Press Release

Eagle Bancorp and Virginia Heritage Bank Announce Merger Agreement

Bethesda, MD., Tysons Corner, VA. On June 9, 2014, Eagle Bancorp, Inc. (“Eagle”) (NASDAQ: EGBN), the parent company of EagleBank (“EagleBank”), and Virginia Heritage Bank (“VHB”) (OTCQB: VGBK) announced that they have entered into a definitive agreement (the “Agreement”) pursuant to which VHB will be merged into EagleBank, with EagleBank being the surviving institution. The merger will accelerate Eagle’s growth with the addition of VHB’s 6 branches, which are all located in the attractive Northern Virginia market. At March 31, 2014, VHB had approximately $917.4 million in assets, $715.8 million in net loans and $737.1 million in deposits.

Under the Agreement, as illustrated in the table below, each VHB shareholder will be entitled to receive a combination of Eagle common stock and cash for each share of VHB common stock they own. So long as the average closing price of a share of Eagle common stock over a 20 trading day period ending five trading days prior to closing (the “Eagle Average Price”) is at least $29.00 and not more than $35.50, then each share of VHB 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 higher than $35.50, then each share of VHB common stock would be converted into 0.6056 shares of Eagle common stock, and the cash consideration per share would increase above $7.50 as illustrated in the table below. If the Eagle Average Price is less than $29.00, then, generally, each share of VHB 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.

Options to acquire VHB common stock will be assumed by Eagle and converted into options to acquire shares of Eagle common stock.

Based on the closing price of Eagle common stock on June 6, 2014 of $32.92, the Exchange Ratio would be 0.6531, and the aggregate value of the transaction would be approximately $182.9 million, including the value of outstanding options to acquire VHB common stock, but excluding the value of VHB’s preferred stock, or approximately 205.7% of VHB’s book value and tangible book value per common share and 18.1x VHB’s trailing twelve month earnings available to common shareholders, each as of March 31, 2014. Approximately $45.1 million of the aggregate consideration would be payable in cash. The Exchange Ratio and the value of the transaction at closing may be higher or lower, depending on the change in the value of Eagle common stock. Eagle expects that the transaction will be accretive to Eagle’s earnings within twelve months following the closing of the merger, and will result in modest dilution to tangible book value, which is expected to be earned back within four years.

The following table sets forth, for illustrative purposes only, the consideration to be received in exchange for each share of VHB common stock, and the approximate aggregate transaction value (including the value attributable to in the money options) and shares issuable, at a range of Eagle Average Prices.

Eagle would also assume the 15,300 shares of VHB’s preferred stock which has an aggregate liquidation preference of $15.3 million and was issued in connection with the U.S. Treasury’s Small Business Lending Fund Program.

In connection with the merger, David P. Summers, Chairman and CEO of VHB, will be invited to join the Board of Directors of Eagle and EagleBank.

The merger is expected to close as early as the fourth quarter of 2014. The Agreement has been unanimously approved by the boards of directors of both Eagle and VHB and is subject to the approval by common shareholders of VHB, the approval of the applicable bank regulatory authorities, and the satisfaction or waiver of the conditions to closing and covenants of each party contained in the Agreement.

The merger is not contingent on the raising of any additional capital. However, in order to maintain the levels of capital which Eagle desires to maintain as of the closing of the merger, which is expected to coincide with the effectiveness of the new regulatory capital rules, and to support continued operations, Eagle expects that it will seek to supplement its capital prior to the closing of the merger through the sale of up to $55 million of subordinated debt.

Ronald D. Paul, Chairman and CEO of Eagle and EagleBank said, “We are extremely excited about the proposed acquisition of VHB and the transformative opportunities the combination creates for us in Northern Virginia. Both banks are similar in that we share a culture of providing outstanding customer service and putting customer relationships first, while never taking the eye off the ball in terms of credit quality or enhancing shareholder value. We look forward to serving VHB’s customers with our portfolio of deposit, cash management, and loan products tailored for small and medium-sized businesses, real estate investors, law firms and other professional organizations. The addition of VHB’s team, combined with our own organic growth, gives EagleBank the ability to be a major factor in this dynamic market, long one of our principal objectives. We feel that VHB’s customers will value our vision of providing superior customer service, making credit available to eligible borrowers, providing access to local leadership and decision makers, and our commitment to the community which have resulted in Eagle becoming the premier community banking organization in the D.C. metropolitan area.”

David P. Summers, Chairman and CEO of VHB noted, “In 16 years EagleBank has established itself as the leading community banking company serving the Washington, D.C. metropolitan area. For our customers, partnership with Eagle means access to additional products and services, greater convenience, a significantly higher lending capacity, and an expanding, well-positioned branch network. For our shareholders, taking the currency of a high performing company translates into enhanced shareholder value. The alliance of our two companies should prove a winning combination all around. I look forward to working with Ron to continue the expansion of the combined franchise.”

VHB was advised by Sandler O’Neill + Partners, L.P. as financial advisor, and Holland & Knight LLP as legal counsel. Houlihan Lokey Capital, Inc. served as financial advisor, and Buckley Sandler LLP served as legal counsel, to Eagle. Keefe, Bruyette & Woods, Inc. provided a fairness opinion to the Board of Directors of Eagle.

[1] Based on 6,018,801 shares of VHB common stock issued and outstanding as of May 31, 2014, and options outstanding as of May 31, 2014 to purchase 481,861 shares of VHB common stock at an average weighted exercise price of approximately $11.64 per share. Excludes the value of VHB preferred stock.