Under the federal program, participating institutions had to shelve equity payouts, bonuses and retention awards as long as they owed the government. EagleBank, while participating in the program, floated its executives long-term restricted stock in compliance with regulations, according to its Securities and Exchange Commission proxy report.
Once EagleBank redeemed all of the $38.2 million in preferred stock it issued to the Treasury Department under TARP last July, the bank doled out cash bonuses to its top talent to make up for three years of “shortfalls in incentive compensation.”
“Now, that we have exited TARP, we plan to revert back to our former pay-for-performance strategy where more emphasis is placed on cash bonuses and equity awards that must be earned,” EagleBank said in its proxy.
About 40 percent of Paul’s total compensation was tied to restricted stock. The executive, who declined to comment for this story, received a $799,348 performance-based bonus and an incentive payout of $521,979.
By any measure, EagleBank has had a strong run. The bank has increased earnings for 13 consecutive quarters. It closed out 2011 with a profit of $24.6 million, up 47 percent from 2010.
EagleBank was not the only former TARP participant to reward its leader. Olney-based Sandy Spring Bank gave chief executive Daniel J. Schrider, who declined comment, a 28 percent pay raise to $874,764. His salary accounted for more than half of his compensation, with a $174,589 incentive payout driving the bulk of his raise.
Similar to EagleBank, Sandy Spring recorded significant growth in earnings last year. The bank swung a $34.1 million profit, up 45 percent over 2010. In December, Sandy Spring also inked a $25.4 million agreement to acquire CommerceFirst Bank of Annapolis, gaining a greater presence in central Maryland and a larger portfolio of small-business loans.
Sandy Spring was the third local bank to settle its TARP bill with the government, when it closed out its $83 million tab in December 2010. Bowie-based Old Line Bank led the way by handing back the $7 million it received in July 2009, followed by Industrial Bank in the District which repaid its $6 million loan in the fall of 2010.
There are only three local banks — Arlington-based Virginia Commerce Bank, Severn Savings of Annapolis and Annapolis Bank — that have yet to repurchase the preferred stock they issued to Treasury under TARP.