| PART I. | FINANCIAL INFORMATION | PAGE |
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| Item 1. · Financial Statements (Unaudited) |
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| Condensed Consolidated Statements of Financial Condition as of June 30, 2024 and December 31, 2023 | 1 |
| Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2024 and 2023 | 3 |
| Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months and six months ended June 30, 2024 and 2023 | 5 |
| Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months and six months ended June 30, 2024 and 2023 | 6 |
| Condensed Consolidated Statements of Cash Flows for the six months ended June 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 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 39 |
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| Item 4. | Controls and Procedures | 39 |
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| PART II. | OTHER INFORMATION | |
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| Item 1. | Legal Proceedings | 40 |
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| Item 1A. | Risk Factors | 40 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 40 |
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| Item 3. | Defaults Upon Senior Securities | 40 |
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| Item 4. | Mine Safety Disclosures | 40 |
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| Item 5. | Other Information | 41 |
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| Item 6. | Exhibits | 41 |
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| Signatures | 42 | |
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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; |
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| ● | statements regarding our business plans, prospects, growth and operating strategies; |
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| ● | statements regarding the asset quality of our loan and investment portfolios; and |
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| ● | estimates of our risks and future costs and benefits. |
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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; |
| ● | the emergence or continuation of widespread health emergencies or pandemics, including the magnitude and duration of the ongoing novel coronavirus, or COVID-19, and its impacts on the economies and communities we serve, which may likely have an adverse impact on our credit portfolio, goodwill, stock price, borrowers and the economy as a whole both globally and domestically; |
| ● | local, regional, national and international economic and market conditions and events, including the ability of the U.S. Congress to increase the U.S. statutory debt limit, as needed, 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; |
| ● | the risks related to the transition and physical impacts of climate change; |
| ● | 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; |
| ● | 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.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| June 30, | December 31, |
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| 2024 | 2023 |
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| ASSETS: |
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| Cash and due from banks | $22,361 | $23,243 |
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| Interest-bearing deposits in banks | 1,401 | 1,302 |
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| Total cash and cash equivalents | 23,762 | 24,545 |
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| Securities available-for-sale, at fair value (amortized cost of $335,210 at June 30, 2024 and $345,355 at December 31, 2023) | 306,869 | 318,279 |
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| Federal Home Loan Bank ("FHLB") stock | 10,136 | 9,191 |
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| Federal Reserve Bank ("FRB") stock | 4,131 | 4,131 |
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| Mortgage loans held-for-sale, at fair value | 10,518 | 11,432 |
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| Loans receivable, net of allowance for credit losses of $16,830 at June 30, 2024 and $16,440 at December 31, 2023 | 1,500,663 | 1,468,049 |
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| Accrued interest and dividends receivable | 13,195 | 12,485 |
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| Mortgage servicing rights, net | 15,614 | 15,853 |
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| Assets held-for-sale, at cost | 257 | - |
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| Premises and equipment, net | 98,397 | 94,282 |
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| Cash surrender value of life insurance, net | 48,529 | 47,939 |
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| Goodwill | 34,740 | 34,740 |
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| Core deposit intangible, net | 5,168 | 5,880 |
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| Other assets | 26,976 | 28,860 |
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| Total assets | $2,098,955 | $2,075,666 |
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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Continued)
| June 30, | December 31, |
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| 2024 | 2023 |
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| LIABILITIES: |
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| Deposit accounts: |
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| Noninterest-bearing | $400,113 | $418,727 |
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| Interest-bearing | 1,218,752 | 1,216,468 |
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| Total deposits | 1,618,865 | 1,635,195 |
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| Accrued expenses and other liabilities | 35,804 | 36,462 |
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| FHLB advances and other borrowings | 215,050 | 175,737 |
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| Other long-term debt: |
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| Principal amount | 60,155 | 60,155 |
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| Unamortized debt issuance costs | (1,081) | (1,156) |
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| Total other long-term debt, net | 59,074 | 58,999 |
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| Total liabilities | 1,928,793 | 1,906,393 |
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| SHAREHOLDERS' EQUITY: |
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| Preferred stock (par value $0.01 per share; 1,000,000 shares authorized; no shares issued or outstanding) | - | - |
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| Common stock (par value $0.01 per share; 20,000,000 shares authorized; 8,507,429 shares issued at June 30, 2024 and December 31, 2023; 8,016,784 shares outstanding at June 30, 2024 and December 31, 2023) | 85 | 85 |
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| Additional paid-in capital | 108,962 | 108,819 |
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| Unallocated common stock held by Employee Stock Ownership Plan ("ESOP") | (4,297) | (4,583) |
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| Treasury stock, at cost (490,645 shares at June 30, 2024 and December 31, 2023) | (11,124) | (11,124) |
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| Retained earnings | 97,413 | 96,021 |
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| Accumulated other comprehensive loss, net of tax | (20,877) | (19,945) |
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| Total shareholders' equity | 170,162 | 169,273 |
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| Total liabilities and shareholders' equity | $2,098,955 | $2,075,666 |
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