3/30/2026
EagleBank Disavows Diligence Capital Management’s Board Nominees
Banking Dive (03/30/26) Ennis, Dan
EagleBank (NASDAQ: EGBN) is disregarding the three board nominees Diligence Capital Management has suggested, the embattled Maryland lender told its shareholders last week. The slate of nominees that Diligence floated earlier this month, along with four proposals meant to improve EagleBank’s performance, are “invalid” because the investor’s notice failed to comply with the bank’s amended bylaws, Eagle said. Further, Eagle said, Diligence Capital is not a shareholder of record and is ineligible to submit a notice indicating that it intends to nominate director candidates or submit business proposals for the bank. Diligence holds roughly 27,500 shares, or less than 0.1%, of Eagle stock. Moreover, Eagle sent to its shareholders proxy cards that did not include Diligence’s suggestions but included a separate new board nominee, Trevor Montano. Montano is the founder of Washington, D.C.-based private investment firm West Potomac Capital who previously spent three years as the chief investment officer at the Treasury Department. “Trevor’s experience as a public company director and advisor to financial institutions enables him to provide valuable insights and support our ongoing efforts to optimize and diversify our loan portfolio, strengthen our deposit base, invest in innovation and capitalize on our market position,” EagleBank’s board chair, Jim Soltesz, said in a statement. Eagle’s annual meeting, where board nominees will stand for election, is May 14. But no proxies with votes in favor of Diligence’s candidates will be recognized or tabulated at the meeting, the bank said, unless the investor takes the matter to court, and the court agrees with Diligence. Diligence CEO Jim Abbott told American Banker last week that a court fight would likely waste valuable resources. “The best approach is to focus all time and efforts and money on the actual turnaround,” he told the publication. “So we’re not interested in spending a lot of time and money and effort to create zero forward progress.” Among its proposals, Diligence wants Eagle to develop a three-year performance improvement plan with specific benchmarks — and for executive compensation to tie into those metrics. Eagle last year reported consecutive quarters with earnings losses of $69.8 million and $67.5 million, respectively. The bank leans heavily into commercial real estate, but its woes predate the immediate past. The bank agreed in 2022 to pay a $22.9 million penalty to the Securities and Exchange Commission and the Federal Reserve to settle claims that its former CEO, Ronald Paul, engaged in insider lending. Paul – who retired in 2019, citing health concerns – has been banned from working in the banking industry. Eagle is looking for its next CEO, too. The bank's current chief executive, Susan Riel, said in November that she would retire this year. In its notice to shareholders, Eagle acknowledged there is no litigation pending from Diligence. However, if a court fight arises, the bank would issue an amended proxy card including Diligence’s nominees. In that case, the annual meeting would be postponed, the bank said. Abbott, however, said the goal is to improve the bank “in the least disruptive way … so that they can make progress.” “But if the company is not making progress, then we need to do something disruptive,” he said. Also among Diligence’s proposals, the investor seeks transparency into Eagle’s plan to dispose of problem loans. It also wants the bank to separate its chair and CEO roles until certain key performance indicators are met. Abbott is among the nominees Diligence is floating to join Eagle’s board. Soltesz, Eagle’s chair, is among the directors Diligence wants to replace.
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