Cautionary Note Regarding Forward-Looking Statements 

 

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

 

●	statements of our goals, intentions and expectations;

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

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

●	estimates of our risks and future costs and benefits.

 

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

 

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

●

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

●

local, regional, national and international economic conditions or macroeconomic instability (including any economic slowdown or recession, inflation, interest rate changes, credit loss trends, unemployment, changes in housing or securities markets, or other factors) and the impact of the same on Eagle and its customers;

	●	volatility, disruption, or uncertainty in national and international financial markets, including as a result of geopolitical developments, including the war in the Middle East;
	●	the effects of any U.S. federal government shutdown, closures or significant staff reductions in agencies regulating or otherwise impacting Eagle's business;
	●	the direct or indirect impact of any new regulatory, policy, or enforcement developments resulting from the policies or actions of the current U.S. presidential administration, including the implementation of tariffs and other protectionist trade policies, including any reciprocal tariffs by foreign countries, and any uncertainties related thereto;
	●	competition among depository and other traditional and non-traditional financial service providers;

●

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

●

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

	●	our ability to attract deposits and other sources of funding or liquidity;
	●	possible changes in governmental monetary and fiscal policies, or any leadership changes of those determining such policies;
	●	volatility in Eagle's stock price due to investor sentiment and perception of the banking industry;
	●	the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior, adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures and labor shortages on economic conditions and our business;
	●	an inability to access capital markets or maintain deposits or borrowing costs;
	●	our ability to assess and monitor the effect of evolving uses of artificial intelligence on our business and operations;
	●	our ability to navigate differing environmental, social, governmental, and sustainability concerns among governmental administrations, our stakeholders, and other activists that may arise from our business activities;

●

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

●

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

	●	limitations on Eagle's ability to receive dividends from its subsidiaries;
	●	unforeseen events, such as pandemics or natural disasters, and any governmental or societal responses thereto;
	●	the effect of acquisitions we may make, if any, including, without limitation, the failure to achieve expected revenue growth and/or expense savings from such acquisitions;

●

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

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

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

●

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

●

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

●

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

 

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the Part II, Item 1A, “Risk Factors” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2025, 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

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except for Share Data)

(Unaudited)

 

 

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

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 (Dollars in Thousands, Except for Per Share Data)

(Unaudited)

 

 

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

 

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

(Unaudited)

 

 

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

 

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the three months ended March 31, 2026 and 2025

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

 

 

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

 

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(In Thousands)

(Unaudited)

 

 

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

 

 

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands)
(Unaudited)

 

 

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

 

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

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

 

Eagle Bancorp Statutory Trust I (the "Trust") was established in September 2005 and is owned 100% by Eagle.

 

In March 2021, the Bank established a subsidiary, Opportunity Housing Fund, LLC ("OHF"), to invest in Low-Income Housing Tax Credit ("LIHTC") projects. The LIHTC program is designed to encourage capital investment in construction and rehabilitation of low-income housing. During the year ended December 31,2021, OHF made investments in two LIHTC projects. Tax credits are allowable over a 10-year period. Amortizing investments in LIHTC projects are included in other assets on the condensed consolidated statements of financial condition and totaled $5,767,000 and $5,963,000 as of March 31, 2026 and December 31, 2025, respectively. Outstanding funding obligations for LIHTC projects are included in accrued expenses and other liabilities on the condensed consolidated statements of financial condition and totaled $166,000 as of March 31, 2026 and  December 31, 2025.

 

Opportunity Financial Services, Inc. ("OFS") facilitates deferred payment contracts for customers that produce agricultural products. The revenue from these contracts is accounted for in accordance with ASC Topic 606. The Company is considered an agent in these contracts, as: (i) the Company facilitates payment from customer to supplier, (ii) the Company does not take inventory of commodities as they are delivered by supplier to the customer, (iii) pricing of commodities is determined by the market, (iv) consideration on deferred payment contracts is insignificant to the Company and (v) the Company’s exposure to credit risk is minimal. Revenue is recognized net of expenses and reported in other noninterest income in the financial statements. Commodity sales income and the corresponding commodity sales expense were $2,151,000 for the three months ended March 31, 2026 and $2,314,000 for the three months ended March 31, 2025, respectively, for a net impact of $0. Outstanding deferred contracts payable are included in accrued expenses and other liabilities on the condensed consolidated statements of financial condition and totaled $14,135,000 as of March 31, 2026 and $23,549,000 as of December 31, 2025. 

 

The Bank is headquartered in Helena, Montana, and has additional branches in Ashland, Big Timber, Billings, Bozeman, Butte, Choteau, Culbertson, Denton, Dutton, Froid, Glasgow, Great Falls, Hamilton, Hinsdale, Livingston, Missoula, Sheridan, Three Forks, Townsend, Twin Bridges, Winifred and Wolf Point, Montana. The Bank currently has 30 full-service branches. The Bank’s principal business is accepting deposits and, together with funds generated from operations and borrowings, investing in various types of loans and securities.

 

Basis of Financial Statement Presentation and Use of Estimates

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). It is recommended that these unaudited interim condensed consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K with all of the audited information and footnotes required by U.S. GAAP for complete financial statements for the year ended December 31, 2025, as filed with the SEC on March 9, 2026. 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, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or any other period. In preparing condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated statement of financial condition and reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses ("ACL"), mortgage servicing rights, the fair value of financial instruments, the valuation of goodwill and deferred tax assets and liabilities.

 

Principles of Consolidation

 

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

 

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

 

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

 

Subsequent Events

 

The Company has evaluated events and transactions subsequent to March 31, 2026 for recognition and/or disclosure.

 

Goodwill

 

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

 

Our quantitative annual impairment test as of  October 31, 2025 did not result in impairment. The annual goodwill impairment test for 2026 will be performed as of October 31. 

 

Segment Reporting

 

Management considers operations to be aggregated in one operating segment, as well as one reportable segment. The Company operates as one line of business (community banking) by providing a similar base of commercial and retail customers with comparable product and service offerings throughout our Montana markets. The President/Chief Executive Officer (“CEO”) serves as the Company’s chief operating decision maker (“CODM”).

 

The CODM is responsible for assessing performance and allocating operating and capital expenditure resources. The CODM regularly assesses the performance of the single operating and reporting segment based on consolidated net income. The CODM reviews expenses at a level consistent with those reported in the Company’s consolidated statements of income. All significant expense categories are reflected in the consolidated statements of income. The measure of segment assets is reflected in the consolidated statements of financial condition as total assets.

 

Recently Adopted Accounting Pronouncements

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The updated accounting guidance requires enhanced income tax disclosures, including the disaggregation of existing disclosures related to the tax rate reconciliation and income taxes paid. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis, but retrospective application is permitted. The amendments in this ASU became effective for the Company on January 1, 2025 and did not have a significant impact on the Company’s financial position, results of operations, or liquidity.

 

Recently Issued Accounting Pronouncements

 

In  November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires that public companies disclose details about specific expenses, among other things, such as employee compensation, depreciation, amortization, depletion, and inventory purchases. This ASU is effective for annual reporting periods beginning after  December 15, 2026, and interim reporting periods within fiscal years beginning after  December 15, 2027, with early adoption permitted. In  January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which clarifies the effective date identified under ASU No. 2024-03. The Company is currently evaluating the effect the ASU will have on its consolidated financial statements and related disclosures.

 

In  November 2025, the FASB issued ASU 2025-08, “Financial Instruments—Credit Losses (Topic 326): Purchased Loans,” which amends the accounting for acquired loans by introducing a category of purchased seasoned loans and expanding the use of the gross-up approach, requiring qualifying acquired loans to be recorded at purchase price plus an allowance for expected credit losses rather than recognizing a Day-1 provision through earnings. ASU 2025-08 is effective for annual reporting periods beginning after  December 15, 2026, including interim periods within those annual periods, and is to be applied prospectively, with early adoption permitted. The Company is evaluating the impact of adoption, including the potential effect on the accounting for loans acquired in future acquisitions.

 

  

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

NOTE 2. INVESTMENT SECURITIES

 

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

 

 

		March 31, 2026
						Gross				Gross
		Amortized				Unrealized				Unrealized								Fair
		Cost				Gains				Losses				ACL				Value
		(In Thousands)
Available-for-sale:
U.S. government and agency obligations		$	4,023			$	61			$	(116	)		$	-			$	3,968
U.S. treasury obligations			47,675				-				(3,749	)			-				43,926
Municipal obligations			126,641				1				(10,826	)			-				115,816
Corporate obligations			2,000				-				(30	)			-				1,970
Mortgage-backed securities			26,684				157				(1,064	)			-				25,777
Collateralized mortgage obligations			81,569				37				(4,707	)			-				76,899
Asset-backed securities			6,487				45				(1	)			-				6,531
Total		$	295,079			$	301			$	(20,493	)		$	-			$	274,887

 

		December 31, 2025
						Gross				Gross
		Amortized				Unrealized				Unrealized								Fair
		Cost				Gains				Losses				ACL				Value
		(In Thousands)
Available-for-sale:
U.S. government and agency obligations		$	4,179			$	62			$	(86	)		$	-			$	4,155
U.S. treasury obligations			47,665				-				(3,357	)			-				44,308
Municipal obligations			127,469				53				(9,198	)			-				118,324
Corporate obligations			2,000				-				(29	)			-				1,971
Mortgage-backed securities			27,222				180				(908	)			-				26,494
Collateralized mortgage obligations			83,907				49				(4,295	)			-				79,661
Asset-backed securities			6,720				60				(1	)			-				6,779
Total		$	299,162			$	404			$	(17,874	)		$	-			$	281,692

 

There was no sales activity for available-for-sale securities during the three months ended March 31, 2026 or 2025. 

 

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, 2026
		Amortized				Fair
		Cost				Value
		(In Thousands)
Due in one year or less		$	1,186			$	1,184
Due from one to five years			52,910				49,717
Due from five to ten years			68,858				61,270
Due after ten years			63,872				60,040
			186,826				172,211
Mortgage-backed securities			26,684				25,777
Collateralized mortgage obligations			81,569				76,899
Total		$	295,079			$	274,887

 

As of  March 31, 2026 and December 31, 2025, securities with a fair value of $19,694,000 and $19,976,000, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

 

NOTE 2. INVESTMENT SECURITIES – continued

 

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, 2026
		Less than 12 Months								12 Months or Longer
						Gross								Gross
		Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses
		(In Thousands)
U.S. government and agency obligations		$	-			$	-			$	1,811			$	(116	)
U.S. treasury obligations			-				-				43,926				(3,749	)
Municipal obligations			17,226				(541	)			97,723				(10,285	)
Corporate obligations			-				-				1,970				(30	)
Mortgage-backed securities and collateralized mortgage obligations			11,492				(97	)			70,783				(5,674	)
Asset-backed securities			1,356				-				147				(1	)
Total		$	30,074			$	(638	)		$	216,360			$	(19,855	)

 

		December 31, 2025
		Less than 12 months								12 months or Longer
						Gross								Gross
		Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses
		(In Thousands)
U.S. government and agency obligations		$	-			$	-			$	1,848			$	(86	)
U.S. treasury obligations			-				-				44,308				(3,357	)
Municipal obligations			4,250				(101	)			107,365				(9,097	)
Corporate obligations			-				-				1,971				(29	)
Mortgage-backed securities and collateralized mortgage obligations			5,961				(42	)			73,924				(5,161	)
Asset-backed securities			-				-				164				(1	)
Total		$	10,211			$	(143	)		$	229,580			$	(17,731	)

 

As of  March 31, 2026 and December 31, 2025, 252 and 241 securities, respectively, were in unrealized loss positions. Based on analysis of available-for-sale debt securities with unrealized losses as of March 31, 2026, the Company determined the decline in value was unrelated to credit losses and was primarily caused by changes in interest rates and market spreads subsequent to the initial purchase of the securities. Management does not intend to sell and the Company is not likely to be required to sell these securities prior to maturity. As a result, no ACL was recorded on available-for-sale securities at March 31, 2026 and  December 31, 2025. As part of this determination, consideration was given to the extent to which fair value was less than amortized cost, rating downgrades by a rating agency and other factors. 

NOTE 3. LOANS RECEIVABLE  

 

Loans receivable consisted of the following:

 

		March 31,				December 31,
		2026				2025
		(In Thousands)
Real estate loans:
Residential 1-4 family		$	188,784			$	183,793
Commercial real estate			926,631				918,839
Other loans:
Home equity			109,278				108,073
Consumer			23,154				24,424
Commercial			271,439				283,890
Total			1,519,286				1,519,019
Allowance for credit losses			(17,430	)			(17,370	)
Total loans, net		$	1,501,856			$	1,501,649

 

Included in the above are loans guaranteed by U.S. government agencies totaling $12,326,000 and $12,091,000 at March 31, 2026 and  December 31, 2025, respectively. 

 

 

NOTE 3. LOANS RECEIVABLE – continued

 

The following table provides allowance for credit losses activity for the three months ended March 31, 2026.

 

		Residential				Commercial				Home
		1-4 Family				Real Estate				Equity				Consumer				Commercial				Total
		(In Thousands)
Allowance for credit losses on loans:
Beginning balance, January 1, 2026		$	1,965			$	11,295			$	547			$	84			$	3,479			$	17,370
Charge-offs			-				-				-				(40	)			(14	)			(54	)
Recoveries			-				4				-				-				1				5
Provision			8				64				4				1				32				109
Total ending allowance balance, March 31, 2026		$	1,973			$	11,363			$	551			$	45			$	3,498			$	17,430

 

The following table provides allowance for credit losses activity for the three months ended March 31, 2025.

 

		Residential				Commercial				Home
		1-4 Family				Real Estate				Equity				Consumer				Commercial				Total
		(In Thousands)
Allowance for credit losses on loans:
Beginning balance, January 1, 2025		$	1,911			$	10,907			$	553			$	245			$	3,234			$	16,850
Charge-offs			-				-				-				(6	)			-				(6	)
Recoveries			-				2				-				1				1				4
Recapture			(7	)			(79	)			(2	)			(1	)			(39	)			(128	)
Total ending allowance balance, March 31, 2025		$	1,904			$	10,830			$	551			$	239			$	3,196			$	16,720

 

 

NOTE 3. LOANS RECEIVABLE – continued

 

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

 

		March 31, 2026
		2026				2025				2024				2023				2022				Prior				Revolving Loans				Total Loans
		(In Thousands)
RESIDENTIAL 1-4 FAMILY
Pass		$	4,870			$	17,906			$	15,308			$	21,680			$	28,615			$	54,324			$	1,060			$	143,763
Substandard			-				-				-				-				715				592				-				1,307
Total Residential 1-4 family			4,870				17,906				15,308				21,680				29,330				54,916				1,060				145,070
Current-period gross charge-offs			-				-				-				-				-				-				-				-
RESIDENTIAL 1-4 FAMILY CONSTRUCTION
Pass			11,789				17,908				1,590				1,493				10,129				-				456				43,365
Special Mention			-				-				349				-				-				-				-				349
Total Residential 1-4 family construction			11,789				17,908				1,939				1,493				10,129				-				456				43,714
Current-period gross charge-offs			-				-				-				-				-				-				-				-
COMMERCIAL REAL ESTATE
Pass			20,552				49,189				69,731				61,487				173,058				244,772				38,747				657,536
Special Mention			-				-				-				789				393				2,089				2,998				6,269
Substandard			-				-				-				500				-				3,380				-				3,880
Total Commercial real estate			20,552				49,189				69,731				62,776				173,451				250,241				41,745				667,685
Current-period gross charge-offs			-				-				-				-				-				-				-				-
COMMERCIAL CONSTRUCTION AND DEVELOPMENT
Pass			915				39,392				11,852				6,085				13,024				18,232				7,865				97,365
Substandard			-				-				-				-				-				917				-				917
Total Commercial construction and development			915				39,392				11,852				6,085				13,024				19,149				7,865				98,282
Current-period gross charge-offs			-				-				-				-				-				-				-				-
FARMLAND
Pass			3,404				30,203				19,713				15,982				25,821				59,141				1,892				156,156
Special Mention			556				-				-				819				567				23				-				1,965
Substandard			-				-				184				-				1,118				1,185				56				2,543
Total Farmland			3,960				30,203				19,897				16,801				27,506				60,349				1,948				160,664
Current-period gross charge-offs			-				-				-				-				-				-				-				-
HOME EQUITY
Pass			905				1,931				1,197				948				2,672				2,344				98,373				108,370
Special Mention			-				-				-				-				-				19				581				600
Substandard			-				-				-				-				-				59				249				308
Total Home Equity			905				1,931				1,197				948				2,672				2,422				99,203				109,278
Current-period gross charge-offs			-				-				-				-				-				-				-				-
CONSUMER
Pass			2,186				7,643				4,970				3,226				1,914				1,096				1,878				22,913
Substandard			-				103				37				72				10				1				18				241
Total Consumer			2,186				7,746				5,007				3,298				1,924				1,097				1,896				23,154
Current-period gross charge-offs			-				11				15				13				-				-				1				40
COMMERCIAL
Pass			9,656				27,484				24,602				18,437				12,971				22,382				33,844				149,376
Special Mention			145				-				-				298				153				51				200				847
Substandard			-				82				1,088				41				-				142				4				1,357
Total Commercial			9,801				27,566				25,690				18,776				13,124				22,575				34,048				151,580
Current-period gross charge-offs			-				-				-				-				-				14				-				14
AGRICULTURAL
Pass			8,574				28,666				12,620				5,389				4,010				2,899				52,065				114,223
Special Mention			-				441				868				1,450				-				17				503				3,279
Substandard			-				-				641				924				-				792				-				2,357
Total Agricultural			8,574				29,107				14,129				7,763				4,010				3,708				52,568				119,859
Current-period gross charge-offs			-				-				-				-				-				-				-				-
TOTAL LOANS
Pass			62,851				220,322				161,583				134,727				272,214				405,190				236,180				1,493,067
Special Mention			701				441				1,217				3,356				1,113				2,199				4,282				13,309
Substandard			-				185				1,950				1,537				1,843				7,068				327				12,910
Total		$	63,552			$	220,948			$	164,750			$	139,620			$	275,170			$	414,457			$	240,789			$	1,519,286

   

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

 

NOTE 3. LOANS RECEIVABLE – continued

 

		December 31, 2025
		2025				2024				2023				2022				2021				Prior				Revolving Loans				Total Loans
		(In Thousands)
RESIDENTIAL 1-4 FAMILY
Pass		$	20,044			$	15,428			$	22,525			$	29,851			$	17,751			$	40,339			$	1,333			$	147,271
Substandard			-				-				-				719				-				525				-				1,244
Total Residential 1-4 family			20,044				15,428				22,525				30,570				17,751				40,864				1,333				148,515
Current-period gross charge-offs			-				-				-				-				-				-				-				-
RESIDENTIAL 1-4 FAMILY CONSTRUCTION
Pass			19,065				3,975				1,760				10,129				-				-				-				34,929
Special Mention			-				349				-				-				-				-				-				349
Total Residential 1-4 family construction			19,065				4,324				1,760				10,129				-				-				-				35,278
Current-period gross charge-offs			-				-				-				-				-				-				-				-
COMMERCIAL REAL ESTATE
Pass			41,530				51,964				63,566				177,502				112,350				141,336				39,155				627,403
Special Mention			-				-				-				407				-				1,265				2,989				4,661
Substandard			-				-				512				-				424				2,970				-				3,906
Total Commercial real estate			41,530				51,964				64,078				177,909				112,774				145,571				42,144				635,970
Current-period gross charge-offs			-				-				-				-				-				33				-				33
COMMERCIAL CONSTRUCTION AND DEVELOPMENT
Pass			44,051				26,041				9,483				14,272				7,325				11,853				6,339				119,364
Substandard			-				-				-				-				-				925				-				925
Total Commercial construction and development			44,051				26,041				9,483				14,272				7,325				12,778				6,339				120,289
Current-period gross charge-offs			-				-				-				-				-				-				-				-
FARMLAND
Pass			30,610				19,993				16,219				26,109				17,580				45,784				1,961				158,256
Special Mention			-				-				827				570				62				719				-				2,178
Substandard			-				188				55				1,118				-				729				56				2,146
Total Farmland			30,610				20,181				17,101				27,797				17,642				47,232				2,017				162,580
Current-period gross charge-offs			-				-				-				-				-				-				-				-
HOME EQUITY
Pass			2,162				1,218				1,018				2,804				281				2,227				97,660				107,370
Special Mention			-				-				-				-				-				21				348				369
Substandard			-				-				33				-				40				11				250				334
Total Home Equity			2,162				1,218				1,051				2,804				321				2,259				98,258				108,073
Current-period gross charge-offs			-				1				-				-				-				26				-				27
CONSUMER
Pass			9,069				5,536				3,899				2,312				654				670				1,973				24,113
Special Mention			-				-				6				-				-				-				-				6
Substandard			113				59				92				10				-				16				15				305
Total Consumer			9,182				5,595				3,997				2,322				654				686				1,988				24,424
Current-period gross charge-offs			-				17				47				14				-				83				14				175
COMMERCIAL
Pass			27,402				26,864				19,468				13,647				10,284				15,376				34,160				147,201
Special Mention			-				-				311				164				-				-				347				822
Substandard			92				1,111				41				-				18				142				4				1,408
Total Commercial			27,494				27,975				19,820				13,811				10,302				15,518				34,511				149,431
Current-period gross charge-offs			-				-				-				6				-				-				-				6
AGRICULTURAL
Pass			42,889				15,230				7,802				5,210				2,415				2,501				52,014				128,061
Special Mention			442				1,112				1,590				2				17				626				543				4,332
Substandard			-				1,035				824				-				-				207				-				2,066
Total Agricultural			43,331				17,377				10,216				5,212				2,432				3,334				52,557				134,459
Current-period gross charge-offs			-				-				-				-				-				-				-				-
TOTAL LOANS
Pass			236,822				166,249				145,740				281,836				168,640				260,086				234,595				1,493,968
Special Mention			442				1,461				2,734				1,143				79				2,631				4,227				12,717
Substandard			205				2,393				1,557				1,847				482				5,525				325				12,334
Total		$	237,469			$	170,103			$	150,031			$	284,826			$	169,201			$	268,242			$	239,147			$	1,519,019

 

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

 

NOTE 3. LOANS RECEIVABLE – continued

 

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

		March 31, 2026
		Loans Past Due and Still Accruing
						90 Days								Nonaccrual				Nonaccrual
		30-89 Days				and								Loans with				Loans with				Current				Total
		Past Due				Greater				Total				no ACL				ACL				Loans				Loans
		(In Thousands)
Real estate loans:
Residential 1-4 family		$	2,161			$	158			$	2,319			$	189			$	-			$	142,562			$	145,070
Residential 1-4 family construction			-				-				-				-				-				43,714				43,714
Commercial real estate			3,097				3				3,100				420				-				664,165				667,685
Commercial construction and development			81				-				81				1				-				98,200				98,282
Farmland			90				815				905				578				-				159,181				160,664
Other loans:
Home equity			555				-				555				550				-				108,173				109,278
Consumer			66				-				66				58				112				22,918				23,154
Commercial			756				-				756				178				86				150,560				151,580
Agricultural			217				2,230				2,447				156				-				117,256				119,859
Total		$	7,023			$	3,206			$	10,229			$	2,130			$	198			$	1,506,729			$	1,519,286

 

		December 31, 2025
		Loans Past Due and Still Accruing
						90 Days								Nonaccrual				Nonaccrual
		30-89 Days				and								Loans with				Loans with				Current				Total
		Past Due				Greater				Total				no ACL				ACL				Loans				Loans
		(In Thousands)
Real estate loans:
Residential 1-4 family		$	1,591			$	48			$	1,639			$	298			$	-			$	146,578			$	148,515
Residential 1-4 family construction			-				-				-				-				-				35,278				35,278
Commercial real estate			660				-				660				420				-				634,890				635,970
Commercial construction and development			213				-				213				1				-				120,075				120,289
Farmland			481				841				1,322				308				-				160,950				162,580
Other loans:
Home equity			637				-				637				395				-				107,041				108,073
Consumer			203				-				203				101				109				24,011				24,424
Commercial			557				10				567				183				96				148,585				149,431
Agricultural			168				2,645				2,813				177				-				131,469				134,459
Total		$	4,510			$	3,544			$	8,054			$	1,883			$	205			$	1,508,877			$	1,519,019

 

Interest income recognized on nonaccrual loans for the three months ended March 31, 2026 and 2025 is considered insignificant. Interest payments received on a cash basis related to nonaccrual loans were $241,000 at March 31, 2026 and $262,000 at  December 31, 2025.

 

The following tables present the amortized cost basis of collateral-dependent loans by class of loans and collateral type.

 

		March 31, 2026
		Real Estate				Business Assets				Other
		(In Thousands)
Real estate loans:
Residential 1-4 family		$	883			$	-			$	-
Commercial real estate			95				2,936				-
Commercial construction and development			1				-				-
Farmland			1,361				-				-
Other loans:
Home equity			414				-				-
Consumer			-				-				168
Commercial			-				366				4
Agricultural			29				2,230				-
Total		$	2,783			$	5,532			$	172

 

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

 

NOTE 3. LOANS RECEIVABLE – continued

 

		December 31, 2025
		Real Estate				Business Assets				Other
		(In Thousands)
Real estate loans:
Residential 1-4 family		$	822			$	-			$	-
Commercial real estate			97				492				-
Commercial construction and development			1				-				-
Farmland			1,143				-				-
Other loans:
Home equity			278				-				-
Consumer			-				-				202
Commercial			-				482				14
Agricultural			-				2,645				-
Total		$	2,341			$	3,619			$	216

  

The Company offers modifications of loans to borrowers experiencing financial difficulty by providing principal forgiveness, interest rate reductions, term extensions, other than insignificant payment delays, or any combination of these. 

 

The following tables include the amortized cost basis at the period end for the loans modified to borrowers experiencing financial difficulty.

 

		As of or For the
		Three-Months Ended
		March 31, 2026
		Term Extension and Payment Deferral								Term Extension and Interest Rate Reduction
		Amortized Cost Basis				Percent of Loan Category				Amortized Cost Basis				Percent of Loan Category				Total Amortized Cost Basis				Total Number of Loans
		(Dollars in Thousands)
Other loans:
Agricultural		$	156				0.13	%		$	-				0.00	%		$	156				1
Total		$	156							$	-							$	156				1

 

		As of or For the
		Three-Months Ended
		March 31, 2025
		Term Extension and Payment Deferral								Term Extension and Interest Rate Reduction
		Amortized Cost Basis				Percent of Loan Category				Amortized Cost Basis				Percent of Loan Category				Total Amortized Cost Basis				Total Number of Loans
		(Dollars in Thousands)
Real estate loans:
Commercial real estate		$	-				0.00	%		$	209				0.03	%		$	209				1
Other loans:
Home equity			45				0.04				-				0.00				45				1
Agricultural			252				0.19				-				0.00				252				2
Total		$	297							$	209							$	506				4

 

---

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

NOTE 4. MORTGAGE SERVICING RIGHTS

 

The Company is servicing mortgage loans for the benefit of others which are not included in the condensed consolidated statements of financial condition and have unpaid principal balances of $1,967,740,000 and $1,976,243,000 at  March 31, 2026 and  December 31, 2025, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing. Mortgage loan servicing fees were $1,234,000 and $1,256,000 for the three months ended March 31, 2026 and 2025, respectively. These fees, net of amortization, are included in mortgage banking, net, which is a component of noninterest income on the condensed consolidated statements of income.

 

Custodial balances maintained in connection with the foregoing loan servicing are included in noninterest checking deposits and were $24,809,000 and $15,598,000 at  March 31, 2026 and December 31, 2025, respectively.

 

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

 

		As of or For the
		Three Months Ended
		March 31,
		2026				2025
		(In Thousands)
Mortgage servicing rights:
Beginning balance		$	15,043			$	15,376
Mortgage servicing rights capitalized			486				271
Amortization of mortgage servicing rights			(620	)			(365	)
Mortgage servicing rights, net		$	14,909			$	15,282

  

The fair values of these mortgage servicing rights were $19,747,000 and $20,302,000 at  March 31, 2026 and  December 31, 2025, respectively. The fair value of mortgage servicing rights was determined at loan level, depending on the interest rate and term of the specific loan, using the following valuation assumptions:

 

		March 31,				December 31,
		2026				2025
Key assumptions:
Discount rate			12	%			12	%
Prepayment speed range			94 - 279	%			90 - 211	%
Weighted average prepayment speed			127	%			119	%

 

NOTE 5. DEPOSITS

 

Deposits are summarized as follows:

 

		March 31,				December 31,
		2026				2025
		(In Thousands)
Noninterest checking		$	437,574			$	452,183
Interest-bearing checking			218,113				218,484
Savings			214,133				207,789
Money market			443,473				440,971
Time certificates of deposit			472,783				462,172
Total		$	1,786,076			$	1,781,599

 

There were no brokered time certificates of deposit at March 31, 2026 and December 31, 2025.

 

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

NOTE 6. OTHER LONG-TERM DEBT

 

Other long-term debt consisted of the following:

 

		March 31, 2026								December 31, 2025
						Unamortized								Unamortized
						Debt								Debt
		Principal				Issuance				Principal				Issuance
		Amount				Costs				Amount				Costs
		(In Thousands)
Subordinated debentures fixed at 3.50% to floating, due 2032		$	40,000			$	(676	)		$	40,000			$	(705	)
Subordinated debentures variable at 3-Month SOFR plus 1.68%, due 2035			5,155				-				5,155				-
Total other long-term debt		$	45,155			$	(676	)		$	45,155			$	(705	)

 

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

 

In June 2020, the Company completed the issuance of $15,000,000 in aggregate principal amount of subordinated notes due in 2030 in a private placement transaction to certain qualified institutional accredited investors. The notes bore interest at an annual fixed rate of 5.50% payable semi-annually. Starting July 1, 2025, interest accrued at a floating rate per annum equal to a benchmark rate, which was three-month term SOFR plus a spread of 509.0 basis points, payable quarterly. The floating rate was 9.39% for the three months ended September 30, 2025. The notes were subject to redemption at the option of the Company on or after July 1, 2025. The subordinated debentures qualified as Tier 2 capital for regulatory capital purposes. The notes were redeemed October 1, 2025 utilizing a line of credit with a correspondent bank to finance the redemption payment. The line of credit rate is based on Prime minus 50.0 basis points and was 6.25% as of March 31, 2026 and December 31, 2025.

 

In  September 2005, the Company completed the private placement of $5,155,000 in subordinated debentures to the Trust. The Trust funded the purchase of the subordinated debentures through the sale of trust preferred securities with a liquidation value of $5,155,000. Using interest payments made by the Company on the debentures, the Trust began paying quarterly dividends to preferred security holders in  December 2005. The annual percentage rate of the interest payable on the subordinated debentures and distributions payable on the preferred securities was fixed at 6.02% until  December 2010 then became variable at three-month LIBOR plus 1.42%. In  December of 2022, Governors of the Federal Reserve System adopted final rule 12 C.F.R. Part 253, Regulation Implementing the Adjustable Interest Rate (LIBOR) Act. Rule 253 identified SOFR-benchmark rates to replace LIBOR in certain financial contracts after  June 30, 2023. As a result, the variable rate for interest payable converted to three-month CME Term SOFR plus 1.68% during the quarter ended  March 31, 2024. The rate was 5.36% as of  March 31, 2026 and 5.33% as of December 31, 2025. Dividends on the preferred securities are cumulative and the Trust  may defer the payments for up to five years. The preferred securities mature in  December 2035 unless the Company elects and obtains regulatory approval to accelerate the maturity date. The subordinated debentures qualify as Tier 1 capital for regulatory purposes.

NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

 

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

 

		Unrealized
		(Losses) Gains
		on Securities
		Available for Sale
		(In Thousands)
Balance at January 1, 2026		$	(12,874	)
Other comprehensive loss, before reclassifications and income taxes			(2,722	)
Amounts reclassified from accumulated other comprehensive loss, before income taxes			-
Income tax benefit			716
Total other comprehensive loss			(2,006	)
Balance at March 31, 2026		$	(14,880	)
Balance at January 1, 2025		$	(20,146	)
Other comprehensive income, before reclassifications and income taxes			1,640
Amounts reclassified from accumulated other comprehensive loss, before income taxes			-
Income tax provision			(439	)
Total other comprehensive income			1,201
Balance at March 31, 2025		$	(18,945	)

 

 

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

 

NOTE 8. EARNINGS PER COMMON SHARE 

 

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

 

		Three Months Ended
		March 31,
		2026				2025
		(Dollars in Thousands,
		Except for Share Data)
Basic weighted average shares outstanding			7,818,831				7,812,248
Dilutive effect of stock compensation			25,626				11,388
Diluted weighted average shares outstanding			7,844,457				7,823,636
Net income available to common shareholders		$	3,984			$	3,239
Basic earnings per common share		$	0.51			$	0.41
Diluted earnings per common share		$	0.51			$	0.41
Restricted stock units excluded from the diluted average outstanding share calculation because their effect would be anti-dilutive			9,262				2,478

 

 

NOTE 9. DERIVATIVES AND HEDGING ACTIVITIES 

 

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

 

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

 

Derivatives are summarized as follows:

 

		March 31, 2026												December 31, 2025
		Notional				Fair Value								Notional				Fair Value
		Amount				Asset				Liability				Amount				Asset				Liability
		(In Thousands)
Interest rate lock commitments		$	16,558			$	-			$	101			$	14,949			$	-			$	49
Forward TBA mortgage-backed securities			13,000				231				-				16,000				-				55
Mandatory forward commitments			1,500				-				8				-				-				-

 

Changes in the fair value of the derivatives are recorded in mortgage banking, net, within noninterest income on the condensed consolidated statements of income. Net gains of $226,000 were recorded for the three months ended March 31, 2026, compared to net losses of $93,000 for the three months ended March 31, 2025. 

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

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

 

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

 

The fair value hierarchy is as follows:

 

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

 

■

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

 

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

 

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

 

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

 

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

		March 31, 2026
		Level 1				Level 2				Level 3				Total Fair
		Inputs				Inputs				Inputs				Value
		(In Thousands)
Financial assets:
Available-for-sale securities:
U.S. government and agency obligations		$	-			$	3,968			$	-			$	3,968
U.S. treasury obligations			43,926				-				-				43,926
Municipal obligations			-				115,816				-				115,816
Corporate obligations			-				1,970				-				1,970
Mortgage-backed securities			-				25,777				-				25,777
Collateralized mortgage obligations			-				76,899				-				76,899
Asset-backed securities			-				6,531				-				6,531
Loans held-for-sale			-				9,904				-				9,904
Forward TBA mortgage-backed securities			-				231				-				231
Financial liabilities:
Interest rate lock commitments			-				-				101				101
Mandatory forward commitments			-				8				-				8

 

		December 31, 2025
		Level 1				Level 2				Level 3				Total Fair
		Inputs				Inputs				Inputs				Value
		(In Thousands)
Financial assets:
Available-for-sale securities:
U.S. government and agency obligations		$	-			$	4,155			$	-			$	4,155
U.S. treasury obligations			44,308				-				-				44,308
Municipal obligations			-				118,324				-				118,324
Corporate obligations			-				1,971				-				1,971
Mortgage-backed securities			-				26,494				-				26,494
Collateralized mortgage obligations			-				79,661				-				79,661
Asset-backed securities			-				6,779				-				6,779
Loans held-for-sale			-				7,452				-				7,452
Financial liabilities:
Forward TBA mortgage-backed securities			-				55				-				55
Interest rate lock commitments			-				-				49				49

 

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

 

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

 

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

 

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

 

		March 31, 2026
		Level 1				Level 2				Level 3				Total Fair
		Inputs				Inputs				Inputs				Value
		(In Thousands)
Collateral-dependent loans individually evaluated, net of ACL		$	-			$	-			$	58			$	58

 

		December 31, 2025
		Level 1				Level 2				Level 3				Total Fair
		Inputs				Inputs				Inputs				Value
		(In Thousands)
Collateral-dependent loans individually evaluated, net of ACL		$	-			$	-			$	189			$	189

 

The following table represents the Bank's financial assets and liabilities measured at fair value on a recurring and nonrecurring basis, the valuation techniques used to measure the fair value of those assets and liabilities, and the significant unobservable inputs and the ranges of values for those inputs.

 

		Principal		Significant		Range of
		Valuation		Unobservable		Significant Input
Instrument		Technique		Inputs		Values
Collateral-dependent loans individually evaluated		Fair value of underlying collateral		Discount applied to the obtained appraisal			10 - 30%
Real estate and other repossessed assets		Fair value of collateral		Discount applied to the obtained appraisal			10 - 30%
Interest rate lock commitments		Internal pricing model		Pull-through expectations			85 - 96%

 

The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable Level 3 inputs on a recurring basis.

 

		As of or For the
		Three Months Ended
		March 31,
		2026				2025
		Interest Rate Lock Commitments
		(In Thousands)
Beginning balance		$	(49	)		$	(103	)
Purchases and issuances			(246	)			(18	)
Sales and settlements			194				93
Ending balance		$	(101	)		$	(28	)
Unrealized (losses) gains related to items held during the period		$	(52	)		$	75

 

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

 

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS – continued  

 

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

 

		March 31, 2026
		Level 1				Level 2				Level 3				Total				Carrying
		Inputs				Inputs				Inputs				Fair Value				Amount
		(In Thousands)
Financial assets:
Cash and cash equivalents		$	53,733			$	-			$	-			$	53,733			$	53,733
FHLB stock			-				2,734				-				2,734				2,734
FRB stock			-				4,131				-				4,131				4,131
Loans receivable, gross			-				-				1,505,005				1,505,005				1,519,286
Mortgage servicing rights			-				-				19,747				19,747				14,909
Financial liabilities:
Time certificates of deposit			-				-				471,506				471,506				472,783
FHLB advances and other borrowings			-				-				27,062				27,062				26,667
Other long-term debt			-				-				44,273				44,273				45,155

 

		December 31, 2025
		Level 1				Level 2				Level 3				Total				Carrying
		Inputs				Inputs				Inputs				Fair Value				Amount
		(In Thousands)
Financial assets:
Cash and cash equivalents		$	62,962			$	-			$	-			$	62,962			$	62,962
FHLB stock			-				2,650				-				2,650				2,650
FRB stock			-				4,131				-				4,131				4,131
Loans receivable, gross			-				-				1,493,348				1,493,348				1,519,019
Mortgage servicing rights			-				-				20,302				20,302				15,043
Financial liabilities:
Time certificates of deposit			-				-				461,201				461,201				462,172
Federal Funds Purchased			-				-				105				105				105
FHLB advances and other borrowings			-				-				38,447				38,447				37,917
Other long-term debt			-				-				43,905				43,905				45,155

 

---

 

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

 

Introduction 

 

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

 

This discussion and analysis provides information that management believes is necessary to understand Eagle's financial condition, changes in financial condition, results of operations, and cash flows for the three months ended March 31, 2026, as compared to the same period of 2025. The following should be read in conjunction with the Company's Consolidated Financial Statements, and accompanying Notes thereto, for the year ended December 31, 2025, included in Eagle's Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on March 9, 2026, and in conjunction with the Condensed Consolidated Financial Statements, and accompanying Notes thereto, included in Part I - Item 1. Financial Statements of this report. The results of operations for the three months ended March 31, 2026, are not necessarily indicative of the future results that may be attained for the entire year or other interim periods. 

 

Executive Summary

 

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

 

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

 

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

 

The level and movement of interest rates impacts the Bank’s earnings as well. The Federal Open Market Committee decreased the federal funds target rate to 3.75% during the year ended December 31, 2025. The rate remained at 3.75% during the three months ended March 31, 2026. 

 

 

Financial Condition

 

Comparisons of financial condition in this section are between March 31, 2026 and December 31, 2025.

 

Total assets were $2.09 billion at March 31, 2026, a decrease of $14.52 million, or 0.7%, from $2.11 billion at December 31, 2025. Loans receivable, net increased by $207,000 from December 31, 2025. Securities available-for-sale decreased $6.81 million, or 2.4%, from December 31, 2025. Total liabilities were $1.90 billion at March 31, 2026, a decrease of $15.66 million, or 0.8%, from $1.91 billion at December 31, 2025. The decrease was largely due to a decrease in FHLB advances, offset by an increase in total deposits. Total borrowings decreased $11.32 million from December 31, 2025 and total deposits increased $4.48 million from December 31, 2025. Total shareholders’ equity increased $1.15 million, or 0.6%, from December 31, 2025.

 

 

Financial Condition Details

 

Investment Activities

 

The following table summarizes investment activities:

 

		March 31,								December 31,
		2026								2025
		Fair Value				Percent of Total				Fair Value				Percent of Total
		(Dollars in Thousands)
Securities available-for-sale:
U.S. government and agency obligations		$	3,968				1.44	%		$	4,155				1.48	%
U.S. treasury obligations			43,926				15.98				44,308				15.73
Municipal obligations			115,816				42.13				118,324				41.99
Corporate obligations			1,970				0.72				1,971				0.70
Mortgage-backed securities			25,777				9.38				26,494				9.41
Collateralized mortgage obligations			76,899				27.97				79,661				28.28
Asset-backed securities			6,531				2.38				6,779				2.41
Total securities available-for-sale		$	274,887				100.00	%		$	281,692				100.00	%

 

Securities available-for-sale were $274.89 million at March 31, 2026, a decrease of $6.80 million, or 2.4% from $281.69 million at December 31, 2025. The decrease was primarily due to maturity, principal payments and call activity of $3.89 million and a decrease in fair value of $2.72 million. 

 

 

Financial Condition – continued

 

Lending Activities 

 

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

 

		March 31,								December 31,
		2026								2025
		Amount				Percent of Total				Amount				Percent of Total
		(Dollars in Thousands)
Real estate loans:
Residential 1-4 family (1)		$	145,070				9.55	%		$	148,515				9.78	%
Residential 1-4 family construction			43,714				2.88				35,278				2.32
Total residential 1-4 family			188,784				12.43				183,793				12.10
Commercial real estate			667,685				43.95				635,970				41.87
Commercial construction and development			98,282				6.47				120,289				7.92
Farmland			160,664				10.57				162,580				10.70
Total commercial real estate			926,631				60.99				918,839				60.49
Total real estate loans			1,115,415				73.42				1,102,632				72.59
Other loans:
Home equity			109,278				7.19				108,073				7.11
Consumer			23,154				1.52				24,424				1.61
Commercial			151,580				9.98				149,431				9.84
Agricultural			119,859				7.89				134,459				8.85
Total commercial loans			271,439				17.87				283,890				18.69
Total other loans			403,871				26.58				416,387				27.41
Total loans			1,519,286				100.00	%			1,519,019				100.00	%
Allowance for credit losses			(17,430	)							(17,370	)
Total loans, net		$	1,501,856							$	1,501,649

 

(1)

Excludes loans held-for-sale.

 

Total loans, net increased $207,000 to $1.50 billion at March 31, 2026 from $1.50 billion at December 31, 2025. The increase was largely driven by an increase in total commercial real estate loans of $7.79 million, an increase in total residential loans of $4.99 million and an increase of $1.21 million in home equity loans. The increases were largely offset by a decrease of $12.45 million in total commercial loans and a decrease of $1.27 million in consumer loans. 

 

Total loan originations were $170.95 million for the three months ended March 31, 2026. Total residential 1-4 family originations were $91.77 million, which includes $69.26 million of loans held-for-sale originations. Total commercial originations were $45.38 million. Total commercial real estate originations were $25.71 million. Home equity loan originations totaled $5.98 million. Consumer loan originations totaled $2.11 million. Loans held-for-sale increased by $2.45 million to $9.90 million at March 31, 2026 from $7.45 million at December 31, 2025.

 

 

Financial Condition – continued

 

Lending Activities– continued

 

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

 

For mortgage loans and home equity loans, if the borrower is unable to cure the delinquency or reach a payment agreement, we will institute foreclosure actions. If a foreclosure action is taken and the loan is not reinstated, paid in full or refinanced, the property is sold at judicial sale at which we may be the buyer if there are no adequate offers to satisfy the debt. Any property acquired as the result of foreclosure, or by deed in lieu of foreclosure, is classified as real estate owned until such time as it is sold or otherwise disposed of. When real estate owned is acquired, it is recorded at its fair market value less estimated selling costs. The initial recording of any loss is charged to the allowance for credit losses. Subsequent write-downs are recorded as a charge to operations. As of March 31, 2026 and December 31, 2025 there was $70,000 and $98,000, respectively, of real estate owned and other repossessed property. 

 

The following table sets forth information regarding nonperforming assets:

 

		March 31,				December 31,
		2026				2025
		(Dollars in Thousands)
Non-accrual loans
Real estate loans:
Residential 1-4 family		$	189			$	298
Commercial real estate			420				420
Commercial construction and development			1				1
Farmland			578				308
Other loans:
Home equity			550				395
Consumer			170				210
Commercial			264				279
Agricultural			156				177
Accruing loans delinquent 90 days or more
Real estate loans:
Residential 1-4 family			158				48
Commercial real estate			3				-
Farmland			815				841
Other loans:
Commercial			-				10
Agricultural			2,230				2,645
Total nonperforming loans			5,534				5,632
Real estate owned and other repossessed property, net			70				98
Total nonperforming assets		$	5,604			$	5,730
Total nonperforming loans to total loans			0.36	%			0.37	%
Total nonperforming loans to total assets			0.26	%			0.27	%
Total nonaccrual loans to total loans			0.15	%			0.14	%
Total nonperforming assets to total assets			0.27	%			0.27	%

 

 

Nonaccrual loans as of March 31, 2026 and December 31, 2025 include $721,000 and $460,000, respectively of acquired loans that deteriorated subsequent to the acquisition date. 

 

 

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

 

		March 31, 2026
		Non-Owner Occupied				Owner Occupied				Total				Percent of Total CRE
		(Dollars In Thousands)
Automotive related		$	-			$	23,603			$	23,603				3.54	%
Bars and restaurants			5,267				16,598				21,865			3.27
Car washes			975				-				975			0.15
Construction and related industries			17,581				15,872				33,453			5.01
Healthcare and social assistance			22,530				11,037				33,567			5.03
Hospitality industry related			-				11,542				11,542			1.73
Hotels and other traveler accommodations			87,999				-				87,999			13.18
Industrial/warehouse			60,017				-				60,017			8.99
Lessors of mini warehouses and self-storage units			18,392				-				18,392			2.75
Lessors of nonresidential buildings			60,031				-				60,031			8.99
Lessors of other real estate property			29,214				-				29,214			4.38
Multifamily			109,658				-				109,658			16.42
Office space			18,357				43,898				62,255			9.32
Real estate leasing activities			2,120				28,726				30,846			4.62
Wholesale and retail trade			7,734				12,140				19,874			2.98
Other			43,929				20,465				64,394			9.64
Total commercial real estate		$	483,804			$	183,881			$	667,685			100.00		%

 

 

		December 31, 2025
		Non-Owner Occupied				Owner Occupied				Total				Percent of Total CRE
		(Dollars In Thousands)
Automotive related		$	-			$	23,339			$	23,339				3.67	%
Bars and restaurants			5,341				15,803				21,144				3.32
Car washes			979				-				979				0.15
Construction and related industries			17,889				14,227				32,116				5.05
Healthcare and social assistance			9,746				9,016				18,762				2.95
Hospitality industry related			-				11,706				11,706				1.84
Hotels and other traveler accommodations			80,037				-				80,037				12.59
Industrial/warehouse			56,337				-				56,337				8.86
Lessors of mini warehouses and self-storage units			18,926				-				18,926				2.98
Lessors of nonresidential buildings			59,323				-				59,323				9.33
Lessors of other real estate property			29,003				-				29,003				4.56
Multifamily			109,041				-				109,041				17.14
Office space			19,610				44,235				63,845				10.04
Other real estate rental and leasing			2,351				-				2,351				0.37
Real estate leasing activities			-				30,452				30,452				4.79
Wholesale and retail trade			7,140				13,104				20,244				3.18
Other			34,028				24,337				58,365				9.18
Total commercial real estate		$	449,751			$	186,219			$	635,970				100.00	%

 

Commercial real estate loans made up $667.69 million or 43.9% of the Bank's total loan portfolio at March 31, 2026, compared to $635.97 million or 41.9% at December 31, 2025. The Bank's commercial real estate loans are primarily permanent loans secured by improved property such as office buildings, retail stores, commercial warehouses, and apartment buildings. The terms and conditions of each loan are tailored to the needs of the borrower and based on the financial strength of the project and any guarantors. Generally, commercial real estate loans originated by the Bank will not exceed 80.0% of the appraised value or the selling price of the property, whichever is less. The Bank's commercial real estate portfolio's average loan-to-value ratio range was 32% to 48% by property type as of March 31, 2026.

 

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

 

Financial Condition – continued

 

Deposits and Other Sources of Funds

 

The following table includes deposit accounts by category:

 

		March 31,								December 31,
		2026								2025
						Percent								Percent
		Amount				of Total				Amount				of Total
		(Dollars in Thousands)
Noninterest checking		$	437,574				24.50	%		$	452,183				25.38	%
Interest-bearing checking			218,113				12.21				218,484				12.27
Savings			214,133				11.99				207,789				11.66
Money market			443,473				24.83				440,971				24.75
Total			1,313,293				73.53				1,319,427				74.06
Certificates of deposit accounts:
IRA certificates			20,534				1.15				20,926				1.17
Other certificates			452,249				25.32				441,246				24.77
Total certificates of deposit			472,783				26.47				462,172				25.94
Total deposits		$	1,786,076				100.00	%		$	1,781,599				100.00	%

 

Deposits increased by $4.48 million, or 0.3%, from December 31, 2025 to March 31, 2026. Time certificates of deposit increased by $10.61 million, savings increased by $6.34 million and money market increased by $2.50 million. These increases were partially offset by decreases in noninterest checking of $14.61 million, and interest bearing checking of $371,000.

 

The estimated amount of uninsured deposits was $354.06 million, or 19.6%, of total deposits at March 31, 2026, compared to $354.59 million, or 19.5%, of total deposits at December 31, 2025.

 

The following table summarizes borrowing activity:

 

		March 31,								December 31,
		2026								2025
		Net				Percent				Net				Percent
		Amount				of Total				Amount				of Total
		(Dollars in Thousands)
FHLB advances and other borrowings		$	26,667				37.48	%		$	38,022				46.10	%
Other long-term debt:
Subordinated debentures fixed at 3.50% to floating, due 2032			39,324				55.27				39,295				47.65
Subordinated debentures variable at 3-Month SOFR plus 1.68%, due 2035			5,155				7.25				5,155				6.25
Total other long-term debt			44,479				62.52				44,450				53.90
Total borrowings		$	71,146				100.00	%		$	82,472				100.00	%

 

Total borrowings decreased by $11.32 million, or 13.7%, to $71.15 million at March 31, 2026 from $82.47 million at December 31, 2025, due to a decrease in FHLB advances and other borrowings.

 

Shareholders’ Equity

 

Total shareholders’ equity increased by $1.15 million, or 0.6%, to $192.96 million at March 31, 2026 from $191.81 million at December 31, 2025. The increase was primarily attributed to net income of $3.98 million. The increase was largely offset by an increase in unrealized losses of securities available for sale of $2.01 million and dividends paid of $1.16 million.

 

Analysis of Net Interest Income

 

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

 

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

 

		Three Months Ended March 31, 2026												Three Months Ended March 31, 2025
		Average				Interest								Average				Interest
		Daily				and				Yield/				Daily				and				Yield/
		Balance				Dividends				Cost(4)				Balance				Dividends				Cost(4)
		(Dollars in Thousands)
Assets:
Interest earning assets:
Investment securities		$	280,552			$	2,215				3.20	%		$	293,273			$	2,451				3.39	%
FHLB and FRB stock			6,687				138				8.37				11,816				260				8.92
Loans receivable(1)			1,525,274				23,570				6.27				1,526,774				23,320				6.19
Other earning assets			33,862				299				3.58				3,347				38				4.60
Total interest-earning assets			1,846,375				26,222				5.76				1,835,210				26,069				5.76
Noninterest-earning assets			245,905												243,932
Total assets		$	2,092,280											$	2,079,142
Liabilities and equity:
Interest-bearing liabilities:
Deposit accounts:
Checking		$	216,444			$	92				0.17	%		$	219,912			$	97				0.18	%
Savings			211,263				30				0.06				203,079				31				0.06
Money market			443,353				2,422				2.22				376,988				2,191				2.36
Certificates of deposit			469,079				4,117				3.56				465,718				4,552				3.96
FHLB advances and other borrowings			30,582				412				5.46				138,830				1,626				4.75
Other long-term debt			44,460				446				4.07				59,174				670				4.59
Total interest-bearing liabilities			1,415,181				7,519				2.15				1,463,701				9,167				2.54
Noninterest checking			438,927												405,652
Other noninterest-bearing liabilities			42,823												40,701
Total liabilities			1,896,931												1,910,054
Total equity			195,349												169,088
Total liabilities and equity		$	2,092,280											$	2,079,142
Net interest income/interest rate spread(2)						$	18,703			3.61		%						$	16,902				3.22	%
Net interest margin(3)											4.11	%											3.74	%
Total interest earning assets to interest-bearing liabilities											130.47	%											125.38	%

   

(1) Includes loans held-for-sale.

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

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

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

 

Net Interest Margin ("NIM"). Net interest margin for the three months ended March 31, 2026 was 4.11%, an increase of 37 basis points compared to March 31, 2025. The increase in NIM reflects lower funding costs and improved balance sheet leverage through a favorable funding mix and reduced borrowings, with stable yields on interest‑earning assets.

 

 

Rate/Volume Analysis

 

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

 

		Three Months Ended March 31,
		2026												2025
						Due to												Due to
		Volume				Rate				Net				Volume				Rate				Net
		(In Thousands)
Interest earning assets:
Investment securities		$	(106	)		$	(130	)		$	(236	)		$	(181	)		$	(92	)		$	(273	)
FHLB and FRB stock			(113	)			(9	)			(122	)			(28	)			41				13
Loans receivable(1)			(23	)			273				250				402				976				1,378
Other earning assets			346				(85	)			261				(2	)			11				9
Total interest earning assets			104				49				153				191				936				1,127
Interest-bearing liabilities:
Checking			(2	)			(3	)			(5	)			-				51				51
Savings			1				(2	)			(1	)			(3	)			(1	)			(4	)
Money market			386				(155	)			231				229				(63	)			166
Certificates of deposit			33				(468	)			(435	)			260				(150	)			110
FHLB advances and other borrowings			(1,267	)			53				(1,214	)			(584	)			(287	)			(871	)
Other long-term debt			(167	)			(57	)			(224	)			2				(15	)			(13	)
Total interest-bearing liabilities			(1,016	)			(632	)			(1,648	)			(96	)			(465	)			(561	)
Change in net interest income		$	1,120			$	681			$	1,801			$	287			$	1,401			$	1,688

  

(1) Includes loans held-for-sale.

 

 

Results of Operations

 

The following compares the results of operations for the three months ended March 31, 2026 and 2025.

 

		Three Months Ended
		March 31,
		2026				2025				Dollar Change				Percent Change
		(Dollars in Thousands)
Interest and dividend income		$	26,222			$	26,069			$	153				0.6	%
Interest expense			7,519				9,167				(1,648	)			-18.0
Net interest income			18,703				16,902				1,801				10.7
Provision for credit losses			279				42				237				564.3
Net interest income after provision for credit losses			18,424				16,860				1,564				9.3
Noninterest income			4,881				4,016				865				21.5
Noninterest expense			18,211				17,006				1,205				7.1
Provision for income taxes			1,110				631				479				75.9
Net income		$	3,984			$	3,239			$	745				23.0	%

 

Net Income. Eagle’s net income for the three months ended March 31, 2026, was $3.98 million, compared to $3.24 million for the three months ended March 31, 2025. The increase of $745,000 was due to an increase in net interest income after provision for credit losses of $1.56 million and an increase in noninterest income of $865,000. These were partially offset by an increase in noninterest expense of $1.21 million and an increase in the provision for income taxes of $479,000. For the current period, basic earnings per common share and diluted earnings per common share were both $0.51. Basic earnings per common share and diluted earnings per common share were both $0.41 for the three months ended March 31, 2025.

 

Net Interest Income. Net interest income increased to $18.70 million for the three months ended March 31, 2026, from $16.90 million for the three months ended March 31, 2025. The increase of $1.80 million, or 10.7%, was primarily the result of a decrease in interest expense of $1.65 million.

 

Interest and Dividend Income. Interest and dividend income was $26.22 million for the three months ended March 31, 2026, compared to $26.07 million for the three months ended March 31, 2025, an increase of $153,000, or 0.6%. Interest and fees on loans increased to $23.57 million for the three months ended March 31, 2026, from $23.32 million for the three months ended March 31, 2025. This increase of $250,000, or 1.1%, was due in part to an increase in the average yield on loans, with average loan balances remaining relatively stable, period over period. The average interest rate earned on loans receivable increased by eight basis points, from 6.19% for the three months ended March 31, 2025, to 6.27% for the current period. Interest accretion on purchased loans was $185,000 for the three months ended March 31, 2026, which resulted in a four-basis point increase in net interest margin compared to $172,000 for the three months ended March 31, 2025, which also resulted in a four-basis point increase in net interest margin. Average balances for loans receivable, including loans held-for-sale, remained relatively stable at $1.53 billion for the three months ended March 31, 2026 and 2025. Interest on investment securities available-for-sale decreased by $236,000, or 9.6%, period over period, primarily due to the decrease in average balances for investments from $293.27 million for the three months ended March 31, 2025, to $280.55 million for the three months ended March 31, 2026. In addition, average interest rates earned on investments decreased from 3.39% for the three months ended March 31, 2025, to 3.20% for the three months ended March 31, 2026.

 

Interest Expense. Total interest expense was $7.52 million for the three months ended March 31, 2026, decreasing from $9.17 million for the three months ended March 31, 2025. The decrease of $1.65 million, or 18.0%, was primarily due to a decrease of $1.44 million in interest expense on total borrowings. The decrease in interest expense on total borrowings was driven by the average balance of FHLB advances and other borrowings decreasing from $138.83 million for the three months ended March 31, 2025, to $30.58 million for the three months ended March 31, 2026. The average rate paid on FHLB advances and other borrowings increased from 4.75% for the three months ended March 31, 2025, to 5.46% for the three months ended March 31, 2026 due to the payoff of lower-cost borrowings. Interest expense on deposits decreased minimally by $210,000, period over period. The overall average rate on total deposits was down from 1.67% for the three months ended March 31, 2025, compared to 1.52% for the three months ended March 31, 2026. However, the average balance for total deposits increased from $1.67 billion for the three months ended March 31, 2025, to $1.78 billion for the three months ended March 31, 2026.

 

Provision for Credit Losses. Provision for credit losses was $279,000 for the three months ended March 31, 2026, compared to $42,000 for the three months ended March 31, 2025. The provision for credit losses for the three months ended March 31, 2026, included an increase in the provision for credit losses on loans to $109,000, and unchanged provision for unfunded commitments of $170,000.

 

Noninterest Income. Total noninterest income was $4.88 million for the three months ended March 31, 2026, compared to $4.02 million for the three months ended March 31, 2025, an increase of $865,000, or 21.5%. This increase was primarily due to an increase of $490,000 in other noninterest income due to insurance proceeds of $484,000 received for the three months ended March 31,2026 due to smoke damage caused by a furnace fire and other damage from a windstorm. In addition, mortgage banking, net increased $309,000 to $2.43 million for the three months ended March 31, 2026, from $2.13 million for the three months ended March 31, 2025. Mortgage banking, net, includes net gain on sale of mortgage loans, which increased to $1.68 million for the three months ended March 31, 2026, compared to $1.35 million for the three months ended March 31, 2025. During the three months ended March 31, 2026, $66.08 million residential mortgage loans were sold, compared to $42.80 million in the three months ended March 31, 2025. However, gross margin levels decreased from 3.15% for the three months ended March 31, 2025, to 2.54% for the three months ended March 31, 2026.

 

Noninterest Expense. Noninterest expense was $18.21 million for the three months ended March 31, 2026, compared to $17.01 million for the three months ended March 31, 2025, an increase of $1.21 million, or 7.1%. The driver of the increase was salaries and employee benefits, which increased $1.15 million.

 

Provision for Income Taxes. Provision for income taxes was $1.11 million for the three months ended March 31, 2026, compared to $631,000 for the three months ended March 31, 2025. The effective tax rate was 21.8% for the current period compared to 16.3% for the three months ended March 31, 2025. The effective tax rate increased as the Company’s pretax earnings have increased at a faster pace than tax-exempt income.

 

 

Liquidity and Capital Resources 

 

Liquidity

 

The Bank is required by regulation to maintain sufficient levels of liquidity for safety and soundness purposes. Appropriate levels of liquidity will depend upon the types of activities in which the company engages. For internal reporting purposes, the Bank uses policy minimums of 1.0% and 8.0% for “basic surplus” and “basic surplus with FHLB” as internally defined. In general, the “basic surplus” is a calculation of the ratio of unencumbered short-term assets reduced by estimated percentages of CD maturities and other deposits that may leave the Bank in the next 30 days divided by total assets. “Basic surplus with FHLB” adds to “basic surplus” the additional borrowing capacity the Bank has with the FHLB of Des Moines. The Bank exceeded those minimum ratios as of March 31, 2026 and December 31, 2025.

 

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

 

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

 

The Company's available borrowing capacity was approximately $593.00 million as of March 31, 2026 and $601.00 million as of December 31, 2025.

 

		March 31,								December 31,
		2026								2025
		Borrowings				Remaining Borrowing				Borrowings				Remaining Borrowing
		Outstanding				Capacity				Outstanding				Capacity
		(In Thousands)
Federal Home Loan Bank advances		$	11,667			$	484,796			$	22,917			$	492,553
Federal Reserve Bank discount window			-				23,333				-				23,506
Correspondent bank lines of credit			15,000				85,000				15,105				84,895
Total		$	26,667			$	593,129			$	38,022			$	600,954

 

Brokered deposits are another source of funding the Bank may utilize from time to time. As of March 31, 2026, the Bank had no brokered certificates and $2.02 million in brokered money market deposits. As of December 31, 2025, the Bank had no brokered certificates and $3.21 million in brokered money market deposits. Policy limits for brokered deposits are set at 10% of assets.

 

In addition to bank level liquidity management, Eagle must manage liquidity at the parent company level for various operating needs, including the servicing of debt, the payment of dividends on our common stock, share repurchases, payment of general corporate expenses, and potential capital infusions into subsidiaries. The primary source of liquidity for Eagle consists of dividends from the Bank, which is governed by certain rules and regulations of the Montana Division of Banking and Financial Institutions and the Federal Reserve, and access to capital markets.

 

Eagle has a $15.00 million line of credit with a correspondent bank. The outstanding balance for this line of credit was $15.00 million at March 31, 2026 and December 31, 2025. The line of credit was used to finance the redemption payment for subordinated notes of $15.00 million. The line of credit has a two-year maturity and a variable interest rate equal to 0.50% below prime. The rate was 6.25% as of March 31, 2026. The draw is secured by the assets of the Company and includes certain financial covenants and negative covenants. The Company is in compliance with the covenants under the line of credit. Outstanding draws on the line impact remaining borrowing capacity for the Company’s correspondent bank lines of credit included above.

 

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

 

 

Capital Resources

 

As of March 31, 2026, the Bank’s internally determined measurement of sensitivity to interest rate movements as measured by a 200-basis point rise in interest rates scenario, increased the economic value of equity (“EVE”) by 3.2% compared to an increase of 3.4% at December 31, 2025. A 200-basis point decrease in interest rates scenario decreased EVE by 9.1% compared to a decrease of 9.3% at December 31, 2025. The Bank is within the guidelines set forth by the Board of Directors for interest rate risk sensitivity in rising interest rate scenarios.

 

The Bank's regulatory capital was in excess of all applicable regulatory requirements and the Bank is deemed "well capitalized" pursuant to State of Montana and FRB rules as of March 31, 2026. The Bank's actual capital amounts and ratios as of March 31, 2026 are presented in the table below and all of the ratios, with the exception of the Tier 1 capital adjusted total average assets ratio, include the capital conservation buffer of 2.50%. 

 

																		Minimum
																		To Be Well
										Minimum Required								Capitalized Under
										for Capital Adequacy								Prompt Corrective
		Actual								Purposes								Action Provisions
		Amount				Ratio				Amount				Ratio				Amount				Ratio
		(Dollars in Thousands)
March 31, 2026:
Total risk-based capital to risk weighted assets		$	244,174				14.46	%		$	177,258				10.50	%		$	168,817				10.00	%
Tier 1 capital to risk weighted assets			224,734				13.31				143,494				8.50				135,054				8.00
Common equity Tier 1 capital to risk weighted assets			224,734				13.31				118,172				7.00				109,731				6.50
Tier 1 capital to adjusted total average assets			224,734				10.85				82,833				4.00				103,541				5.00

 

The Bank's regulatory capital was in excess of all applicable regulatory requirements and the Bank is deemed "well capitalized" pursuant to State of Montana and FRB rules as of December 31, 2025. The Bank's actual capital amounts and ratios as of December 31, 2025 are presented in the table below and all of the ratios, with the exception of the Tier 1 capital adjusted total average assets ratio, include the capital conservation buffer of 2.50%. 

 

																		Minimum
																		To Be Well
										Minimum Required								Capitalized Under
										for Capital Adequacy								Prompt Corrective
		Actual								Purposes								Action Provisions
		Amount				Ratio				Amount				Ratio				Amount				Ratio
		(Dollars in Thousands)
December 31, 2025:
Total risk-based capital to risk weighted assets		$	241,786				14.28	%		$	177,739				10.50	%		$	169,275				10.00	%
Tier 1 capital to risk weighted assets			222,576				13.15				143,884				8.50				135,420				8.00
Common equity Tier 1 capital to risk weighted assets			222,576				13.15				118,492				7.00				110,029				6.50
Tier 1 capital to adjusted total average assets			222,576				10.62				83,832				4.00				104,790				5.00

 

 

Impact of Inflation and Changing Prices

 

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

 

Interest Rate Risk

 

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

 

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

 

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

 

The Bank has established acceptable levels of interest rate risk as follows for an instantaneous and permanent shock in rates: projected net interest income over the next twelve months (i.e. year-1) will not be reduced by more than 15.0% given an immediate increase or decrease in interest rates of up to 300 basis points, and the subsequent twelve months (i.e. year-2) will not be reduced by more than 20.0% given an immediate increase or decrease in interest rates of up to 300 basis points. 

 

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

 

Changes in Market		As of March 31, 2026				Board Policy		Board Policy
Interest Rates		Rate Sensitivity				Limits		Limits
(Basis Points)		Year 1		Year 2		Year 1		Year 2
+300		-4.4%		7.7%		-15.0%		-20.0%
+200		-2.8%		6.5%		-15.0%		-15.0%
+100		-1.2%		5.6%		-10.0%		-10.0%
-100		0.1%		0.4%		-10.0%		-10.0%
-200		0.5%		-3.2%		-15.0%		-15.0%
-300		2.4%		-4.9%		-15.0%		-20.0%

 

 

The accounting and financial reporting policies of Eagle are in accordance with generally accepted accounting principles ("GAAP") and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Eagle has identified certain of its accounting policies as “critical accounting policies,” consisting of those related to the allowance for credit losses and business combinations. In determining which accounting policies are critical in nature, Eagle has identified the policies that require significant judgment or involve complex estimates. It is management's practice to discuss critical accounting policies with the Board of Directors' Audit Committee on a periodic basis, including the development, selection, implementation, and disclosure of the critical accounting policies. The application of these policies has a significant impact on Eagle’s unaudited interim consolidated financial statements. Eagle’s financial results could differ significantly if different judgments or estimates are used in the application of these policies. All accounting policies described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 – Organization and Summary of Significant Accounting Policies" in Eagle’s 2025 Form 10-K, as filed with the SEC on March 9, 2026, should be reviewed for a greater understanding of how we record and report our financial performance. There have been no significant changes to the accounting policies, estimates, and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Eagle’s 2025 Form 10-K.

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

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

 

Item 4. Controls and Procedures 

 

As of the end of the period covered by this report, we conducted an evaluation under the supervision and with the participation of our management including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure. Based on that evaluation, our CEO and CFO concluded that as of March 31, 2026, our disclosure controls and procedures were effective. During the last quarter, there were no changes in the Company’s internal control over financial reporting that have materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

Part II - OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

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

 

Item 1A.

Risk Factors

 

There have not been any material changes in the risk factors previously disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

 

Item 3.

Defaults Upon Senior Securities.

 

Not applicable.

 

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information.

 

During the three months ended March 31, 2026, none of our directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

 

 

 

Part II - OTHER INFORMATION - continued

 

Item 6.

Exhibits.

 

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of Eagle Bancorp Montana, Inc. (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on February 23, 2010).
3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation. (incorporated by reference to Exhibit 3.2 of our Quarterly Report on Form 10-Q filed on May 9, 2019).
3.3	Bylaws of Eagle Bancorp Montana, Inc., amended as of August 20, 2015 (incorporated by reference to 3.1 of our Current Report on Form 8-K filed on August 25, 2015).
31.1	Certification by Laura F. Clark, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Miranda J. Spaulding, Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Laura F. Clark, Chief Executive Officer, and Miranda J. Spaulding, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)(1)
101.SCH	Inline XBRL Taxonomy Extension Schema Document(1)
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document(1)
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document(1)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document(1)
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document(1)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(1) These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

 

 

SIGNATURES

 

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

 

	EAGLE BANCORP MONTANA, INC.
Date: May 7, 2026	By:	/s/ Laura F. Clark
		Laura F. Clark
		President/CEO
Date: May 7, 2026	By:	/s/ Miranda J. Spaulding
		Miranda J. Spaulding
		EVP/CFO