3/25/2026
Proxy Battle Erupts at EagleBank: Investor Demands Board Overhaul and Strategy Shift
Washington Business Journal (03/25/26) Kline, Alan
An investor in Eagle Bancorp Inc. (NASDAQ: EGBN) is pressuring the struggling Bethesda company to shake up its board and cease its practice of selling off commercial real estate loans, arguing that big changes are needed to reverse two years of steep losses and return the bank to profitability. But the company, the parent of $10.5 billion-asset EagleBank, is fighting back, urging investors in a regulatory filing Tuesday to reject the investor’s slate of nominees and reelect most of its existing directors at its May annual meeting. The proxy battle exploded into view this week after the investor, Salt Lake City-based Diligence Capital Management, fired off a letter to Eagle Bancorp’s board of directors demanding the company replace Chairman James Soltesz and two other directors with three of its own nominees, all with experience turning around problem banks. Diligence Capital was also highly critical of the bank’s recent strategy of moving problem CRE loans, primarily office loans, off its books, arguing that holding those loans and working through them would produce better results. The proxy fight is playing out during a turbulent time for Eagle Bancorp, which lost more than $138 million last year after setting aside $280 million for problem CRE loans and is under investigation for potential violations of its anti-money-laundering controls. It’s also coming as the bank is searching for a new CEO to replace Susan Riel, who announced late last year she would step down by the end of 2026. Last week, the company disclosed it is paying out $1.2 million in bonuses to three top executives as incentives to keep them on during the leadership transition. Diligence Capital was founded in 2024 and is headed by James Abbott, a one-time bank analyst who later became the longtime head of relations at Zions Bancorporation (NASDAQ: ZION) in Salt Lake City. The company says it began amassing Eagle shares in July and owns about 27,500 — or less than 1% — of the bank's outstanding shares, according to reports. In the letter to Eagle’s board, Abbott said he and others at Diligence Capital have tried on three occasions since the fall to meet with company officials to discuss proposed governance changes and each time were rejected. Abbott is calling on the company to replace Soltesz, its chairman since November, when Riel stepped down from the chair role, as well as directors Benjamin Soto and Steven Freidkin. Soltesz, the CEO of Rockville engineering firm Soltesz Inc., has been a board member since 2007 and had been lead independent director since 2021 before being elevated to chairman. Soto, a D.C. real estate attorney, has been a board member of EagleBank since 2006 and the holding company since 2019, and Freidkin, the founder and CEO of McLean tech firm Ntiva Inc., joined the holding company board in 2021. In their place, Diligence has nominated Abbott, former Zions Chief Risk Officer Keith Maio and David Hooston, a former chief financial officer at four publicly traded banks. Diligence supports seven of the bank's other nominees, including Riel. "Diligence analyzed the qualifications of Eagle's board and believes the current composition lacks experience in bank turnaround situations, particularly navigating credit stress and elevated regulatory pressure," Diligence said in a statement. Eagle has reconstructed its board of late, adding two seasoned bank directors in September and just this week nominated Trevor Montano, a former chief investment officer at the Treasury Department and experienced bank director, to stand for election at the May 14 annual meeting. It's pushing back, though, against Diligence Capital's efforts to nominate its three candidates, arguing, among other things, that Diligence is an ordinary retail investor and not a registered shareholder and "therefore, is ineligible, to submit a notice of its intention to nominate director candidates." Eagle further argued that Diligence missed a key deadline for submitting its slate of nominees and did not file its notice with the Securities and Exchange Commission, in violation of the bank's bylaws. Apart from the board changes, Diligence is also calling for a slew of other governance changes at EagleBank. They include: keeping the roles of CEO and chair separate at least until the company's profitability and credit quality metrics are at peer levels; developing a three-year plan to fix risk and capital management issues and boost revenue growth and publish that plan by July 31; immediately ceasing the sale of CRE loans and hiring a team of workout specialists instead; and significantly improving disclosures surrounding its concentration of CRE loans. Eagle's shares were trading at $24.98 Wednesday morning, up 1.3% from Tuesday's closing price. The shares are up more than 16% since the start of the year though are trading well below their all-time high of nearly $70.
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