Board of Governors of the Federal Reserve System

The Federal Reserve Board on Tuesday announced that it has fined EagleBank, of Bethesda, Maryland, $9.5 million for violation of the Board's insider lending regulation. The bank improperly extended credit to entities owned or controlled by its then-CEO and Chairman, Ronald D. Paul.

The Board found that EagleBank had deficient internal controls over insider lending practices between 2015 and 2018, which allowed the bank to extend credit totaling nearly $100 million to entities that Paul owned or controlled, including certain family trusts, without making appropriate disclosures to, or obtaining required approvals from, a majority of the bank's board of directors. These internal control deficiencies also extended to the bank's supervision of lending staff, who permitted Paul to participate in matters in which he had a conflict of interest. The Board also cited EagleBank for third-party risk management deficiencies over the same period that resulted in inadequate oversight of contracts between the bank and a local government official.

In addition, the Board announced that it has permanently barred Paul from employment in the banking industry and assessed a $90,000 fine against him for his central role in the bank's violations of law and unsafe and unsound practices.

In conjunction with these actions by the Board, the U.S. Securities and Exchange Commission today announced its own settlement of actions against Paul and EagleBank's holding company, Eagle Bancorp, Inc. In total, the bank and holding company will pay approximately $22.9 million and Paul will pay approximately $521,000 to settle the agency actions.

The Board previously barred EagleBank's former General Counsel Laurence E. Bensignor from banking for his role in EagleBank's unsafe and unsound lending practices.

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