Eagle Bancorp Montana 10Q 2024 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission file number 1-34682

Eagle Bancorp Montana, Inc.

(Exact name of registrant as specified in its charter)

Delaware	27-1449820
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1400 Prospect Avenue, Helena, MT 59601

(Address of principal executive offices) (Zip code)

(406) 442-3080

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Common stock, par value $0.01 per share

8,016,784 shares outstanding

As of October 31, 2024

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Financial Condition as of September 30, 2024 and December 31, 2023	1

	Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2024 and 2023	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months and nine months ended September 30, 2024 and 2023	5

	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months and nine months ended September 30, 2024 and 2023	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41

Signatures		42

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

Cautionary Note Regarding Forward-Looking Statements

This report includes “forward-looking statements” within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “project,” “could,” “intend,” “target” and other similar words and expressions of the future. These forward-looking statements include, but are not limited to:

●	statements of our goals, intentions and expectations;

●	statements regarding our business plans, prospects, growth and operating strategies;

●	statements regarding the asset quality of our loan and investment portfolios; and

●	estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of the management of Eagle Bancorp Montana, Inc. (“Eagle” or the “Company”) and Opportunity Bank of Montana (“OBMT” or the “Bank”), Eagle’s wholly-owned subsidiary, and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

●

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

●

local, regional, national and international economic and market conditions and events, as well as the impact of the 2024 U.S. presidential election, and the impact they may have on us, our customers and our assets and liabilities;

●

competition among depository and other traditional and non-traditional financial service providers;

●

risks related to the concentration of our business in Montana, including risks associated with changes in the prices, values and sales volume of residential and commercial real estate in Montana;

●

inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments or reduces loan demand;

	●	our ability to attract deposits and other sources of funding or liquidity;
	●	the impact of adverse developments affecting the U.S. banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto;
	●	the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior, adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures and labor shortages on economic conditions and our business;
	●	an inability to access capital markets or maintain deposits or borrowing costs;
	●	uncertainty regarding the content, timing and impact of regulatory capital and liquidity requirements;
	●	our ability to assess and monitor the effect of artificial intelligence on our business and operations;
	●	our ability to achieve environmental, social and governance goals and commitments or the impact of any changes in the Company’s sustainability strategy or commitments generally;

●

changes or volatility in the securities markets that lead to impairment in the value of our investment securities and goodwill;

●

our ability to implement our growth strategy, including identifying and consummating suitable acquisitions, raising additional capital to finance such transactions, entering new markets, possible failures in realizing the anticipated benefits from such acquisitions and an inability of our personnel, systems and infrastructure to keep pace with such growth;

	●	unforeseen events, such as pandemics or natural disasters, and any governmental or societal responses thereto;
	●	the effect of acquisitions we may make, if any, including, without limitation, the failure to achieve expected revenue growth and/or expense savings from such acquisitions;

●

risks related to the integration of any businesses we have acquired or expect to acquire, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, the time and costs associated with integrating systems, technology platforms, procedures and personnel;

●

potential impairment on the goodwill we have recorded or may record in connection with business acquisitions;

●

political developments, uncertainties or instability;

	●	our ability to enter new markets successfully and capitalize on growth opportunities;
	●	the need to retain capital for strategic or regulatory reasons;
	●	changes in consumer spending, borrowing and savings habits;
	●	our ability to continue to increase and manage our commercial and residential real estate, multi-family and commercial business loans;

●

the level of future deposit insurance premium assessments;

	●	our ability to implement new technologies and maintain secure and reliable technology systems;
	●	our ability to develop and maintain secure and reliable information technology systems, effectively defend ourselves against cyberattacks, or recover from breaches to our cybersecurity infrastructure;

●

the failure of assumptions underlying the establishment of allowance for possible loan losses and other estimates;

●

changes in the financial performance and/or condition of our borrowers and their ability to repay their loans when due; and

●

the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the Part II, Item 1A, “Risk Factors” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2023, any subsequent Reports on Form 10-Q and Form 8-K, and other filings with the SEC. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	September 30,		December 31,
	2024		2023
ASSETS:
Cash and due from banks	$	22,954	$	23,243
Interest-bearing deposits in banks		19,235		1,302
Total cash and cash equivalents		42,189		24,545

Securities available-for-sale, at fair value (amortized cost of $327,476 at September 30, 2024 and $345,355 at December 31, 2023)		306,982		318,279
Federal Home Loan Bank ("FHLB") stock		11,218		9,191
Federal Reserve Bank ("FRB") stock		4,131		4,131
Mortgage loans held-for-sale, at fair value		13,429		11,432
Loans receivable, net of allowance for credit losses of $17,130 at September 30, 2024 and $16,440 at December 31, 2023		1,517,522		1,468,049
Accrued interest and dividends receivable		14,844		12,485
Mortgage servicing rights, net		15,443		15,853
Assets held-for-sale, at cost		257		-
Premises and equipment, net		100,297		94,282
Cash surrender value of life insurance, net		52,852		47,939
Goodwill		34,740		34,740
Core deposit intangible, net		4,834		5,880
Other assets		26,375		28,860

Total assets	$	2,145,113	$	2,075,666

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	September 30,			December 31,
	2024			2023
LIABILITIES:
Deposit accounts:
Noninterest-bearing	$	419,760		$	418,727
Interest-bearing		1,230,752			1,216,468
Total deposits		1,650,512			1,635,195

Accrued expenses and other liabilities		38,593			36,462
FHLB advances and other borrowings		219,167			175,737
Other long-term debt:
Principal amount		60,155			60,155
Unamortized debt issuance costs		(1,044	)		(1,156	)
Total other long-term debt, net		59,111			58,999

Total liabilities		1,967,383			1,906,393

SHAREHOLDERS' EQUITY:
Preferred stock (par value $0.01 per share; 1,000,000 shares authorized; no shares issued or outstanding)		-			-
Common stock (par value $0.01 per share; 20,000,000 shares authorized; 8,507,429 shares issued at September 30, 2024 and December 31, 2023; 8,016,784 shares outstanding at September 30, 2024 and December 31, 2023)		85			85
Additional paid-in capital		109,040			108,819
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")		(4,154	)		(4,583	)
Treasury stock, at cost (490,645 shares at September 30, 2024 and December 31, 2023)		(11,124	)		(11,124	)
Retained earnings		98,979			96,021
Accumulated other comprehensive loss, net of tax		(15,096	)		(19,945	)
Total shareholders' equity		177,730			169,273

Total liabilities and shareholders' equity	$	2,145,113		$	2,075,666

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans	$	23,802	$	21,068	$	68,526	$	57,942
Securities available-for-sale		2,598		2,794		7,953		8,586
FHLB and FRB dividends		266		212		777		480
Other interest income		94		20		268		66
Total interest and dividend income		26,760		24,094		77,524		67,074

INTEREST EXPENSE:
Deposits		7,190		5,152		20,622		11,767
FHLB advances and other borrowings		3,084		2,672		8,206		5,993
Other long-term debt		684		683		2,048		2,035
Total interest expense		10,958		8,507		30,876		19,795

NET INTEREST INCOME		15,802		15,587		46,648		47,279

Provision for credit losses		277		588		554		1,186

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		15,525		14,999		46,094		46,093

NONINTEREST INCOME:
Service charges on deposit accounts		430		447		1,258		1,313
Mortgage banking, net		2,602		4,338		7,196		11,252
Interchange and ATM fees		662		643		1,865		1,861
Appreciation in cash surrender value of life insurance		314		299		922		871
Bank owned life insurance benefit gain		724		83		724		294
Net loss on sale of available-for-sale securities		-		-		-		(222	)
Other noninterest income		251		225		1,239		1,541
Total noninterest income	$	4,983	$	6,035	$	13,204	$	16,910

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
NONINTEREST EXPENSE:
Salaries and employee benefits	$	9,894	$	10,837	$	29,885	$	31,614
Occupancy and equipment expense		2,134		1,956		6,337		6,100
Data processing		1,587		1,486		4,494		4,270
Advertising		277		340		846		930
Amortization		337		386		1,054		1,201
Loan costs		385		517		1,195		1,426
Federal Deposit Insurance Corporation ("FDIC") insurance premiums		295		301		878		862
Professional and examination fees		438		408		1,345		1,484
Other noninterest expense		1,923		1,644		5,576		5,311
Total noninterest expense		17,270		17,875		51,610		53,198

INCOME BEFORE PROVISION FOR INCOME TAXES		3,238		3,159		7,688		9,805

Provision for income taxes		529		524		1,343		1,913

NET INCOME	$	2,709	$	2,635	$	6,345	$	7,892

BASIC EARNINGS PER COMMON SHARE	$	0.35	$	0.34	$	0.81	$	1.01

DILUTED EARNINGS PER COMMON SHARE	$	0.34	$	0.34	$	0.81	$	1.01

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in Thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023

NET INCOME	$	2,709		$	2,635		$	6,345		$	7,892

OTHER ITEMS OF COMPREHENSIVE INCOME (LOSS) BEFORE TAX:
Change in fair value of investment securities available-for-sale		7,847			(9,763	)		6,582			(6,410	)
Reclassification for net realized losses on investment securities available-for-sale		-			-			-			222
Total other comprehensive income gain (loss)		7,847			(9,763	)		6,582			(6,188	)

Income tax (provision) benefit related to securities available-for-sale		(2,066	)		2,571			(1,733	)		1,630

COMPREHENSIVE INCOME (LOSS)	$	8,490		$	(4,557	)	$	11,194		$	3,334

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the nine months ended September 30, 2024 and 2023

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

																	*ACCUMULATED*
					*ADDITIONAL*			*UNALLOCATED*									*OTHER*
	*PREFERRED*		*COMMON*		*PAID-IN*			*ESOP*			*TREASURY*			*RETAINED*			*COMPREHENSIVE*
	*STOCK*		*STOCK*		*CAPITAL*			*SHARES*			*STOCK*			*EARNINGS*			*(LOSS) INCOME*			*TOTAL*

Balance at July 1, 2024	$	-	$	85	$	108,962		$	(4,297	)	$	(11,124	)	$	97,413		$	(20,877	)	$	170,162
Net income		-		-		-			-			-			2,709			-			2,709
Other comprehensive income		-		-		-			-			-			-			5,781			5,781
Dividends paid ($0.1425 per share)		-		-		-			-			-			(1,143	)		-			(1,143	)
Stock compensation expense		-		-		135			-			-			-			-			135
ESOP shares allocated (5,997 shares)		-		-		(57	)		143			-			-			-			86
Balance at September 30, 2024	$	-	$	85	$	109,040		$	(4,154	)	$	(11,124	)	$	98,979		$	(15,096	)	$	177,730

Balance at July 1, 2023	$	-	$	85	$	109,345		$	(4,870	)	$	(11,574	)	$	93,462		$	(23,723	)	$	162,725
Net income		-		-		-			-			-			2,635			-			2,635
Other comprehensive loss		-		-		-			-			-			-			(7,192	)		(7,192	)
Dividends paid ($0.140 per share)		-		-		-			-			-			(1,118	)		-			(1,118	)
Stock compensation expense		-		-		143			-			-			-			-			143
ESOP shares allocated (5,997 shares)		-		-		(66	)		143			-			-			-			77
Balance at September 30, 2023	$	-	$	85	$	109,422		$	(4,727	)	$	(11,574	)	$	94,979		$	(30,915	)	$	157,270

Balance at January 1, 2024	$	-	$	85	$	108,819		$	(4,583	)	$	(11,124	)	$	96,021		$	(19,945	)	$	169,273
Net income		-		-		-			-			-			6,345			-			6,345
Other comprehensive income		-		-		-			-			-			-			4,849			4,849
Dividends paid ($0.4225 per share)		-		-		-			-			-			(3,387	)		-			(3,387	)
Stock compensation expense		-		-		405			-			-			-			-			405
ESOP shares allocated (17,991 shares)		-		-		(184	)		429			-			-			-			245
Balance at September 30, 2024	$	-	$	85	$	109,040		$	(4,154	)	$	(11,124	)	$	98,979		$	(15,096	)	$	177,730

Balance at January 1, 2023	$	-	$	85	$	109,164		$	(5,156	)	$	(11,343	)	$	92,023		$	(26,357	)	$	158,416
Net income		-		-		-			-			-			7,892			-			7,892
Impact of the adoption of ASC 326 Credit Losses		-		-		-			-			-			(1,616	)		-			(1,616	)
Other comprehensive loss		-		-		-			-			-			-			(4,558	)		(4,558	)
Dividends paid ($0.415 per share)		-		-		-			-			-			(3,320	)		-			(3,320	)
Stock compensation expense		-		-		432			-			-			-			-			432
ESOP shares allocated (17,991 shares)		-		-		(174	)		429			-			-			-			255
Treasury stock purchased (17,901 shares at $12.89 average cost per share)		-		-		-			-			(231	)		-			-			(231	)
Balance at September 30, 2023	$	-	$	85	$	109,422		$	(4,727	)	$	(11,574	)	$	94,979		$	(30,915	)	$	157,270

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,345		$	7,892
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses		554			1,186
Depreciation		3,886			2,854
Net amortization of investment securities premiums and discounts		788			807
Amortization of mortgage servicing rights		1,351			1,330
Amortization of right-of-use assets		380			512
Amortization of core deposit intangibles		1,054			1,201
Compensation expense related to restricted stock awards		405			432
ESOP compensation expense for allocated shares		245			255
Net gain on sale of loans		(4,705	)		(8,551	)
Originations of loans held-for-sale		(150,244	)		(265,496	)
Proceeds from sales of loans held-for-sale		152,011			264,418
Net gain on sale/disposal of premises and equipment		(17)			(83	)
Net realized loss on sales of available-for-sale securities		-			222
Net appreciation in cash surrender value of life insurance		(922	)		(1,165	)
Net change in:
Accrued interest and dividends receivable		(2,359	)		(2,373	)
Other assets		(1,566	)		(7,143	)
Accrued expenses and other liabilities		5,771			851
Net cash provided by (used in) operating activities		12,977			(2,851	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales		-			34,020
Maturities, principal payments and calls		17,125			27,340
Purchases		-			(28,126	)
FHLB stock purchased		(2,027	)		(5,349	)
Loan origination and principal collection, net		(50,121	)		(123,687	)
(Purchase) proceeds from bank owned life insurance		(5,000	)		1,230
Insurance proceeds related to premises and equipment		25			-
Proceeds from sale of premises and equipment		62			979
Purchases of premises and equipment, net		(10,757	)		(11,602	)
Net cash used in investing activities	$	(50,693	)	$	(105,195	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2024			2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits	$	15,317		$	(19,794	)
Net short-term advances on FHLB and other borrowings		14,263			130,363
Advances on long-term FHLB and other borrowings		29,167			-
Purchase of treasury stock		-			(231	)
Dividends paid		(3,387	)		(3,320	)
Net cash provided by financing activities		55,360			107,018

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		17,644			(1,028	)

CASH AND CASH EQUIVALENTS, beginning of period		24,545			21,811

CASH AND CASH EQUIVALENTS, end of period	$	42,189		$	20,783


SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest	$	29,971		$	17,109
Cash paid during the period for income taxes, net of refund		384			2,414

NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES:
Increase (decrease) in fair value of securities available-for-sale	$	6,582		$	(6,188	)
Mortgage servicing rights recognized		941			1,656
Loans transferred to real estate and other assets acquired in foreclosure		4			-
Right-of-use assets obtained in exchange for lease liabilities		(151	)		11
Decrease (increase) in commitments to invest in Low-Income Housing Tax Credit projects		(2,390	)		3,068
Cumulative effect adjustment to retained earnings due to adoption of Topic 326		-			(1,616	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Eagle Bancorp Montana, Inc. (“Eagle” or the “Company”), is a Delaware corporation that holds 100% of the capital stock of Opportunity Bank of Montana (“OBMT” or the “Bank”), formerly American Federal Savings Bank (“AFSB”). The Bank was founded in 1922 as a Montana chartered building and loan association and has conducted operations and maintained its administrative office in Helena, Montana since that time. In 1975, the Bank adopted a federal thrift charter and in October 2014 converted to a Montana chartered commercial bank and became a member bank in the Federal Reserve System.

In September 2021, the Company entered into an Agreement and Plan of Merger ("Merger Agreement") with First Community Bancorp, Inc. ("FCB"), a Montana corporation, and FCB's wholly-owned subsidiary, First Community Bank, a Montana chartered commercial bank. The Merger Agreement provided that, upon the terms and subject to the conditions set forth in the Merger Agreement, FCB would merge with and into Eagle, with Eagle continuing as the surviving corporation. The merger closed on April 30, 2022. First Community Bank operated nine branches in Ashland, Culbertson, Froid, Glasgow, Helena, Hinsdale, Three Forks and Wolf Point, Montana.

In March 2021, the Bank established a subsidiary, Opportunity Housing Fund, LLC ("OHF"), to invest in Low-Income Housing Tax Credit ("LIHTC") projects. The LIHTC program is designed to encourage capital investment in construction and rehabilitation of low-income housing. Tax credits are allowable over a 10-year period. Amortizing investments in LIHTC projects are included in other assets on the consolidated statements of financial condition and totaled $7,053,000 and $7,644,000 as of September 30, 2024 and December 31, 2023, respectively. Outstanding funding obligations for LIHTC projects are included in accrued expenses and other liabilities on the condensed consolidated financial statements of condition and totaled $270,000 and $2,660,000 as of September 30, 2024 and December 31, 2023, respectively.

On January 1, 2020, the Company acquired Western Holding Company of Wolf Point, ("WHC"), a Montana corporation, and WHC's wholly-owned subsidiary, Western Bank of Wolf Point ("WB"), a Montana chartered commercial bank. The acquisition included one branch in Wolf Point, Montana. In addition, Western Financial Services, Inc. ("WFS") was acquired through the WHC merger. In December 2023, WFS changed its name to Opportunity Financial Services, Inc. ("OFS"). OFS facilitates deferred payment contracts for customers that produce agricultural products.

The Bank currently has 29 full-service branches. The Bank’s principal business is accepting deposits and, together with funds generated from operations and borrowings, investing in various types of loans and securities.

Basis of Financial Statement Presentation and Use of Estimates

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). It is recommended that these unaudited interim condensed consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K with all of the audited information and footnotes required by U.S. GAAP for complete financial statements for the year ended December 31, 2023, as filed with the SEC on March 6, 2024. In the opinion of management, all normal adjustments and recurring accruals considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included.

The results of operations for the nine-month period ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or any other period. In preparing condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated statement of financial condition and reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses ("ACL"), mortgage servicing rights, the fair value of financial instruments, the valuation of goodwill and deferred tax assets and liabilities.

Principles of Consolidation

The condensed consolidated financial statements include Eagle, the Bank, OHF, Eagle Bancorp Statutory Trust I (the “Trust”) and OFS. All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Certain prior period amounts were reclassified to conform to the presentation for 2024. These reclassifications had no impact on net income or shareholders’ equity.

Subsequent Events

The Company has evaluated events and transactions subsequent to September 30, 2024 for recognition and/or disclosure.

Goodwill

Goodwill is recorded upon completion of a business combination as the difference between the purchase price and the fair value of net identifiable assets acquired. Subsequent to initial recognition, the Company tests goodwill for impairment annually as of October 31, or more often if events or circumstances, such as adverse changes in the business climate indicate there may be impairment. A goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying value. An impairment charge is recorded for the amount by which thy carrying amount exceeds the reporting unit’s fair value. For goodwill considerations the Company is a single reporting unit.

During the quarter ended September 30, 2024, Management performed a quantitative goodwill impairment test with assistance from a third-party valuation specialist. The interim determination was primarily driven by a revision in the Company’s earnings outlook in comparison to budget. A weighted average of both the market and income approaches was used in valuing the reporting unit’s fair value. The interim goodwill impairment assessment as of August 31, 2024 concluded that goodwill was not impaired.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued

Recently Adopted Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) which provides temporary optional expedients to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) to an alternative reference rate such as Secured Overnight Financing Rate ("SOFR"). In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU No. 2021-01 was effective upon issuance and generally can be applied through December 31, 2024. The Company has reviewed all of its LIBOR based products and all products have been adjusted to another index as LIBOR ceased to be published after June 30, 2023. ASU No. 2021-01 did not have a significant impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Report (Topic 280): Improvements to Reportable Segment Disclosures. The updated accounting guidance requires expanded reportable segment disclosures, primarily related to significant segment expenses which are regularly provided to the company's chief operating decision maker. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Retrospective application is required. The Company is currently evaluating the effect the updated guidance will have on the Company's financial statement disclosures as the Company has a single reportable segment.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The updated accounting guidance requires enhanced income tax disclosures, including the disaggregation of existing disclosures related to the tax rate reconciliation and income taxes paid. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect the updated guidance will have on its consolidated financial statements and related disclosures.

NOTE 2. INVESTMENT SECURITIES

The amortized cost and fair values of securities, together with unrealized gains and losses, were as follows:

	September 30, 2024											December 31, 2023
			Gross											Gross
	Amortized		Unrealized							Fair		Amortized		Unrealized							Fair
	Cost		Gains		(Losses)			ACL		Value		Cost		Gains		(Losses)			ACL		Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	5,457	$	99	$	(107	)	$	-	$	5,449	$	6,574	$	121	$	(152	)	$	-	$	6,543
U.S. Treasury obligations		52,570		-		(4,397	)		-		48,173		52,505		-		(5,690	)		-		46,815
Municipal obligations		145,584		252		(9,483	)		-		136,353		149,168		460		(11,678	)		-		137,950
Corporate obligations		4,248		-		(168	)		-		4,080		4,245		-		(340	)		-		3,905
Mortgage-backed securities		24,848		7		(1,062	)		-		23,793		28,426		-		(1,673	)		-		26,753
Collateralized mortgage obligations		87,004		3		(5,700	)		-		81,307		94,709		-		(8,141	)		-		86,568
Asset-backed securities		7,765		81		(19	)		-		7,827		9,728		32		(15	)		-		9,745
Total	$	327,476	$	442	$	(20,936	)	$	-	$	306,982	$	345,355	$	613	$	(27,689	)	$	-	$	318,279

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. INVESTMENT SECURITIES – continued

Proceeds from sale of available-for sale securities and the associated realized gains and losses were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	-	$	-	$	-	$	34,020

Gross realized gain on sale of available-for-sale securities		-		-		-		69
Gross realized loss on sale of available-for-sale securities		-		-		-		(291	)
Net realized loss on sale of available-for-sale securities	$	-	$	-	$	-	$	(222	)

The amortized cost and fair value of securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2024
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	7,589	$	7,527
Due from one to five years		36,223		33,943
Due from five to ten years		76,561		69,184
Due after ten years		95,251		91,228
		215,624		201,882
Mortgage-backed securities		24,848		23,793
Collateralized mortgage obligations		87,004		81,307
Total	$	327,476	$	306,982

As of September 30, 2024 and December 31, 2023, securities with a fair value of $23,139,000 and $23,076,000, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

The Company’s investment securities that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve or more months were as follows:

	September 30, 2024
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency obligations	$	-	$	-		$	1,822	$	(107	)
U.S. Treasury obligations		-		-			48,173		(4,397	)
Municipal obligations		14,062		(83	)		100,617		(9,400	)
Corporate obligations		-		-			4,080		(168	)
Mortgage-backed securities and collateralized mortgage obligations		2,010		(14	)		97,607		(6,748	)
Asset-backed securities		2,036		(19	)		-		-
Total	$	18,108	$	(116	)	$	252,299	$	(20,820	)

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. INVESTMENT SECURITIES – continued

	December 31, 2023
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency obligations	$	402	$	-		$	1,800	$	(152	)
U.S. Treasury obligations		-		-			46,816		(5,690	)
Municipal obligations		12,000		(63	)		91,869		(11,615	)
Corporate obligations		-		-			3,905		(340	)
Mortgage-backed securities and collateralized mortgage obligations		11,452		(156	)		101,869		(9,658	)
Asset-backed securities		2,521		(10	)		2,202		(5	)
Total	$	26,375	$	(229	)	$	248,461	$	(27,460	)

As of September 30, 2024 and December 31, 2023, there were, respectively, 267 and 286 securities in unrealized loss positions. Based on analysis of available-for-sale debt securities with unrealized losses as of September 30, 2024, the Company determined the decline in value was unrelated to credit losses and was primarily caused by changes in interest rates and market spreads subsequent to the initial purchase of the securities. Management does not intend to sell and the Company is not likely to be required to sell these securities prior to maturity. As a result, no ACL was recorded on available-for-sale securities at September 30, 2024 and December 31, 2023. As part of this determination, consideration was given to the extent to which fair value was less than amortized cost, adverse security ratings by a rating agency and other factors.

NOTE 3. LOANS RECEIVABLE

Loans receivable consisted of the following:

	September 30,			December 31,
	2024			2023
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	209,028		$	200,012
Commercial real estate		914,698			909,413

Other loans:
Home equity		93,646			86,932
Consumer		29,445			30,125
Commercial		287,835			258,007

Total		1,534,652			1,484,489

Allowance for credit losses		(17,130	)		(16,440	)
Total loans, net	$	1,517,522		$	1,468,049

Included in the above are loans guaranteed by U.S. government agencies totaling $13,513,000 and $23,215,000 at September 30, 2024 and December 31, 2023, respectively.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

The following table provides allowance for credit losses activity for the three months ended September 30, 2024.

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity		Consumer			Commercial		Total
	(In Thousands)
Allowance for credit losses on loans:
Beginning balance July 1, 2024	$	1,898	$	10,932	$	554	$	295		$	3,151	$	16,830
Charge-offs		-		-		-		(22	)		-		(22	)
Recoveries		-		3		-		-			2		5
Provision		38		202		9		2			66		317
Total ending allowance balance, September 30, 2024	$	1,936	$	11,137	$	563	$	275		$	3,219	$	17,130

The following table provides allowance for credit losses activity for the nine months ended September 30, 2024.

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity		Consumer			Commercial		Total
	(In Thousands)
Allowance for credit losses on loans:
Beginning balance, January 1, 2024	$	1,866	$	10,691	$	540	$	304		$	3,039	$	16,440
Charge-offs		-		-		-		(35	)		-		(35	)
Recoveries		-		13		-		2			66		81
Provision		70		433		23		4			114		644
Total ending allowance balance, September 30, 2024	$	1,936	$	11,137	$	563	$	275		$	3,219	$	17,130

The following table provides allowance for credit losses activity for the three months ended September 30, 2023.

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity		Consumer			Commercial			Total
	(In Thousands)
Allowance for credit losses on loans:
Beginning balance, July 1, 2023	$	1,786	$	10,011	$	526	$	318		$	2,919		$	15,560
Charge-offs		-		-		-		(20	)		(102	)		(122	)
Recoveries		-		6		4		-			4			14
Provision		61		546		8		3			160			778
Total ending allowance balance, September 30, 2023	$	1,847	$	10,563	$	538	$	301		$	2,981		$	16,230

The following table provides allowance for credit losses activity for the nine months ended September 30, 2023.

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity		Consumer			Commercial			Total
	(In Thousands)
Allowance for credit losses on loans:
Beginning balance, January 1, 2023, prior to adoption of ASC 326"	$	1,472	$	9,037	$	509	$	342		$	2,640		$	14,000
Impact of adopting ASC 326		21		534		3		1			141			700
Charge-offs		-		-		-		(50	)		(128	)		(178	)
Recoveries		195		17		13		1			16			242
Provision		159		975		13		7			312			1,466
Total ending allowance balance, September 30, 2023	$	1,847	$	10,563	$	538	$	301		$	2,981		$	16,230

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

Internal classification of the loan portfolio by amortized cost and based on year originated was as follows:

	September 30, 2024
	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total Loans
	(In Thousands)
RESIDENTIAL 1-4 FAMILY
Pass	$	14,784	$	27,040	$	34,730	$	21,650	$	13,906	$	36,561	$	6,986	$	155,657
Special Mention		-		-		678		-		-		-		-		678
Substandard		-		-		-		-		-		476		-		476
Total Residential 1-4 family		14,784		27,040		35,408		21,650		13,906		37,037		6,986		156,811
Current-period gross charge-offs		-		-		-		-		-		-		-		-
RESIDENTIAL 1-4 FAMILY CONSTRUCTION
Pass		16,972		14,345		19,936		-		-		-		-		51,253
Substandard		-		207		-		757		-		-		-		964
Total Residential 1-4 family construction		16,972		14,552		19,936		757		-		-		-		52,217
Current-period gross charge-offs		-		-		-		-		-		-		-		-
COMMERCIAL REAL ESTATE
Pass		31,157		59,961		191,669		131,617		46,601		135,918		39,242		636,165
Special Mention		-		-		1,472		-		1,790		-		-		3,262
Substandard		-		497		-		469		-		3,626		-		4,592
Total Commercial real estate		31,157		60,458		193,141		132,086		48,391		139,544		39,242		644,019
Current-period gross charge-offs		-		-		-		-		-		-		-		-
COMMERCIAL CONSTRUCTION AND DEVELOPMENT
Pass		25,095		27,734		39,926		10,159		5,174		9,014		6,311		123,413
Special Mention		-		-		497		-		-		-		-		497
Substandard		-		-		441		-		2		970		-		1,413
Total Commercial construction and development		25,095		27,734		40,864		10,159		5,176		9,984		6,311		125,323
Current-period gross charge-offs		-		-		-		-		-		-		-		-
FARMLAND
Pass		16,646		18,522		30,680		18,876		20,742		35,023		3,261		143,750
Special Mention		-		-		734		209		-		229		-		1,172
Substandard		-		-		-		-		65		369		-		434
Total Farmland		16,646		18,522		31,414		19,085		20,807		35,621		3,261		145,356
Current-period gross charge-offs		-		-		-		-		-		-		-		-
HOME EQUITY
Pass		336		1,435		3,288		357		531		2,265		84,936		93,148
Special Mention		-		-		-		-		-		-		96		96
Substandard		-		-		-		44		-		92		266		402
Total Home Equity		336		1,435		3,288		401		531		2,357		85,298		93,646
Current-period gross charge-offs		-		-		-		-		-		-		-		-
CONSUMER
Pass		9,201		8,788		5,289		2,040		1,128		880		2,021		29,347
Special Mention		-		-		13		-		-		-		-		13
Substandard		-		6		33		-		27		17		2		85
Total Consumer		9,201		8,794		5,335		2,040		1,155		897		2,023		29,445
Current-period gross charge-offs		-		6		1		5		1		16		6		35
COMMERCIAL
Pass		15,227		29,313		20,307		18,555		18,332		6,645		34,563		142,942
Substandard		-		-		8		25		-		211		4		248
Total Commercial		15,227		29,313		20,315		18,580		18,332		6,856		34,567		143,190
Current-period gross charge-offs		-		-		-		-		-		-		-		-
AGRICULTURAL
Pass		27,458		29,567		10,250		5,464		3,952		1,967		62,765		141,423
Special Mention		476		409		99		15		-		-		710		1,709
Substandard		-		149		-		-		-		515		849		1,513
Total Agricultural		27,934		30,125		10,349		5,479		3,952		2,482		64,324		144,645
Current-period gross charge-offs		-		-		-		-		-		-		-		-
TOTAL LOANS
Pass	$	156,876	$	216,705	$	356,075	$	208,718	$	110,366	$	228,273	$	240,085		1,517,098
Special Mention		476		409		3,493		224		1,790		229		806		7,427
Substandard		-		859		482		1,295		94		6,276		1,121		10,127
Doubtful		-		-		-		-		-		-		-		-
Total	$	157,352	$	217,973	$	360,050	$	210,237	$	112,250	$	234,778	$	242,012	$	1,534,652

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

	December 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total Loans
	(In Thousands)
RESIDENTIAL 1-4 FAMILY
Pass	$	10,987	$	15,696	$	24,575	$	38,738	$	28,122	$	30,938	$	6,179	$	155,235
Special Mention		-		-		-		940		-		228		-		1,168
Substandard		-		-		-		-		-		175		-		175
Total Residential 1-4 family		10,987		15,696		24,575		39,678		28,122		31,341		6,179		156,578
Current-period gross charge-offs		-		-		-		-		-		-		-		-
RESIDENTIAL 1-4 FAMILY CONSTRUCTION
Pass		-		-		6,088		21,889		14,700		-		-		42,677
Substandard		-		-		757		-		-		-		-		757
Total Residential 1-4 family construction		-		-		6,845		21,889		14,700		-		-		43,434
Current-period gross charge-offs		-		-		-		-		-		-		-		-
COMMERCIAL REAL ESTATE
Pass		55,820		50,408		141,407		154,941		63,174		103,620		31,122		600,492
Special Mention		2,593		1,948		493		1,512		1,314		-		-		7,860
Substandard		-		-		-		-		-		339		-		339
Total Commercial real estate		58,413		52,356		141,900		156,453		64,488		103,959		31,122		608,691
Current-period gross charge-offs		-		-		-		-		-		-		-		-
COMMERCIAL CONSTRUCTION AND DEVELOPMENT
Pass		6,900		6,399		19,500		80,061		31,149		3,762		8,285		156,056
Special Mention		-		-		441		511		134		990		-		2,076
Total Commercial construction and development		6,900		6,399		19,941		80,572		31,283		4,752		8,285		158,132
Current-period gross charge-offs		-		-		-		-		-		-		-		-
FARMLAND
Pass		9,551		21,728		19,795		36,291		19,452		29,551		4,480		140,848
Substandard		483		65		-		407		-		787		-		1,742
Total Farmland		10,034		21,793		19,795		36,698		19,452		30,338		4,480		142,590
Current-period gross charge-offs		-		-		-		-		-		-		-		-
HOME EQUITY
Pass		621		565		376		3,630		1,736		2,398		77,409		86,735
Substandard		-		-		-		-		-		107		90		197
Total Home Equity		621		565		376		3,630		1,736		2,505		77,499		86,932
Current-period gross charge-offs		-		-		-		-		-		-		-		-
CONSUMER
Pass		449		1,953		3,398		8,109		13,083		1,069		1,977		30,038
Special Mention		-		-		-		18		-		-		-		18
Substandard		-		37		-		8		-		22		2		69
Total Consumer		449		1,990		3,398		8,135		13,083		1,091		1,979		30,125
Current-period gross charge-offs		1		-		28		2		16		4		-		51
COMMERCIAL
Pass		2,834		20,496		22,804		23,581		31,661		6,354		21,914		129,644
Special Mention		-		25		33		109		-		98		2,741		3,006
Substandard		-		-		17		9		-		33		-		59
Total Commercial		2,834		20,521		22,854		23,699		31,661		6,485		24,655		132,709
Current-period gross charge-offs		-		-		26		-		-		8		-		34
AGRICULTURAL
Pass		1,473		5,818		7,241		16,856		40,176		1,517		50,461		123,542
Substandard		427		55		435		282		-		557		-		1,756
Total Agricultural		1,900		5,873		7,676		17,138		40,176		2,074		50,461		125,298
Current-period gross charge-offs		-		-		-		1		-		93		-		94
TOTAL LOANS
Pass		88,635		123,063		245,184		384,096		243,253		179,209		201,827		1,465,267
Special Mention		2,593		1,973		967		3,090		1,448		1,316		2,741		14,128
Substandard		910		157		1,209		706		-		2,020		92		5,094
Doubtful		-		-		-		-		-		-		-		-
Total	$	92,138	$	125,193	$	247,360	$	387,892	$	244,701	$	182,545	$	204,660	$	1,484,489

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

The following tables include information regarding delinquencies within the loan portfolio.

	September 30, 2024
	Loans Past Due and Still Accruing

			90 Days				Nonaccrual		Nonaccrual
	30-89 Days		and				Loans with		Loans with		Current		Total
	Past Due		Greater		Total		no ACL		ACL		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	2,099	$	-	$	2,099	$	370	$	-	$	154,342	$	156,811
Residential 1-4 family construction		116		-		116		964		-		51,137		52,217
Commercial real estate		4,929		-		4,929		986		-		638,104		644,019
Commercial construction and development		-		-		-		2		-		125,321		125,323
Farmland		79		-		79		192		-		145,085		145,356
Other loans:
Home equity		422		-		422		320		-		92,904		93,646
Consumer		223		-		223		105		15		29,102		29,445
Commercial		84		94		178		58		21		142,933		143,190
Agricultural		38		850		888		826		-		142,931		144,645
Total	$	7,990	$	944	$	8,934	$	3,823	$	36	$	1,521,859	$	1,534,652

	December 31, 2023
	Loans Past Due and Still Accruing

			90 Days				Nonaccrual		Nonaccrual
	30-89 Days		and				Loans with		Loans with		Current		Total
	Past Due		Greater		Total		no ACL		ACL		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	305	$	-	$	305	$	297	$	-	$	155,976	$	156,578
Residential 1-4 family construction		-		-		-		757		-		42,677		43,434
Commercial real estate		697		-		697		340		-		607,654		608,691
Commercial construction and development		194		-		194		-		-		157,938		158,132
Farmland		404		26		430		1,982		1,734		138,444		142,590
Other loans:
Home equity		32		-		32		182		-		86,718		86,932
Consumer		115		-		115		45		15		29,950		30,125
Commercial		-		-		-		27		-		132,682		132,709
Agricultural		74		-		74		2,947		69		122,208		125,298
Total	$	1,821	$	26	$	1,847	$	6,577	$	1,818	$	1,474,247	$	1,484,489

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

Interest income recognized on nonaccrual loans for the three and nine months ended September 30, 2024 and 2023 is considered insignificant. Interest payments received on a cash basis related to nonaccrual loans were $468,000 at September 30, 2024 and $471,000 at December 31, 2023.

The following tables presents the amortized cost basis of collateral-dependent loans by class of loans.

	September 30, 2024
	Real Estate		Business Assets		Other
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	231	$	-	$	-
Residential 1-4 family construction		964		-		-
Commercial real estate		146		947		-
Farmland		173		-		-
Other loans:
Home equity		139		-		-
Consumer		-		10		38
Commercial		-		150		-
Agricultural		-		1,243		-
Total	$	1,653	$	2,350	$	38

	December 31, 2023
	Real Estate		Business Assets		Other
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	264	$	-	$	-
Residential 1-4 family construction		757		-		-
Commercial real estate		39		300		-
Farmland		4,116		-		-
Other loans:
Home equity		44		-		-
Consumer		-		-		36
Commercial		-		-		-
Agricultural		-		2,465		-
Total	$	5,220	$	2,765	$	36

During the three months ended September 30, 2024, the Company did not modify any loans. During the nine months ended September 30, 2024, the Company modified one farmland loan by extending the payment for seven months. The load had amortized cost of $155,000 or 0.1% of farmland loans at September 30, 2024. There was no forgiveness of principal, and the loan was current with its modified terms as of September 30, 2024.

During the three months ended September 30, 2023, the Company modified one commercial real estate loan with an amortized cost basis of $431,000 or 0.1% of commercial real estate loans by consolidating four loans and refinancing into one short-term, interest only loan for 12 months. There was no forgiveness of principal, and the loan was paid off during the year ended December 31, 2023. During the nine months ended September 30, 2023, the Company modified two commercial real estate loans. The first loan was modified by consolidating four loans and refinancing into one short-term, interest only loan for 12 months. There was no forgiveness of principal, and the loan was paid off during the year ended December 31, 2023. The second commercial real estate loan was modified by consolidating two lines of credit and refinancing into one long-term loan for ten years. It had an amortized cost of $534,000 or 0.1% of commercial real estate loans. There was no forgiveness of principal, and the loan was current with its modified terms as of September 30, 2024.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. MORTGAGE SERVICING RIGHTS

The Company is servicing mortgage loans for the benefit of others which are not included in the condensed consolidated statements of financial condition and have unpaid principal balances of $2,021,571,000 and $2,066,505,000 at September 30, 2024 and December 31, 2023, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing. Mortgage loan servicing fees were $1,265,000 and $1,262,000 for the three months ended September 30, 2024 and 2023, respectively. Mortgage loan servicing fees were $3,844,000 and $3,797,000 for the nine months ended September 30, 2024 and 2023, respectively. These fees, net of amortization, are included in mortgage banking, net, which is a component of noninterest income on the condensed consolidated statements of income.

Custodial balances maintained in connection with the foregoing loan servicing are included in noninterest checking deposits and were $15,395,000 and $8,539,000 at September 30, 2024 and December 31, 2023, respectively.

The following table is a summary of activity in mortgage servicing rights:

	As of or For the
	Three Months Ended
	September 30,
	2024			2023
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	15,614		$	15,501
Mortgage servicing rights capitalized		342			681
Amortization of mortgage servicing rights		(513	)		(444	)
Ending balance	$	15,443		$	15,738

	As of or For the
	Nine Months Ended
	September 30,
	2024			2023
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	15,853		$	15,412
Mortgage servicing rights capitalized		941			1,656
Amortization of mortgage servicing rights		(1,351	)		(1,330	)
Ending balance	$	15,443		$	15,738

The fair values of these mortgage servicing rights were $19,944,000 and $20,388,000 at September 30, 2024 and December 31, 2023, respectively. The fair value of mortgage servicing rights was determined at loan level, depending on the interest rate and term of the specific loan, using the following valuation assumptions:

	September 30,	December 31,
	2024	2023
Key assumptions:
Discount rate	12%	12%
Prepayment speed range	0 - 226%	104 - 526%
Weighted average prepayment speed	120%	119%

NOTE 5. DEPOSITS

Deposits are summarized as follows:

	September 30,		December 31,
	2024		2023
	(In Thousands)
Noninterest checking	$	419,760	$	418,727
Interest-bearing checking		209,061		211,101
Savings		212,239		230,711
Money market		351,097		330,274
Time certificates of deposit		458,355		444,382
Total	$	1,650,512	$	1,635,195

Time certificates of deposit include $22,097,000 and $72,168,000 of fixed rate brokered certificates at September 30, 2024 and December 31, 2023, respectively.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6. OTHER LONG-TERM DEBT

Other long-term debt consisted of the following:

	September 30, 2024					December 31, 2023
			Unamortized					Unamortized
			Debt					Debt
	Principal		Issuance			Principal		Issuance
	Amount		Costs			Amount		Costs
	(In Thousands)
Subordinated debentures fixed at 5.50% to floating, due 2030	$	15,000	$	(194	)	$	15,000	$	(219	)
Subordinated debentures fixed at 3.50% to floating, due 2032		40,000		(850	)		40,000		(937	)
Subordinated debentures variable at 3-Month SOFR plus 1.68%, due 2035		5,155		-			5,155		-
Total other long-term debt	$	60,155	$	(1,044	)	$	60,155	$	(1,156	)

In January 2022, the Company completed the issuance of $40,000,000 in aggregate principal amount of subordinated notes due in 2032 in a private placement transaction to certain institutional accredited investors and qualified buyers. The notes bear interest at an annual fixed rate of 3.50% payable semi-annually. Starting February 1, 2027, interest will accrue at a floating rate per annum equal to a benchmark rate, which is expected to be three-month term Secured Overnight Financing Rate ("SOFR") plus a spread of 218.0 basis points, payable quarterly. The notes are subject to redemption at the option of the Company on or after February 1, 2027. The subordinated debentures qualify as Tier 2 capital for regulatory capital purposes.

In June 2020, the Company completed the issuance of $15,000,000 in aggregate principal amount of subordinated notes due in 2030 in a private placement transaction to certain qualified institutional accredited investors. The notes bear interest at an annual fixed rate of 5.50% payable semi-annually. Starting July 1, 2025, interest will accrue at a floating rate per annum equal to a benchmark rate, which is expected to be three-month term SOFR plus a spread of 509.0 basis points, payable quarterly. The notes are subject to redemption at the option of the Company on or after July 1, 2025. The subordinated debentures qualify as Tier 2 capital for regulatory capital purposes.

In September 2005, the Company completed the private placement of $5,155,000 in subordinated debentures to the Trust. The Trust funded the purchase of the subordinated debentures through the sale of trust preferred securities to First Tennessee Bank, N.A. with a liquidation value of $5,155,000. Using interest payments made by the Company on the debentures, the Trust began paying quarterly dividends to preferred security holders in December 2005. The annual percentage rate of the interest payable on the subordinated debentures and distributions payable on the preferred securities was fixed at 6.02% until December 2010 then became variable at three-month LIBOR plus 1.42% until June 30, 2023, making the rate 6.20% as of December 31, 2023. In December of 2022, Governors of the Federal Reserve System adopted final rule 12 C.F.R. Part 253, Regulation Implementing the Adjustable Interest Rate (LIBOR) Act. Rule 253 identified SOFR-benchmark rates to replace LIBOR in certain financial contracts after June 30, 2023. As a result, the variable rate for interest payable converted to three-month CME Term SOFR plus 1.68% beginning during the quarter ended March 31, 2024. The rate was 6.27% as of September 30, 2024. Dividends on the preferred securities are cumulative and the Trust may defer the payments for up to five years. The preferred securities mature in December 2035 unless the Company elects and obtains regulatory approval to accelerate the maturity date. The subordinated debentures qualify as Tier 1 capital for regulatory purposes.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table includes information regarding the activity in accumulated other comprehensive income (loss).

	Unrealized
	(Losses) Gains
	on Securities
	Available-for-Sale
	(In Thousands)
Balance, July 1, 2024	$	(20,877	)
Other comprehensive income, before reclassifications and income taxes		7,847
Amounts reclassified from accumulated other comprehensive loss, before income taxes		-
Income tax provision		(2,066	)
Total other comprehensive income		5,781
Balance, September 30, 2024	$	(15,096	)

Balance, July 1, 2023	$	(23,723	)
Other comprehensive loss, before reclassifications and income taxes		(9,763	)
Amounts reclassified from accumulated other comprehensive loss, before income taxes		-
Income tax benefit		2,571
Total other comprehensive loss		(7,192	)
Balance, September 30, 2023	$	(30,915	)

Balance, January 1, 2024	$	(19,945	)
Other comprehensive income, before reclassifications and income taxes		6,582
Amounts reclassified from accumulated other comprehensive loss, before income taxes		-
Income tax provision		(1,733	)
Total other comprehensive income		4,849
Balance, September 30, 2024	$	(15,096	)

Balance, January 1, 2023	$	(26,357	)
Other comprehensive loss, before reclassifications and income taxes		(6,410	)
Amounts reclassified from accumulated other comprehensive loss, before income taxes		222
Income tax benefit		1,630
Total other comprehensive loss		(4,558	)
Balance, September 30, 2023	$	(30,915	)

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8. EARNINGS PER COMMON SHARE

The computations of basic and diluted earnings per common share are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(Dollars in Thousands, Except Per Share Data)
Basic weighted average shares outstanding		7,836,921		7,784,279		7,830,947		7,787,987
Dilutive effect of stock compensation		23,217		7,687		17,249		4,606
Diluted weighted average shares outstanding		7,860,138		7,791,966		7,848,196		7,792,593

Net income available to common shareholders	$	2,709	$	2,635	$	6,345	$	7,892

Basic earnings common per share	$	0.35	$	0.34	$	0.81	$	1.01

Diluted earnings per common share	$	0.34	$	0.34	$	0.81	$	1.01

Restricted stock units excluded from the diluted average outstanding share calculation because their effect would be anti-dilutive		2,223		19,237		9,684		18,443

NOTE 9. DERIVATIVES AND HEDGING ACTIVITIES

The Company enters into commitments to originate and sell mortgage loans. The Bank uses derivatives to hedge the risk of changes in fair values of interest rate lock commitments and mortgage loans held-for-sale. An optimal amount of mortgage loans are sold directly into bulk commitments with investors at the time an interest rate is locked, other loans are sold on an individual best-efforts basis at the time an interest rate is locked, and the remaining balance of locked loans are hedged using To-Be-Announced (“TBA”) mortgage-backed securities or bulk mandatory forward loan sale commitments.

Derivatives are accounted for as free-standing or economic derivatives and are measured at fair value. Derivatives are recorded as either other assets or other liabilities on the condensed consolidated statements of condition.

Derivatives are summarized as follows:

	September 30, 2024						December 31, 2023
	Notional		Fair Value				Notional		Fair Value
	Amount		Asset		Liability		Amount		Asset		Liability
	(In Thousands)
Interest rate lock commitments	$	19,186	$	-	$	40	$	15,670	$	15	$	-
Forward TBA mortgage-backed securities		17,000		32		-		12,000		-		75

Changes in the fair value of the derivatives are recorded in mortgage banking, net, within noninterest income on the condensed consolidated statements of income. Net gains of $118,000 were recorded for the three months ended September 30, 2024 compared to net gains of $39,000 for the three months ended September 30, 2023. Net gains of $51,000 were recorded for the nine months ended September 30, 2024, compared to net gains of $133,000 for the nine months ended September 30, 2023.

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Assets and liabilities that are measured at fair value are grouped in three levels within the fair value hierarchy based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

The fair value hierarchy is as follows:

■	Level 1 Inputs – Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

■

Level 2 Inputs – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations for which all significant assumptions are observable or can be corroborated by observable market data.

■	Level 3 Inputs – Valuations are based on unobservable inputs that may include significant management judgment and estimation.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy at the reporting date, is set forth below.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

Available-for-Sale Securities – Securities classified as available-for-sale are reported at fair value utilizing Level 1 (nationally recognized securities exchanges) and Level 2 inputs. For level 2 securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include but is not limited to dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the bond’s terms and conditions.

Loans Held-for-Sale – These loans are reported at fair value. Fair value is determined based on expected proceeds based on committed sales contracts and commitments of similar loans if not already committed and are considered Level 2 inputs.

Derivative Instruments – The fair value of the interest rate lock commitments, forward TBA mortgage-backed securities and mandatory forward commitments are estimated using quoted or published market prices for similar instruments and adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. Interest rate lock commitments are considered Level 3 inputs and forward TBA mortgage-backed securities and mandatory forward commitments are considered Level 2 inputs.

Collateral-Dependent Loans – Individually reviewed collateral-dependent loans are reported at the fair value of the underlying collateral less costs to sell. Collateral-dependent loans are considered Level 3 inputs. Collateral values are estimated using Level 3 inputs based on internally customized discounting criteria.

Real Estate and Other Repossessed Assets – Fair values are determined at the time the loan is foreclosed upon and the asset is transferred from loans. The value is based primarily on third party appraisals, less costs to sell and are considered Level 3 inputs for determining fair value. Repossessed assets are reviewed and evaluated periodically for additional impairment and adjusted accordingly.

Mortgage Servicing Rights – The fair value of mortgage servicing rights are estimated using net present value of expected cash flows based on a third party model that incorporates industry assumptions and is adjusted for factors such as prepayment speeds and are considered Level 3 inputs.

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	September 30, 2024
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency obligations	$	-	$	5,449	$	-	$	5,449
U.S. Treasury obligations		48,173		-		-		48,173
Municipal obligations		-		136,353		-		136,353
Corporate obligations		-		4,080		-		4,080
Mortgage-backed securities		-		23,793		-		23,793
Collateralized mortgage obligations		-		81,307		-		81,307
Asset-backed securities		-		7,827		-		7,827
Loans held-for-sale		-		13,429		-		13,429
Forward TBA mortgage-backed securities		-		32		-		32
Financial liabilities:
Interest rate lock commitments		-		-		40		40

	December 31, 2023
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency obligations	$	-	$	6,543	$	-	$	6,543
U.S. Treasury obligations		46,815		-		-		46,815
Municipal obligations		-		137,950		-		137,950
Corporate obligations		-		3,905		-		3,905
Mortgage-backed securities		-		26,753		-		26,753
Collateralized mortgage obligations		-		86,568		-		86,568
Asset-backed securities		-		9,745		-		9,745
Loans held-for-sale		-		11,432		-		11,432
Interest rate lock commitments		-		-		15		15
Financial liabilities:
Forward TBA mortgage-backed securities		-		75		-		75

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

Certain financial assets may be measured at fair value on a nonrecurring basis. These assets are subject to fair value adjustments that result from the application of lower of cost or fair value accounting or write-downs of individual assets, such as impaired loans that are collateral-dependent, real estate and other repossessed assets and mortgage servicing rights.

The following table summarizes financial assets measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting periods presented:

	September 30, 2024
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Collateral-dependent loans individually evaluated, net of ACL	$	-	$	-	$	97	$	97

	December 31, 2023
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Collateral-dependent loans individually evaluated, net of ACL	$	-	$	-	$	1,782	$	1,782

The following table represents the Banks’s Level 3 financial assets and liabilities, the valuation techniques used to measure the fair value of those financial assets and liabilities, and the significant unobservable inputs and the ranges of values for those inputs.

	Principal	Significant	Range of
	Valuation	Unobservable	Significant Input
Instrument	Technique	Inputs	Values

Collateral-dependent loans individually evaluated	Fair value of underlying collateral	Discount applied to the obtained appraisal	10-30%
Real estate and other repossessed assets	Fair value of collateral	Discount applied to the obtained appraisal	10-30%
Interest rate lock commitments	Internal pricing model	Pull-through expectations	85-95%

The following tables provide a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2024.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
	Interest Rate Lock Commitments						Interest Rate Lock Commitments
	(In Thousands)						(In Thousands)
Beginning balance	$	(91	)	$	(57	)	$	15		$	(81	)
Purchases and issuances		(84	)		(133	)		(478	)		(283	)
Sales and settlements		135			(2	)		423			172
Ending balance	$	(40	)	$	(192	)	$	(40	)	$	(192	)
Unrealized gains (losses) related to items held at end of period	$	51		$	(135	)	$	(55	)	$	(111	)

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

The tables below summarize the estimated fair values of financial instruments of the Company, whether or not recognized at fair value on the condensed consolidated statements of condition. The tables are followed by methods and assumptions that were used by the Company in estimating the fair value of the classes of financial instruments.

	September 30, 2024
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	42,189	$	-	$	-	$	42,189	$	42,189
FHLB stock		-		11,218		-		11,218		11,218
FRB stock		-		4,131		-		4,131		4,131
Loans receivable, gross		-		-		1,481,246		1,481,246		1,534,652
Mortgage servicing rights		-		-		19,944		19,944		15,443
Financial liabilities:
Non-maturing interest-bearing deposits		-		772,397		-		772,397		772,397
Time certificates of deposit		-		-		457,347		457,347		458,355
FHLB advances and other borrowings		-		-		219,671		219,671		219,167
Other long-term debt		-		-		58,961		58,961		60,155

	December 31, 2023
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	24,545	$	-	$	-	$	24,545	$	24,545
FHLB stock		-		9,191		-		9,191		9,191
FRB stock		-		4,131		-		4,131		4,131
Loans receivable, gross		-		-		1,416,203		1,416,203		1,484,489
Mortgage servicing rights		-		-		20,388		20,388		15,853
Financial liabilities:
Non-maturing interest-bearing deposits		-		772,086		-		772,086		772,086
Time certificates of deposit		-		-		441,939		441,939		444,382
FHLB advances and other borrowings		-		-		175,842		175,842		175,737
Other long-term debt		-		-		58,094		58,094		60,155

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Eagle Bancorp Montana, Inc. is a bank holding company registered under the Bank Holding Company Act, is incorporated under the laws of Delaware and headquartered in Helena, Montana. Its wholly-owned subsidiary, Opportunity Bank of Montana (the "Bank"), is a Montana-state-chartered bank that is a member of the Federal Reserve System.

This discussion and analysis provides information that management believes is necessary to understand Eagle's financial condition, changes in financial condition, results of operations, and cash flows for the three and nine months ended September 30, 2024, as compared to 2023. The following should be read in conjunction with the Company's Consolidated Financial Statements, and accompanying Notes thereto, for the year ended December 31, 2023, included in Eagle's Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (SEC) on March 6, 2024, and in conjunction with the Condensed Consolidated Financial Statements, and accompanying Notes thereto, included in Part I - Item 1. Financial Statements. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the future results that may be attained for the entire year or other interim periods.

Executive Summary

The Company’s primary business activity is the ownership of the Bank. The Bank focuses on consumer, commercial, and agricultural lending. It engages in typical banking activities: acquiring deposits from local markets and originating loans and investing in securities. Our earnings depend primarily on our level of net interest income, which is the difference between interest earned on our interest-earning assets, consisting primarily of loans and investment securities, and the interest paid on interest-bearing liabilities, consisting primarily of deposits, borrowed funds, and trust-preferred securities. Net interest income is a function of our interest rate spread, which is the difference between the average yield earned on our interest-earning assets and the average rate paid on our interest-bearing liabilities, as well as a function of the average balance of interest-earning assets compared to interest-bearing liabilities. Also contributing to our earnings is noninterest income, which consists primarily of service charges and fees on loan and deposit products and services, net gains and losses on sale of assets, and mortgage loan service fees. Net interest income and noninterest income are offset by provisions for credit losses, general administrative and other expenses, including salaries and employee benefits and occupancy and equipment costs, as well as by state and federal income tax expense.

The Bank has focused on diversifying the loan portfolio over the past decade, adding commercial and agricultural loans to the strong mortgage lending proficiency. Loan originations represented by single-family residential mortgages enabled the Bank to successfully market home equity loans, as well as a wide range of shorter-term consumer loans for various personal needs (automobiles, recreational vehicles, etc.). The Bank has grown the commercial loan portfolio in both real estate and non-real estate, and further added agricultural loans, which have a shorter term and slightly higher interest rate, through acquisitions. The purpose of diversification is to mitigate the Bank’s exposure to specific market segments, as well as to improve our ability to manage our interest rate spread. This has provided additional interest income and improved interest rate sensitivity. The Bank’s management recognizes that fee income will also enable it to be less dependent on specialized lending and it now maintains a significant loan serviced portfolio which provides a steady source of fee income. Fee income is also supplemented with fees generated from deposit accounts. The Bank has a high percentage of non-maturity deposits, such as checking accounts and savings accounts, which allows management flexibility in managing its spread. Non-maturity deposits and certificates of deposits do not automatically reprice as interest rates rise. Gain on sale of loans also provides significant noninterest income in periods of high mortgage loan origination volumes. Such income will be, and has recently been, adversely affected in periods of lower mortgage activity.

Management continues to focus on improving the Bank’s earnings. Management believes the Bank needs to continue to concentrate on increasing net interest margin, other areas of fee income and control of operating expenses to achieve earnings growth going forward. Management’s strategy of growing the loan portfolio and deposit base is expected to help achieve these goals as follows: loans typically earn higher rates of return than investments; a larger deposit base should yield higher fee income; increasing the asset base will reduce the relative impact of fixed operating costs. The biggest challenge to this strategy is funding growth in an efficient manner. It may become more difficult to maintain deposit growth due to significant competition, the current conditions in the banking industry and possible reduced customer demand for deposits as customers may shift into other asset classes.

The level and movement of interest rates impacts the Bank’s earnings as well. The Federal Open Market Committee increased the federal funds target rate to 5.50% during the year ended December 31, 2023. The rate was decreased to 5.00% during the nine months ended September 30, 2024.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition

Comparisons of financial condition in this section are between September 30, 2024 and December 31, 2023.

Total assets were $2.15 billion at September 30, 2024, an increase of $69.44 million, or 3.3% from $2.08 billion at December 31, 2023. Loans receivable, net increased by $49.47 million or 3.4% from December 31, 2023. Total cash and cash equivalents also increased $17.64 million or 71.9% from December 31, 2023. However, securities available-for-sale decreased $11.30 million, or 3.6% from December 31, 2023. Total liabilities were $1.97 billion at September 30, 2024, an increase of $60.99 million, or 3.2% from $1.91 billion at December 31, 2023. The increase was largely due to an increase in FHLB advances and other borrowings and an increase in total deposits. Total borrowings increased $43.54 million from December 31, 2023, and total deposits increased $15.31 million from December 31, 2023. Total shareholders’ equity increased $8.46 million, or 5.0% from December 31, 2023.

Financial Condition Details

Investment Activities

The following table summarizes investment activities:

	September 30,					December 31,
	2024					2023
	Fair Value		Percentage of Total			Fair Value		Percentage of Total
	(Dollars in Thousands)
Securities available-for-sale:
U.S. government and agency obligations	$	5,449		1.78	%	$	6,543		2.06	%
U.S. treasury obligations		48,173		15.69			46,815		14.71
Municipal obligations		136,353		44.41			137,950		43.33
Corporate obligations		4,080		1.33			3,905		1.23
Mortgage-backed securities		23,793		7.75			26,753		8.41
Collateralized mortgage obligations		81,307		26.49			86,568		27.20
Asset-backed securities		7,827		2.55			9,745		3.06
Total securities available-for-sale	$	306,982		100.00	%	$	318,279		100.00	%

Securities available-for-sale were $306.98 million at September 30, 2024, a decrease of $11.30 million, or 3.6%, from $318.28 million at December 31, 2023. The decrease was primarily due to maturity, principal payments and call activity of $17.13 million offset by an increase in fair value of $6.58 million.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition – continued

Lending Activities

The following table includes the composition of the Bank’s loan portfolio by loan category:

	September 30,						December 31,
	2024						2023
	Amount			Percent of Total			Amount			Percent of Total
	(Dollars in thousands)
Real estate loans:
Residential 1-4 family ⁽¹⁾	$	156,811			10.22	%	$	156,578			10.55	%
Residential 1-4 family construction		52,217			3.40			43,434			2.93
Total residential 1-4 family		209,028			13.62			200,012			13.48

Commercial real estate		644,019			41.96			608,691			40.99
Commercial construction and development		125,323			8.17			158,132			10.65
Farmland		145,356			9.47			142,590			9.61
Total commercial real estate		914,698			59.60			909,413			61.25

Total real estate loans		1,123,726			73.22			1,109,425			74.73

Other loans:
Home equity		93,646			6.10			86,932			5.86
Consumer		29,445			1.92			30,125			2.03

Commercial		143,190			9.33			132,709			8.94
Agricultural		144,645			9.43			125,298			8.44
Total commercial loans		287,835			18.76			258,007			17.38

Total other loans		410,926			26.78			375,064			25.27

Total loans		1,534,652			100.00	%		1,484,489			100.00	%

Allowance for credit losses		(17,130	)					(16,440	)
Total loans, net	$	1,517,522					$	1,468,049

⁽¹⁾

Excludes loans held-for-sale.

Loans receivable, net increased $49.47 million, or 3.4%, to $1.52 billion at September 30, 2024 from $1.47 billion at December 31, 2023. The increase was largely driven by an increase in total commercial loans of $29.83 million in addition to increases in total residential loans of $9.02 million, home equity loans of $6.72 million and commercial real estate loans of $5.29 million. The increase was slightly offset by a decrease of $680,000 in consumer loans.

Total loan originations were $398.50 million for the nine months ended September 30, 2024. Total residential 1-4 family originations were $191.03 million, which includes $150.24 million of loans held-for-sale originations. Total commercial real estate originations were $90.70 million. Total commercial originations were $83.94 million. Home equity loan originations totaled $22.33 million. Consumer loan originations totaled $10.50 million. Loans held-for-sale increased by $2.00 million to $13.43 million at September 30, 2024 from $11.43 million at December 31, 2023.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition – continued

Lending Activities– continued

Generally, our collection procedures provide that when a loan is 15 or more days delinquent, the borrower is sent a past due notice. If the loan becomes 30 days delinquent, the borrower is sent a written delinquency notice requiring payment. If the delinquency continues, subsequent efforts are made to contact the delinquent borrower, including face to face meetings and counseling to resolve the delinquency. All collection actions are undertaken with the objective of compliance with the Fair Debt Collection Act.

For mortgage loans and home equity loans, if the borrower is unable to cure the delinquency or reach a payment agreement, we will institute foreclosure actions. If a foreclosure action is taken and the loan is not reinstated, paid in full or refinanced, the property is sold at judicial sale at which we may be the buyer if there are no adequate offers to satisfy the debt. Any property acquired as the result of foreclosure, or by deed in lieu of foreclosure, is classified as real estate owned until such time as it is sold or otherwise disposed of. When real estate owned is acquired, it is recorded at its fair market value less estimated selling costs. The initial recording of any loss is charged to the allowance for credit losses. Subsequent write-downs are recorded as a charge to operations. As of September 30, 2024 and December 31, 2023 there was $4,000 and $5,000 of real estate owned and other repossessed property.

The following table sets forth information regarding nonperforming assets:

	September 30,			December 31,
	2024			2023
	(Dollars in Thousands)
Nonaccrual loans
Real estate loans:
Residential 1-4 family	$	370		$	297
Residential 1-4 family construction		964			757
Commercial real estate		986			340
Commercial construction and development		2			-
Farmland		192			3,716
Other loans:
Home equity		320			182
Consumer		120			60
Commercial		79			27
Agricultural		826			3,016
Accruing loans delinquent 90 days or more
Real estate loans:
Farmland		-			26
Other loans:
Commercial		94			-
Agricultural		850			-
Total nonperforming loans		4,803			8,421
Real estate owned and other repossessed property, net		4			5
Total nonperforming assets	$	4,807		$	8,426

Total nonperforming loans to total loans		0.31	%		0.57	%
Total nonperforming loans to total assets		0.22	%		0.41	%
Total nonaccrual loans to total loans		0.25	%		0.57	%
Total nonperforming assets to total assets		0.22	%		0.41	%

Nonaccrual loans as of September 30, 2024 and December 31, 2023 include $1.34 million and $1.68 million, respectively of acquired loans that deteriorated subsequent to the acquisition date.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables include the composition of the commercial real estate loan category:

	September 30, 2024
(In Thousands)	Non-Owner Occupied		Owner Occupied		Total		Percent of Total CRE
Automotive related	$	-	$	24,205	$	24,205		3.76	%
Bars and restaurants		6,384		14,548		20,932		3.25
Car washes		11,217		-		11,217		1.74
Construction and related industries		22,562		12,117		34,679		5.38
Healthcare and social assistance		10,592		14,112		24,704		3.84
Hospitality industry related		-		15,694		15,694		2.44
Hotels and other traveler accommodations		67,281		-		67,281		10.45
Industrial/warehouse		45,153		-		45,153		7.01
Lessors of mini warehouses and self-storage units		14,371		-		14,371		2.23
Lessors of nonresidential buildings		67,798		-		67,798		10.53
Lessors of other real estate property		30,635		-		30,635		4.76
Multifamily		99,510		-		99,510		15.45
Office space		20,776		38,554		59,330		9.21
Other real estate rental and leasing		6,975		-		6,975		1.08
Real estate leasing activities		-		40,487		40,487		6.29
Wholesale and retail trade		12,638		15,197		27,835		4.32
Other		30,338		22,875		53,213		8.26
Total commercial real estate	$	446,230	$	197,789	$	644,019		100.00	%

	December 31, 2023
(In Thousands)	Non-Owner Occupied		Owner Occupied		Total		Percent of Total CRE
Automotive related	$	-	$	22,241	$	22,241		3.65	%
Bars and restaurants		5,565		14,955		20,519		3.37
Car washes		10,792		-		10,792		1.77
Construction and related industries		17,530		11,840		29,370		4.83
Healthcare and social assistance		10,206		21,564		31,770		5.22
Hospitality industry related		-		14,756		14,756		2.42
Hotels and other traveler accommodations		58,157		-		58,157		9.55
Industrial/warehouse		43,983		-		43,983		7.23
Lessors of mini warehouses and self-storage units		13,959		-		13,959		2.29
Lessors of nonresidential buildings		63,515		-		63,515		10.44
Lessors of other real estate property		9,778		-		9,778		1.61
Multifamily		86,980		-		86,980		14.30
Office space		20,150		40,657		60,807		9.99
Other real estate rental and leasing		4,877		-		4,877		0.80
Real estate leasing activities		-		28,998		28,998		4.76
Wholesale and retail trade		14,575		13,861		28,436		4.67
Other		54,556		25,197		79,754		13.10
Total commercial real estate	$	414,623	$	194,069	$	608,691		100.00	%

Commercial real estate loans made up $644.02 million or 42.0% of the Bank's total loan portfolio at September 30, 2024, compared to $608.69 million or 41.0% at December 31, 2023. The Bank's commercial real estate loans are primarily permanent loans secured by improved property such as office buildings, retail stores, commercial warehouses, and apartment buildings. The terms and conditions of each loan are tailored to the needs of the borrower and based on the financial strength of the project and any guarantors. Generally, commercial real estate loans originated by the Bank will not exceed 80.0% of the appraised value or the selling price of the property, whichever is less. The Bank's commercial real estate portfolio's average loan-to-value ratio range was 26% to 51% as of September 30, 2024.

The Bank's asset quality with respect to commercial real estate loans has remained strong despite recent economic and market conditions. The Bank has limited exposure in the office space sector, none of which is located in central business districts. Management believes that the Bank has implemented appropriate risk management practices, including regular and ongoing loan reviews, stress tests, and sensitivity analysis. Loan reviews include monitoring past due rates, non-performing trends, concentrations, loan to values, and other qualitative factors. The Bank's loan policy is robust and is updated annually or as needed to meet the risk mitigation and strategic goals of the bank.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition – continued

Deposits and Other Sources of Funds

The following table includes deposit accounts by category:

	September 30,					December 31,
	2024					2023
			Percent					Percent
	Amount		of Total			Amount		of Total
	(Dollars in Thousands)
Noninterest checking	$	419,760		25.43	%	$	418,727		25.61	%
Interest-bearing checking		209,061		12.67			211,101		12.91
Savings		212,239		12.86			230,711		14.11
Money market		351,097		21.27			330,274		20.20
Total		1,192,157		72.23			1,190,813		72.83
Certificates of deposit accounts:
IRA certificates		21,926		1.33			22,960		1.40
Brokered certificates		22,097		1.34			72,168		4.41
Other certificates		414,332		25.10			349,254		21.36
Total certificates of deposit		458,355		27.77			444,382		27.17
Total deposits	$	1,650,512		100.00	%	$	1,635,195		100.00	%

Deposits increased by $15.31 million, or 0.9%, from December 31, 2023 to September 30, 2024. Money market deposits increased $20.82 million, time certificates of deposit increased $13.97 million, and noninterest checking increased $1.03 million. These increases were partially offset by decreases in savings of $18.47 million and interest-bearing checking of $2.04 million. Brokered certificates decreased by $50.07 million and IRA certificates decreased by $1.03 million. These decreases were offset by an increase in other certificates of deposit of $65.08 million.

The estimated amount of uninsured deposits was approximately $307.00 million or 18% of total deposits at September 30, 2024 compared to approximately $275.00 million or 17% of total deposits at December 31, 2023.

The following table summarizes borrowing activity:

	September 30,					December 31,
	2024					2023
	Net		Percent			Net		Percent
	Amount		of Total			Amount		of Total
	(Dollars in Thousands)
FHLB advances and other borrowings	$	219,167		78.76	%	$	175,737		74.87	%
Other long-term debt:
Subordinated debentures fixed at 5.50% to floating, due 2030		14,806		5.32			14,781		6.30
Subordinated debentures fixed at 3.50% to floating, due 2032		39,150		14.07			39,063		16.64
Subordinated debentures variable, due 2035		5,155		1.85			5,155		2.19
Total other long-term debt		59,111		21.24			58,999		25.13
Total borrowings	$	278,278		100.00	%	$	234,736		100.00	%

Total borrowings increased by $43.54 million, or 18.5%, to $278.28 million at September 30, 2024 from $234.74 million at December 31, 2023. The increase is due to an increase in FHLB advances and other borrowings and continues to be a source to help fund loan growth.

Shareholders’ Equity

Total shareholders’ equity increased by $8.46 million, or 5.0%, to $177.73 million at September 30, 2024 from $169.27 million at December 31, 2023. The increase was primarily attributed to net income of $6.35 million and a decrease in unrealized losses of securities available for sale of $4.85 million. These were offset by an increase in dividends paid of $3.39 million.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Analysis of Net Interest Income

The Bank’s earnings have historically depended primarily upon net interest income, which is the difference between interest income earned on loans and investments and interest paid on deposits and any borrowed funds. It is the single largest component of Eagle’s operating income. Net interest income is affected by (i) the difference between rates of interest earned on loans and investments and rates paid on interest-bearing deposits and borrowings (the “interest rate spread”) and (ii) the relative amounts of loans and investments and interest-bearing deposits and borrowings.

The following table includes average balances for financial condition items, as well as interest and dividends and average yields related to the average balances. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields include the effect of deferred fees and discounts and premiums that are amortized or accreted to interest income or expense.

	For the Three Months Ended September 30,
	2024							2023
	Average		Interest					Average		Interest
	Daily		and		Yield/			Daily		and		Yield/
	Balance		Dividends		Cost⁽⁴⁾			Balance		Dividends		Cost⁽⁴⁾
	(Dollars in Thousands)
Assets:
Interest-earning assets:
Investment securities	$	305,730	$	2,598		3.37	%	$	319,308	$	2,794		3.47	%
FHLB and FRB stock		14,909		266		7.08			14,302		212		5.88
Loans receivable⁽¹⁾		1,547,246		23,802		6.10			1,476,584		21,068		5.66
Other earning assets		6,784		94		5.50			2,416		20		3.28
Total interest-earning assets		1,874,669		26,760		5.66			1,812,610		24,094		5.27
Noninterest-earning assets		242,170							239,833
Total assets	$	2,116,839						$	2,052,443

Liabilities and equity:
Interest-bearing liabilities:
Deposit accounts:
Checking	$	212,451	$	98		0.18	%	$	227,938	$	88		0.15	%
Savings		208,199		33		0.06			231,465		38		0.07
Money market		359,018		2,326		2.57			324,895		1,576		1.92
Certificates of deposit		435,610		4,733		4.31			386,646		3,450		3.54
FHLB advances and other borrowings		228,467		3,084		5.36			192,880		2,672		5.50
Other long-term debt		59,099		684		4.59			58,950		683		4.60
Total interest-bearing liabilities		1,502,844		10,958		2.89			1,422,774		8,507		2.37
Noninterest checking		406,976							431,826
Other noninterest-bearing liabilities		41,857							38,910
Total liabilities		1,951,677							1,893,510

Total equity		165,162							158,933

Total liabilities and equity	$	2,116,839						$	2,052,443
Net interest income/interest rate spread⁽²⁾			$	15,802		2.77	%			$	15,587		2.90	%

Net interest margin⁽³⁾						3.34	%						3.41	%
Total interest-earning assets to interest-bearing liabilities						124.74	%						127.40	%

⁽¹⁾Includes loans held-for-sale.

⁽²⁾Interest rate spread represents the difference between the average yield on interest-earning assets and the average rate on interest-bearing liabilities.

⁽³⁾ Net interest margin represents income before the provision for loan losses divided by average interest-earning assets.

⁽⁴⁾For purposes of this table, tax exempt income is not calculated on a tax equivalent basis.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	For the Nine Months Ended September 30,
	2024							2023
	Average		Interest					Average		Interest
	Daily		and		Yield/			Daily		and		Yield/
	Balance		Dividends		Cost⁽⁴⁾			Balance		Dividends		Cost⁽⁴⁾
	(Dollars in Thousands)
Assets:
Interest-earning assets:
Investment securities	$	308,688	$	7,953		3.43	%	$	335,898	$	8,586		3.42	%
FHLB and FRB stock		13,825		777		7.49			12,610		480		5.09
Loans receivable⁽¹⁾		1,519,951		68,526		6.01			1,417,291		57,942		5.47
Other earning assets		5,004		268		7.14			2,562		66		3.44
Total interest-earning assets		1,847,468		77,524		5.59			1,768,361		67,074		5.07
Noninterest-earning assets		239,483							231,503
Total assets	$	2,086,951						$	1,999,864

Liabilities and equity:
Interest-bearing liabilities:
Deposit accounts:
Checking	$	217,158	$	283		0.17	%	$	239,494	$	538		0.30	%
Savings		214,763		102		0.06			243,939		110		0.06
Money market		348,695		6,495		2.48			333,731		3,685		1.48
Certificates of deposit		437,644		13,742		4.18			336,659		7,434		2.95
FHLB advances and other borrowings		200,667		8,206		5.45			151,819		5,993		5.28
Other long-term debt		59,062		2,048		4.62			58,912		2,035		4.62
Total interest-bearing liabilities		1,477,989		30,876		2.78			1,364,554		19,795		1.94
Noninterest checking		406,376							442,377
Other noninterest-bearing liabilities		39,480							32,016
Total liabilities		1,923,845							1,838,947

Total equity		163,106							160,917

Total liabilities and equity	$	2,086,951						$	1,999,864
Net interest income/interest rate spread⁽²⁾			$	46,648		2.81	%			$	47,279		3.13	%

Net interest margin⁽³⁾						3.36	%						3.57	%
Total interest-earning assets to interest-bearing liabilities						125.00	%						129.59	%

⁽¹⁾Includes loans held-for-sale.

⁽²⁾Interest rate spread represents the difference between the average yield on interest-earning assets and the average rate on interest-bearing liabilities.

⁽³⁾ Net interest margin represents income before the provision for loan losses divided by average interest-earning assets.

⁽⁴⁾For purposes of this table, tax exempt income is not calculated on a tax equivalent basis.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Rate/Volume Analysis

The following tables present the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: (1) changes in volume multiplied by the old rate; (2) changes in rate, which are changes in rate multiplied by the old volume; and (3) changes not solely attributable to rate or volume, which have been allocated proportionately to the change due to volume and the change due to rate.

	For the Three Months Ended September 30,
	2024									2023
				Due to									Due to
	Volume			Rate			Net			Volume			Rate			Net
	(In Thousands)
Interest-earning assets:
Investment securities	$	(119	)	$	(77	)	$	(196	)	$	(401	)	$	640		$	239
FHLB and FRB stock		9			45			54			67			82			149
Loans receivable⁽¹⁾		1,008			1,726			2,734			2,244			2,159			4,403
Other earning assets		36			38			74			(47	)		8			(39	)
Total interest-earning assets		934			1,732			2,666			1,863			2,889			4,752

Interest-bearing liabilities:
Checking		(6	)		16			10			(9	)		29			20
Savings		(4	)		(1	)		(5	)		(7	)		20			13
Money Market		166			584			750			(37	)		1,306			1,269
Certificates of deposit		437			846			1,283			286			2,847			3,133
FHLB advances and other borrowings		493			(81	)		412			2,286			250			2,536
Other long-term debt		2			(1	)		1			(1	)		82			81
Total interest-bearing liabilities		1,088			1,363			2,451			2,518			4,534			7,052

Change in net interest income	$	(154	)	$	369		$	215		$	(655	)	$	(1,645	)	$	(2,300	)

	For the Nine Months Ended September 30,
	2024									2023
				Due to									Due to
	Volume			Rate			Net			Volume			Rate			Net
	(In Thousands)
Interest earning assets:
Investment securities	$	(696	)	$	63		$	(633	)	$	52		$	2,671		$	2,723
FHLB and FRB stock		46			251			297			186			134			320
Loans receivable⁽¹⁾		4,197			6,387			10,584			10,235			4,774			15,009
Other earning assets		63			139			202			(194	)		54			(140	)
Total interest earning assets		3,610			6,840			10,450			10,279			7,633			17,912

Interest bearing liabilities:
Checking		(50	)		(205	)		(255	)		1			431			432
Savings		(13	)		5			(8	)		(9	)		25			16
Money Market		165			2,645			2,810			(32	)		2,958			2,926
Certificates of deposit		2,230			4,078			6,308			473			6,469			6,942
FHLB advances and other borrowings		1,928			285			2,213			2,868			2,968			5,836
Other long-term debt		5			8			13			(38	)		218			180
Total interest bearing liabilities		4,265			6,816			11,081			3,263			13,069			16,332

Change in net interest income	$	(655	)	$	24		$	(631	)	$	7,016		$	(5,436	)	$	1,580

⁽¹⁾Includes loans held-for-sale.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended September 30, 2024 and 2023

Net Income. Eagle’s net income for the three months ended September 30, 2024 was $2.71 million compared to $2.64 million for the three months ended September 30, 2023. The increase of $74,000 was due to a decrease in noninterest expense of $605,000 and an increase in net interest income after provision for credit losses of $526,000. These were largely offset by a decrease in noninterest income of $1.06 million and an increase in provision for income taxes of $5,000. For the current period, basic earnings per common share was $0.35 and diluted earnings per common share was $0.34. Basic and diluted earnings per common share were both $0.34 for the prior year comparable period.

Net Interest Income. Net interest income increased to $15.80 million for the three months ended September 30, 2024, from $15.59 million for the same quarter in the prior year. The increase of $215,000, or 1.4%, was the result of an increase in interest and dividend income of $2.67 million largely offset by an increase in interest expense of $2.45 million.

Interest and Dividend Income. Interest and dividend income was $26.76 million for the three months ended September 30, 2024, compared to $24.09 million for the three months ended September 30, 2023. The increase of $2.67 million, or 11.1% was driven by interest and fees on loans, which increased to $23.80 million for the three months ended September 30, 2024, from $21.07 million for the three months ended September 30, 2023. The increase in interest and fees on loans was due to an increase in the average yield on loans, as well as an increase in the average balance of loans. The average interest rate earned on loans receivable increased by 44 basis points, from 5.66% for the three months ended September 30, 2023, to 6.10% for the current period. Interest accretion on purchased loans was $167,000 for the three months ended September 30, 2024, which resulted in a 3 basis point increase in net interest margin compared to $175,000 for the three months ended September 30, 2023, which resulted in a 4 basis point increase in net interest margin. Average balances for loans receivable, including loans held-for-sale, for the three months ended September 30, 2024 were $1.55 billion compared to $1.48 billion for the prior year period. This represents an increase of $70.67 million, or 4.8% and was due to organic growth. Interest on investment securities available-for-sale decreased by $196,000 period over period, primarily due to the decrease in average balances for investments from $319.31 million for the three months ended September 30, 2023 to $305.73 million for the three months ended September 30, 2024.

Interest Expense. Total interest expense was $10.96 million for the three months ended September 30, 2024, compared to $8.51 million for the three months ended September 30, 2023. The increase of $2.45 million was due to an increase of $2.04 million in interest expense on deposits, as well as a net increase of $413,000 in interest expense on total borrowings. The overall average rate on total deposits was up from 1.28% for the three months ended September 30, 2023, compared to 1.76% for the three months ended September 30, 2024. In addition, the average balance for total deposits was $1.62 billion for the three months ended September 30, 2024, compared to $1.60 billion for the three months ended September 30, 2023. The increase in interest expense on total borrowings was driven by the average balance of FHLB advances and other borrowings, increasing from $192.88 million for the three months ended September 30, 2023, to $228.47 million for the three months ended September 30, 2024. Short-term borrowings have increased to fund loan growth. However, the average rate paid on FHLB advances and other borrowings decreased from 5.50% for the three months ended September 30, 2023, to 5.36% for the three months ended September 30, 2024.

Provision for Credit Losses. Provision for credit losses was $277,000 for the three months ended September 30, 2024, compared to $588,000 in provision for credit losses for the three months ended September 30, 2023. The provision for credit losses for the three months ended September 30, 2024 includes a provision for credit losses on loans of $317,000 and a decrease in the provision for unfunded commitments of $40,000.

Noninterest Income. Total noninterest income was $4.98 million for the three months ended September 30, 2024, compared to $6.04 million for the three months ended September 30, 2023. The decrease of $1.06 million, or 17.5%, was primarily due to a decrease in mortgage banking, net, of $1.74 million. Mortgage banking, net, includes net gain on sale of mortgage loans which decreased to $1.69 million for the three months ended September 30, 2024, compared to $3.59 million for the three months ended September 30, 2023. During the three months ended September 30, 2024, $51.02 million residential mortgage loans were sold compared to $109.02 million in the same period in the prior year. Mortgage volumes continued to be impacted by the interest rate environment. Gross margin levels increased 2 basis points from 3.29% for the three months ended September 30, 2023, to 3.31% for the three months ended September 30, 2024. The decrease in mortgage banking, net, was partially offset by an increase in income from bank owned life insurance of $656,000, increasing to $1.04 million for the three months ended September 30, 2024, compared to $382,000 for the three months ended September 30, 2023.

Noninterest Expense. Noninterest expense was $17.27 million for the three months ended September 30, 2024, compared to $17.88 million for the three months ended September 30, 2023, a decrease of $605,000 or 3.4%. The largest driver of the decrease was salaries and employee benefits, decreasing 8.7% from $9.89 million for the three months ended September 30, 2023, compared to $10.84 million for the three months ended September 30, 2024.

Provision for Income Taxes. Provision for income taxes was $529,000 for the three months ended September 30, 2024, compared to $524,000 for the three months ended September 30, 2023. The effective tax rate was 16.3% for the current period compared to 16.6% for the prior period.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Net Income. Eagle’s net income for the nine months ended September 30, 2024 was $6.35 million compared to $7.89 million for the nine months ended September 30, 2023. The decrease of $1.54 million was due to a decrease in noninterest income of $3.71 million. This decrease was partially offset by a decrease in noninterest expense of $1.59 million, decrease in provision for income taxes of $570,000 and a decrease in net interest income after provision for credit losses of $1,000. Basic and diluted earnings per common share were both $0.81 for the current period. Basic and diluted earnings per common share were both $1.01 for the prior year comparable period.

Net Interest Income. Net interest income decreased to $46.65 million for the nine months ended September 30, 2024, from $47.28 million for the nine months ended September 30, 2023. The decrease of $631,000 was the result of an increase in interest expense of $11.08 million partially offset by an increase in interest and dividend income of $10.45 million.

Interest and Dividend Income. Interest and dividend income was $77.52 million for the nine months ended September 30, 2024, compared to $67.07 million for the nine months ended September 30, 2023. Interest and fees on loans increased to $68.53 million for the nine months ended September 30, 2024, from $57.94 million for the nine months ended September 30, 2023. This increase of $10.59 million, or 18.3%, was due to an increase in the average yield on loans and the average balance of loans. The average interest rate earned on loans receivable increased by 54 basis points from 5.47% for the nine months ended September 30, 2023, to 6.01% for the nine months ended September 30, 2024. Interest accretion on purchased loans was $590,000 for the nine months ended September 30, 2024, which resulted in a 4 basis point increase in net interest margin, compared to $838,000 for the nine months ended September 30, 2023, which resulted in an 6 basis point increase in net interest margin. Average balances for loans receivable, including loans held-for-sale, for the nine months ended September 30, 2024 were $1.52 billion compared to $1.42 billion for the prior year period. This represents an increase of $102.66 million, or 7.2%, and due to organic growth. Interest on investment securities available-for-sale decreased by $633,000 period over period. Average balances for investments decreased to $308.69 million for the nine months ended September 30, 2024, from $335.90 million for the nine months ended September 30, 2023. Interest rates earned on investments increased slightly to 3.43% for the nine months ended September 30, 2024, from 3.42% for the nine months ended September 30, 2023.

Interest Expense. Total interest expense was $30.88 million for the nine months ended September 30, 2024, compared to $19.80 million for the nine months ended September 30, 2023. The increase of $11.08 million, or 56.0%, was primarily due to an increase of $8.85 million in interest expense on deposits, in addition to a net increase of $2.23 million in interest expense on total borrowings. The overall average rate on total deposits was up from 0.99% for the nine months ended September 30, 2023, compared to 1.69% for the nine months ended September 30, 2024. In addition, the average balance for total deposits was $1.62 billion for the nine months ended September 30, 2024, compared to $1.60 billion for the nine months ended September 30, 2023. The increase in the interest expense on total borrowings was largely due to an increase in the average balance for FHLB advances and other borrowings, which increased to $200.67 million for the nine months ended September 30, 2024, from $151.82 million for the nine months ended September 30, 2023. Short-term borrowings have increased to fund loan growth. In addition, the average rate paid on FHLB advances and other borrowings increased from 5.28% for the nine months ended September 30, 2023, to 5.45% for the nine months ended September 30, 2024.

Provision for Credit Losses. Provision for credit losses was $554,000 for the nine months ended September 30, 2024, compared to $1.19 million for the nine months ended September 30, 2023. The provision for credit losses for the nine months ended September 30, 2024 includes a provision for credit losses on loans of $644,000 and a decrease in the provision for unfunded commitments of $90,000

Noninterest Income. Total noninterest income was $13.20 million for the nine months ended September 30, 2024 compared to $16.91 million for the nine months ended September 30, 2023. The decrease of $3.71 million was primarily due to a decrease in mortgage banking, net of $4.05 million. Mortgage banking, net includes net gain on sale of mortgage loans which decreased to $4.71 million for the nine months ended September 30, 2024, compared to $8.55 million for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, $147.81 million residential mortgage loans were sold compared to $256.17 million in the same period in the prior year. Mortgage volumes continued to be impacted by the interest rate environment. Gross margin levels decreased 16 basis points from 3.34% for the nine months ended September 30, 2023, to 3.18% for the nine months ended September 30, 2024. The decrease in mortgage banking, net, was partially offset by an increase in income from bank owned life insurance of $481,000, increasing from $1.17 million for the nine months ended September 30, 2023, compared to $1.65 million for the nine months ended September 30, 2024.

Noninterest Expense. Noninterest expense was $51.61 million for the nine months ended September 30, 2024, compared to $53.20 million for the nine months ended September 30, 2023, a decrease of $1.59 million or 3.0%. The decrease was primarily related to lower salaries and employee benefits, decreasing 5.4% from $31.61 million for the nine months ended September 30, 2023, to $29.89 million for the nine months ended September 30, 2024.

Provision for Income Taxes. Provision for income taxes was $1.34 million for the nine months ended September 30, 2024, compared to $1.91 million for the nine months ended September 30, 2023, due to the decrease in proportion of tax-exempt income compared to pretax earnings. In addition, the effective tax rate for the current period includes tax credits and other benefits related to investments in low-income housing tax credit projects. The year-to-date effective tax rate was 17.5% for the current period compared to 19.5% for same period in 2023.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Liquidity

The Bank is required by regulation to maintain sufficient levels of liquidity for safety and soundness purposes. Appropriate levels of liquidity will depend upon the types of activities in which the company engages. For internal reporting purposes, the Bank uses policy minimums of 1.0% and 8.0% for “basic surplus” and “basic surplus with FHLB” as internally defined. In general, the “basic surplus” is a calculation of the ratio of unencumbered short-term assets reduced by estimated percentages of CD maturities and other deposits that may leave the Bank in the next 90 days divided by total assets. “Basic surplus with FHLB” adds to “basic surplus” the additional borrowing capacity the Bank has with the FHLB of Des Moines. The Bank exceeded those minimum ratios as of September 30, 2024 and December 31, 2023.

The Bank’s primary sources of funds are deposits, repayment of loans and mortgage-backed securities, maturities of investments, funds provided from operations, advances from the FHLB of Des Moines and other borrowings. Scheduled repayments of loans and mortgage-backed securities and maturities of investment securities are generally predictable. However, other sources of funds, such as deposit flows and loan prepayments, can be greatly influenced by the general level of interest rates, economic conditions and competition. The Company uses liquidity resources principally to fund existing and future loan commitments. It also uses them to fund maturing certificates of deposit and demand deposit withdrawals, for investment purposes, to meet operating expenses and capital expenditures, for dividend payments and for stock repurchases to maintain adequate liquidity levels.

Liquidity may be adversely affected by unexpected deposit outflows, higher interest rates paid by competitors, and similar matters. Management monitors projected liquidity needs and determines the level desirable based in part on the Bank's commitments to make loans and management’s assessment of the Bank's ability to generate funds.

The Company's available borrowing capacity was approximately $348.10 million as of September 30, 2024 and $398.50 million as of December 31, 2023.

	September 30,				December 31,
	2024				2023
	Borrowings		Remaining Borrowing		Borrowings		Remaining Borrowing
	Outstanding		Capacity		Outstanding		Capacity
	(Dollars in Thousands)
Federal Home Loan Bank advances	$	219,167	$	219,365	$	175,737	$	266,017
Federal Reserve Bank discount window		-		28,734		-		32,472
Correspondent bank lines of credit		-		100,000		-		100,000
Total	$	219,167	$	348,099	$	175,737	$	398,489

During the first quarter of 2023, the FRB offered a new Bank Term Funding Program ("BTFP") for eligible depository institutions. The BTFP offered loans of up to one year in length to institutions pledging collateral eligible for purchase by FRB such as U.S. treasuries, agency securities, and mortgage-backed securities. These assets were valued at par. In March of 2024, the Company accessed borrowings through the BTFP. In September of 2024, the Company paid off the borrowings.

In addition to bank level liquidity management, Eagle must manage liquidity at the parent company level for various operating needs, including the servicing of debt, the payment of dividends on our common stock, share repurchases, payment of general corporate expense, and potential capital infusions into subsidiaries. The primary source of liquidity for Eagle consists of dividends from the Bank, which is governed by certain rules and regulations of the Montana Division of Banking and Financial Institutions and the Federal Reserve, and access to capital markets. Eagle has a $15.00 million line of credit with a correspondent bank. There was no outstanding balance for this line of credit at September 30, 2024 or December 31, 2023. Eagle's ability to receive dividends from the Bank in future periods will depend on several factors, including, without limitation, the Bank's future profits, asset quality, liquidity, and overall condition. In addition, both the Montana Division of Banking and Financial Institutions and Federal Reserve may require approval to pay dividends, based on certain regulatory statutes and limitations.

Eagle presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs in the short and long term. However, if economic conditions were to significantly deteriorate, regulatory capital requirements for Eagle or the Bank were to increase as the result of regulatory directives or otherwise, or Eagle were to believe it is prudent to enhance current liquidity levels, then Eagle may seek additional liquidity from external sources.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Capital Resources

As of September 30, 2024, the Bank’s internally determined measurement of sensitivity to interest rate movements as measured by a 300 basis point rise in interest rates scenario, increased the economic value of equity (“EVE”) by 2.3% compared to a decrease of 1.9% at December 31, 2023. A 300 basis point decrease in interest rates scenario decreased EVE by 17.0% compared to a decrease of 18.2% at December 31, 2023. The Bank is within the guidelines set forth by the Board of Directors for interest rate risk sensitivity in rising interest rate scenarios.

The Bank's regulatory capital was in excess of all applicable regulatory requirements and the Bank is deemed "well capitalized" pursuant to State of Montana and FRB rules as of September 30, 2024. The Bank's actual capital amounts and ratios as of September 30, 2024 are presented in the table below and all of the ratios, with the exception of the Tier 1 capital adjusted total average assets ratio, include the capital conservation buffer of 2.50%.

											Minimum
											To Be Well
						Minimum Required					Capitalized Under
						for Capital Adequacy					Prompt Corrective
	Actual					Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
September 30, 2024:
Total risk-based capital to risk weighted assets	$	226,289		13.14	%	$	180,784		10.50	%	$	172,176		10.00	%

Tier 1 capital to risk weighted assets		207,959		12.08			146,349		8.50			137,740		8.00

Common equity Tier 1 capital to risk weighted assets		207,959		12.08			120,523		7.00			111,914		6.50

Tier 1 capital to adjusted total average assets		207,959		9.87			84,300		4.00			105,375		5.00

											Minimum
											To Be Well
						Minimum Required					Capitalized Under
						for Capital Adequacy					Prompt Corrective
	Actual					Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
December 31, 2023:
Total risk-based capital to risk weighted assets	$	218,909		13.01	%	$	176,692		10.50	%	$	168,278		10.00	%

Tier 1 capital to risk weighted assets		201,179		11.96			143,037		8.50			134,623		8.00

Common equity Tier 1 capital to risk weighted assets		201,179		11.96			117,795		7.00			109,381		6.50

Tier 1 capital to adjusted total average assets		201,179		9.75			82,569		4.00			103,212		5.00

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Impact of Inflation and Changing Prices

Our condensed consolidated financial statements and the accompanying notes, which are found in Part I, Item 1, have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation. The impact of inflation is reflected in the increased cost of our operations. Interest rates have a greater impact on our performance than do the general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Interest Rate Risk

Interest rate risk is the potential for loss of future earnings resulting from adverse changes in the level of interest rates. Interest rate risk results from several factors and could have a significant impact on the Company’s net interest income, which is the Company's primary source of revenue. Net interest income is affected by changes in interest rates, the relationship between rates on interest-bearing assets and liabilities, the impact of interest rate fluctuations on asset prepayments and the mix of interest-bearing assets and liabilities.

Although interest rate risk is inherent in the banking industry, banks are expected to have sound risk management practices in place to measure, monitor and control interest rate exposures. The objective of interest rate risk management is to contain the risks associated with interest rate fluctuations. The process involves identification and management of the sensitivity of net interest income to changing interest rates.

The ongoing monitoring and management of this risk is an important component of the Company’s asset/liability committee, which is governed by policies established by the Company’s Board that are reviewed and approved annually. The Board delegates responsibility for carrying out the asset/liability management policies to the Bank’s asset/liability committee. In this capacity, the asset/liability committee develops guidelines and strategies impacting the Company’s asset/liability management related activities based upon estimated market risk sensitivity, policy limits and overall market interest rate levels and trends. The Company’s goal of its asset and liability management practices is to maintain or increase the level of net interest income within an acceptable level of interest rate risk.

The Bank has established acceptable levels of interest rate risk as follows for an instantaneous and permanent shock in rates: projected net interest income over the next twelve months (i.e. year-1) will not be reduced by more than 15% given an immediate increase or decrease in interest rates of up to 300 basis points, and the subsequent twelve months (i.e. year-2) will not be reduced by more than 20.0% given an immediate increase or decrease in interest rates of up to 300 basis points.

The following table includes the Bank’s net interest income sensitivity analysis.


Changes in Market	Rate Sensitivity		Policy	Policy
Interest Rates	As of September 30, 2024		Limits	Limits
(Basis Points)	Year 1	Year 2	Year 1	Year 2

+300	-8.5%	5.6%	-15.0%	-20.0%
+200	-5.6%	6.1%	-15.0%	-15.0%
+100	-2.4%	7.4%	-10.0%	-10.0%
-100	2.8%	8.2%	-10.0%	-10.0%
-200	5.5%	8.3%	-15.0%	-15.0%
-300	7.4%	6.6%	-15.0%	-20.0%

Critical Accounting Policies and Estimates

The accounting and financial reporting policies of Eagle are in accordance with generally accepted accounting principles ("GAAP") and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Eagle has identified certain of its accounting policies as “critical accounting policies,” consisting of those related to the allowance for credit losses and business combinations. In determining which accounting policies are critical in nature, Eagle has identified the policies that require significant judgment or involve complex estimates. It is management's practice to discuss critical accounting policies with the Board of Directors' Audit Committee on a periodic basis, including the development, selection, implementation, and disclosure of the critical accounting policies. The application of these policies has a significant impact on Eagle’s unaudited interim consolidated financial statements. Eagle’s financial results could differ significantly if different judgments or estimates are used in the application of these policies. All accounting policies described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 – Organization and Summary of Significant Accounting Policies" in Eagle’s 2023 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. There have been no significant changes to the accounting policies, estimates, and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Eagle’s 2023 Form 10-K, other than the following:

The excess of consideration paid over fair value of net assets acquired is recorded as goodwill. Goodwill is not amortized but is tested at least annually for impairment or more frequently if events occur or circumstances change that indicate impairment may exist. A goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying value. An impairment charge is recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value. Estimating the fair value of the reporting unit requires the use of inputs and assumptions including projected earnings of the Company in future years for which there is inherent uncertainty.

During the quarter ended September 30, 2024, Management performed a quantitative goodwill impairment test with assistance from a third-party valuation specialist. The interim determination was primarily driven by a revision in the Company’s earnings outlook in comparison to budget. A weighted average of both the market and income approaches was used in valuing the reporting unit’s fair value. The interim goodwill impairment assessment as of August 31, 2024 concluded that goodwill was not impaired. However, changing economic conditions that may adversely affect the Company's performance, the fair value of its assets and liabilities, or its stock price could result in future impairment. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. Management will continue to monitor events that could influence this conclusion in the future.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 3. Quantitative and Qualitative Disclosures About Market Risk

This item has been omitted based on Eagle’s status as a smaller reporting company.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation under the supervision and with the participation of our management including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure. Based on that evaluation, our CEO and CFO concluded that as of September 30, 2024, our disclosure controls and procedures were effective. During the last quarter, there were no changes in the Company’s internal control over financial reporting that have materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Part II - OTHER INFORMATION

Item 1.

Legal Proceedings.

Neither the Company nor the Bank is involved in any pending legal proceeding other than non-material legal proceedings occurring in the ordinary course of business.

Item 1A.

Risk Factors

There have not been any material changes in the risk factors previously disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

On April 18, 2024, Eagle's Board of Directors (the "Board") authorized the repurchase of up to 400,000 shares of its common stock beginning May 1, 2024. Under the plan, shares may be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend on market conditions and other corporate considerations. No shares were purchased during the second or third quarter of 2024 under this plan. The plan expires on May 1, 2025.

On April 20, 2023, the Board authorized the repurchase of up to 400,000 shares of its common stock beginning May 1, 2023. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchased its shares and the timing of such repurchases depended on market conditions and other corporate considerations. During the second quarter of 2023, 17,901 shares were purchased under this plan at an average price of $12.89. No shares were purchased during the third or fourth quarter of 2023 under this plan. No shares were purchased during the first or second quarter of 2024 under this plan. The plan expired on May 1, 2024.

On April 21, 2022, the Board authorized the repurchase of up to 400,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchased its shares and the timing of such repurchases depended on market conditions and other corporate considerations. During the second quarter of 2022, 5,000 shares were purchased under this plan at an average price of $19.75. During the third quarter of 2022, 99,517 shares were purchased under this plan at an average price of $19.45. During the fourth quarter of 2022, 6,608 shares were purchased under this plan at an average price of $18.80. No shares were purchased during the first or second quarter of 2023 under this plan. The plan expired on April 21, 2023.

Item 3.

Defaults Upon Senior Securities.

Not applicable.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information.

During the three months ended September 30, 2024, none of our directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Part II - OTHER INFORMATION - continued

Item 6.

Exhibits.

Exhibit Number	Description

3.1	Amended and Restated Certificate of Incorporation of Eagle Bancorp Montana, Inc. (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on February 23, 2010).

3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation. (incorporated by reference to Exhibit 3.2 of our Quarterly Report on Form 10-Q filed on May 9, 2019).

3.3	Bylaws of Eagle Bancorp Montana, Inc., amended as of August 20, 2015 (incorporated by reference to 3.1 of our Current Report on Form 8-K filed on August 25, 2015).

10.1	Fourth Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Laura F. Clark adopted October 17, 2024 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on October 22, 2024).

10.2	First Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Miranda J. Spaulding adopted October 17, 2024 (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on October 22, 2024).

10.3	Third Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Dale F. Field adopted October 17, 2024 (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed on October 22, 2024).

10.4	Second Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Rachel R. Amdahl adopted November 1, 2024 (filed herewith).

10.5	First Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Alana Binde adopted November 1, 2024 (filed herewith).

10.6	Second Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Chantelle Nash adopted November 1, 2024 (filed herewith).

10.7	First Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Mark O'Neill adopted November 1, 2024 (filed herewith).

10.8	First Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Patrick D. Rensmon adopted November 1, 2024 (filed herewith).

31.1	Certification by Laura F. Clark, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.

31.2	Certification by Miranda J. Spaulding, Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.

32.1	Certification by Laura F. Clark, Chief Executive Officer, and Miranda J. Spaulding, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)⁽¹⁾

101.SCH	Inline XBRL Taxonomy Extension Schema Document⁽¹⁾

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document⁽¹⁾

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document⁽¹⁾

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document⁽¹⁾

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document⁽¹⁾

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

⁽¹⁾ These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	EAGLE BANCORP MONTANA, INC.

Date: November 13, 2024	By:	/s/ Laura F. Clark
		Laura F. Clark
		President/CEO



Date: November 13, 2024	By:	/s/ Miranda J. Spaulding
		Miranda J. Spaulding
		SVP/CFO

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	7th grade Avg

Eagle Bancorp Montana (EBMT) 10-Q2024 Q3 Quarterly report

Content analysis