# EDGAR Filing Document

**Accession Number:** 0001478454
**File Stem:** 0001171843-23-000498
**Filing Date:** 2023-1
**Character Count:** 44129
**Document Hash:** 7047cfe1bb295192d29a1442154fd5cd
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001171843-23-000498.hdr.sgml**: 20230126

**ACCESSION NUMBER**: 0001171843-23-000498

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230126

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230126

**DATE AS OF CHANGE**: 20230126

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Eagle Bancorp Montana, Inc.
- **CENTRAL INDEX KEY:** 0001478454
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-34682
- **FILM NUMBER:** 23555200

**BUSINESS ADDRESS:**
- **STREET 1:** 1400 PROSPECT AVE.
- **STREET 2:** P.O. BOX 4999
- **CITY:** HELENA
- **STATE:** MT
- **ZIP:** 59604
- **BUSINESS PHONE:** 406-442-3080

**MAIL ADDRESS:**
- **STREET 1:** 1400 PROSPECT AVE.
- **STREET 2:** P.O. BOX 4999
- **CITY:** HELENA
- **STATE:** MT
- **ZIP:** 59604

?xml version="1.0" encoding="utf-8"?Form 8-K

### UNITED STATES

### SECURITIES AND EXCHANGE COMMISSION

### Washington, D.C. 20549
_________________

### FORM 8-K
_________________

#### CURRENT REPORT

#### Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

#### Date of Report (Date of earliest event reported): January 26, 2023
_______________________________

#### EAGLE BANCORP MONTANA, INC.
(Exact name of registrant as specified in its charter)

_______________________________

---

| | | |
|:---|:---|:---|
| **Delaware** | **1-34682** | **27-1449820** |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |

---

#### 1400 Prospect Ave.

#### Helena, Montana 59601
(Address of Principal Executive Offices) (Zip Code)

(406) 442-3080

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock par value $0.01 per share | EBMT | Nasdaq Global Market |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

**Item 2.02. Results of Operations and Financial Condition.**

On January 26, 2023, Eagle Bancorp Montana, Inc. announced its results of operations for the quarter ended December 31, 2022. A copy of the press release announcing Eagle's results for the quarter ended December 31, 2022, and dated January 26, 2023 is attached as Exhibit 99.1 and incorporated herein by reference.

The information in Item 2.02, as well as Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

**Item 9.01. Financial Statements and Exhibits.**

(d) The following exhibit is being filed herewith and this list shall constitute the exhibit index:

---

| | |
|:---|:---|
| <u>Exhibit No.</u> | <u>Description</u> |
| [99.1](exh_991.htm) | [Eagle Bancorp press release issued January 26, 2023.](exh_991.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

#### SIGNATURE
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 hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **EAGLE BANCORP MONTANA, INC.** | **EAGLE BANCORP MONTANA, INC.** |
| Date: January 26, 2023 | By: | <u>/s/ Miranda J. Spaulding&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> |
|  |  | Miranda J. Spaulding |
|  |  | Senior Vice President and CFO |

---

## Exhibit 99.1

**EXHIBIT 99.1**

**Eagle Bancorp Montana Earns $3.6 Million, or $0.47 per Diluted Share, in Fourth Quarter of 2022; Earns $10.7 Million, or $1.45 per Diluted Share, for the Year 2022; Declares Quarterly Cash Dividend of $0.1375 per Share**

HELENA, Mont., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the "Company," "Eagle"), the holding company of Opportunity Bank of Montana (the "Bank"), today reported net income of $3.6 million, or $0.47 per diluted share, in the fourth quarter of 2022, compared to $3.1 million, or $0.40 per diluted share, in the preceding quarter, and $1.7 million, or $0.26 per diluted share, in the fourth quarter a year ago. For the year 2022, net income was $10.7 million, or $1.45 per diluted share, compared to $14.4 million, or $2.17 per diluted share, in 2021. Results for 2022 included $2.3 million in acquisition costs associated with the merger of First Community Bancorp, Inc., and its subsidiary, First Community Bank ("First Community"), compared to $761,000 in acquisition related expenses in 2021.

Eagle's board of directors declared a quarterly cash dividend of $0.1375 per share on January 19, 2023. The dividend will be payable March 3, 2023 to shareholders of record February 10, 2023. The current dividend represents an annualized yield of 3.24% based on recent market prices.

"Eagle's fourth quarter operating results reflect another quarter of growth in the loan portfolio and the resulting net interest margin expansion," said Laura F. Clark, President and CEO. "Fourth quarter loan growth totaled $41.5 million and was well diversified across our loan categories. Additionally, our fourth quarter net interest margin improved year-over-year as we took advantage of interest rate increases enacted by the Federal Reserve. One of the highlights of 2022 was the acquisition of First Community, which was completed during the second quarter of 2022 and has already contributed nicely to operating results. I am excited about the opportunities this new market provides for continued long-term growth."

Eagle closed its acquisition of First Community on April 30, 2022, in a transaction valued at approximately $38.6 million. The acquisition added approximately $370 million in assets, $321 million in deposits and $191 million in loans.

**Fourth Quarter 2022 Highlights** (at or for the three-month period ended December 31, 2022, except where noted):

* Net income was $3.6 million, or $0.47 per diluted share, in the fourth quarter of 2022, compared to $3.1 million, or $0.40 per diluted share, in the preceding quarter, and $1.7 million, or $0.26 per diluted share, in the fourth quarter a year ago.

* Net interest margin ("NIM") was 4.10% in the fourth quarter of 2022, compared to 4.18% in the preceding quarter, and 3.75% in the fourth quarter a year ago.

* Revenues (net interest income before the loan loss provision, plus noninterest income) decreased modestly to $25.1 million in the fourth quarter of 2022, compared to $25.3 million in the preceding quarter and increased 15.2% compared to $21.8 million in the fourth quarter a year ago. 

* The Company recorded a discount on loans acquired from First Community of $5.4 million at April 30, 2022 of which $4.1 million remained as of December 31, 2022.

* Remaining discount on loans from acquisitions prior to 2022 totaled $728,000 as of December 31, 2022.

* The accretion of the loan purchase discount into loan interest income from the First Community, and previous acquisitions, was $267,000 in the fourth quarter of 2022, compared to accretion on purchased loans from acquisitions of $392,000 in the preceding quarter.

* The allowance for loan losses represented 180.0% of nonperforming loans at December 31, 2022, compared to 177.1% a year earlier.

* Total loans increased 45.1% to $1.35 billion, at December 31, 2022, compared to $933.1 million a year earlier, and increased 3.2% compared to $1.31 billion at September 30, 2022.

* Total deposits increased 33.8% to $1.64 billion at December 31, 2022, from $1.22 billion a year ago, and decreased 2.3% compared to $1.67 billion at September 30, 2022.

* The Company paid a quarterly cash dividend in the fourth quarter of $0.1375 per share on December 2, 2022 to shareholders of record November 10, 2022.

**Balance Sheet Results** 

Eagle's total assets increased 35.7% to $1.95 billion at December 31, 2022, compared to $1.44 billion a year ago, and increased 1.3% from $1.92 billion three months earlier. The year over year increase was primarily due to the First Community acquisition that closed during the second quarter of 2022.

The investment securities portfolio totaled $349.5 million at December 31, 2022, compared to $271.3 million a year ago, and $351.9 million at September 30, 2022.

Eagle originated $95.3 million in new residential mortgages during the quarter and sold $107.1 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.77%. This production compares to residential mortgage originations of $142.0 million in the preceding quarter with sales of $121.3 million and an average gross margin on sale of mortgage loans of approximately 3.46%.

Total loans increased $420.5 million or 45.1% compared to a year ago, and $41.5 million or 3.2% from three months earlier. Commercial real estate loans increased 31.3% to $539.1 million at December 31, 2022, compared to $410.6 million a year earlier. Agricultural and farmland loans increased 112.1% to $240.4 million at December 31, 2022, compared to $113.3 million a year earlier. Commercial construction and development loans increased 63.6% to $151.1 million, compared to $92.4 million a year ago. Residential mortgage loans increased 34.4% to $135.9 million, compared to $101.2 million a year earlier. Commercial loans increased 25.3% to $127.3 million, compared to $101.5 million a year ago. Home equity loans increased 43.5% to $74.3 million, residential construction loans increased 30.9% to $59.8 million, and consumer loans increased 49.6% to $27.6 million, compared to a year ago.

Total deposits increased 33.8% to $1.64 billion at December 31, 2022, compared to $1.22 billion at December 31, 2021, and decreased 2.3% from $1.67 billion at September 30, 2022. Noninterest-bearing checking accounts represented 28.7%, interest-bearing checking accounts represented 15.5%, savings accounts represented 16.7%, money market accounts comprised 23.7% and time certificates of deposit made up 15.4% of the total deposit portfolio at December 31, 2022. The average cost of funds was 0.85% in the fourth quarter of 2022, compared to 0.47% in the preceding quarter and 0.35% in the fourth quarter of 2021.

Shareholders' equity was $158.4 million at December 31, 2022, compared to $156.7 million a year earlier and $151.3 million three months earlier. Book value per share was $19.79 at December 31, 2022, compared to $23.07 a year earlier and $18.94 three months earlier. Tangible book value per share, a non-GAAP financial measure calculated by dividing shareholders' equity, less goodwill and core deposit intangible, by common shares outstanding, was $14.52 at December 31, 2022, compared to $19.74 a year earlier and $13.60 three months earlier.

**Operating Results**

"Higher yields on interest earning assets contributed to NIM expanding 35 basis points during the fourth quarter of 2022, compared to the fourth quarter a year ago. Compared to the preceding quarter, NIM contracted eight basis points, largely due to an uptick in funding costs," said Clark.

Eagle's NIM was 4.10% in the fourth quarter of 2022, compared to 4.18% in the preceding quarter, and 3.75% in the fourth quarter a year ago. The interest accretion on acquired loans totaled $267,000 and resulted in a six basis-point increase in the NIM during the fourth quarter of 2022, compared to $392,000 and a nine basis-point increase in the NIM during the preceding quarter. Average yields on interest earning assets for the fourth quarter increased to 4.72% from 3.99% a year ago. For the year, the NIM expanded 18 basis points to 4.03%, compared to the same period one year earlier.

Eagle's fourth quarter revenues decreased modestly to $25.1 million, compared to $25.3 million in the preceding quarter and increased 15.2% compared to $21.8 million in the fourth quarter a year ago. For the year, revenues were $93.8 million, compared to $94.3 million in 2021.

Net interest income, before the loan loss provision, decreased 1.5% to $17.6 million in the fourth quarter, compared to $17.9 million in the third quarter of 2022, and increased 46.2% compared to $12.0 million in the fourth quarter of 2021. For the year, net interest income, before the loan loss provision, increased 36.0% to $63.3 million, compared to $46.5 million in 2021.

Eagle's total noninterest income was $7.4 million in the fourth quarter of 2022, which was unchanged compared to the preceding quarter, and a 23.3% decrease compared to $9.7 million in the fourth quarter a year ago. Net mortgage banking, the largest component of noninterest income, totaled $3.3 million in the fourth quarter of 2022, compared to $4.4 million in the preceding quarter and $7.7 million in the fourth quarter a year ago. Noninterest income includes $2.1 million for the fourth quarter of 2022, compared to $624,000 for the fourth quarter of 2021 related to commodity sales income from Eagle's subsidiary Western Financial Services ("WFS"). WFS facilitates deferred payment contracts for customers that produce agricultural products. The corresponding commodity sales expense is included in noninterest expense. For the year 2022, noninterest income decreased 36.2% to $30.5 million, compared to $47.8 million in 2021. Net mortgage banking decreased 52.5% to $19.5 million in 2022, compared to $41.0 million in 2021. Decreases in net mortgage banking were largely driven by reduced mortgage volumes. Noninterest income includes $4.3 million for 2022, compared to $1.6 million for 2021 related to commodity sales income for WFS.

Fourth quarter noninterest expense decreased 1.7% to $20.3 million, compared to $20.7 million in the preceding quarter and increased 6.2% compared to $19.1 million in the fourth quarter a year ago. Noninterest expense includes commodity sales expense for WFS of $2.1 million for the fourth quarter of 2022, compared to $624,000 for the fourth quarter of 2021. For the year, noninterest expense increased to $78.0 million, compared to $74.2 million in 2021. Salaries and employee benefits expense were down overall due to lower commissions for residential mortgage originations. However, acquisition costs were $2.3 million in 2022 compared to $761,000 in 2021. In addition, noninterest expense includes commodity sales expense for WFS of $4.3 million for 2022, compared to $1.6 million for 2021.

For the fourth quarter of 2022, the income tax provision totaled $787,000, for an effective tax rate of 17.8%, compared to $1.0 million in the preceding quarter, and $632,000 in the fourth quarter of 2021.

**Credit Quality** 

The loan loss provision was $347,000 in the fourth quarter of 2022, compared to $517,000 in the preceding quarter and $285,000 in the fourth quarter a year ago. The allowance for loan losses represented 180.0% of nonperforming loans at December 31, 2022, compared to 306.4% three months earlier and 177.1% a year earlier. Nonperforming loans were $7.8 million at December 31, 2022, compared to $4.5 million at September 30, 2022, and $7.1 million a year earlier.

Eagle had no other real estate owned and other repossessed assets on its books at December 31, 2022, or at September 30, 2022. This compared to $4,000 at December 31, 2021.

Net loan charge-offs totaled $197,000 in the fourth quarter of 2022, compared to net loan recoveries of $8,000 in the preceding quarter and net loan recoveries of $15,000 in the fourth quarter a year ago. The allowance for loan losses was $14.0 million, or 1.03% of total loans, at December 31, 2022, compared to $13.9 million, or 1.06% of total loans, at September 30, 2022, and $12.5 million, or 1.34% of total loans, a year ago.

**Capital Management**

The ratio of tangible common shareholders' equity (shareholders' equity, less goodwill and core deposit intangible) to tangible assets (total assets, less goodwill and core deposit intangible) decreased to 6.10% at December 31, 2022 from 9.49% a year ago and increased from 5.77% three months earlier. Shareholders' equity has been impacted by an accumulated other comprehensive loss related to securities available-for-sale. These unrealized losses are primarily a result of rapid increases in interest rates. As of December 31, 2022, the Bank's regulatory capital was in excess of all applicable regulatory requirements and is deemed well capitalized. The Bank's Tier 1 capital to adjusted total average assets was 9.82% as of December 31, 2022.

**About the Company**

Eagle Bancorp Montana, Inc. is a bank holding company headquartered in Helena, Montana, and is the holding company of Opportunity Bank of Montana, a community bank established in 1922 that serves consumers and small businesses in Montana through 32 banking offices. Additional information is available on the Bank's website at www.opportunitybank.com. The shares of Eagle Bancorp Montana, Inc. are traded on the NASDAQ Global Market under the symbol "EBMT."

**Forward Looking Statements**

*This release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and may be identified by the use of such words as "believe," "will" "expect," "anticipate," "should," "planned," "estimated," and "potential." These forward-looking statements include, but are not limited to statements of our goals, intentions and expectations; statements regarding our business plans, prospects, mergers, growth and operating strategies; statements regarding the current global COVID-19 pandemic, 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 our management 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. These factors include, but are not limited to, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; general economic conditions and political events, either nationally or in our market areas, that are worse than expected; the duration and impact of the COVID-19 pandemic, including but not limited to vaccine efficacy and immunization rates, new variants, steps taken by governmental and other authorities to contain, mitigate and combat the pandemic, adverse effects on our employees, customers and third-party service providers, the increase in cyberattacks in the current work-from-home environment, the ultimate extent of the impacts on our business, financial position, results of operations, liquidity and prospects, continued deterioration in general business and economic conditions could adversely affect our revenues and the values of our assets and liabilities, lead to a tightening of credit and increase stock price volatility, and potential impairment charges; competition among depository and other financial institutions; loan demand or residential and commercial real estate values in Montana; the concentration of our business in Montana; our ability to continue to increase and manage our commercial real estate, commercial business and agricultural loans; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (including any securities, bank operations, consumer or employee litigation); inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; adverse changes in the securities markets that lead to impairment in the value of our investment securities and goodwill; other economic, governmental, competitive, regulatory and technological factors that may affect our operations; our ability to implement new technologies and maintain secure and reliable technology systems; cyber incidents, or theft or loss of Company or customer data or money; our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; the effect of our recent acquisitions, including the failure to achieve expected revenue growth and/or expense savings, the failure to effectively integrate their operations, the outcome of any legal proceedings and the diversion of management time on issues related to the integration.* 

*Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. All information set forth in this press release is current as of the date of this release and the company undertakes no duty or obligation to update this information.*

**Use of Non-GAAP Financial Measures**

In addition to results presented in accordance with generally accepted accounting principles utilized in the United States, or GAAP, the Financial Ratios and Other Data contains non-GAAP financial measures. Non-GAAP disclosures include: 1) core efficiency ratio, 2) tangible book value per share, 3) tangible common equity to tangible assets, 4) earnings per diluted share, excluding acquisition costs and related taxes and 5) return on average assets, excluding acquisition costs and related taxes. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and performance trends, and to enhance investors' overall understanding of such financial performance. In particular, the use of tangible book value per share and tangible common equity to tangible assets is prevalent among banking regulators, investors and analysts.

The numerator for the core efficiency ratio is calculated by subtracting acquisition costs and intangible asset amortization from noninterest expense. Tangible assets and tangible common shareholders' equity are calculated by excluding intangible assets from assets and shareholders' equity, respectively. For these financial measures, our intangible assets consist of goodwill and core deposit intangible. Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of common shares outstanding. We believe that this measure is consistent with the capital treatment by our bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios and present this measure to facilitate the comparison of the quality and composition of our capital over time and in comparison, to our competitors.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. Further, the non-GAAP financial measure of tangible book value per share should not be considered in isolation or as a substitute for book value per share or total shareholders' equity determined in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Reconciliation of the GAAP and non-GAAP financial measures are presented below.

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| | | | |
|:---|:---|:---|:---|
| <u>**Balance Sheet**</u> | | | |
| *(Dollars in thousands, except per share data)* | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* |
|  | December 31, | September 30, | December 31, |
|  | 2022 | 2022 | 2021 |
| Assets: |  |  |  |
| Cash and due from banks | $19321 | $22154 | $10938 |
| Interest bearing deposits in banks | 2490 | 3043 | 43669 |
| Federal funds sold | - | - | 6827 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash and cash equivalents | 21811 | 25197 | 61434 |
| Securities available-for-sale | 349495 | 351949 | 271262 |
| Federal Home Loan Bank ("FHLB") stock | 5089 | 2939 | 1702 |
| Federal Reserve Bank ("FRB") stock | 4131 | 4206 | 2974 |
| Mortgage loans held-for-sale, at fair value | 8250 | 24408 | 25819 |
| Loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Residential 1-4 family | 135947 | 137798 | 101180 |
| &nbsp;&nbsp;&nbsp;&nbsp; Residential 1-4 family construction | 59756 | 57467 | 45635 |
| &nbsp;&nbsp;&nbsp;&nbsp; Commercial real estate | 539070 | 506716 | 410568 |
| &nbsp;&nbsp;&nbsp;&nbsp; Commercial construction and development | 151145 | 145300 | 92403 |
| &nbsp;&nbsp;&nbsp;&nbsp; Farmland | 136334 | 129827 | 67005 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Home equity | 74271 | 67409 | 51748 |
| &nbsp;&nbsp;&nbsp;&nbsp; Consumer | 27609 | 27703 | 18455 |
| &nbsp;&nbsp;&nbsp;&nbsp; Commercial | 127255 | 130975 | 101535 |
| &nbsp;&nbsp;&nbsp;&nbsp; Agricultural | 104036 | 110633 | 46335 |
| &nbsp;&nbsp;&nbsp;&nbsp; Unearned loan fees | (1745) | (1674) | (1725) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans | 1353678 | 1312154 | 933139 |
| Allowance for loan losses | (14000) | (13850) | (12500) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loans | 1339678 | 1298304 | 920639 |
| Accrued interest and dividends receivable | 11284 | 10778 | 5751 |
| Mortgage servicing rights, net | 15412 | 15141 | 13693 |
| Assets held-for-sale, at fair value | 1305 | 2041 |  |
| Premises and equipment, net | 84323 | 79374 | 67266 |
| Cash surrender value of life insurance, net | 47724 | 45845 | 36474 |
| Goodwill | 34740 | 34740 | 20798 |
| Core deposit intangible, net | 7459 | 7895 | 1780 |
| Other assets | 17683 | 21103 | 6334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $1948384 | $1923920 | $1435926 |
| Liabilities: |  |  |  |
| Deposit accounts: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Noninterest bearing | 468955 | 507034 | 368846 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest bearing | 1166317 | 1167216 | 853703 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 1635272 | 1674250 | 1222549 |
| Accrued expenses and other liabilities | 26458 | 23748 | 21779 |
| FHLB advances and other borrowings | 69394 | 15600 | 5000 |
| Other long-term debt, net | 58844 | 59048 | 29869 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 1789968 | 1772646 | 1279197 |
| Shareholders' Equity: |  |  |  |
| Preferred stock (par value $0.01 per share; 1,000,000 shares |  |  |  |
| &nbsp;&nbsp;authorized; no shares issued or outstanding) |  |  |  |
| Common stock (par value $0.01; 20,000,000 shares authorized; |  |  |  |
| &nbsp;&nbsp;8,507,429, 8,507,429 and 7,110,833 shares issued; 8,006,033, |  |  |  |
| &nbsp;&nbsp;7,986,890 and 6,794,811 shares outstanding at December 31, 2022, |  |  |  |
| &nbsp;&nbsp;September 30, 2022 and December, 2021, respectively | 85 | 85 | 71 |
| Additional paid-in capital | 109164 | 109488 | 80832 |
| Unallocated common stock held by Employee Stock Ownership Plan | (5156) | (5300) | (5729) |
| Treasury stock, at cost (501,396, 520,539, and 316,022 shares at |  |  |  |
| &nbsp;&nbsp;December 31, 2022, September 30, 2022 and December 31, 2021, respectively) | (11343) | (11627) | (7321) |
| Retained earnings | 92023 | 89502 | 85383 |
| Accumulated other comprehensive (loss) income, net of tax | (26357) | (30874) | 3493 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 158416 | 151274 | 156729 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $1948384 | $1923920 | $1435926 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <u>**Income Statement**</u> |  | *(Unaudited)* |  | *(Unaudited)* | *(Unaudited)* |
| *(Dollars in thousands, except per share data)* | Three Months Ended | Three Months Ended | Three Months Ended | Years Ended | Years Ended |
|  | December 31, | September 30, | December 31, | December 31, | December 31, |
|  | 2022 | 2022 | 2021 | 2022 | 2021 |
| Interest and dividend income: |  |  |  |  |  |
| Interest and fees on loans | $17420 | $16665 | $11474 | $60353 | $45134 |
| Securities available-for-sale | 2716 | 2555 | 1249 | 8579 | 4238 |
| FRB and FHLB dividends | 142 | 63 | 61 | 302 | 255 |
| Other interest income | 22 | 59 | 30 | 228 | 120 |
| Total interest and dividend income | 20300 | 19342 | 12814 | 69462 | 49747 |
| Interest expense: |  |  |  |  |  |
| Interest expense on deposits | 1673 | 717 | 356 | 3124 | 1474 |
| FHLB advances and other borrowings | 357 | 136 | 23 | 514 | 175 |
| Other long-term debt | 657 | 602 | 390 | 2512 | 1558 |
| Total interest expense | 2687 | 1455 | 769 | 6150 | 3207 |
| Net interest income | 17613 | 17887 | 12045 | 63312 | 46540 |
| Loan loss provision | 347 | 517 | 285 | 2001 | 861 |
| Net interest income after loan loss provision | 17266 | 17370 | 11760 | 61311 | 45679 |
| Noninterest income: |  |  |  |  |  |
| Service charges on deposit accounts | 445 | 498 | 329 | 1668 | 1213 |
| Mortgage banking, net | 3306 | 4447 | 7675 | 19489 | 41035 |
| Interchange and ATM fees | 707 | 594 | 493 | 2375 | 1982 |
| Appreciation in cash surrender value of life insurance | 287 | 291 | 209 | 1035 | 721 |
| Commodity sales income | 2147 | 1171 | 624 | 4279 | 1586 |
| Other noninterest income | 555 | 416 | 385 | 1653 | 1232 |
| Total noninterest income | 7447 | 7417 | 9715 | 30499 | 47769 |
| Noninterest expense: |  |  |  |  |  |
| Salaries and employee benefits | 11010 | 11699 | 11673 | 44521 | 48766 |
| Occupancy and equipment expense | 2160 | 1946 | 1702 | 7601 | 6448 |
| Data processing | 1367 | 1964 | 1369 | 5995 | 5035 |
| Advertising | 367 | 464 | 426 | 1419 | 1276 |
| Amortization | 439 | 333 | 142 | 1334 | 573 |
| Loan costs | 412 | 491 | 610 | 2036 | 2736 |
| FDIC insurance premiums | 229 | 93 | 89 | 559 | 332 |
| Professional and examination fees | 371 | 420 | 356 | 1469 | 1756 |
| Acquisition costs |  | 103 | 726 | 2296 | 761 |
| Commodity sales expense | 2147 | 1171 | 624 | 4279 | 1586 |
| Other noninterest expense | 1802 | 1980 | 1399 | 6453 | 4897 |
| Total noninterest expense | 20304 | 20664 | 19116 | 77962 | 74166 |
| Income before provision for income taxes | 4409 | 4123 | 2359 | 13848 | 19282 |
| Provision for income taxes | 787 | 1031 | 632 | 3147 | 4863 |
| Net income | $3622 | $3092 | $1727 | $10701 | $14419 |
| Basic earnings per share | $0.47 | $0.40 | $0.26 | $1.45 | $2.17 |
| Diluted earnings per share | $0.47 | $0.40 | $0.26 | $1.45 | $2.17 |
| Basic weighted average shares outstanding | 7776145 | 7793485 | 6543192 | 7376275 | 6653935 |
| Diluted weighted average shares outstanding | 7777552 | 7808050 | 6563512 | 7386253 | 6655735 |

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| | | | |
|:---|:---|:---|:---|
| <u>**ADDITIONAL FINANCIAL INFORMATION**</u> |  | *(Unaudited)* |  |
| *(Dollars in thousands, except per share data)* | Three Months Ended or Years Ended | Three Months Ended or Years Ended | Three Months Ended or Years Ended |
|  | December 31, | September 30, | December 31, |
|  | 2022 | 2022 | 2021 |
| **Mortgage Banking Activity (For the quarter):** |  |  |  |
| Net gain on sale of mortgage loans | $2965 | $4192 | $9825 |
| Net change in fair value of loans held-for-sale and derivatives | (509) | (378) | (2439) |
| Mortgage servicing income, net | 850 | 633 | 289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage banking, net | $3306 | $4447 | $7675 |
| **Mortgage Banking Activity (Year-to-date):** |  |  |  |
| Net gain on sale of mortgage loans | $18610 |  | $46086 |
| Net change in fair value of loans held-for-sale and derivatives | (1842) |  | (5443) |
| Mortgage servicing income, net | 2721 |  | 392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage banking, net | $19489 |  | $41035 |
| **Performance Ratios (For the quarter):** |  |  |  |
| Return on average assets | 0.75% | 0.65% | 0.48% |
| Return on average equity | 9.38% | 7.51% | 4.37% |
| Yield on average interest earning assets | 4.72% | 4.52% | 3.99% |
| Cost of funds | 0.85% | 0.47% | 0.35% |
| Net interest margin | 4.10% | 4.18% | 3.75% |
| Core efficiency ratio\* | 79.27% | 79.94% | 83.86% |
| **Performance Ratios (Year-to-date):** |  |  |  |
| Return on average assets | 0.60% |  | 1.06% |
| Return on average equity | 6.87% |  | 9.18% |
| Yield on average interest earning assets | 4.42% |  | 4.11% |
| Cost of funds | 0.54% |  | 0.39% |
| Net interest margin | 4.03% |  | 3.85% |
| Core efficiency ratio\* | 79.24% |  | 77.23% |
| \* The core efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of acquisition | \* The core efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of acquisition | \* The core efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of acquisition | \* The core efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of acquisition |
| costs and intangible asset amortization, by the sum of net interest income and non-interest income. | costs and intangible asset amortization, by the sum of net interest income and non-interest income. |  |  |
| <u>**ADDITIONAL FINANCIAL INFORMATION**</u> |  |  |  |
| *(Dollars in thousands, except per share data)* |  |  |  |
| **Asset Quality Ratios and Data:** | As of or for the Three Months Ended | As of or for the Three Months Ended | As of or for the Three Months Ended |
|  | December 31, | September 30, | December 31, |
|  | 2022 | 2022 | 2021 |
| Nonaccrual loans | $2200 | $2534 | $4835 |
| Loans 90 days past due and still accruing | 1076 | 874 |  |
| Restructured loans, net | 4502 | 1112 | 2224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total nonperforming loans | 7778 | 4520 | 7059 |
| Other real estate owned and other repossessed assets | - | - | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total nonperforming assets | $7778 | $4520 | $7063 |
| Nonperforming loans / portfolio loans | 0.57% | 0.34% | 0.76% |
| Nonperforming assets / assets | 0.40% | 0.23% | 0.49% |
| Allowance for loan losses / portfolio loans | 1.03% | 1.06% | 1.34% |
| Allowance / nonperforming loans | 179.99% | 306.42% | 177.08% |
| Gross loan charge-offs for the quarter | $216 | $6 | $2 |
| Gross loan recoveries for the quarter | $19 | $14 | $17 |
| Net loan charge-offs (recoveries) for the quarter | $197 | $(8) | $(15) |
|  | December 31, | September 30, | December 31, |
|  | 2022 | 2022 | 2021 |
| **Capital Data (At quarter end):** |  |  |  |
| Book value per share | $19.79 | $18.94 | $23.07 |
| Tangible book value per share\*\* | $14.52 | $13.60 | $19.74 |
| Shares outstanding | 8006033 | 7986890 | 6794811 |
| Tangible common equity to tangible assets\*\*\* | 6.10% | 5.77% | 9.49% |
| **Other Information:** |  |  |  |
| Average investment securities for the quarter | $348267 | $378680 | $262736 |
| Average investment securities year-to-date | $336779 | $332950 | $215978 |
| Average loans for the quarter \*\*\*\* | $1345776 | $1301358 | $942783 |
| Average loans year-to-date \*\*\*\* | $1194788 | $1144459 | $914804 |
| Average earning assets for the quarter | $1705349 | $1699027 | $1274817 |
| Average earning assets year-to-date | $1572106 | $1527692 | $1209715 |
| Average total assets for the quarter | $1934002 | $1913710 | $1433003 |
| Average total assets year-to-date | $1768919 | $1713892 | $1357249 |
| Average deposits for the quarter | $1655298 | $1656228 | $1215046 |
| Average deposits year-to-date | $1514158 | $1467111 | $1138608 |
| Average equity for the quarter | $154409 | $164592 | $158208 |
| Average equity year-to-date | $155655 | $156071 | $157014 |
| \*\* The tangible book value per share is a non-GAAP ratio that is calculated by dividing shareholders' equity, | \*\* The tangible book value per share is a non-GAAP ratio that is calculated by dividing shareholders' equity, | \*\* The tangible book value per share is a non-GAAP ratio that is calculated by dividing shareholders' equity, |  |
| less goodwill and core deposit intangible, by common shares outstanding. |  |  |  |
| \*\*\* The tangible common equity to tangible assets is a non-GAAP ratio that is calculated by dividing shareholders' | \*\*\* The tangible common equity to tangible assets is a non-GAAP ratio that is calculated by dividing shareholders' | \*\*\* The tangible common equity to tangible assets is a non-GAAP ratio that is calculated by dividing shareholders' |  |
| equity, less goodwill and core deposit intangible, by total assets, less goodwill and core deposit intangible. | equity, less goodwill and core deposit intangible, by total assets, less goodwill and core deposit intangible. | equity, less goodwill and core deposit intangible, by total assets, less goodwill and core deposit intangible. |  |
| \*\*\*\* Includes loans held for sale |  |  |  |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <u>**Reconciliation of Non-GAAP Financial Measures**</u> | <u>**Reconciliation of Non-GAAP Financial Measures**</u> | | | | |
| <u>**Core Efficiency Ratio**</u> |  | *(Unaudited)* |  | *(Unaudited)* | *(Unaudited)* |
| *(Dollars in thousands)* | Three Months Ended | Three Months Ended | Three Months Ended | Years Ended | Years Ended |
|  | December 31, | September 30, | December 31, | December 31, | December 31, |
|  | 2022 | 2022 | 2021 | 2022 | 2021 |
| Calculation of Core Efficiency Ratio: |  |  |  |  |  |
| Noninterest expense | $20304 | $20664 | $19116 | $77962 | $74166 |
| Acquisition costs |  | (103) | (726) | (2296) | (761) |
| Intangible asset amortization | (439) | (333) | (142) | (1334) | (573) |
| Core efficiency ratio numerator | 19865 | 20228 | 18248 | 74332 | 72832 |
| Net interest income | 17613 | 17887 | 12045 | 63312 | 46540 |
| Noninterest income | 7447 | 7417 | 9715 | 30499 | 47769 |
| Core efficiency ratio denominator | 25060 | 25304 | 21760 | 93811 | 94309 |
| Core efficiency ratio (non-GAAP) | 79.27% | 79.94% | 83.86% | 79.24% | 77.23% |

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| | | | |
|:---|:---|:---|:---|
| <u>**Tangible Book Value and Tangible Assets**</u> | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* |
| *(Dollars in thousands, except per share data)* | December 31, | September 30, | December 31, |
|  | 2022 | 2022 | 2021 |
| Tangible Book Value: |  |  |  |
| Shareholders' equity | $158416 | $151274 | $156729 |
| Goodwill and core deposit intangible, net | (42199) | (42635) | (22578) |
| Tangible common shareholders' equity (non-GAAP) | $116217 | $108639 | $134151 |
| Common shares outstanding at end of period | 8006033 | 7986890 | 6794811 |
| Common shareholders' equity (book value) per share (GAAP) | $19.79 | $18.94 | $23.07 |
| Tangible common shareholders' equity (tangible book value) |  |  |  |
| per share (non-GAAP) | $14.52 | $13.60 | $19.74 |
| Tangible Assets: |  |  |  |
| Total assets | $1948384 | $1923920 | $1435926 |
| Goodwill and core deposit intangible, net | (42199) | (42635) | (22578) |
| Tangible assets (non-GAAP) | $1906185 | $1881285 | $1413348 |
| Tangible common shareholders' equity to tangible assets |  |  |  |
| (non-GAAP) | 6.10% | 5.77% | 9.49% |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <u>**Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes**</u> | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* |
| *(Dollars in thousands, except per share data)* | Three Months Ended | Three Months Ended | Three Months Ended | Years Ended | Years Ended |
|  | December 31, | September 30, | December 31, | December 31, | December 31, |
|  | 2022 | 2022 | 2021 | 2022 | 2021 |
| Net interest income after loan loss provision | $17266 | $17370 | $11760 | $61311 | $45679 |
| Noninterest income | 7447 | 7417 | 9715 | 30499 | 47769 |
| Noninterest expense | 20304 | 20664 | 19116 | 77962 | 74166 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs | - | (103) | (726) | (2296) | (761) |
| Noninterest expense, excluding acquisition costs (non-GAAP) | 20304 | 20561 | 18390 | 75666 | 73405 |
| Income before income taxes, excluding acquisition costs | 4409 | 4226 | 3085 | 16144 | 20043 |
| Provision for income taxes, excluding acquisition costs |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;related taxes (non-GAAP) | 787 | 1057 | 827 | 3669 | 5055 |
| Net Income, excluding acquisition costs and related taxes (non-GAAP) | $3622 | $3169 | $2258 | $12475 | $14988 |
| Diluted earnings per share (GAAP) | $0.47 | $0.40 | $0.26 | $1.45 | $2.17 |
| Diluted earnings per share, excluding acquisition costs and related |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;taxes (non-GAAP) | $0.47 | $0.41 | $0.34 | $1.69 | $2.25 |

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| | | | |
|:---|:---|:---|:---|
| <u>**Return on Average Assets, Excluding Acquisition Costs and Related Taxes**</u> | *(Unaudited)* | *(Unaudited)* | *(Unaudited)* |
| *(Dollars in thousands)* | December 31, | September 30, | December 31, |
|  | 2022 | 2022 | 2021 |
| **For the quarter:** |  |  |  |
| Net income, excluding acquisition costs and related taxes (non-GAAP)\* | $3622 | $3169 | $2258 |
| Average total assets quarter-to-date | $1934002 | $1913710 | $1433003 |
| Return on average assets, excluding acquisition costs and related taxes (non-GAAP) | 0.75% | 0.66% | 0.63% |
| **Year-to-date:** |  |  |  |
| Net income, excluding acquisition costs and related taxes (non-GAAP)\* | $12475 | $8801 | $14988 |
| Average total assets year-to-date | $1768919 | $1713892 | $1357249 |
| Return on average assets, excluding acquisition costs and related taxes (non-GAAP) | 0.71% | 0.68% | 1.10% |
| \* See Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes table for GAAP to non-GAAP reconciliation. | \* See Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes table for GAAP to non-GAAP reconciliation. | \* See Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes table for GAAP to non-GAAP reconciliation. | \* See Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes table for GAAP to non-GAAP reconciliation. |

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| | |
|:---|:---|
| Contacts: | Laura F. Clark, President and CEO |
|  | (406) 457-4007 |
|  | Miranda J. Spaulding, SVP and CFO |
|  | (406) 441-5010 |

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