EagleBank has been more than just a client to Jack Evans
By Jeffrey Anderson
In 2010, shortly before the D.C. Council increased the amount of District funds the city could deposit in local banks such as EagleBank, the bank approved a $200,000 loan for Ward 2 Councilmember Jack Evans, chair of the Committee on Finance and Revenue, according to out-of-state property records.
The $200,000 promissory note, secured by a house Evans owns in Del Ray Beach, Florida, came with a variable interest rate of 3.5 %, one week after he paid off his 2003 mortgage, documents filed with the Palm Beach County Clerk and Comptroller on November 30, 2010, state.
Evans went back to EagleBank in 2013 for a revolving line of credit up to $400,000, according to a mortgage he recorded on May 21, 2013.
EagleBank, a publicly traded for-profit community business bank with eighteen local offices, focuses on customer service and custom financial solutions for the local business community, and also offers a complete line of competitive personal banking products and services, according to its website.
Trading as Eagle Bancorp Inc. (NASDAQ: EGBN), the bank has taken on new significance in the Evans saga recently, since Robert McCartney of The Washington Post obtained a confidential memo by a law firm that the Washington Metropolitan Area Transit Authority hired in response to reports of violations of the Metro Code of Ethics and Compact by Evans.
According to the memo, submitted to Metro by the firm SchulteRoth&Zabel and dated May 20, 2019, former EagleBank Chairman and CEO Ron Paul hired Evans as a consultant in 2016, to provide unspecified services through Evans’s home-based company, NSE Consulting LLC, which Evans had established just days earlier. (Evans has since resigned from the Metro Board of Directors, which he chaired for the last four-plus years, and has dissolved his consultancy.)
The memo states that “As of August 1, 2016, EagleBank and a corporation owned by Paul signed consulting agreements with NSE. Pursuant to those agreements, NSE would receive more than $50,000 per year. A year later, the amount was increased to $100,000 per year.”
An internal investigative body at Metro found that Evans had failed to disclose the consulting relationship, even though EagleBank was–and still is–a Metro vendor.
Evans told investigators that he was not aware that EagleBank had a banking relationship with Metro, the memo states, or that Metro has increased the funds it had deposited with the bank from $4 million to approximately $24 million as of 2019.
That’s an unlikely assertion, however, given Evans’s close relationship over the years with Paul and EagleBank Vice Chairman Bob Pincus, and given that Paul himself told the Washington Business Journal in 2011 that Evans was responsible for legislation that called for shifting some city assets from large national banks to local banks that would be more supportive of small businesses.
Evans introduced the legislation on December 20, 2011, WBJ reported, which allowed the D.C. chief financial officer to increase the deposited funds to local banks–such as EagleBank–under an agreement that the banks would loan D.C.-based small businesses at least 200 % of the funds deposited.
“Right now we put most of our money in Bank of America up in New York, which does us of no value because they don’t loan to our small businesses,” Evans said at the time. “We have a number of local banks that, if we were to deposit our funds to our local banks, that would then under this program relend that money, 2-1, to our small businesses.”
Only two other banks, Bank of Georgetown and Industrial Bank, were qualified to participate, having at least five D.C. branches and assets of between $250 million and $5 billion. “The program will promote the growth of local small businesses, enhance the creation of new jobs for District residents and provide an overall stimulative effect to the District’s economy,” Evans told WBJ, which later reported that a named partner at Patton Boggs, where Evans worked at the time, sits on EagleBank’s Northern Virginia advisory board.
Evans at the time denied any knowledge that Douglas Boggs was on the bank’s board, and denied having any conversations with anyone at the firm about the increase in deposits to EagleBank. Rather, he told reporter Michael Neibauer that the idea for the bill came from Pincus.
Two years later, Evans took out his second loan with Eagle Bank, which was becoming the largest community bank in the D.C. metropolitan area based on deposits.
It is unclear why a local institution branded as the premier community bank in the D.C. region would be extending mortgage loan services to Jack Evans on a Florida residential property. Also unclear is the interest rate the bank gave Evans on the second loan, as it is not specified.
Calls to bank officials and an email from District Dig were not returned. Evans did not respond to requests for comment to his communications director and cell phone.
EagleBank first surfaced in connection with Evans’s ethics scandal in early March, when The Post reported that federal investigators served subpoenas on the Council and the administration of Mayor Muriel Bowser, for records related to Paul in his capacity as CEO of the bank and a firm called RDP Management.
A couple weeks later, Paul abruptly announced his immediate retirement due to health issues, on March 21. He did not return a call for comment.
On Tuesday, at an administrative meeting of the Council, requested by Evans, who wanted an opportunity to refute the Metro ethics report, At-Large Councilmember Elissa Silverman asked Evans about his relationship with EagleBank, in the context of his role as chairman of the Metro board. Evans said that he only recently learned of the banking relationship between the two.
Asked whether he had ever shared information with Paul that had been discussed during Metro board meetings, Evans said he had no recollection of any such conversations. He also told his colleagues that he had never received anything of value from the bank, aside from his fee for consulting services, which remain unspecified.
The status of Evans’s loan balance with the bank is unknown. The second loan, in 2013, came a time in which Evans was involved with a series of transactions with Capital One, which also has played a pivotal role in the D.C. business community.
In January 2012, Evans borrowed $800,000 against his Georgetown row house from Capital One, subordinating a 2003 mortgage loan of $450,000, according to records on file with the D.C. Recorder of Deeds.
Evans re-financed that loan (with a different local bank) in April 2013, property records show, again subordinating his $450,000 mortgage, about a month before closing on his second loan with EagleBank, which he secured with his Florida home.
As The Dig has reported, Evans did not record a subordination of a 2011 Agreement with his wife, Michele Evans, who had loaned him $850,000 to renovate his house in Georgetown, before completing either of those local transactions, even though the Agreement named her the priority lien holder. (Capital One extended a $1.5 million revolving line of credit to Evans in 2014, but only after Michele Evans demanded that her husband first pay his debt to her, according to emails from Evans’s Council account obtained by The Dig through a FOIA request.)
Awash in debt, Evans chose a good time to establish a consulting relationship with EagleBank in 2016. News reports from July 2016 show the bank announcing plans to raise $75 million in new debt, then raising twice that amount. “The debt raise was both unusual in its speed and its overall size, showing strong investor desire to buy into the EagleBank business model,” WBJ reported at the time. “And while many banks end up ‘up-sizing’ debt offerings, doubling them is rare.”
“It was a hell of a week for EagleBank,” Paul said at the time. “We far exceeded our expectations on the demand from investors.” According to WBJ, the $150 million in debt the bank raised figured to increase its capital base, yield an increase in commercial loans and assets, and allow for debt offerings without “diluting shareholders through a new stock issuance.”
And, the interest would be tax deductible, the report stated.
Though Evans’s consulting services for EagleBank have dried up, he has remained an influential presence for the bank. In 2018, he joined WMATA General Manager Paul Wiedefeld and other regional officials and business leaders known as “The 2030 Group” in co-hosting with EagleBank a business series on “economic and structural issues affecting growth and competitiveness in the DMV,” according to EagleBank’s website.
EagleBank has been there for Evans as well. Last year the bank touted his efforts to impose a 1% regional sales tax to address transit infrastructure issues, a plan that Maryland and Virginia later rejected by coming up with their own funding increases: “Councilman Evans introduced the proposal of a one-cent tax across all three jurisdictions as the only way to address the crumbling transit infrastructure and to provide expanded service, rail lines and new cars over the long term…A one-cent sales tax would generate $600 million a year for Metro, giving the system what it needs to thrive and expand over the next decade,” the bank stated in a press release.
