EBMT Eagle Bancorp Montana Inc

PROPOSAL 1: THE MERGER

Background of the Merger

As part of their ongoing consideration and evaluation of Eagle’s long-term prospects and strategies, Eagle’s board of directors and senior management regularly review and assess its business strategies and objectives. With the goal of enhancing long term value for Eagle shareholders, Eagle’s board of directors and senior management have considered various strategic opportunities, including mergers and acquisitions. Over the past couple of years, Eagle’s board of directors discussed the Montana banking market and acquisition opportunities generally and identified potential acquisition opportunities in the near term, based on conversations between Eagle’s President and CEO, Peter J. Johnson, and other bank CEOs in the state. In November 2016, Eagle engaged Panoramic Capital Advisors, Inc. (“Panoramic Capital”) as a consultant to assist Eagle with its M&A activities.

From time to time, the board of directors of WHC has engaged in reviews and discussions of WHC’s long-term strategies and objectives, considering ways in which the company might enhance shareholder value and performance in light of competitive and other relevant factors. Generally, these reviews have centered on strategies to improve WHC’s existing operations or to pursue opportunities in new markets or lines of business. Often these assessments included discussions and analyses of potential merger transactions as a means to enhance or improve shareholder value.

Beginning in March 2019, Duane Kurokawa, WHC’s President, and Peter J. Johnson engaged in discussions regarding a possible combination of WHC and Eagle. Johnson and Kurokawa initially met in Nashville, Tennessee during the week of March 18, 2019. After this meeting and follow up discussions, WHC and Eagle entered into a non-disclosure agreement on April 1, 2019. Eagle then requested additional information from WHC and began preparing an indication of interest.

Eagle instructed Panoramic Capital and Nixon Peabody LLP, counsel to Eagle (“Nixon Peabody”), to prepare an initial letter of interest that was delivered to the WHC management team on April 23, 2019 for consideration by the WHC board of directors. During the period from April 25, 2019 through May 15, 2019, there were a series of discussions among Kurokawa and Johnson related to pricing and other items in the Eagle letter of interest.

At its April 29, 2019 meeting, WHC’s board of directors thoroughly reviewed the initial letter of interest from Eagle and resolved to further investigate the proposal from Eagle and its impact on WHC shareholders. The final non-binding letter of interest was delivered by Eagle’s President and CEO Johnson to WHC on May 16, 2019, which was accepted by WHC’s President Kurokawa on the same day. The letter of interest contemplated an aggregate consideration range of $13 million to $14 million, based on a 70/30 stock and cash combination, or an aggregate consideration range of $12.5 million to $13.5 million based on a 50/50 stock and cash combination, which would be finalized after due diligence and confirmed in the definitive merger agreement.

Eagle began its diligence review, including credit due diligence, of WHC in late May 2019. Based on discussions between the parties, an electronic data room was opened for Eagle and its advisors to review diligence documents, and WHC’s responses to diligence questions. Upon the conclusion of its preliminary review of WHC’s loan portfolio, representatives of Eagle communicated its continued interest in a strategic business combination. The parties continued to negotiate the principal terms of the transaction.

On June 18, 2019, Nixon Peabody circulated an initial draft of the merger agreement, based on the terms outlined in the letter of interest and certain revised terms agreed to by the parties, to Ballard Spahr LLP (“Ballard”), counsel to WHC, and the parties began negotiations of the terms of the agreement.

From July 4, 2019 to August 7, 2019, Eagle and its representatives continued negotiations with WHC and its representatives with respect to the terms of the potential transaction and the draft merger agreement and related documents. The issues raised in these negotiations included the respective representations and warranties of the parties, respective covenants of the parties pending closing of the transaction and termination fees payable in certain circumstances. Representatives of Eagle had multiple telephonic conference calls with representatives of WHC to negotiate the terms of the draft merger agreement and ancillary agreements.

On July 3, 2019, Ballard sent comments on the draft of the merger agreement to Nixon Peabody. On July 22, 2019, Nixon Peabody circulated a revised draft of the merger agreement. On July 30, 2019, Ballard and Nixon Peabody preliminarily reviewed and discussed issues relating to the terms of the merger agreement. On July 31, 2019, Ballard provided comments on the revised draft merger agreement. After completing its due diligence and taking into account shifts in market conditions since the letter of intent was signed, Eagle determined to set the valuation of WHC for the proposed merger at $13 million, and Peter Johnson and Duane Kurokawa discussed this valuation. Based upon these negotiations, the parties agreed upon a valuation of WHC of $13 million and merger consideration of a 50/50 stock and cash combination. On August 2, 2019, Nixon Peabody circulated a revised draft of the merger agreement and received comments from Ballard on August 6, 2019. Following various email exchanges among the parties on August 6, Nixon Peabody circulated a revised draft of the merger agreement to the working group on August 7, 2019, and Nixon Peabody and Ballard Spahr substantially finalized the merger agreement and related documents.

On June 4, 2019, management of WHC initiated discussions with Vining Sparks IBG, LP (“Vining Sparks”) to provide financial advice regarding the proposed merger with Eagle. On August 1, 2019, WHC formally engaged Vining Sparks.

On August 8, 2019, the boards of directors of WHC and WB held a joint meeting to consider the merger agreement and the transactions contemplated therein. WHC management and representatives of Vining Sparks summarized aspects of the merger agreement, the ancillary documents related to the merger agreement and the transactions contemplated therein. Representatives of Vining Sparks then provided a presentation regarding the fairness of the proposed merger consideration to the WHC shareholders from a financial point of view given the exchange ratio of $2,946.51 in cash and 179.4464 shares of Eagle common stock for each share of WHC common stock. The value of the cash and stock consideration was approximately $13 million and the stock consideration was based on the volume weighted average closing price of Eagle’s common stock over a period of 20 trading days. At the conclusion of the joint meeting, Vining Sparks delivered its oral opinion, which was confirmed by delivery of a written opinion dated August 8, 2019, to the WHC board of directors that, as of that date and based upon and subject to factors and assumptions set forth therein, the merger consideration to be received by the holders of WHC common stock was fair, from a financial point of view.

Following further discussion, the WHC board of directors unanimously (i) determined and declared that the merger agreement, the merger, and the other transactions contemplated by the merger agreement are advisable and in the best interests of WHC and its shareholders, (ii) authorized, adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, (iii) recommended the adoption of the merger agreement, the merger and the other transactions contemplated by the merger agreement to the WHC shareholders and (iv) resolved that the merger agreement be submitted to the WHC shareholders for adoption thereof.

On August 8, 2019, the boards of directors of Eagle and Opportunity Bank held joint meetings to review and consider the merger agreement and the transactions and agreements contemplated by it. The management team made a presentation relating to the strategic and financial considerations and rationale of the transaction. A representative of Panoramic Capital reviewed the principal terms of the proposed transaction and the financial impacts of the merger on Eagle and provided comparable transaction analysis for Montana and national bank mergers. Nixon Peabody reviewed for the directors the terms and conditions of the merger agreement, the merger and the various ancillary agreements to be signed in connection with the merger agreement, and engaged in discussions with the board members on such matters. After additional discussion and deliberation, the Eagle and Opportunity Bank boards of directors adopted and approved the draft merger agreement and the transactions and agreements contemplated by it and determined that the merger agreement and the transactions contemplated by it were in the best interests of Eagle and its shareholders.

The parties signed the merger agreement on August 8, 2019, and a press release announcing the transaction was issued on August 9, 2019, prior to the open of trading in Eagle common stock. A conference call to discuss the merger was held later in the morning of August 9, 2019.

WHC’s Reasons for the Merger and Recommendation of the WHC Board of Directors

After careful consideration, at its meeting on August 8, 2019, the WHC board of directors determined that the merger agreement and the transactions contemplated thereby, including the merger and bank merger, taken together, were fair to and in the best interests of the WHC shareholders. Accordingly, the WHC board of directors unanimously approved the merger agreement and the transactions contemplated thereby and recommended that the WHC shareholders vote “FOR” the merger proposal.

In reaching its decision to approve the merger and recommend the merger to WHC shareholders, WHC’s board of directors consulted with the WHC management, as well as WHC’s financial, legal, and accounting advisors, and considered a number of factors weighing in favor of the merger, including the following, which are not presented in order of priority:

After taking into account all of the factors set forth above, as well as others, the WHC board of directors concluded that the potential benefits of the merger to the WHC shareholders outweighed the potentially negative factors associated with the merger.

WHC’s board of directors also considered potential risks and uncertainties associated with the merger in connection with its deliberations, including, without limitation, the following:

In considering the recommendation of the WHC board of directors, you should be aware that certain directors and officers of WHC may have interests in the merger that are different from, or in addition to, interests of WHC shareholders generally and may create potential conflicts of interest. The WHC board of directors was aware of these interests and considered them when evaluating and negotiation the merger agreement, the merger and the other transactions contemplated by the merger agreement, and in recommending to WHC shareholders that they vote in favor of the proposal to approve the merger agreement. See “Proposal 1: The Merger - Interests of WHC Directors and Executive Officers in the Merger.”

The foregoing discussion of the factors and risks considered by WHC’s board of directors is not exhaustive, but includes the material factors and risks considered by the board of directors. In view of the wide variety of factors and risks considered by WHC’s board of directors in connection with its evaluation of the merger and the complexity of those matters, the board of directors did not consider it practical to, nor did it attempt to, quantify, rank, or otherwise assign relative weights to the specific factors that it considered in reaching its decision. In considering the factors and risks described above, individual members of WHC’s board of directors may have given different priority to different factors.

WHC’s entry into the Merger Agreement was unanimously approved by WHC’s board of directors on August 8, 2019 and WHC’s board unanimously recommends that you vote “FOR” the merger proposal and “FOR” the adjournment proposal.

Each of the directors of WHC has entered into a support agreement with Eagle, pursuant to which they have agreed to vote in favor of the merger proposal and the other proposals to be voted on at the WHC special meeting. The support agreements are discussed in more detail in the section entitled “Information About the WHC Special Meeting – Shares Subject to Company Shareholder Support Agreements; Shares Held by Directors and Executive Officers” beginning on page 23 of this proxy statement/prospectus.

Eagle’s Reasons for the Merger

As a part of Eagle’s growth strategy, Eagle routinely evaluates opportunities to acquire financial institutions. The acquisition of WHC is consistent with Eagle’s expansion strategy. Eagle’s board of directors, senior management and other officers of Opportunity Bank reviewed the business, financial condition, results of operations and prospects for WHC, the market condition of the market area in which WHC conducts business, the compatibility of the management and the proposed financial terms of the merger. In addition, management of Eagle believes that the merger will provide opportunities for future growth and provide the potential to realize cost savings. Eagle’s board of directors also considered the financial condition and valuation for both WHC and Eagle as well as the financial and other effects the merger would have on Eagle’s shareholders and stakeholders. The board considered the fact that the acquisition is expected to be accretive, Opportunity Bank’s ability to leverage the agricultural lending expertise it has recently acquired, Western Bank’s highly liquid balance sheet, and that it is a low-risk alternative to de novo expansion into eastern Montana. In addition, the board of directors also considered the analysis and presentations from its outside financial advisor, Panoramic Capital.

While management of Eagle believes that revenue opportunities will be achieved and costs savings will be obtained following the merger, Eagle has not quantified the amount of enhancements or projected the areas of operation in which such enhancements will occur.

In view of the variety of factors considered in connection with its evaluation of the merger, the Eagle board did not find it useful to, and did not attempt to quantify, rank or otherwise assign relative weights to factors it considered. Further, individual directors may have given differing weights to different factors. In addition, the Eagle board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination. Rather, the board conducted an overall analysis of the factors it considered material, including thorough discussions with, and questioning of, Eagle’s management.

Opinion of WHC’s Financial Advisor

WHC’s board of directors retained Vining Sparks to render financial advisory and investment banking services. Vining Sparks is a nationally recognized investment banking firm with substantial expertise in transactions similar to the proposed transaction and is familiar with WHC and its business. As part of its investment banking business, Vining Sparks is regularly engaged in the valuation of financial services companies and their securities in connection with mergers and acquisitions, private placements and valuations for estate, corporate and other purposes.

On August 8, 2019, Vining Sparks delivered its opinion to WHC that the merger consideration to be received by WHC common shareholders in the proposed transaction is fair, from a financial point of view, to WHC’s common shareholders. The full text of Vining Sparks’ opinion is attached as Appendix B to this proxy statement/prospectus and should be read in its entirety.

Vining Sparks’ opinion was directed to WHC’s board of directors and is limited to the fairness, from a financial point of view, of the consideration to be received by WHC common shareholders in the proposed transaction. It did not address WHC’s underlying business decision to proceed with the proposed transaction or constitute a recommendation to the WHC board of directors as to how it should vote on the merger and does not constitute a recommendation to any holder of WHC common stock as to how such shareholder should vote in connection with the merger.

Vining Sparks’ opinion was reviewed and approved by Vining Sparks’ Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.

For purposes of Vining Sparks’ opinion and in connection with its review of the proposed transaction, Vining Sparks has, among other things:

In conducting its review and arriving at its opinion, Vining Sparks has assumed and relied, without independent verification, upon the accuracy and completeness of all the financial and other information that has been provided to it by WHC and Eagle, and their respective representatives, and of the publicly available information that was reviewed by Vining Sparks. Vining Sparks is not an expert in the evaluation of the adequacy of allowances for loan losses and it did not independently verify the adequacy of such allowances. Vining Sparks assumed that the allowance for loan losses set forth in the financial statements of Eagle and WHC were adequate to cover such losses and complied fully with applicable law, regulatory policy and sound banking practice as of the date of such financial statements. Vining Sparks did not conduct a physical inspection of any of the properties or facilities of WHC or Eagle, did not make any independent evaluation or appraisal of the assets, liabilities or prospects of WHC or Eagle, was not furnished with any such evaluation or appraisal, and did not review any individual credit files. Vining Sparks assumed that any projections provided by or approved by WHC were reasonably prepared and reflect the best currently available estimates and judgments of WHC management.

Vining Sparks’ opinion is necessarily based on economic, market, and other conditions as in effect on, and the information made available to it as of, the date of its opinion. Events occurring after the date thereof, including but not limited to, changes affecting the securities markets, the results of operations or material changes in the assets or liabilities of Eagle or WHC could materially affect the assumptions used in preparing the opinion. Vining Sparks assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either WHC or Eagle since the date of the last financial statements of each entity that were made available to Vining Sparks. Vining Sparks assumed that all of the representations and warranties contained in the merger agreement and all related agreements are true and correct, that each party to the merger agreement will perform all of the covenants required to be performed by each party under such agreement and that the conditions precedent in the merger agreement are not waived.

In delivering its opinion to the board of directors of WHC, Vining Sparks prepared and delivered written materials containing various analyses and other information. The following is a summary of the material financial analyses performed by Vining Sparks in connection with the preparation of its opinion and does not purport to be a complete description of all the analyses performed by Vining Sparks. The summary includes information presented in tabular format, which should be read together with the text that accompanies those tables. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, an opinion is not necessarily susceptible to partial analysis or summary description. Vining Sparks believes that its analyses must be considered as a whole and that selecting portions of such analyses and the factors considered therein, without considering all factors and analyses, could create an incomplete view of the analyses and the processes underlying its opinion. In its analyses, Vining Sparks made numerous assumptions with respect to industry performance, business and economic conditions, and other matters, many of which are beyond the control of WHC, Eagle and Vining Sparks. Any estimates contained in Vining Sparks’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than such estimates. Estimates of values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold.

Vining Sparks’ opinion was based on information available to Vining Sparks through the date of its opinion and conditions as they existed and could be evaluated on the date thereof. Vining Sparks reviewed the financial terms of the proposed transaction set forth in the merger agreement. As described in the merger agreement, each outstanding share of common stock of WHC will be converted into the right to receive (i) $2,946.51 in cash and (ii) 179.4464 shares of Eagle. For purposes of the financial analyses described below, based on a value of $16.42 per share for Eagle, the merger consideration represented an implied value of $5,893.02 per share of WHC. Based on 2,206 shares of WHC common stock outstanding, aggregate merger consideration would equal $13.0 million. Additionally, per the merger agreement, WHC’s adjusted tangible stockholders equity as of the last day of the month prior to the month in which the Effective Time is expected to occur shall be an amount not less than $10,000,000. WHC is allowed to incur permitted transaction expenses up to $800,000 and any excess may be paid as a special dividend to shareholders.       

Selected Company Analysis - Eagle. Vining Sparks used publicly available information to compare selected financial information and stock pricing for Eagle with a selected group of financial institutions. The Eagle peer group consisted of publicly traded Montana, Idaho, North Dakota, South Dakota and Wyoming banking organizations with total assets between $125 million and $10 billion, excluding merger targets. While Vining Sparks believes that the companies listed below are similar to Eagle, none of these companies have the same composition, operations, size or financial profile as Eagle.

To perform this analysis, Vining Sparks used financial information as of June 30, 2019, a price of $16.42 for Eagle (the 20-day volume weighted average closing price for Eagle) and pricing data for the peer group as of July 31, 2019 obtained from S&P Global Market Intelligence. The following table sets forth the comparative financial and market data:

Stock Trading History. Vining Sparks reviewed the closing per share market prices and volumes for Eagle common stock on a daily basis from January 1, 2019 to July 26, 2019. Eagle is listed for trading on NASDAQ under the symbol “EBMT”. For the period between January 1, 2019 to July 26, 2019, the closing price of Eagle common stock ranged from a low of $15.53 to a high of $18.28. The closing price on July 26, 2019 was $16.85 per share. For the period between January 1, 2019 and July 26, 2019, the average daily trading volume for Eagle was 7,111 shares.

Analysis of Selected Financial Institution Transactions. Vining Sparks reviewed certain publicly available information regarding selected merger and acquisition transactions (which we refer to as the “comparable transactions”) announced from January 1, 2018 to July 31, 2019 involving U.S. financial institutions located in a rural area, with total assets under $300 million and a return on assets over 0.00%. The transactions included in the group are shown in the following chart. This data was obtained from S&P Global Market Intelligence.

Vining Sparks reviewed the multiples of transaction value to book, transaction value to tangible book, transaction value to earnings, and tangible book premium to core deposits and calculated high, low, median and mean multiples for the comparable transactions. These ratios were compared with corresponding transaction ratios for the proposed merger based on the merger consideration of $5,893.02 per share for WHC common stock. The results of the analysis are set forth in the following table:

No company or transaction used as a comparison in the above analysis is identical to WHC or the proposed transaction. Accordingly, an analysis of these results is not strictly mathematical. An analysis of the results of the foregoing involves complex considerations and judgments concerning differences in financial and operating characteristics of WHC and the companies included in the comparable transactions. The transaction multiples resulting from the merger consideration of $5,893.02 per share are within the range of multiples computed using the comparable transactions.

Present Value Analysis. Vining Sparks calculated the present value of theoretical future earnings of WHC and compared the transaction value to the calculated present value of WHC’s common stock on a stand-alone basis. Based on projected earnings for WHC of $950,000 in 2019, $1.1 million in 2020, $1.2 million in 2021, $1.3 million in 2022 and $1.4 million in 2023, discount rates ranging from 12% to 18%, and including a residual value, the stand-alone present value of WHC indicated an implied range of values per share of $3,435.07 to $5,831.00 as shown in the table below.

Discounted Cash Flow Analysis. Using a discounted cash flow analysis, Vining Sparks estimated the net present value of the future streams of after-tax cash flow that WHC could produce to benefit a potential acquirer, referred to as dividendable net income, and added a terminal value. Based on projected earnings for WHC for 2019 through 2023 (indicated above), we assumed after-tax distributions to a potential acquirer such that its tier 1 leverage ratio would be maintained at 9.00%. The terminal value for WHC was calculated based on WHC’s projected 2023 equity and earnings, the median price to tangible book multiple and the median price to earnings multiple paid in the comparable transactions and utilized discount rate of 12%. This discounted cash flow analysis indicated implied values of $5,390.34 per share and $5,728.68 per share.

Pro Forma Merger Analysis. Vining Sparks performed pro forma merger analyses to calculate the financial implications of the merger to WHC common shareholders. This analysis assumes, among other things, the terms of the transaction as indicated above, that the merger closes at December 31, 2019 and cost savings and revenue enhancement opportunities of $1,000,000 annually in the years 2020 through 2023, which consists of cost saves of $538,000 or approximately 25% of WHC’s total overhead expense in 2018 and the remainder as revenue enhancements for Eagle’s ability to generate additional loans given its loan to deposit ratio equaled 100.54% at June 30, 2019 and WHC’s loan to deposit ratio equaled only 52.52%. This analysis utilized earnings estimates of $1.60 per share in 2019, $1.78 per share in 2020 and $1.96 per share in 2021 for Eagle and earnings estimates of $430.65 per share in 2019, $478.19 per share in 2020 and $526.01 in 2021 for WHC. This analysis indicated that the merger could be accretive to WHC’s projected earnings per share in 2020 and 2021.

In the two years prior to the issuance of this opinion, Vining Sparks engaged in securities and loan sales and trading activity with WHC and/or its subsidiary bank and with Eagle and/or its subsidiary bank for which Vining Sparks was paid an immaterial amount of commissions or other fees, which may include mark-ups on the purchase or sale of loans and securities. Pursuant to the terms of an engagement letter with WHC, Vining Sparks received a fee of $25,000 upon delivery of its opinion. Vining Sparks’ opinion fee is not contingent upon consummation of the proposed transaction. In addition, WHC has agreed to indemnify Vining Sparks against certain liabilities and expenses arising out of or incurred in connection with its engagement, including liabilities and expenses which may arise under the federal securities laws.

Certain Financial Forecasts of WHC

WHC does not, as a matter of course, publicly disclose forecasts or internal projections as to its future performance, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates, the risk that they will prove incorrect and the inherent difficulty of accurately predicting financial performance for future periods. However, in connection with the merger, WHC’s management provided its financial advisor, Vining Sparks with certain nonpublic unaudited forecasted financial information regarding WHC, on a stand-alone basis, prepared by WHC’s management that was considered by Vining Sparks for the purpose of preparing its fairness opinion to WHC’s board of directors, as described in this proxy statement/prospectus under the heading “—Opinion of WHC’s Financial Advisor” beginning on page 31. This nonpublic unaudited forecasted financial information was prepared as part of WHC’s overall process of analyzing various strategic initiatives, and was not prepared for the purposes of, or with a view toward, public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of forecasted financial information, published guidelines of the SEC regarding forward-looking statements or GAAP. A summary of certain significant elements of this information is set forth below, and is included in this proxy statement/prospectus solely because such information was made available to Vining Sparks in connection with the preparation of its fairness opinion and analyses. The information included below does not comprise all of the forecasted financial information provided by WHC to Vining Sparks.

The financial forecasts set forth below were presented to the board of directors of WHC on August 8, 2019. Although presented with numeric specificity, the financial forecasts reflect numerous estimates and assumptions of WHC management made at the time they were prepared, including based on management’s expectation of low interest rates and low-growth economic environment. These and the other estimates and assumptions underlying the financial forecasts involve judgments with respect to, among other things, the future interest rate environment and other economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industry in which WHC and Eagle operate, and the risks and uncertainties described under the sections entitled “Risk Factors” and “Cautionary Statements About Forward-Looking Statements” beginning on pages 16 and 21, respectively, all of which are difficult to predict and many of which are outside the control of WHC and will be beyond the control of the combined company. There can be no assurance that the underlying assumptions would prove to be accurate or that the projected results would be realized, and actual results likely would differ materially from those reflected in the financial forecasts, whether or not the merger is completed. Further, these assumptions do not include all potential actions that management could or might have taken during these time periods. The inclusion in this proxy statement/prospectus of the unaudited forecasted financial information below should not be regarded as an indication that WHC, Eagle, their respective boards of directors, or Vining Sparks considered, or now consider, these projections and forecasts to be a reliable predictor of future results or to be material information to any WHC shareholder particularly in light of the inherent risks and uncertainties associated with such projections and forecasts. The financial forecasts are not fact and should not be relied upon as being necessarily indicative of future results, and this information should not be relied on as such. In addition, this information represents WHC’s management’s evaluation at the time it was prepared of certain measures of WHC’s expected future financial performance on a standalone basis, based on certain assumptions regarding strategic investment expenses and without reference to the proposed merger or transaction-related costs or benefits. No assurances can be given that these financial forecasts and the underlying assumptions are reasonable or that, if they had been prepared as of the date of this proxy statement/prospectus, similar assumptions would be used. In addition, the financial forecasts may not reflect the manner in which Eagle would operate the WHC business after the merger.

The financial forecasts summarized in this section were prepared by and are the responsibility of the management of WHC. No independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the forecasted financial information and, accordingly, no independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the forecasted financial information. By including the forecasted financial information in this proxy statement/prospectus, neither Eagle nor WHC nor any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of WHC or Eagle compared to the information contained in or implied by the forecasted financial information. Neither WHC, Eagle nor, after completion of the merger, the combined company undertakes any obligation to update or otherwise revise the forecasted financial information to reflect circumstances existing since their preparation or to reflect the occurrence of subsequent or unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.

The forecasted financial information is not being included in this proxy statement/prospectus in order to induce any WHC shareholder to vote in favor of the merger proposal but is included solely for the purpose of providing WHC shareholders with access to certain nonpublic information that was made available to WHC’s financial advisor for the purposes of performing financial analyses regarding the proposed merger.

In light of the foregoing as well as the uncertainties inherent in any forecasted information, WHC shareholders are strongly cautioned not to place unwarranted reliance on such information.

The following table presents select unaudited forecasted financial information for the fiscal years ended December 31, 2019 through December 31, 2023 prepared by WHC’s management and considered by Vining Sparks for the purpose of preparing its fairness opinion to WHC’s board of directors, as described in this proxy statement/prospectus under the heading “—Opinion of WHC’s Financial Advisor” beginning on page 31.

Material U.S. Federal Income Tax Consequences of the Merger

The following section constitutes the opinion of Nixon Peabody as to the anticipated material U.S. federal income tax consequences of the merger generally applicable to U.S. holders (as defined below) of WHC common stock. These opinions and the following discussion are based on, and subject to, the Code, the treasury regulations promulgated under the Code, existing interpretations, court decisions, and administrative rulings, all of which are in effect as of the date of this proxy statement/prospectus, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any U.S. state or local or non-U.S. tax considerations or any U.S. federal estate, gift, alternative minimum tax, or Medicare contribution tax considerations.

This summary only addresses the material U.S. federal income tax consequences of the merger to U.S. holders of WHC common stock who hold such shares as a capital asset within the meaning of Section 1221 of the Code. This summary does not address all aspects of U.S. federal income taxation that may be applicable to WHC shareholders in light of their particular circumstances or to WHC shareholders subject to special treatment under U.S. federal income tax law, such as:

In addition, the discussion does not address any alternative minimum tax or any state, local or foreign tax consequences of the merger.

U.S. Holders

For purposes of this summary, the term “U.S. holder” means a beneficial holder of WHC common stock that is:

If a partnership (including any entity or arrangement that is taxed as a partnership for U.S. federal income tax purposes) holds WHC common stock, the tax treatment of a partner will generally depend on the status of the partners and the activities of the partnership. Partnerships and partners in such a partnership should consult their tax advisers about the tax consequences of the merger to them.

The Merger

The parties intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to Eagle’s and WHC’s obligation to complete the merger that they each receive an opinion from their respective counsel, dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. In addition, in connection with the filing of the registration statement of which this document is a part, Nixon Peabody has delivered an opinion to Eagle, to the same effect as the opinions described above. These tax opinions will be based on representation letters provided by WHC and Eagle and which set forth customary factual assumptions. None of the opinions described above will be binding on the Internal Revenue Service. WHC and Eagle have not sought and will not seek any ruling from the Internal Revenue Service regarding any matters relating to the merger, and as a result, there can be no assurance that the Internal Revenue Service will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below. In addition, if any of the representations or assumptions upon which those opinions are based are inconsistent with the actual facts, the United States federal income tax consequences of the merger could be adversely affected. Based on factual representations contained in the representation letters provided by WHC and Eagle, and which representations must continue to be true and accurate as of the effective time of the merger, in the opinion of Nixon Peabody, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

The tax consequences of the merger to a U.S. holder of WHC common stock will generally depend upon the form of consideration such U.S. holder receives in the merger.

Tax Consequences to U.S. Holders. Subject to the discussions below relating to the potential recharacterization of gain as a dividend and the receipt of cash in lieu of a fractional share, a U.S. holder that exchanges its WHC common stock for a combination of shares of Eagle common stock and cash:

Such capital gain will generally be long-term capital gain if, as of the effective date of the merger, the holding period for such shares of WHC common stock is more than one year. Long-term capital gain of certain non-corporate taxpayers, including individuals, is generally taxed at preferential rates.

In the case of any U.S. holder that acquired different blocks of WHC common stock at different times and at different prices, any realized gain or loss generally will be determined separately for each identifiable block of shares exchanged in the merger. Such U.S. holder should consult the U.S. holder’s own tax advisor regarding the manner in which gain or loss should be determined for each identifiable block of WHC shares.

Potential Recharacterization of Gain as a Dividend. Any gain recognized by a U.S. holder of WHC common stock in connection with the merger generally will be capital gain unless such U.S. holder’s receipt of cash has the effect of a distribution of a dividend, in which case the gain will generally be treated as a dividend to the extent of such holder’s ratable share of WHC’s accumulated earnings and profits, as calculated for U.S. federal income tax purposes. For purposes of determining whether a U.S. holder’s receipt of cash in the merger has the effect of a distribution of a dividend, such U.S. holder will generally be treated as if it first exchanged all of its WHC common stock solely in exchange for Eagle common stock and then Eagle immediately redeemed a portion of that stock for the cash that such U.S. holder actually received in the merger (referred to herein as the “deemed redemption”). Receipt of cash will generally not have the effect of a dividend to a U.S. holder if such receipt is “not essentially equivalent to a dividend” or “substantially disproportionate,” in each case within the meaning of Section 302(b) of the Code. In order for the deemed redemption to be “not essentially equivalent to a dividend,” the deemed redemption must result in a “meaningful reduction” in the U.S. holder’s deemed percentage stock ownership of Eagle following the merger. The determination generally requires a comparison of the percentage of the outstanding stock of Eagle that such U.S. holder is considered to have owned immediately before the deemed redemption to the percentage of the outstanding stock of Eagle that such U.S. holder owned immediately after the deemed redemption, including shares deemed owned under the constructive ownership rules of the Code. The Internal Revenue Service has indicated in rulings that any reduction in the interest of a minority shareholder that owns, actually and constructively, a small number of shares in a publicly and widely held corporation and that exercises no control over such corporation’s corporate affairs would generally result in capital gain (as opposed to dividend) treatment.

The determination as to whether a U.S. holder will recognize a capital gain or dividend income as a result of the exchange of WHC common stock for Eagle common stock and cash in the merger is complex and is determined on a shareholder-by-shareholder basis. Accordingly, we urge each U.S. holder to consult its own tax advisor with respect to any such determination.

Cash Instead of a Fractional Share. If you receive cash in the merger instead of a fractional share interest in Eagle common stock, you will be treated as having received such fractional share in the merger, and then as having received cash in exchange for such fractional share. Gain or loss would be recognized in an amount equal to the difference between the amount of cash received and your adjusted tax basis allocable to such fractional share. Except as described in the section entitled “Potential Recharacterization of Gain as a Dividend” above, this gain or loss will generally be a capital gain or loss, and will be long-term capital gain or loss if, as of the effective date of the merger, you have held your shares of WHC common stock for more than one year.

Backup Withholding and Information Reporting

In general, information reporting requirements may apply to any cash payments made to a U.S. holder in connection with the merger, unless an exemption applies. Backup withholding (currently 24%) may be imposed on the above payments if a U.S. holder (1) fails to provide a taxpayer identification number or appropriate certificates or (2) otherwise fails to comply with all applicable requirements of the backup withholding rules.

Any amounts withheld from payments to a U.S. holder under the backup withholding rules are not an additional tax and will be allowed as a refund or credit against its applicable U.S. federal income tax liability, provided the required information is furnished to the IRS. U.S. holders should consult their own tax advisors regarding the application of backup withholding based on their particular circumstances and the availability and procedure for obtaining an exemption from backup withholding.

A U.S. holder of WHC common stock who receives Eagle common stock as a result of the merger will be required to retain records pertaining to the merger. Each U.S. holder of WHC common stock who is required to file a U.S. federal income tax return and who is a “significant holder” that receives Eagle common stock in the merger will be required to file a statement with such U.S. federal income tax return in accordance with Treasury Regulations Section 1.368-3 setting forth information regarding the parties to the merger, the date of the merger, such holder’s basis in the WHC common stock surrendered and the fair market value of Eagle common stock received in the merger. A “significant holder” is a holder of WHC common stock who, immediately before the merger, owned at least 1% (by vote or value) of the outstanding stock of WHC or securities of WHC with a basis for U.S. federal income tax purposes of at least $1 million.

The preceding discussion is for general information purposes only and is not intended to be a complete analysis or description of all potential U.S. federal income tax consequences of the merger. The discussion does not address tax consequences which may vary with, or are contingent on, your individual circumstances. Moreover, the discussion does not address any non-income tax or any foreign, state or local tax consequences of the merger. Accordingly, you are strongly encouraged to consult with your own tax advisor as to the tax consequences of the merger in your particular circumstances, including any state, local or foreign and other tax laws and of changes in those laws.

Accounting Treatment

The merger will be accounted for using the acquisition method of accounting pursuant to U.S. GAAP. Eagle will be treated as the acquiror. Under the acquisition method of accounting, WHC’s assets and liabilities will be recorded in Eagle’s consolidated financial statements at their respective fair values as of the date of completion of the merger. Financial statements of Eagle issued after the merger will reflect these values but will not be restated retroactively to reflect the historical financial position or results of operations of WHC before the merger date.

Regulatory Approvals

Completion of the merger and the bank merger are subject to the receipt of all approvals and consents required to complete the transactions contemplated by the merger agreement from (i) the Federal Reserve Board, (ii) the Montana Division of Banking and Financial Institutions, and (iii) any other regulatory approval, the failure of which to obtain would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Eagle, and the expiration of any applicable statutory waiting periods, in each case, without the imposition of a materially burdensome regulatory condition. Notifications regarding, and/or applications requesting approval for, the transactions contemplated by the merger agreement may also be submitted to various other federal and state regulatory authorities and self-regulatory organizations. WHC and Eagle have agreed to use their commercially reasonable efforts to obtain as promptly as practicable all required regulatory approvals and consents. Eagle, WHC and/or their respective subsidiaries have filed applications and/or notifications to obtain these required regulatory approvals and consents or applicable waivers therefrom.

Although we currently believe we should be able to obtain all required regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them or, if obtained, whether they will contain terms, conditions or restrictions not currently contemplated that will be detrimental to Eagle after the completion of the merger, or will contain a materially burdensome regulatory condition.

Board of Governors of the Federal Reserve System – The Merger

Eagle is a bank holding company as defined in the BHC Act. The primary regulator of Eagle is the Federal Reserve Board. Eagle has filed with the Federal Reserve a combined application and notification under Sections 3, 4(c)(8) and 4(j) of the BHC Act for the transactions contemplated by the merger agreement. In considering the approval of the merger, the Federal Reserve Board is required by the BHC Act to review, with respect to Eagle and the companies and insured depository institution to be acquired: (1) the effect of the proposal on competition, (2) the financial condition and future prospects of the combined company and the banks concerned and the managerial resources, including the competence, experience, and integrity of the officers, directors and principal stockholders of Eagle, WHC and their subsidiary banks, (3) the convenience and needs of the communities to be served, including the record of performance under the Community Reinvestment Act of 1977 and the regulations issued thereunder (which we refer to as the "CRA"), (4) the companies' effectiveness in combating money-laundering activities, (5) the banks' record of compliance with the CRA and (6) the risk to the stability of the United States banking or financial system presented by the merger and the related transactions.

In connection with its review of the application and notification, the Federal Reserve Board will provide an opportunity for public comment on the application and notification, and is authorized to hold a public meeting or other proceeding if it determines such meeting or other proceeding would be appropriate. Eagle filed its application and notification for approval of the merger with the Federal Reserve on October 4, 2019.

Board of Governors of the Federal Reserve System – The Bank Merger

In order to consummate the merger of Western Bank with and into Opportunity Bank, Opportunity Bank must receive the approval of the Federal Reserve under Section 18(c) of the Federal Deposit Insurance Act (which we refer to as the "Bank Merger Act"). In considering an application under the Bank Merger Act, the Federal Reserve reviews certain factors, including: (i) the competitive impact of the transaction, (ii) the financial and managerial resources of the depository institutions party to the bank merger and future prospects of the resulting institution, (iii) the convenience and needs of the communities to be served, (iv) the depository institutions' effectiveness in combating money-laundering activities, (v) the risk to the stability of the United States banking and financial system and (vi) the records of performance of the relevant insured depository institutions under the CRA.

Furthermore, the Bank Merger Act and Federal Reserve regulations require published notice of, and the opportunity for public comment on, the application to the Federal Reserve, and authorize the Federal Reserve to hold a public hearing or meeting if the Federal Reserve determines that a hearing or meeting would be appropriate. The Federal Reserve takes into account the views of third-party commenters, particularly on the subject of the merging parties' CRA performance and record of service to their communities. As part of the review process in merger transactions, the Federal Reserve frequently receives protests from community groups and others. Any hearing, meeting or comments provided by third parties could prolong the period during which the application is under review by the Federal Reserve.

Opportunity Bank's establishment and operation of a branch at Western Bank's existing branch location is also subject to approval by the Federal Reserve. Opportunity Bank filed its application for approval of the bank merger with the Federal Reserve on October 4, 2019.

Montana Division of Banking and Financial Institutions

Completion of the bank merger is subject to the approval of the Montana Division of Banking and Financial Institutions (which we refer to as the "Montana Division") pursuant to the Banking Law of the State of Montana. The Montana Division requires a 30-day public comment period on a merger application and may consider any comments received and other factors in considering the merger. Opportunity Bank filed an application regarding the bank merger pursuant to the Banking Law of the State of Montana, with the Montana Commissioner on October 4, 2019.

Eagle and WHC believe that the merger and the bank merger should not raise substantial antitrust or other significant regulatory concerns and that Eagle will be able to obtain all requisite regulatory approvals in a timely manner. However, there can be no assurance that all of the regulatory approvals described above will be obtained and, if obtained, as to the timing of any such approvals. In addition, there can be no assurance that such approvals will not impose conditions or requirements that would reasonably be likely to have a material adverse effect on Eagle and its subsidiaries, taken as a whole, after giving effect to the merger. There can likewise be no assurances that U.S. federal or state regulatory authorities will not attempt to challenge the merger on antitrust grounds or for other reasons, or if such a challenge is made, as to the result of such challenge.

Dissenters’ Rights for WHC Shareholders

Holders of WHC common stock as of the record date are entitled to dissenters’ rights under the MBCA. Pursuant to Section 35-1-827 of the MBCA, a WHC shareholder who does not wish to accept the consideration to be received pursuant to the terms of the merger agreement may dissent from the merger and elect to receive the fair value of his or her shares of WHC common stock. Pursuant to Section 35-1-830, any WHC shareholder who desires to assert dissenters’ rights must deliver notice of such intention to WHC before the date of the special meeting to vote on the proposal to approve the merger agreement. Under the terms of the merger agreement, if holders of 5% or more of the outstanding shares of WHC common stock validly exercise their dissenters’ rights, then Eagle will not be obligated to complete the merger.

In order to exercise dissenters’ rights, a dissenting WHC shareholder must strictly comply with the statutory procedures of Sections 35-1-826 through 35-1-839 of the MBCA. A copy of the full text of those Sections is included as Appendix C to this proxy statement/prospectus. WHC shareholders are urged to read Appendix C in its entirety and to consult with their legal advisors. Failure to adhere strictly to the requirements of Montana law in any regard will cause a forfeiture of any dissenters’ rights.

Certain WHC shareholders are subject to company shareholder support agreements, dated as of August 8, 2019, by which such WHC shareholders have agreed to waive all dissenters’ rights, appraisal rights and similar rights in connection with the merger.

BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF MONTANA LAW RELATING TO DISSENTERS’ APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISORS.

Board of Directors and Management of Eagle Following the Merger

The members of the board of directors of Eagle and Opportunity Bank immediately prior to the effective time of the merger will be the directors of the surviving companies. Directors will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

Pursuant to the merger agreement, Opportunity Bank has agreed to establish an advisory board, at or promptly following the effective time of the merger, to assist with retaining Western Bank customers, developing new business and representing the combined bank positively in the communities served by Western Bank. R.J. Doornek and Duane Kurokawa will be appointed to the newly created advisory board of Opportunity Bank. While Opportunity Bank intends to maintain the advisory board for approximately three (3) years, it will consider the composition, compensation and need for the advisory board after the completion of each one-year term.

The executive officers of Eagle and Opportunity Bank immediately prior to the effective time of the merger will be the executive officers of the surviving companies and will hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

Information regarding the executive officers and directors of Eagle is contained in documents filed by Eagle with the SEC and incorporated by reference into this proxy statement/prospectus, including Eagle’s Annual Report on Form 10-K for the year ended December 31, 2018 and its definitive proxy statement on Schedule 14A for its 2019 annual meeting, filed with the SEC on March 12, 2019. See “Where You Can Find More Information” and “Documents Incorporated by Reference.”

Interests of WHC Directors and Executive Officers in the Merger

In the merger, the directors and executive officers of WHC will receive the same merger consideration for their WHC shares as the other WHC shareholders. In considering the recommendation of the WHC board of directors that you vote to approve the merger agreement, you should be aware that some of the executive officers and directors of WHC may have interests in the merger and may have arrangements, as described below, that may be considered to be different from, or in addition to, those of WHC shareholders generally. The WHC board of directors was aware of these interests and considered them, among other matters, in reaching its decision to adopt and approve the merger agreement and to recommend that WHC shareholders vote in favor of approving the merger agreement. For a more complete description of WHC’s reasons for the merger and the recommendations of the WHC board of directors, please see the section entitled “Proposal 1: The Merger – Background of the Merger” and “Proposal 1: The Merger – WHC’s Reasons for the Merger and Recommendations of the WHC Board of Directors” beginning on pages 26, and 28, respectively of this proxy statement/prospectus. WHC’s shareholders should take these interests into account in deciding whether to vote “FOR” the proposal to approve the merger agreement. These interests are described in more detail below.

Director Restrictive Covenant Agreement; Claims Letters

Each member of the WHC and Western Bank boards of directors have entered into a restrictive covenant agreement, covering a two-year period commencing with the effective time of the merger, with Eagle in the form attached as Exhibit E to the merger agreement attached as Appendix A to this document. However, directors would be permitted to serve on other bank boards within the restricted territory after the first anniversary of the restrictive covenant agreement. In addition, each of the members of the WHC and Western Bank boards of directors have entered into a claims letter in the form attached as Exhibit D to the merger agreement attached as Appendix A to this proxy statement/prospectus, by which they have agreed to release certain claims against WHC, effective as of the effective time of the merger.

Indemnification and Insurance

As described under “The Merger Agreement —Indemnification and Directors’ and Officers’ Insurance” beginning on page 54 of this proxy statement/prospectus, for a period of six years from and after the effective time of the merger, Eagle will indemnify and defend the present and former directors and officers of WHC and its subsidiaries against claims pertaining to matters occurring at or prior to the closing of the merger as permitted by WHC’s articles of incorporation and bylaws in effect as of the date of the merger agreement and under applicable law. Eagle also has agreed, for a period of six years after the effective time of the merger, to provide coverage to present and former directors and officers of WHC pursuant to WHC’s existing directors’ and officers’ liability insurance. This insurance policy may be substituted, but must contain at least the same coverage and amounts, and contain terms no less advantageous than the coverage currently provided by WHC. In no event shall Eagle be required to expend for the tail insurance a premium amount in excess of 250% of the annual premiums paid by WHC for its directors’ and officers’ liability insurance in effect as of the date of the merger agreement.

Split Dollar Arrangements and Salary Continuation Agreements

Western Bank purchased insurance policies on the life of each of R.J. Doornek, Duane Kurokawa, Cathy Wanderaas and Jerald Petersen (collectively, the “Policies”). The amount of the life insurance benefits and the distribution provisions and other terms of such Policies are set forth in a Split-Dollar Agreement executed by each executive officer, the terms of which are described below, and each of which will be assumed by Opportunity Bank as a result of the merger.

Each Split-Dollar Agreement provides that, at the Eligibility Age (as set forth in each respective agreement), the executive can designate a beneficiary of the death benefit. The death benefit amount for Messrs. Doornek, Kurokawa, Petersen and Ms. Wanderaas are $150,000, $150,000, $50,000 and $50,000, respectively. Upon the death of the respective executive officer, his or her beneficiaries will be entitled to receive the death benefit. The Split Dollar Agreement includes an option to purchase whereby Western Bank cannot sell, surrender, or transfer ownership of the policy while the arrangement is in effect without first giving the executive the option to purchase the policy. The Split Dollar Agreement automatically terminates upon the executive’s termination of employment prior to the Eligibility Age. Western Bank is entitled to any death proceeds payable under the Policies that remain after payment to the executive officer’s beneficiaries. Western Bank and the executive officer’s beneficiaries share pro rata in any interest due on the death proceeds of the Policies, based on the amount of proceeds due each person, excluding any such interest.

Messrs. Doornek, Kurokawa, Petersen and Ms. Wanderaas previously entered into salary continuation agreements (which we refer to as the “SCAs”) with Western Bank, each of which will be assumed by Opportunity Bank as a result of the merger. The SCAs pay a benefit upon retirement, disability, early termination, or death. The benefit amount varies based on the termination event. The SCAs all promise to pay the normal retirement annual benefit (as set forth in each respective agreement) in 12 equal monthly installments for a period of 20 years. The agreements allow the executive to name a beneficiary for the payments. In the event the executive dies prior to the completion of 20 years of payments, the beneficiary will receive all remaining payments.

Upon an early termination, Western Bank is required to pay a fixed annuity which is payable in 20 annual equal installments. Upon a termination due to disability, Western Bank is required to pay the executive’s actual benefit accrual at the time of termination in a lump sum. If the executive dies while employed by Western Bank, Western Bank is required to pay to the executive’s beneficiary the normal retirement annual benefit in 12 equal monthly installments over a period of 20 years.

Upon a “change of control,” defined as the transfer of shares of Western Bank’s voting stock such that one entity or one person acquires more than 50% of Western Bank’s outstanding voting common stock followed within 12 months by the executive’s termination of employment for reasons other than death, disability, or retirement, executive is entitled to a benefit equal to the actual benefit accrual payable in a lump sum.

The SCAs include a non-competition provision whereby the executive will not receive his or her benefit if the executive engages in, becomes interested in, directly or indirectly (without the prior written consent of Western Bank) as a sole proprietor, a partner, substantial shareholder, or becomes associated with, in the capacity of employee, director, officer, principal, agent, trustee, any enterprise conducted in a 50 mile radius of Western Bank that is competitive with the business of Western Bank. The non-competition provision is not applicable following a change of control.

Advisory Board

As described above, Opportunity Bank has agreed to establish an advisory board, at or promptly following the effective time of the merger, and R.J. Doornek and Duane Kurokawa will be appointed to the newly created advisory board. Members of the advisory board, including Messrs. Doornek and Kurokawa, will receive an annual retainer of $1,200.

PROPOSAL 2: ADJOURNMENT OF THE WHC SPECIAL MEETING

WHC shareholders are being asked to approve the adjournment proposal.

If this adjournment proposal is approved, the WHC special meeting could be adjourned to any date if necessary or appropriate to solicit additional proxies if there are insufficient votes to approve the merger agreement at the time of the special meeting. If the adjournment proposal is approved, we may also adjourn the meeting and use the additional time to solicit proxies from WHC shareholders that have previously returned proxies voting against the merger proposal and seek to convince the holders of those WHC shares to change their votes to votes in favor of the merger proposal.

If the WHC special meeting is adjourned, WHC shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you sign and return a proxy and do not indicate how you wish to vote on the adjournment proposal, your shares of WHC common stock will be voted in favor of the adjournment proposal.

We do not anticipate calling a vote on the adjournment proposal if the merger proposal is approved by the requisite number of WHC shares of common stock at the special meeting.

The adjournment proposal will be approved if the votes of WHC common stock cast in favor of the adjournment proposal exceed the votes cast against the adjournment proposal.

THE WHC BOARD OF DIRECTORS RECOMMENDS THAT WHC SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

THE MERGER AGREEMENT

The following is a summary of the material provisions of the merger agreement. This summary is qualified in its entirety by reference to the merger agreement, a copy of which is included as Appendix A to this proxy statement/prospectus and is incorporated herein by reference. You should read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

The Merger and the Bank Merger

The boards of directors of Eagle and WHC have each unanimously approved and adopted the merger agreement, which provides for the merger of WHC with and into Eagle, with Eagle as the surviving company in the merger.

The merger agreement also provides that immediately after the effective time of the merger, Western Bank, a Montana state bank and wholly-owned subsidiary of WHC, will merge with and into Opportunity Bank, a Montana state bank and wholly owned subsidiary of Eagle, with Opportunity Bank as the surviving bank of such merger. The terms and conditions of the merger of Western Bank and Opportunity Bank are set forth in a separate plan of merger and merger agreement (referred to as the “plan of bank merger”), the form of which is attached as Exhibit C to the merger agreement, included as Appendix A to this proxy statement/prospectus. We refer to the merger of Western Bank and Opportunity Bank as the “bank merger.”

Closing and Effective Time of the Merger

Unless both Eagle and WHC otherwise agree, the closing of the merger will take place at 10:00 a.m., Mountain time, on a date which shall be no later than five business days after all the conditions to the closing (other than conditions to be satisfied at the closing, which shall be satisfied or waived at the closing) have been satisfied or waived in accordance with the terms of the merger agreement, unless another date or time is agreed to by Eagle and WHC. Eagle will file articles of merger with the Secretary of State of the State of Montana and a certificate of merger with the Secretary of State of the State of Delaware. The merger will become effective at such time as the articles of merger and certificate of merger are filed or such other time as may be specified in the articles of merger and certificate of merger.

We currently expect that the merger will be completed in the fourth quarter of 2019, subject to the approval of the merger agreement by WHC shareholders, certain bank regulators and other conditions. However, completion of the merger could be delayed if there is a delay in satisfying any other conditions to the merger. No assurance is made as to whether, or when, Eagle and WHC will complete the merger. See “The Merger Agreement – Conditions to Completion of the Merger” on page 59 of this proxy statement/prospectus.

Merger Consideration

Under the terms of the merger agreement, each share of WHC common stock outstanding immediately prior to the effective time of the merger (excluding certain shares held by WHC, Eagle and their wholly-owned subsidiaries and dissenting shares described below) will be automatically converted into the right to receive (i) 179.4464 shares of Eagle common stock (which we refer to as the “per share stock consideration”) and (ii) $2,946.51 in cash (which we refer to as the “per share cash consideration,” together with the per share stock consideration, the “merger consideration”).

No fractional shares of Eagle common stock will be issued in connection with the merger. Instead, Eagle will make to each WHC shareholder who would otherwise receive a fractional share of Eagle common stock a cash payment, without interest and rounded to the nearest whole cent, equal to: (i) the fractional share amount multiplied by (ii) the average daily volume weighted average price of Eagle common stock on the Nasdaq Global Market for the 20 trading days preceding the fifth trading day immediately preceding the closing date.

In order to avoid termination of the merger agreement, the merger consideration may be adjusted in certain circumstances based on whether Eagle common stock is trading either higher or lower than prices specified in the merger agreement immediately prior to the closing of the merger. If the “average closing price” (determined over a 20 trading day period prior to the determination date, as defined in the merger agreement) of Eagle’s common stock exceeds $20.41 per share and Eagle’s stock outperforms the Nasdaq Bank Index by more than 15%, Eagle may terminate the merger agreement, or elect to reduce the per share stock consideration, provided, however, that Eagle may not adjust the per share stock consideration in a manner that would result in the aggregate shares of Eagle common stock to be issued in the merger being less than 356,272 shares.

Conversely, if the “average closing price” is less than $15.09 per share and Eagle’s stock has also underperformed the Nasdaq Bank Index by more than 15%, WHC may terminate the merger agreement, unless Eagle elects to increase the per share stock consideration. See “Proposal 1: The Merger – Termination.”

All shares of Eagle common stock received by WHC shareholders in the merger will be freely tradable, except that shares of Eagle common stock received by persons who become affiliates of Eagle for purposes of Rule 144 under the Securities Act may be resold by them only in transactions permitted by Rule 144, or as otherwise permitted under the Securities Act.

A WHC shareholder has the right to dissent from the merger and obtain the fair value of his or her shares of WHC common stock in lieu of receiving the merger consideration by strictly following the dissenters’ rights procedures under the MBCA. Shares of WHC common stock outstanding immediately prior to the effective time of the merger and which are held by a shareholder who does not vote to approve the merger agreement and who properly demands the fair value of such shares pursuant to, and who complies with, the dissenters’ rights procedures under the MBCA are referred to as “dissenting shares.” See “Proposal 1: The Merger – Dissenters’ Rights for WHC Shareholders” and Appendix C – Provisions of Montana Business Corporation Act relating to Dissenters’ Rights on pages 43 and C-1, respectively.

If Eagle or any company belonging in the Nasdaq Bank Index declares or effects a stock dividend, reclassification, recapitalization, split-up, combination, exchange of shares or similar transaction between the date of the merger agreement and the relevant determination date, the prices for and amount of shares of Eagle common stock or the common stock of such other company, as the case may be, will be appropriately adjusted for the purposes of calculating the adjustments described above.

Based upon the closing sale price of the Eagle common stock on the Nasdaq Global Market of $17.35 on October 17, 2019, the last practicable trading date prior to the printing of this proxy statement/prospectus, the value of the merger consideration was approximately $6,059.91 per share of WHC common stock.

The value of the shares of Eagle common stock to be issued to WHC shareholders in the merger will fluctuate between now and the closing date of the merger. We make no assurances as to whether or when the merger will be completed, and you are advised to obtain current sale prices for the Eagle common stock. See “Risk Factors – Because the sale price of the Eagle common stock will fluctuate, you cannot be sure of the value of the per share stock consideration that you will receive in the merger until the closing.”

Exchange Procedures

Eagle has appointed as the exchange agent under the merger agreement its transfer agent, Computershare Inc. The merger agreement requires Eagle to cause the exchange agent as promptly as practicable after the effective time but in no event later than five business days after the closing date, to mail or otherwise deliver transmittal materials, which will include instructions to effect the surrender of certificates, to each holder of WHC common stock. Upon surrender to the exchange agent of its certificates representing outstanding shares of WHC common stock, a WHC shareholder will be entitled to receive the merger consideration and any cash in lieu of a fractional share or Eagle common stock to be issued.

Subject to law, following the surrender of any certificate, there shall be issued and/or paid to the holder of the certificates representing whole shares of Eagle common stock issued, and cash in exchange for WHC common stock, without interest: (i) at the time of such surrender, the dividends or other distributions with a record date after the effective time of the merger payable with respect to the whole shares of Eagle common stock and not paid; and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to shares of Eagle common stock with a record date after the effective time of the merger and with a payment date subsequent to surrender.

After the effective time of the merger, there will be no registration of transfers on the stock transfer books of WHC of WHC common stock.

Conduct of Business Pending the Merger

Pursuant to the merger agreement, WHC has agreed to certain restrictions on its activities until the effective time of the merger. WHC has agreed that, except as otherwise permitted by the merger agreement, or as required by applicable law, or with the prior written consent of Eagle, it will:

Until the effective time of the merger, Eagle has agreed to use commercially reasonable efforts to carry on its business consistent with prudent banking practices and in compliance in all material respects with all applicable laws. Eagle has also agreed not to (i) amend or propose to amend its certificate of incorporation or bylaws in a manner that would prohibit or hinder, impede or delay in any material respect the transactions contemplated by the merger agreement, (ii) take any action or knowingly fail to take any action not contemplated by the merger agreement that is intended or reasonably likely to (x) prevent, delay or impair Eagle’s ability to consummate the merger or the transactions contemplated by the merger agreement or (y) prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, or (iii) agree to take, make any commitment to take or adopt any resolutions of its board of directors in support of any of the actions prohibited as described above.

Each of the Eagle and WHC have agreed to use commercially reasonable efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, so as to permit consummation of the transactions contemplated by the merger agreement as promptly as practicable.

WHC has also agreed that except as otherwise permitted by the merger agreement or required by applicable law, or with the prior written consent of Eagle (not to be unreasonably withheld or delayed) it will not:

Company Shareholder Approval

WHC has agreed to take all action necessary to convene a special meeting of its shareholders as promptly as practicable after the Registration Statement on Form S-4 of which this proxy statement/prospectus is a part is declared effective by the SEC to consider and vote upon the approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger, and any other matters required to be approved by WHC’s shareholders. WHC has further agreed to ensure that the shareholder meeting is called, noticed, convened, held and conducted in accordance with its articles of incorporation and bylaws and all other applicable legal requirements.

Unless WHC’s board changes its recommendation to shareholders relating to the merger in accordance with the merger agreement, WHC has agreed to use its reasonable best efforts to obtain the required WHC shareholder approval to consummate the merger and the other transactions contemplated by the merger agreement. However, even if WHC’s board changes its recommendation to shareholders relating to the merger in accordance with the merger agreement, WHC is obligated to convene the meeting and submit the merger agreement to the WHC shareholders for approval unless the merger agreement has been terminated in accordance with its terms.

Regulatory Matters

This proxy statement/prospectus forms part of a Registration Statement on Form S-4 which Eagle has filed with the SEC. Each of Eagle and WHC has agreed to use reasonable best efforts to cause the Registration Statement to be declared effective by the SEC as promptly as reasonably practicable after filing.

Eagle also agrees to use commercially reasonable efforts to obtain any necessary state securities law or “blue sky” permits and approvals required to carry out the transactions contemplated by the merger agreement.

Each of Eagle and WHC has agreed to use reasonable best efforts to prepare all documentation, to effect all filings and to obtain all permits, consents, approvals and authorizations of all third parties and governmental authorities necessary to consummate the transactions contemplated by the merger agreement, and each of Eagle and WHC has agreed to comply with the terms and conditions of such permits, consents, approvals and authorizations and to cause the transactions contemplated by the merger agreement to be consummated as expeditiously as practicable.

Additionally, each of Eagle and WHC has agreed to furnish information to the other party, and each party has the right to review and approve in advance all characterizations of the information relating to such party that appear in any filing made in connection with the transactions contemplated by the merger agreement. Each party has agreed to promptly notify and apprise the other party of the substance of any communication from any governmental authority received by such party with respect to the regulatory applications filed solely in connection with the transactions contemplated by the merger agreement.

In connection with seeking regulatory approval for the merger, Eagle is not required to take any action or agree to any condition or restriction that would reasonably be likely to have a material and adverse effect on Eagle and its subsidiaries, taken as a whole and after giving effect to the merger, measured on a scale relative to WHC and its subsidiaries taken as a whole.

Nasdaq Listing

Eagle has agreed to use commercially reasonable efforts to cause the shares of Eagle common stock to be issued to the holders of WHC common stock in the merger to be approved for listing on the Nasdaq Global Market, subject to official notice of issuance, prior to the effective time of the merger.

Employee Matters

Under the merger agreement, WHC agreed, upon Eagle’s reasonable request, to facilitate discussions between Eagle and WHC employees regarding arrangements to be effective prior to or following the effective time of the merger and, if directed by Eagle, take all actions required to fully fund, terminate or merge any benefit plan of WHC. Following the closing, if Eagle terminates a WHC benefit plan and there is a comparable Eagle benefit plan, WHC employees who continue to be employed with Eagle and its affiliates after closing will be entitled to participate in such Eagle benefit plans to the same extent as similarly-situated employees of Eagle or Opportunity Bank, except for closed or frozen benefit plans. To the extent allowable under Eagle benefit plans, continuing WHC employees will be given credit for prior service or employment with WHC for all purposes, except to the extent that it would result in duplication of benefits. For continuing WHC employees who participate in Eagle benefit plans, Eagle will use commercially reasonable efforts to waive certain pre-existing condition limitations and waiting periods or evidence of insurability requirements and, to the extent allowed by the applicable insurance company, provide credit for deductibles from the same year and analogous WHC benefit plans.

Under the merger agreement, Eagle agreed to provide each full-time employee of WHC, other than an employee who is a party to an employment agreement, change in control agreement or other separation agreement that provides a benefit on a termination of employment, who is terminated by Eagle or its subsidiaries (other than for cause) within six months following the effective time with a lump sum severance payment in a specified amount based upon length of service, subject to such employee entering into a release of claims in a form satisfactory to Eagle.

Indemnification and Directors’ and Officers’ Insurance

For a period of six years from and after the effective time of the merger, Eagle has agreed to indemnify and hold harmless the present and former directors and officers of WHC and Western Bank against all costs or expenses (including reasonable attorney’s fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative arising out of actions or omissions of such persons in the course of performing their duties for WHC or Western Bank or any of their respective subsidiaries occurring at or before the effective time of the merger, to the fullest extent as such persons are indemnified or have the right to advancement of expenses pursuant to the organizational documents of WHC or its subsidiaries and the MBCA.

For a period of six years after the effective time of the merger, Eagle will provide directors’ and officers’ liability insurance that serves to reimburse the present and former officers and directors of WHC or its subsidiaries with respect to claims against them arising from acts and omissions occurring before the effective time of the merger (including the transactions contemplated by the merger agreement). The directors’ and officers’ liability insurance will contain at least the same coverage and amounts, and contain terms and conditions no less advantageous to the indemnified persons as the coverage currently provided by WHC. In no event shall Eagle be required to expend for the tail insurance a premium in an aggregate amount in excess of 250% of the annual premiums paid by WHC for its directors’ and officers’ liability insurance in effect as of the date of the merger agreement.

Third Party Proposals

WHC has agreed that it will not, and will cause its subsidiaries and their respective officers, directors, employees not to, and will not authorize any investment bankers, financial advisors, attorneys, accountants, consultants, affiliates or other agent to, directly or indirectly: (a) initiate, solicit, knowingly induce or encourage, or knowingly take any action to facilitate the making of, inquiries, offers or proposals which constitute, or could reasonably be expected to lead to an acquisition proposal, (b) participate in any discussions or negotiations regarding any acquisition proposal or furnish or otherwise afford access to any person any non-public information or data with respect to WHC or its subsidiaries in connection with any acquisition proposal, (c) release any person from, waive any provisions of, or fail to enforce any confidentiality agreement or standstill agreement to which WHC is a party, or (d) enter into any agreement, agreement in principle or letter of intent with respect to any acquisition proposal or approve or resolve to approve any acquisition proposal or any agreement, agreement in principle or letter of intent relating to any acquisition proposal. An “acquisition proposal” is defined as any inquiry, offer or proposal (other than an inquiry, offer or proposal from Eagle), whether or not in writing, contemplating, relating to, or that could reasonably be expected to lead to, an acquisition transaction. An “acquisition transaction” is defined as: (A) any transaction or series of transactions involving any merger, consolidation, recapitalization, share exchange, liquidation, dissolution or similar transaction involving WHC or Western Bank that, in any such case, results in any person (or, in the case of a direct merger between such third party and WHC, Western Bank or any other subsidiary of WHC, the shareholders of such third party) acquiring 15% or more of any class of equity of WHC or Western Bank; (B) any transaction pursuant to which any third party or group acquires or would acquire (whether through sale, lease or other disposition), directly or indirectly, 15% or more of the consolidated assets of WHC or Western Bank; (C) any issuance, sale or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase or securities convertible into, such securities) representing 15% or more of the votes attached to the outstanding securities of WHC or Western Bank; (D) any tender offer or exchange offer that, if consummated, would result in any third party or group beneficially owning 15% or more of any class of equity securities of WHC or Western Bank; or (E) any transaction which is similar in form, substance or purpose to any of the foregoing transactions, or any combination of the foregoing.

However, the merger agreement provides that at any time prior to the date of the shareholder meeting for WHC shareholders to vote on approval of the merger agreement, if WHC receives a bona fide unsolicited written acquisition proposal that does not violate the “no shop” provisions in the merger agreement and WHC’s board of directors reasonably determines in good faith (after consultation with and having considered the advice of its outside legal counsel and financial advisor) that such acquisition proposal constitutes or could reasonably be expected to lead to a superior proposal (as defined below) and the failure to take such actions would be inconsistent with its fiduciary duties under applicable law, then WHC may: (i) enter into a confidentiality agreement with the third party making the acquisition proposal with terms and conditions no less favorable to WHC than the confidentiality agreement entered into by WHC and Eagle prior to the execution of the merger agreement; (ii) furnish non-public information or data to the third party making the acquisition proposal pursuant to such confidentiality agreement (and provide to Eagle any information not previously provided to Eagle); and (iii) participate in such negotiations or discussions with the third party making the acquisition proposal regarding such proposal. WHC must promptly advise Eagle in writing within 24 hours following receipt of any proposal or offer, or of any request for information, or request for any negotiations or discussions, each in connection with any acquisition proposal. WHC must furnish a copy of, or a description of the material terms and conditions of such proposal or offer and must keep Eagle informed on a reasonably current basis of the status of any proposal, offer, information request, negotiations or discussions.

WHC Board Recommendation

The merger agreement generally prohibits WHC’s board of directors from making a company subsequent determination (i.e., from (i) withholding, withdrawing, changing, modifying, amending or qualifying, or publicly proposing to withdraw, change, qualify, amend or modify, in a manner adverse to Eagle the recommendation that the WHC shareholders vote to approve the merger agreement and the transactions contemplated thereby, or taking any other action or making any other public statement inconsistent with such recommendation, failing to reaffirm such recommendation within five business days following a request by Eagle, or making any public statement, filing or release inconsistent with such recommendation, (ii) approving, recommending, or endorsing (or publicly proposing to approve, recommend or endorse), any acquisition proposal, (iii) submitting the merger agreement to WHC’s shareholders for approval without recommendation or (iv) resolving to take, or publicly announcing an intention to take, any of the foregoing actions). In addition, WHC’s board of directors and any committee of the board of directors may not approve or recommend or propose to approve or recommend any acquisition proposal or enter into any letter of intent, agreement in principle, acquisition agreement or other agreement related to any acquisition transaction or requiring WHC to abandon, terminate or fail to consummate the merger or any other transaction contemplated by the merger agreement. However, prior to the date of the shareholder meeting for WHC shareholders to vote on the approval of the merger agreement, the WHC board of directors may effect a company subsequent determination if the WHC board has determined reasonably and in good faith, after consultation with and considering the advice of its outside legal counsel and its financial advisor, that a bona fide unsolicited written acquisition proposal that it received after the date of the merger agreement (that did not result from a breach of its “no-shop” provisions under the merger agreement) constitutes a superior proposal if, but only if, the WHC board determined reasonably and in good faith after consultation with and having considered the advice of its outside legal counsel and its financial advisor, that because of the existence of such superior proposal, the failure to take such actions would be inconsistent with its fiduciary duties under applicable law.

The board of directors of WHC may not make a company subsequent determination without providing Eagle with at least five business days’ prior written notice of its intention to take such action and with a reasonably detailed description of the acquisition proposal giving rise to its determination to take such action, and without cooperating and negotiating in good faith with Eagle during such five business day notice period (to the extent Eagle seeks to negotiate) and taking into account in good faith, at the end of such notice period, any adjustment, amendment or modification of the merger agreement proposed by Eagle and determining reasonably and in good faith, after consultation with and considering the advice of its outside legal counsel and its financial advisor, that such acquisition proposal continues to constitute a superior proposal and that because of the existence of such superior proposal, the failure to take such actions would be inconsistent with its fiduciary duties under applicable law. Any material amendment to any acquisition proposal will require a new notice period as referred to above, except that such notice period shall be three business days.

A “superior proposal” means a bona fide, unsolicited written acquisition proposal (i) that if consummated would result in a third party (or, in the case of a direct merger between such third party and WHC, Western Bank or any other subsidiary of WHC, the shareholders of such third party) acquiring, directly or indirectly, more than 50% of the outstanding shares of WHC common stock or more than 50% of the assets of WHC and its subsidiaries, taken as a whole, for consideration consisting of cash and/or securities and (ii) that the WHC board of directors reasonably determines in good faith, after consultation with its outside financial advisor and outside legal counsel, (A) is reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal, including all conditions contained therein and the person making such acquisition proposal, and (B) taking into account any changes to the merger agreement proposed by Eagle in response to such acquisition proposal, as contemplated by the merger agreement, and all financial, legal, regulatory and other aspects of such acquisition proposal, including all conditions contained therein and the person making such proposal, is more favorable to the shareholders of WHC from a financial point of view than the merger and the other transactions contemplated by the merger agreement.

If the WHC board of directors makes a company subsequent determination or if WHC terminates the merger agreement to enter into an agreement with respect to a superior proposal, WHC could be required to pay Eagle a break-up fee of $560,000 in cash. See “The Merger Agreement – Termination,” beginning on page 60 of this proxy statement/ prospectus and “The Merger Agreement – Break-Up Fee” beginning on page 61 of this proxy statement/prospectus.

Representations and Warranties

The merger agreement contains generally customary representations and warranties of WHC and Eagle relating to their respective businesses. The representations and warranties of each of WHC and Eagle have been made solely for the benefit of the other party, and these representations and warranties should not be relied on by any other person. In addition, these representations and warranties:

The representations and warranties made by WHC and Eagle to each other primarily relate to:

WHC has also made representations and warranties to Eagle with respect to:

Eagle has also made a representation and warranty to WHC with respect to the legality of Eagle common stock to be issued in connection with the merger and its ability to finance the merger.

Certain of the representations and warranties of WHC and Eagle are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, the term “material adverse effect” means, with respect to any party, any event, occurrence, fact, condition, change, development or effect that individually or in the aggregate (i) is material and adverse to the condition (financial or otherwise), results of operations, liquidity, assets or liabilities, properties, or business of such party and its subsidiaries, taken as a whole, or (ii) would materially impair the ability of such party to perform its obligations under the merger agreement or otherwise materially impairs the ability of such party to timely consummate the merger, the bank merger or the transactions contemplated by the merger agreement; provided, however, that, in the case of clause (i) only, the following shall not constitute a “material adverse effect”, nor shall the occurrence, impact or results of such events be taken into account in determining whether there has been or will be a “material adverse effect”: (A) changes after the date of the merger agreement in laws of general applicability to companies in the industry in which the applicable party or its subsidiaries operate or interpretations thereof by governmental authorities (except to the extent that such change disproportionately adversely affects WHC and its subsidiaries or Eagle and its subsidiaries, as the case may be, compared to other companies of similar size operating in the same industry in which WHC and Eagle operate), (B) changes after the date of the merger agreement in GAAP, or regulatory accounting requirements applicable to banks or bank holding companies generally, or interpretations thereof (except to the extent that such change disproportionately adversely affects WHC and its subsidiaries or Eagle and its subsidiaries, as the case may be, compared to other companies of similar size operating in the same industry in which WHC and Eagle operate), (C) changes after the date of the merger agreement in global or national political or economic or capital or credit market conditions generally, including, but not limited to, changes in levels of interest rates (except to the extent that such change disproportionately adversely affects WHC and its subsidiaries or Eagle and its subsidiaries, as the case may be, compared to other companies of similar size operating in the same industry in which WHC and Eagle operate), (D) solely in the case of whether a material adverse effect has or may occur with respect to Eagle, changes after the date of the merger agreement resulting from any failure to meet internal projections or forecasts or estimates of revenues or earnings for any period (it being understood that the circumstances giving rise thereto that are not otherwise excluded from the definition of material adverse effect may be considered in determining whether a material adverse effect exists), (E) solely in the case of whether a material adverse effect has or may occur with respect to Eagle, any change in the trading price or trading volume of Eagle common stock on the Nasdaq Global Market (it being understood that the circumstances giving rise thereto that are not otherwise excluded from the definition of material adverse effect may be considered in determining whether a material adverse effect exists), and (F) the impact of the merger agreement and the transactions contemplated by the merger agreement, including the public announcement thereof on relationships with customers or employees (including the loss of personnel subsequent to the date of the merger agreement).

Conditions to Completion of the Merger

Mutual Closing Conditions. The obligations of Eagle and WHC to complete the merger are subject to the satisfaction of the following conditions:

Additional Closing Conditions for the Benefit of Eagle. In addition to the mutual closing conditions, Eagle’s obligation to complete the merger is subject to the satisfaction or waiver of the following conditions:

Termination

The merger agreement may be terminated at any time prior to the effective time of the merger, as follows:

Termination Fees

WHC will pay Eagle a termination fee of $200,000 if Eagle terminates the merger agreement based on a WHC breach of its representations or breach of its covenants. Eagle will pay WHC a termination fee of $200,000 if WHC terminates the merger agreement based on an Eagle breach of its representations or breach of its covenants.

Break-up Fee

WHC will owe Eagle a $560,000 break-up fee if:

The payment of the break-up fee will fully discharge WHC from any losses that may be suffered by Eagle arising out of the termination of the merger agreement.

Amendment; Waiver

Prior to the effective time of the merger and to the extent permitted by applicable law, any provision of the merger agreement may be (a) waived, or the time for compliance with such provision may be extended, by the party benefited by the provision, provided such waiver is in writing and signed by such party, or (b) amended or modified at any time, by an agreement in writing among the parties hereto executed in the same manner as the merger agreement, except that after the required shareholder approval has been obtained, no amendment shall be made which by law requires further approval by the shareholders of WHC without obtaining such approval. The failure of any party at any time or times to require performance of any provision of the merger agreement shall in no manner affect the right of such party at a later time to enforce the same or any other provision of the merger agreement. No waiver of any condition or of the breach of any term contained in the merger agreement in one or more instances shall be deemed to be or construed as a further or continuing waiver of such condition or breach or waiver of any other condition or of the breach of any other term of the merger agreement.

Expenses

Regardless of whether the merger is completed, all expenses incurred in connection with the merger, the bank merger, the merger agreement and other transactions contemplated thereby will be paid by the party incurring the expenses.

COMPARISON OF SHAREHOLDERS’ RIGHTS

Eagle and WHC are incorporated under the laws of the State of Delaware and the State of Montana, respectively, and, accordingly, the rights of their shareholders are governed by such laws and their respective certificate and articles of incorporation and bylaws. After the merger, the rights of former shareholders of WHC who receive shares of Eagle common stock in the merger will be determined by reference to Eagle’s certificate of incorporation and bylaws and Delaware law. Set forth below is a description of the material differences between the rights of WHC shareholders and Eagle shareholders.