Table of Contents

 

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 March 31, 2020

 

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 small business issuer 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)

 

(406) 442-3080


(Issuer's telephone number)

 

Website address: www.opportunitybank.com

 

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 ☒

 

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

The Nasdaq Stock Market LLC

 

 

 

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

6,818,883 shares outstanding

As of May 11, 2020

 

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

 

 

TABLE OF CONTENTS

 

PART I.

FINANCIAL INFORMATION

PAGE

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

 

 

 

Consolidated Statements of Financial Condition as of March 31, 2020 and December 31, 2019

1

 

 

 

 

Consolidated Statements of Income for the three months ended March 31, 2020 and 2019

3

 

 

 

 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019

5

 

 

 

 

Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2020 and 2019

6

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019

7

 

 

 

 

Notes to the Unaudited Consolidated Financial Statements

9

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

35

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

49

 

 

 

Item 4.

Controls and Procedures

50

 

 

 

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

51

Item 1A.

Risk Factors

51

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

52

Item 3.

Defaults Upon Senior Securities

52

Item 4. 

Mine Safety Disclosures

52

Item 5.

Other Information

52

Item 6. 

Exhibits

53

 

 

 

Signatures

54

 

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

 

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 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 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 negative impacts and disruptions resulting from the recent outbreak of the novel coronavirus, or COVID-19, 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 and the impact they may have on us, our customers and our assets and liabilities;

 

competition among depository and other financial institutions;

 

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;

 

our ability to attract deposits and other sources of funding or liquidity;

 

changes or volatility in the securities markets;

 

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;

 

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;

 

possible impairments of securities held by us, including those issued by government entities and government sponsored enterprises;

 

the level of future deposit insurance premium assessments;

 

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 Item 1A, “Risk Factors” and Item 7, “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, 2019, 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.

 

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
 

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

 

   

March 31,

   

December 31,

 
   

2020

   

2019

 

ASSETS:

               

Cash and due from banks

  $ 11,544     $ 18,094  

Interest bearing deposits in banks

    8,229       4,284  

Federal funds sold

    -       2,540  

Total cash and cash equivalents

    19,773       24,918  
                 

Securities available-for-sale, at fair value

    167,904       126,875  

Federal Home Loan Bank ("FHLB") stock

    5,161       4,683  

Federal Reserve Bank ("FRB") stock

    2,601       2,526  

Mortgage loans held-for-sale, at fair value

    25,187       25,612  

Loans receivable, net of allowance for loan losses of $9,250 at March 31, 2020 and $8,600 at December 31, 2019

    812,784       770,635  

Accrued interest and dividends receivable

    5,329       4,577  

Mortgage servicing rights, net

    9,018       8,739  

Premises and equipment, net

    51,731       40,082  

Cash surrender value of life insurance, net

    25,898       23,608  

Goodwill

    20,798       15,836  

Core deposit intangible, net

    2,832       2,786  

Other assets

    9,584       3,383  
                 

Total assets

  $ 1,158,600     $ 1,054,260  

 

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

 

- 1 -

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

 

   

March 31,

   

December 31,

 
   

2020

   

2019

 

LIABILITIES:

               

Deposit accounts:

               

Noninterest bearing

  $ 223,723     $ 200,035  

Interest bearing

    664,502       608,958  

Total deposits

    888,225       808,993  
                 

Accrued expenses and other liabilities

    17,067       9,825  

Deferred tax liability, net

    58       492  

FHLB advances and other borrowings

    94,585       88,350  

Other long-term debt:

               

Principal amount

    25,155       25,155  

Unamortized debt issuance costs

    (198 )     (214 )

Total other long-term debt, net

    24,957       24,941  
                 

Total liabilities

    1,024,892       932,601  
                 

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; 7,110,833 and 6,714,983 shares issued; 6,818,883 and 6,423,033 shares outstanding at March 31, 2020 and December 31, 2019, respectively)

    71       67  

Additional paid-in capital

    77,399       68,826  

Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")

    (269 )     (311 )

Treasury stock, at cost

    (3,643 )     (3,643 )

Retained earnings

    58,670       55,391  

Accumulated other comprehensive income, net of tax

    1,480       1,329  

Total shareholders' equity

    133,708       121,659  
                 

Total liabilities and shareholders' equity

  $ 1,158,600     $ 1,054,260  

 

 

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

 

- 2 -

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

 

CONSOLIDATED STATEMENTS OF INCOME

 (Dollars in Thousands, Except for Per Share Data)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2020

   

2019

 

INTEREST AND DIVIDEND INCOME:

               

Interest and fees on loans

  $ 11,432     $ 10,048  

Securities available-for-sale

    1,027       958  

FHLB and FRB dividends

    94       95  

Other interest income

    78       20  

Total interest and dividend income

    12,631       11,121  
                 

INTEREST EXPENSE:

               

Deposits

    1,339       787  

FHLB advances and other borrowings

    463       594  

Other long-term debt

    352       365  

Total interest expense

    2,154       1,746  
                 

NET INTEREST INCOME

    10,477       9,375  
                 

Loan loss provision

    670       604  
                 

NET INTEREST INCOME AFTER LOAN LOSS PROVISION

    9,807       8,771  
                 

NONINTEREST INCOME:

               

Service charges on deposit accounts

    316       261  

Net gain on sale of loans

    5,411       2,599  

Mortgage banking, net

    1,602       365  

Interchange and ATM fees

    337       275  

Appreciation in cash surrender value of life insurance

    160       157  

Net loss on sale of available-for-sale securities

    -       (55 )

Other noninterest income

    478       92  

Total noninterest income

    8,304       3,694  

 

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

 

- 3 -

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2020

   

2019

 

NONINTEREST EXPENSE:

               

Salaries and employee benefits

  $ 7,682     $ 5,992  

Occupancy and equipment expense

    1,209       1,034  

Data processing

    1,250       928  

Advertising

    249       268  

Amortization

    164       254  

Loan costs

    247       135  

Federal Deposit Insurance Corporation ("FDIC") insurance premiums

    69       60  

Postage

    98       68  

Professional and examination fees

    285       305  

Acquisition costs

    128       1,171  

Other noninterest expense

    1,467       806  

Total noninterest expense

    12,848       11,021  
                 

INCOME BEFORE PROVISION FOR INCOME TAXES

    5,263       1,444  
                 

Provision for income taxes

    1,336       261  
                 

NET INCOME

  $ 3,927     $ 1,183  
                 

BASIC EARNINGS PER SHARE

  $ 0.58     $ 0.18  
                 

DILUTED EARNINGS PER SHARE

  $ 0.57     $ 0.18  

 

 

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

 

- 4 -

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2020

   

2019

 
                 

NET INCOME

  $ 3,927     $ 1,183  
                 

OTHER ITEMS OF COMPREHENSIVE INCOME (LOSS) BEFORE TAX:

               

Change in fair value of investment securities available-for-sale

    205       1,486  

Reclassification for net realized losses on investment securities available-for-sale

    -       55  

Change in fair value of loans held-for-sale

    -       296  

Reclassification for net realized gains on loans held-for-sale

    -       (309 )

Total other items of comprehensive income

    205       1,528  
                 

Income tax (provision) benefit related to:

               

Investment securities

    (54 )     (407 )

Loans held-for-sale

    -       4  

Total income tax provision

    (54 )     (403 )
                 

COMPREHENSIVE INCOME

  $ 4,078     $ 2,308  

 

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

 

- 5 -

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Three Months Ended March 31, 2020 and 2019

(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

   

INCOME (LOSS)

   

TOTAL

 
                                                                 

Balance at January, 1 2020

  $ -     $ 67     $ 68,826     $ (311 )   $ (3,643 )   $ 55,391     $ 1,329     $ 121,659  

Net income

    -       -       -       -       -       3,927       -       3,927  

Other comprehensive income

    -       -       -       -       -       -       151       151  

Dividends paid ($0.095 per share)

    -       -       -       -       -       (648 )     -       (648 )

Stock issued in connection with Western Holding Company of Wolf Point acquisition

    -       4       8,463       -       -       -       -       8,467  

Stock compensation expense

    -       -       70       -       -       -       -       70  

ESOP shares allocated (4,154 shares)

    -       -       40       42       -       -       -       82  

Balance at March 31, 2020

  $ -     $ 71     $ 77,399     $ (269 )   $ (3,643 )   $ 58,670     $ 1,480     $ 133,708  
                                                                 

Balance at January, 1 2019

  $ -     $ 57     $ 52,051     $ (477 )   $ (2,640 )   $ 46,926     $ (1,111 )   $ 94,806  

Net income

    -       -       -       -       -       1,183       -       1,183  

Other comprehensive income

    -       -       -       -       -       -       1,125       1,125  

Dividends paid ($0.0925 per share)

    -       -       -       -       -       (597 )     -       (597 )

Stock issued in connection with Big Muddy Bancorp, Inc. acquisition

    -       10       16,425       -       -       -       -       16,435  

ESOP shares allocated (4,154 shares)

    -       -       30       42       -       -       -       72  

Treasury stock purchased (42,000 shares at $17.43 average cost per share)

    -       -       -       -       (732 )     -       -       (732 )

Balance at March 31, 2019

  $ -     $ 67     $ 68,506     $ (435 )   $ (3,372 )   $ 47,512     $ 14     $ 112,292  

 

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

 

- 6 -

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2020

   

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net income

  $ 3,927     $ 1,183  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Loan loss provision

    670       604  

Impairment of servicing rights

    153       -  

Depreciation

    574       417  

Net amortization of investment securities premiums and discounts

    280       280  

Amortization of mortgage servicing rights

    511       247  

Amortization of right-of-use assets

    117       119  

Amortization of core deposit intangible and tax credits

    164       254  

Compensation expense related to restricted stock awards

    70       -  

ESOP compensation expense for allocated shares

    82       72  

Deferred income tax benefit

    (23 )     (589 )

Net gain on sale of loans

    (5,411 )     (2,599 )

Originations of loans held-for-sale

    (132,225 )     (72,293 )

Proceeds from sales of loans held-for-sale

    138,061       74,122  

Net loss on sale of available-for-sale securities

    -       55  

Net loss on sale of real estate owned and other repossessed assets

    -       37  

Net gain on sale/disposal of premises and equipment

    (4 )     -  

Net appreciation in cash surrender value of life insurance

    (160 )     (157 )

Net change in:

               

Accrued interest and dividends receivable

    256       (270 )

Other assets

    (6,042 )     353  

Accrued expenses and other liabilities

    2,688       (552 )

Net cash provided by operating activities

    3,688       1,283  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Activity in available-for-sale securities:

               

Sales

    -       3,900  

Maturities, principal payments and calls

    4,106       2,919  

Purchases

    (1,500 )     (1,513 )

FHLB stock (purchased) redeemed

    (263 )     468  

FRB stock purchased

    -       (7 )

Net cash received from acquisitions

    7,744       6,901  

Loan origination and principal collection, net

    (371 )     (22,583 )

Proceeds from sale of real estate and other repossessed assets acquired in settlement of loans

    -       70  

Purchases of premises and equipment, net

    (11,596 )     (1,850 )

Net cash used in investing activities

    (1,880 )     (11,695 )

 

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

 

- 7 -

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in Thousands)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2020

   

2019

 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Net (decrease) increase in deposits

  $ (10,040 )   $ 21,728  

Net short-term advances (payments) on FHLB and other borrowings

    7,910       (11,047 )

Long-term advances from FHLB and other borrowings

    10,000       18,000  

Payments on long-term FHLB and other borrowings

    (14,175 )     (16,862 )

Purchase of treasury stock

    -       (732 )

Dividends paid

    (648 )     (597 )

Net cash (used in) provided by financing activities

    (6,953 )     10,490  
                 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

    (5,145 )     78  
                 

CASH AND CASH EQUIVALENTS, beginning of period

    24,918       11,201  
                 

CASH AND CASH EQUIVALENTS, end of period

  $ 19,773     $ 11,279  
                 
                 

SUPPLEMENTAL CASH FLOW INFORMATION:

               

Cash paid during the period for interest

  $ 2,172     $ 1,613  

Cash paid during the period for income taxes

  $ -     $ -  
                 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

               

Increase in fair value of securities available-for-sale

  $ 205     $ 1,541  

Mortgage servicing rights recognized

  $ 943     $ 465  

Right-of-use assets obtained in exchange for lease liabilities

  $ -     $ 2,461  

Loans transferred to real estate and other assets acquired in foreclosure

  $ 34     $ 131  

Stock issued in connection with acquisitions

  $ 8,467     $ 16,435  

 

See Note 2. Mergers and Acquisitions for additional information related to assets acquired and liabilities assumed in acquisitions.

 

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

 
- 8 -

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
 
NOTES TO 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”). 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 2017, the Company entered into an Agreement and Plan of Merger with TwinCo, Inc. ("TwinCo"), a Montana corporation, and TwinCo’s wholly-owned subsidiary, Ruby Valley Bank, a Montana chartered commercial bank to acquire 100% of TwinCo’s equity voting interests. On January 31, 2018, TwinCo merged with and into Eagle, with Eagle continuing as the surviving corporation. Ruby Valley Bank operated two branches in Madison County, Montana.

 

In August 2018, Eagle entered into an Agreement and Plan of Merger with Big Muddy Bancorp, Inc. (“BMB”), a Montana corporation and BMB’s wholly-owned subsidiary, The State Bank of Townsend (“SBOT”), a Montana chartered commercial bank to acquire 100% of BMB’s equity voting interests. On January 1, 2019, BMB merged with and into Eagle, with Eagle continuing as the surviving corporation. SBOT operated four branches in Townsend, Dutton, Denton and Choteau, Montana.

 

In August 2019, Eagle and OBMT, entered into an Agreement and Plan of Merger with 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 Merger Agreement provided that, upon the terms and subject to the conditions set forth in the Merger Agreement, WHC would merge with and into Eagle, with Eagle continuing as the surviving corporation. The merger closed on January 1, 2020. WB operated one branch in Wolf Point, Montana.

 

The Bank currently has 23 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. The Bank also operates certain branches under the names Dutton State Bank, Farmers State Bank of Denton and The State Bank of Townsend.

 

Basis of Financial Statement Presentation and Use of Estimates

 

The accompanying unaudited 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 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, 2019, as filed with the SEC on March 11, 2020. 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 three-month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or any other period. In preparing 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 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 loan losses, mortgage servicing rights, the fair value of financial instruments, the valuation of goodwill and deferred tax assets and liabilities.

 

Principles of Consolidation

 

The consolidated financial statements include Eagle, the Bank, Eagle Bancorp Statutory Trust I (the “Trust”) and Western Financial Services, Inc. (“WFS”). WFS was acquired through the WHC merger. All significant intercompany transactions and balances have been eliminated in consolidation.

  

- 9 -

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

 

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

 

Reclassifications 

 

Certain prior period amounts were reclassified to conform to the presentation for 2020. These reclassifications had no impact on net income or shareholders’ equity.

 

Subsequent Events 

 

The Company has evaluated events and transactions subsequent to March 31, 2020 for recognition and/or disclosure.

 

On March 28, 2020 the State of Montana implemented a Shelter-in-Place order related to the COVID-19 pandemic. This resulted in a substantial reduction is business activity and in some cases the temporary closing of certain businesses. The order was lifted effective April 27, 2020, including the beginning of a phased approach to re-open businesses. The Bank is closely monitoring borrowers and businesses serviced and is providing debt service relief for those that have been affected.

 

Ongoing impact of COVID-19 on business operations:

 

Loan Accommodations – The bank is offering multiple accommodation options to its clients, including 90-day deferrals, forbearances and interest only payments. As of April 30, 2020, there were 185 loans totaling $69,131,000 deferring payments for 90 days, primarily from the real estate rental, accommodation and food services, and the art, entertainment and recreation industries. Approximately 113 borrowers representing $45,375,000 in loans have been approved for up to 6-months interest only payments. There have been approximately 116 forbearances in process for residential mortgage loans totaling $23,921,000.

 

Payroll Protection Program – On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) providing economic relief for the country, including the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) to fund short-term loans for small businesses. In April 2020, additional funding was approved for the PPP. Eagle began taking loan applications from its small business clients immediately after the program was implemented, and as of April 30, 2020, had received approvals for $43,808,000 in SBA PPP loans, with 471 loans funded for $31,287,000.

 

Liquidity Changes – Subsequent to the end of the quarter and in coordination with the roll out of the PPP, Eagle was approved for short-term funding through the FRB Discount Window. The discount window has not been utilized; however, a new funding facility through the FRB called Payroll Protection Program Loan Funding (“PPPLF”) was made available and the Bank has received approval to collateralize with pools of PPP loans for funding. As of April 30, 2020, the Bank had $24,065,000 in PPPLF borrowings secured by 334 PPP loans at a rate of 0.35%. As the PPP loans are repaid, it is currently anticipated Eagle will repay the FRB borrowings.

 

 

NOTE 2. MERGERS AND ACQUISITIONS

 

Effective January 1, 2019, Eagle completed its merger with BMB. The transaction provided an opportunity to expand market presence and lending activities throughout the state. The acquisition closed after receipt of approvals from regulatory authorities, approval of BMB shareholders and the satisfaction of other closing conditions. The total consideration paid was $16,436,000 and included cash consideration of $1,000 and common stock issued of $16,435,000.

 

Effective January 1, 2020, Eagle completed its previously announced merger with WHC. At the effective time of the Merger, WHC merged with and into Eagle, with Eagle continuing as the surviving corporation. The acquisition closed after receipt of approvals from regulatory authorities, approval of WHC shareholders and the satisfaction of other closing conditions. The total consideration paid was $14,967,000 and included cash consideration of $6,500,000 and common stock issued of $8,467,000.

 

These transactions were accounted for under the acquisition method of accounting.

 

- 10 -

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

 

NOTE 2. MERGERS AND ACQUISITIONS – continued

 

All of the assets acquired and liabilities assumed were recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combinations were expensed as incurred. Determining the fair value of assets and liabilities is a complicated process involving significant judgement regarding methods and assumptions used to calculate estimated fair values. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. The goodwill recorded is not deductible for federal income tax purposes.

 

The following table summarizes the fair values of the assets acquired and liabilities assumed, consideration paid and the resulting goodwill.

 

   

WHC

   

BMB

 
   

January 1,

   

January 1,

 
   

2020

   

2019

 
   

(In Thousands)

 

Assets acquired:

               

Cash and cash equivalents

  $ 14,244     $ 6,902  

Securities available-for-sale

    43,710       2,096  

Loans receivable

    43,424       89,204  

Premises and equipment

    740       2,246  

Cash surrender value of life insurance

    2,131       2,862  

Other real estate owned

    -       223  

Core deposit intangible

    208       1,988  

Other assets

    1,874       1,995  

Total assets acquired

  $ 106,331     $ 107,516  
                 

Liabilities assumed:

               

Deposits

  $ 89,272     $ 92,706  

Accrued expenses and other liabilities

    4,554       1,960  

Other borrowings

    2,500       -  

Total liabilities assumed

  $ 96,326     $ 94,666  
                 

Net assets acquired

  $ 10,005     $ 12,850  
                 

Consideration paid:

               

Cash

  $ 6,500     $ 1  

Common stock issued (395,850 shares WHC and 996,041 shares BMB)

    8,467       16,435  

Total consideration paid

  $ 14,967     $ 16,436  
                 

Goodwill resulting from acquisition

  $ 4,962     $ 3,586  

 

 

Goodwill recorded for the WHC acquisition during the three months ended March 31, 2020 was provisionally $4,962,000 due to the timing of the transaction. Amounts may be subject to change due to retrospective measurement period adjustments based on new information. Goodwill recorded for the BMB acquisition during the three months ended March 31, 2019 was $3,586,000. Certain estimates that existed at January 1, 2019 were realized and a final true up of $126,000 was recorded to goodwill during the three months ended December 31, 2019. The final goodwill recorded related to the BMB acquisition was $3,712,000.

 

WHC investments were written up $425,000 to fair value on the date of acquisition based on market prices obtained from an independent third party. BMB investment fair value adjustments were considered insignificant.

 

- 11 -

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

 

NOTE 2. MERGERS AND ACQUISITIONS – continued

 

For acquisitions, the fair value analysis of the loan portfolios resulted in a valuation adjustment for each loan based on an amortization schedule of expected cash flow. Individual amortization schedules were used for each loan over a certain amount and those with specifically identified loss exposure. The remainder of the loans were grouped by type and risk rating into loan pools (based on loan type, fixed or variable interest rate, revolving or term payments and risk rating). Yield inputs for the amortization schedules included contractual interest rates, estimated prepayment speeds, liquidity adjustments and market yields. Credit inputs for the amortization schedules included probability of payment default, loss given default rates and individually identified loss exposure.             

  

The total accretable discount on WHC acquired loans was $1,166,000 as of January 1, 2020. During the three months ended March 31, 2020, accretion of the loan discount was $130,000. The remaining accretable loan discount was $1,036,000 as of March 31, 2020.

 

The total accretable discount on BMB acquired loans was $2,813,000 as of January 1, 2019. During the year ended December 31, 2019, accretion of the loan discount was $1,480,000. During the three months ended March 31, 2020, accretion of the loan discount was $119,000. The remaining accretable loan discount was $1,214,000 as of March 31, 2020.

 

One impaired loan was acquired through the WHC acquisition with an insignificant balance as of January 1, 2020. Four impaired loans were acquired through the BMB acquisition with a net balance of $556,000 as of January 1, 2019. The balance of the acquired impaired loans as of March 31, 2020 was $134,000.

 

Fair value adjustments of $590,000 and $276,000 were recorded for WHC and BMB, respectively, related to premises and equipment. The Company used independent third party appraisals in the determination of the fair value of acquired assets.

 

Core deposit intangible assets of $208,000 were recorded for WHC and are being amortized using an accelerated method over the estimated useful lives of the related deposits of 10 years. Core deposit intangible assets of $1,988,000 were recorded for BMB and are being amortized using an accelerated method over the estimated useful lives of the related deposits of 10 years.

 

For acquisitions, the core deposit intangible value is a function of the difference between the cost of the acquired core deposits and the alternative cost of funds. These cash flow streams were discounted to present value. The fair value of other deposit accounts acquired were valued by estimating future cash flows to be received or paid from individual or homogenous groups of assets and liabilities and then discounting those cash flows to a present value using rates of return that were available in financial markets for similar financial instruments on or near the acquisition date.

 

Direct costs related to the acquisitions were expensed as incurred. The Company recorded acquisition costs related to WHC of $128,000 during the three months ended March 31, 2020 and $818,000 during the years ended December 31, 2019. The Company recorded acquisition costs related to BMB of $1,380,000 and $804,000 during the years ended December 31, 2019 and 2018, respectively. Acquisition costs included professional fees and data processing expenses incurred related to the acquisitions.

 

Operations of WHC have been included in the consolidated financial statements since January 1, 2020. The Company does not consider WHC a separate reporting segment and does not track the amount of revenues and net income attributable to WHC since acquisition. As such, it is impracticable to determine such amounts for the period from January 1, 2020 through March 31, 2020.

 

Operations of BMB have been included in the consolidated financial statements since January 1, 2019. The Company does not consider BMB a separate reporting segment and does not track the amount of revenues and net income attributable to BMB since acquisition. As such, it is impracticable to determine such amounts for the period from January 1, 2019 through March 31, 2020.

 

- 12 -

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

 

NOTE 2. MERGERS AND ACQUISITIONS – continued

 

The accompanying consolidated statements of income include the results of operations of WHC since the January 1, 2020 acquisition date. The following table presents unaudited pro forma results of operations for the three months ended March 31, 2019 as if the acquisition had occurred on January 1, 2019. This pro forma information gives effect to certain adjustments, including purchase accounting fair value adjustments and amortization of the core deposit intangible asset. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company purchased and assumed the assets and liabilities of WHC on January 1, 2019. Cost savings are also not reflected in the unaudited pro forma amounts for the three months ended March 31, 2019.

 

   

Three Months Ended

 
   

March 31, 2019

 
   

(Dollars in Thousands,

Except Per Share Data)

 

Pro forma net income(1)

       

Net interest income after loan loss provision

  $ 9,486  

Noninterest income

    3,983  

Noninterest expense

    11,710  

Income before provision for income taxes

    1,759  

Income tax provision

    352  

Net income

  $ 1,407  
         

Pro forma earnings per share(1)

       

Basic earnings per share

  $ 0.22  

Diluted earnings per share

  $ 0.22  
         

Basic weighted average shares outstanding

    6,450,326  

Diluted weighted average shares outstanding

    6,510,486  

 

(1) Significant assumptions utilized include the acquisition cost noted above and a 20.00% effective tax rate.

 

- 13 -

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

 

 

 NOTE 3. INVESTMENT SECURITIES

 

Investment securities are summarized as follows:

 

   

March 31, 2020

   

December 31, 2019

 
           

Gross

                   

Gross

         
   

Amortized

   

Unrealized

   

Fair

   

Amortized

   

Unrealized

   

Fair

 
   

Cost

   

Gains

   

(Losses)

   

Value

   

Cost

   

Gains

   

(Losses)

   

Value

 
   

(In Thousands)

 

Available-for-Sale:

                                                               

U.S. government and agency obligations

  $ 15,257     $ 610     $ -     $ 15,867     $ 13,318     $ 279     $ -     $ 13,597  

Municipal obligations

    70,685       2,117       (118 )     72,684       50,699       1,616       (93 )     52,222  

Corporate obligations

    8,349       24       (304 )     8,069       8,356       40       (8 )     8,388  

Mortgage-backed securities

    10,066       95       (33 )     10,128       9,460       56       (21 )     9,495  

Collateralized mortgage obligations

    44,040       1,375       (287 )     45,128       33,129       297       (92 )     33,334  

Asset-backed securities

    17,499       -       (1,471 )     16,028       10,110       -       (271 )     9,839  

Total

  $ 165,896     $ 4,221     $ (2,213 )   $ 167,904     $ 125,072     $ 2,288     $ (485 )   $ 126,875  

 

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

 

   

Three Months Ended

 
   

March 31,

 
   

2020

   

2019

 
   

(In Thousands)

 
                 

Proceeds from sale of available-for-sale securities

  $ -     $ 3,900  
                 

Gross realized gain on sale of available-for-sale securities

  $ -     $ 11  

Gross realized loss on sale of available-for-sale securities

    -       (66 )

Net realized loss on sale of available-for-sale securities

  $ -     $ (55 )

 

- 14 -

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

 

NOTE 3. INVESTMENT SECURITIES – continued

 

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.

 

   

March 31, 2020

 
   

Amortized

   

Fair

 
   

Cost

   

Value

 
   

(In Thousands)

 
                 

Due in one year or less

  $ 11,771     $ 11,811  

Due from one to five years

    16,110       15,962  

Due from five to ten years

    15,575       16,150  

Due after ten years

    68,334       68,725  
      111,790       112,648  

Mortgage-backed securities

    10,066       10,128  

Collateralized mortgage obligations

    44,040       45,128  

Total

  $ 165,896     $ 167,904  

 

As of March 31, 2020 and December 31, 2019 securities with a fair value of $28,345,353 and $18,897,000, 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:

 

   

March 31, 2020

 
   

Less Than 12 Months

   

12 Months or Longer

 
           

Gross

           

Gross

 
   

Fair

   

Unrealized

   

Fair

   

Unrealized

 
   

Value

   

Losses

   

Value

   

Losses

 
   

(In Thousands)

 

Municipal obligations

  $ 9,520     $ (118 )   $ -     $ -  

Corporate obligations

    5,036       (304 )     -       -  

Mortgage-backed securities and collateralized mortgage obligations

    13,815       (291 )     2,740       (29 )

Asset-backed securities

    6,967       (478 )     9,061       (993 )

Total

  $ 35,338     $ (1,191 )   $ 11,801     $ (1,022 )

 

- 15 -

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

 

NOTE 3. INVESTMENT SECURITIES continued

 

   

December 31, 2019

 
   

Less Than 12 Months

   

12 Months or Longer

 
           

Gross

           

Gross

 
   

Fair

   

Unrealized

   

Fair

   

Unrealized

 
   

Value

   

Losses

   

Value

   

Losses

 
   

(In Thousands)

 

Municipal obligations

  $ 11,142     $ (93 )   $ -     $ -  

Corporate obligations

    -       -       992       (8 )

Mortgage-backed securities and collateralized mortgage obligations

    9,868       (35 )     7,968       (78 )

Asset-backed securities

    940       (33 )     8,900       (238 )

Total

  $ 21,950     $ (161 )   $ 17,860     $ (324 )

 

Unrealized losses associated with investments are believed to be caused by changing market conditions, primarily spreads related to U.S. treasuries, that are considered to be temporary and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity. Based on the Company’s evaluation of these securities, no other-than-temporary impairment was recorded for the three months ended March 31, 2020, or 2019. As of March 31, 2020 and December 31, 2019, there were, respectively, 58 and 28 securities in unrealized loss positions that were considered to be temporarily impaired and therefore an impairment charge has not been recorded.

 

As of March 31, 2020, 27 U.S. government and agency securities and municipal obligations had unrealized losses of approximately 1.22% of the fair value associated with these securities. At December 31, 2019, 10 U.S. government and agency securities and municipal obligations had unrealized losses of approximately 0.83% of the fair value associated with these securities. As of March 31, 2020, 6 corporate obligations had unrealized losses of approximately 5.69% of the fair value associated with these securities. At December 31, 2019, 1 corporate obligation had an unrealized loss of approximately 0.80% of the fair value associated with these securities. As management has the ability to hold debt securities until maturity, or for the foreseeable future, no declines are deemed to be other than temporary.

 

As of March 31, 2020, 15 mortgage-backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) had unrealized losses of approximately 1.90% of the fair value associated with these securities. At December 31, 2019, 12 MBSs and CMOs had unrealized losses of approximately 0.63% of the fair value associated with these securities. Management believes that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral. 

 

As of March 31, 2020, 10 asset-backed securities (“ABSs”) had unrealized losses of approximately 8.41% of the fair value associated with these securities. At December 31, 2019, 5 ABSs had unrealized losses of approximately 2.68% of the fair value associated with these securities. Management believes that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral. 

 

- 16 -

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

NOTE 4. LOANS RECEIVABLE

 

Loans receivable consisted of the following:

 

   

March 31,

   

December 31,

 
   

2020

   

2019

 
   

(In Thousands)

 

Real estate loans:

               

Residential 1-4 family

  $ 160,047     $ 157,898  

Commercial real estate

    455,620       434,025  
                 

Other loans:

               

Home equity

    57,752       56,414  

Consumer

    19,924       18,882  

Commercial

    129,876       113,319  
                 

Total

    823,219       780,538  
                 

Deferred loan fees, net

    (1,185 )     (1,303 )

Allowance for loan losses

    (9,250 )     (8,600 )

Total loans, net

  $ 812,784     $ 770,635  

 

Within the loan categories above, $11,610,000 and $13,602,000 was guaranteed by the United States Department of Agriculture Rural Development at March 31, 2020 and December 31, 2019, respectively. Also within the loan categories above, $8,686,000 and $5,701,000 was guaranteed by the United States Department of Agriculture Farm Service Agency at March 31, 2020 and December 31, 2019, respectively.

 

- 17 -

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

 

NOTE 4. LOANS RECEIVABLE – continued

 

Allowance for loan losses activity was as follows:

 

   

Residential

   

Commercial

   

Home

                         
   

1-4 Family

   

Real Estate

   

Equity

   

Consumer

   

Commercial

   

Total

 
   

(In Thousands)

 

Allowance for loan losses:

                                               

Beginning balance, January 1, 2020

  $ 1,301     $ 4,826     $ 477     $ 284     $ 1,712     $ 8,600  

Charge-offs

    -       (18 )     -       (8 )     (10 )     (36 )

Recoveries

    -       6       -       8       2       16  

Provision

    -       400       -       70       200       670  

Ending balance, March 31, 2020

  $ 1,301     $ 5,214     $ 477     $ 354     $ 1,904     $ 9,250  
                                                 

Ending balance, March 31, 2020 allocated to loans individually evaluated for impairment

  $ -     $ -     $ -     $ -     $ 74     $ 74  
                                                 

Ending balance, March 31, 2020 allocated to loans collectively evaluated for impairment

  $ 1,301     $ 5,214     $ 477     $ 354     $ 1,830     $ 9,176  
                                                 

Loans receivable:

                                               

Ending balance, March 31, 2020

  $ 160,047     $ 455,620     $ 57,752     $ 19,924     $ 129,876     $ 823,219  
                                                 

Ending balance, March 31, 2020 of loans individually evaluated for impairment

  $ 1,074     $ 2,115     $ 136     $ 179     $ 1,489     $ 4,993  
                                                 

Ending balance, March 31, 2020 of loans collectively evaluated for impairment

  $ 158,973     $ 453,505     $ 57,616     $ 19,745     $ 128,387     $ 818,226  

 

 

   

Residential

   

Commercial

   

Home

                         
   

1-4 Family

   

Real Estate

   

Equity

   

Consumer

   

Commercial

   

Total

 
   

(In Thousands)

 

Allowance for loan losses:

                                               

Beginning balance, January, 1 2019

  $ 1,301     $ 3,593     $ 477     $ 190     $ 1,039     $ 6,600  

Charge-offs

    -       (20 )     -       (9 )     (95 )     (124 )

Recoveries

    -       6       -       6       8       20  

Provision

    -       344       -       10       250       604  

Ending balance, March 31, 2019

  $ 1,301     $ 3,923     $ 477     $ 197     $ 1,202     $ 7,100  
                                                 

Ending balance, March 31, 2019 allocated to loans individually evaluated for impairment

  $ -     $ -     $ -     $ -     $ -     $ -  
                                                 

Ending balance, March 31, 2019 allocated to loans collectively evaluated for impairment

  $ 1,301     $ 3,923     $ 477     $ 197     $ 1,202     $ 7,100  
                                                 

Loans receivable:

                                               

Ending balance, March 31, 2019

  $ 144,313     $ 394,988     $ 54,637     $ 19,043     $ 116,122     $ 729,103  
                                                 

Ending balance, March 31, 2019 of loans individually evaluated for impairment

  $ 984     $ 1,239     $ 433     $ 129     $ 1,743     $ 4,528  
                                                 

Ending balance, March 31, 2019 of loans collectively evaluated for impairment

  $ 143,329     $ 393,749     $ 54,204     $ 18,914     $ 114,379     $ 724,575  

 

- 18 -

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

 

NOTE 4. LOANS RECEIVABLE – continued

 

Internal classification of the loan portfolio was as follows:

 

   

March 31, 2020

 
           

Special

                                 
   

Pass

   

Mention

   

Substandard

   

Doubtful

   

Loss

   

Total

 
   

(In Thousands)

 

Real estate loans:

                                               

Residential 1-4 family

  $ 121,510     $ -     $ 1,140     $ -     $ -     $ 122,650  

Residential 1-4 family construction

    37,060       -       337       -       -       37,397  

Commercial real estate

    334,121       185       2,913       -       -       337,219  

Commercial construction and development

    55,756       94       -       -       -       55,850  

Farmland

    61,645       83       770       53       -       62,551  

Other loans:

                                               

Home equity

    57,517       99       136       -       -       57,752  

Consumer

    19,745       -       179       -       -       19,924  

Commercial

    76,043       958       697       -       -       77,698  

Agricultural

    50,740       121       881       436       -       52,178  

Total

  $ 814,137     $ 1,540     $ 7,053     $ 489     $ -     $ 823,219  

 

   

December 31, 2019

 
           

Special

                                 
   

Pass

   

Mention

   

Substandard

   

Doubtful

   

Loss

   

Total

 
   

(In Thousands)

 

Real estate loans:

                                               

Residential 1-4 family

  $ 118,116     $ -     $ 1,180     $ -     $ -     $ 119,296  

Residential 1-4 family construction

    38,265       -       337       -       -       38,602  

Commercial real estate

    328,750       -       2,312       -       -       331,062  

Commercial construction and development

    52,620       -       50       -       -       52,670  

Farmland

    49,959       108       168       58       -       50,293  

Other loans:

                                               

Home equity

    56,039       78       297       -       -       56,414  

Consumer

    18,694       -       188       -       -       18,882  

Commercial

    71,868       159       707       63       -       72,797  

Agricultural

    39,347       138       570       467       -       40,522  

Total

  $ 773,658     $ 483     $ 5,809     $ 588     $ -     $ 780,538  

 

- 19 -

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

 

NOTE 4. LOANS RECEIVABLE – continued

 

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

 

   

March 31, 2020

 
   

Loans Past Due and Still Accruing

                         
           

90 Days

                                 
   

30-89 Days

   

and

           

Non-Accrual

   

Current

   

Total

 
   

Past Due

   

Greater

   

Total

   

Loans

   

Loans

   

Loans

 
   

(In Thousands)

 

Real estate loans:

                                               

Residential 1-4 family

  $ 1,656     $ 127     $ 1,783     $ 737     $ 120,130     $ 122,650  

Residential 1-4 family construction

    32       99       131       337       36,929       37,397  

Commercial real estate

    2,863       -       2,863       971       333,385       337,219  

Commercial construction and development

    70       -       70       -       55,780       55,850  

Farmland

    371       379       750       1,050       60,751       62,551  

Other loans:

                                               

Home equity

    169       -       169       136       57,447       57,752  

Consumer

    133       -       133       179       19,612       19,924  

Commercial

    327       210       537       707       76,454       77,698  

Agricultural

    228       128       356       782       51,040       52,178  

Total

  $ 5,849     $ 943     $ 6,792     $ 4,899     $ 811,528     $ 823,219