  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

TOTAL ASSETS

   $ 3,914,444   $ 955,685   $ 126,309       $ 4,996,438  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

LIABILITIES AND SHAREHOLDERS' EQUITY

                              

LIABILITIES

    
 		    
 		    
 		  
 		    
 		  

Deposits:

                              

Noninterest bearing demand

   $ 945,485   $ 193,349   $ —       $ 1,138,834  

Interest bearing transaction

     128,415     19,941     —         148,356  

Savings and money market

     1,899,430     130,598     —         2,030,028  

Time, $100,000 or more

     186,063     267,121     166   Note 3     453,350  

Other time

     208,534     165,107     701   Note 3     374,342  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total deposits

     3,367,927     776,116     867         4,144,910  

Customer repurchase agreements

     60,646     3,040     —         63,686  

Long-term borrowings

     30,000     70,000     (10 ) Note 3     99,990  

Subordinated debt

     9,300     —     70,000   Note 5     79,300  

Other liabilities

     19,750     3,225     —         22,975  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total liabilities

     3,487,623     852,381     70,857         4,410,861  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SHAREHOLDERS' EQUITY

                              

Preferred stock, par value $0.01 per share, shares authorized 1,000,000; Series B non-cumulative, $1,000 liquidation amount, shares issued and outstanding 56,600

     56,600     —     —         56,600  

Preferred stock, par value $4.00 per share, shares authorized 5,000,000; Series A non-cumulative, $1,000 liquidation amount, shares issued and outstanding 15,300

     —     15,300     —         15,300  

Common stock, $0.01 par value; 50,000,000 shares authorized, 25,975,186 shares issued and outstanding, 29,978,323 shares issued and outstanding pro forma combined

     255     —     40   Note 2     295  

Common stock, $4.00 par value; shares authorized 15,000,000, 6,020,301 shares issued and outstanding

     —     24,081     (24,081 ) Note 2     —  

Warrant

     946     —     —         946  

Additional paid in capital

     245,629     41,517     101,899   Note 2     389,045  

Retained earnings

     121,553     23,984     (23,984 ) Note 2     121,553  

Accumulated other comprehensive loss

     1,838     (1,578 )   1,578   Note 2     1,838  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total shareholders' equity

     426,821     103,304     55,452         585,577  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

   $ 3,914,444   $ 955,685   $ 126,309       $ 4,996,438  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

2


UNAUDITED PRO FORMA COMBINED INCOME STATEMENT

For the Six Months Ended June 30, 2014

(dollars in thousands)

 
   Eagle   Virginia
Heritage 		  Pro Forma
Adjustments 		   
   Pro Forma
Combined 		 

Interest Income

                              

Interest and fees on loans

   $ 82,679   $ 17,170   $ 187   Note 3   $ 100,036  

Interest and dividends on investment securities

     4,656     1,379     —         6,035  

Interest on balances with other banks and depository institutions

     254     30     —         284  

Interest on federal funds sold

     7     —     —         7  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total interest income

     87,596     18,579     187         106,362  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Expense

                              

Interest on deposits

     4,736     2,375     (325 ) Note 3     6,786  

Interest on customer repurchase agreements and federal funds purchased

     69     5     —         74  

Interest on long-term borrowings

     764     270     2   Note 3     1,036  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total interest expense

     5,569     2,650     (323 )       7,896  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Interest Income

     82,027     15,929     510         98,466  

Provision for Credit Losses

     5,068     760     —         5,828  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Interest Income After Provision For Credit Losses

     76,959     15,169     510         92,638  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noninterest Income

                              

Service charges on deposits

     2,411     334     —         2,745  

Gain on sale of loans

     2,864     2,560     —         5,424  

Gain (loss) on sale of investment securities

     10     (189 )   —         (179 )

Increase in surrender value of bank owned life insurance

     624     —     —         624  

Other income

     2,365     796     —         3,161  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total noninterest income

     8,274     3,501     —         11,775  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noninterest Expense

                              

Salaries and employee benefits

     26,623     6,741     —         33,364  

Premises and equipment expenses

     6,196     1,257     —         7,453  

Marketing and advertising

     877     97     —         974  

Data processing

     3,020     762     —         3,782  

Legal, accounting and professional fees

     1,773     754     —         2,527  

FDIC Insurance

     1,107     241     —         1,348  

Other expenses

     5,637     2,130     —         7,767  

Amortization of intangible

     —     —     539   Note 3     539  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total noninterest expense

     45,233     11,982     539         57,754  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income Before Income Tax Expense

     40,000     6,688     (29 )       46,659  

Income Tax Expense

     14,557     2,402     (12 )       16,947  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income

     25,443     4,286     (17 )       29,712  

Preferred Stock Dividends

     283     76     —         359  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income Available to Common Shareholders

   $ 25,160   $ 4,210   $ (17 )     $ 29,353  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

Earnings Per Share

                              

Basic

   $ 0.97   $ 0.70     —       $ 0.98  

Diluted

   $ 0.95   $ 0.68     —       $ 0.95  

Weighted Average Shares Outstanding—Basic

     25,954,912     6,016,572     (2,023,908 )       29,947,576  

Weighted Average Shares Outstanding—Diluted

     26,599,594     6,231,350     (2,000,159 )       30,830,785  

3


UNAUDITED PRO FORMA COMBINED INCOME STATEMENT

For the Year Ended December 31, 2013

(dollars in thousands)

 
   Eagle   Virginia
Heritage 		  Pro Forma
Adjustments 		   
   Pro Forma
Combined 		 

Interest Income

                              

Interest and fees on loans

   $ 148,801   $ 31,453   $ 375   Note 3   $ 180,629  

Interest and dividends on investment securities

     7,792     2,430     —         10,222  

Interest on balances with other banks and other depository institutions

     689     54     —         743  

Interest on federal funds sold

     12     —     —         12  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total interest income

     157,294     33,937     375         191,606  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Expense

                              

Interest on deposits

     10,614     4,906     (650 ) Note 3     14,870  

Interest on customer repurchase agreements and federal funds purchased

     254     12     —         266  

Interest on long-term borrowings

     1,636     322     3   Note 3     1,961  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total interest expense

     12,504     5,240     (647 )       17,097  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Interest Income

     144,790     28,697     1,022         174,509  

Provision for Credit Losses

     9,602     1,764     —         11,366  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Interest Income After Provision For Credit Losses

     135,188     26,933     1,022         163,143  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noninterest Income

                              

Service charges on deposits

     4,607     652     —         5,259  

Gain on sale of loans

     14,578     7,919     —         22,497  

Gain on sale of investment securities

     19     557     —         576  

Increase in surrender value of bank owned life insurance

     720     229     —         949  

Other income

     4,792     1,319     —         6,111  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total noninterest income

     24,716     10,676     —         35,392  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noninterest Expense

                              

Salaries and employee benefits

     47,481     14,277     —         61,758  

Premises and equipment expenses

     11,923     2,414     —         14,337  

Marketing and advertising

     1,686     259     —         1,945  

Data processing

     5,903     1,403     —         7,306  

Legal, accounting and professional fees

     3,449     615     —         4,064  

FDIC Insurance

     2,263     514     —         2,777  

Other expenses

     11,874     4,781     —         16,655  

Amortization of intangible

     —     —     1,078   Note 3     1,078  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total noninterest expense

     84,579     24,263     1,078         109,920  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income Before Income Tax Expense

     75,325     13,346     (56 )       88,615  

Income Tax Expense

     28,318     4,346     (22 )       32,642  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income

     47,007     9,000     (34 )       55,973  

Preferred Stock Dividends

     566     153     —         719  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income Available to Common Shareholders

   $ 46,441   $ 8,847   $ (34 )     $ 55,254  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

Earnings Per Share

                              

Basic

   $ 1.81   $ 1.70     —       $ 1.86  

Diluted

   $ 1.76   $ 1.65     —       $ 1.81  

Weighted Average Shares Outstanding—Basic

     25,726,062     5,217,531     (1,224,867 )       29,718,726  

Weighted Average Shares Outstanding—Diluted

     26,358,611     5,359,521     (1,128,330 )       30,589,802  

4


EAGLE BANCORP, INC. ("Eagle") AND VIRGINIA HERITAGE BANK ("Virginia Heritage")

Notes to Unaudited Pro Forma Combined Consolidated Financial Statements

Note 1. Basis of Presentation:

        The merger will be accounted for as an acquisition by Eagle of Virginia Heritage using the acquisition accounting method under ASC 805 and, accordingly, the assets and liabilities of Virginia Heritage will be recorded at their respective fair values on the date the merger is completed.

        The merger will be effected by the issuance of 0.6632 shares of Eagle common stock, $.01 par value, and $7.50 in cash to Virginia Heritage shareholders for each share of Virginia Heritage common stock. This pro forma analysis values the shares of Eagle common stock issued in the merger at $35.93 per share, the closing price of Eagle common stock on October 31, 2014, the date of consummation of the merger, and the actual exchange ratio of 0.6632 shares of Eagle common stock. The aggregate purchase price of Virginia Heritage's common stock is $188.6 million, based on the number of shares of Virginia Heritage common stock outstanding on June 30, 2014, excluding options with an inherent value of $9.1 million.

        The unaudited pro forma combined financial statements include estimated adjustments to record assets and liabilities of Virginia Heritage at their respective fair values. The pro forma adjustments included herein are subject to change as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after the merger is completed and additional analyses are performed to determine the fair values of Virginia Heritage's tangible and identifiable intangible assets and liabilities as of the closing date of the merger. Changes in the fair value of the net assets of Virginia Heritage as of the closing date of the merger will likely change the amount of purchase price allocable to goodwill. The further refinement of transaction costs, changes in Virginia Heritage's shareholders' equity, including net income, asset valuations and other items identified in the merger agreement, between June 30, 2014 and October 31, 2014 will further impact the amount of the purchase price and any excess purchase price recorded, as compared to this pro forma analysis. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein.

        The unaudited pro forma combined balance sheet assumes that the merger occurred on that date. The unaudited pro forma combined income statements for the six months ended June 30, 2014 and the twelve months ended December 31, 2013 assume the transaction occurred at the beginning of each period.

        The unaudited pro forma combined information is not necessarily indicative of the results of operations or the combined financial position that would have resulted had the merger been completed at the beginning of the applicable periods presented, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined company.

Note 2. Adjustments to Equity:

        The unaudited pro forma combined financial information reflects the issuance of 3,992,664 shares of Eagle common stock. The actual number of shares issuable is subject to change as a result of the elimination of fractional shares and the exercise of options to acquire shares of Virginia Heritage

5


EAGLE BANCORP, INC. ("Eagle") AND VIRGINIA HERITAGE BANK ("Virginia Heritage")

Notes to Unaudited Pro Forma Combined Consolidated Financial Statements (Continued)

Note 2. Adjustments to Equity: (Continued)

common stock prior to the effectiveness of the merger. The table below provides the calculation of the number of shares issued:

Shares of Virginia Heritage common stock outstanding

     6,020,3010  

Exchange ratio

     0.6632  
       
​ ​ ​ ​ ​

Eagle Bancorp common stock issued

     3,992,664  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​
       

        The unaudited pro forma combined financial statements include adjustments to shareholders' equity for the elimination of Virginia Heritage's common stock of $24.1 million, accumulated other comprehensive loss of $1.6 million and retained earnings of $24.0 million. All of these amounts have been reclassified into additional paid in capital.

        The following table provides the calculation of the number of shares issued and unaudited pro forma adjustments to shareholders' equity.

Pro Forma Adjustments to Shareholders' Equity

              

Purchase Price:

              

Shares of Eagle common stock issued

     3,992,664        

Eagle par value

   $ 0.01     39,927  
             
​ ​ ​ ​ ​ ​ ​ ​

Less Virginia Heritage's common stock

           (24,081,000 )
             
​ ​ ​ ​ ​ ​ ​ ​

Common stock adjustment

           (24,041,073 )
             
​ ​ ​ ​ ​ ​ ​ ​

Additional paid in capital adjustment

              

Purchase price—Virginia Heritage's common stock (Note 3)

           188,608,676  

Less: Cash consideration

           (45,152,258 )

Less: Eagle common stock issued

           (39,927 )

Purchase price—estimated fair value of Virginia Heritage's additional paid in capital

           (41,517,000 )
             
​ ​ ​ ​ ​ ​ ​ ​

Additional paid in capital adjustment

           101,899,491  
             
​ ​ ​ ​ ​ ​ ​ ​

Retained earnings adjustment—Virginia Heritage

           (23,984,000 )

Elimination of Virginia Heritage's accumulated other comprehensive loss

           1,578,000  
             
​ ​ ​ ​ ​ ​ ​ ​

Total shareholders' equity adjustment

           55,452,417  
             
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
             

6


EAGLE BANCORP, INC. ("Eagle") AND VIRGINIA HERITAGE BANK ("Virginia Heritage")

Notes to Unaudited Pro Forma Combined Consolidated Financial Statements (Continued)

Note 3. Acquisition Accounting Adjustments:

        The acquisition accounting adjustments included in the unaudited pro forma balance sheet include the following.

Loan premiums (yield adjustment)

   $ 111,901   (average life of 48 months)

Credit quality fair value adjustment on loans

   $ (11,983,295 )  

Eliminate existing allowance for credit losses

   $ 10,372,000    

Eliminate exiting dealer reserve for indirect auto loans

   $ (2,117,137 )  

Core deposit intangible

   $ 5,180,468   (average life of 46 months)

Long-term borrowings premiums (yield adjustment)

   $ 10,000   (average life of 48 months)

Total time deposits discounts (yield adjustment)

   $ (867,000 ) (average life of 18 months)

Deferred income tax liability (at 40% rate)

   $ (282,830 )  

        The adjustments recorded for these assets and liabilities on the closing date of the merger could vary significantly from the unaudited pro forma adjustments included herein depending on changes in interest rates and the components of the assets and liabilities, including credit quality. Virginia Heritage had no previous unamortized purchase or acquisition adjustments.

7


EAGLE BANCORP, INC. ("Eagle") AND VIRGINIA HERITAGE BANK ("Virginia Heritage")

Notes to Unaudited Pro Forma Combined Consolidated Financial Statements (Continued)

Note 3. Acquisition Accounting Adjustments: (Continued)

        The table below identifies all unaudited pro forma adjustments as well as the unidentified intangible recorded as Goodwill.

Purchase Price:

              

Virginia Heritage common shares outstanding

           6,020,301  

Exchange ratio

           0.6632  
             
​ ​ ​ ​ ​ ​ ​ ​

Eagle Bancorp common shares issued excluding options

           3,992,664  

Total consideration per Virginia Heritage common share

         $ 31.33  

Stock portion of purchase price of Virginia Heritage common shares (3,992,664 shares of Eagle common stock X $35.93 per share)

           143,456,418  

Cash Consideration

           45,152,258  
             
​ ​ ​ ​ ​ ​ ​ ​

Purchase price

           188,608,676  

Net Assets Acquired:

    
 		    
 		  

Virginia Heritage common shareholders' equity

           88,004,000  
             
​ ​ ​ ​ ​ ​ ​ ​

Excess of purchase price over carrying value of net assets acquired

         $ 100,604,676  

Estimated (debit) credit adjustments to reflect fair value of assets acquired and liabilities assumed:

    
 		    
 		  

Estimated core deposit intangible

              

Virginia Heritage's core deposits

     508,996,041        

Premium rate

     1.02 %      
             
​ ​ ​ ​ ​ ​ ​ ​

          (5,180,468 )

Fair value adjustment on loan yields

           (111,901 )

Credit quality fair value adjustment on loans

           11,983,295  

Eliminate existing allowance for credit losses

           (10,372,000 )

Eliminate existing dealer reserve for indirect auto loans

           2,117,137  

Fair value adjustment on total time deposits

           867,000  

Fair value adjustment on long-term borrowings

           (10,000 )

Deferred income tax liability (at 40% rate)

           282,830  
             
​ ​ ​ ​ ​ ​ ​ ​

Goodwill

         $ 100,180,569  
             
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
             

Note 4. Direct Transaction Costs:

        The plan to integrate Eagle and Virginia Heritage is in the process of implementation and is being refined. Eagle and Virginia Heritage have incurred merger related expenses, and Eagle expects to continue to incur merger related expenses, including system conversion costs, employee retention and severance agreements, communications to customers and others. To the extent these are costs associated with these actions, the costs will be recorded based on the nature and timing of these actions. Most acquisition and restructuring costs are recognized separately and generally expensed as incurred. We estimate the pre-tax merger related costs to be approximately 5.7% of the purchase price, or $10.4 million, and expect these costs to be incurred in 2014. These estimated costs are not included in the accompanying unaudited pro forma combined financial statements.

8


EAGLE BANCORP, INC. ("Eagle") AND VIRGINIA HERITAGE BANK ("Virginia Heritage")

Notes to Unaudited Pro Forma Combined Consolidated Financial Statements (Continued)

Note 5. Subordinated Debt:

        The unaudited pro forma presentation at June 30, 2014 reflects the sale on August 5, 2014 of $70.0 million of Eagle's noncallable 5.75% subordinated notes, due September 1, 2024. The notes qualify as Tier 2 capital for regulatory purposes to the fullest extent permitted under the currently applicable capital regulations. It is anticipated that the notes will continue to qualify for Tier 2 capital treatment upon implementation of recently adopted Basel III capital requirements.

9



QuickLinks

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET As of June 30, 2014 (dollars in thousands)
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT For the Six Months Ended June 30, 2014 (dollars in thousands)
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT For the Year Ended December 31, 2013 (dollars in thousands)
EAGLE BANCORP, INC. ("Eagle") AND VIRGINIA HERITAGE BANK ("Virginia Heritage") Notes to Unaudited Pro Forma Combined Consolidated Financial Statements

EAGLE BANCORP INC Reports

Also read