10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2019

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

For the transition period from _____ to _____.

Commission file number 1-34682

Eagle Bancorp Montana, Inc.

(Exact name of small business issuer as specified in its charter)

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

1400 Prospect Avenue, Helena, MT 59601

(Address of principal executive offices)

(406) 442-3080

(Issuer's telephone number)

Website address: www.opportunitybank.com

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

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

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

Large accelerated filer     [   ]	Accelerated filer       [X]
Non-accelerated filer       [   ]	Smaller reporting company   [X]
	Emerging growth company   [   ]

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

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

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

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock par value $0.01 per share	EBMT	The Nasdaq Stock Market LLC

APPLICABLE ONLY TO CORPORATE ISSUERS

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

Common stock, par value $0.01 per share 6,403,693 shares outstanding

As of August 7, 2019

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	PAGE
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition as of June 30, 2019 and December 31, 2018	1
	Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018	3
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018	5
	Consolidated Statements of Changes in Shareholders' Equity for the six months ended June 30, 2019 and 2018	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018	7
	Notes to the Unaudited Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	51
Signatures		52

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

Note Regarding Forward-Looking Statements

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

● statements of our goals, intentions and expectations;

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

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

● estimates of our risks and future costs and benefits.

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

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

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

● local, regional, national and international economic and market conditions and events and the impact they may have on us, our customers and our assets and liabilities;

● competition among depository and other financial institutions;

● changes in the prices, values and sales volume of residential and commercial real estate in Montana;

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

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

● changes or volatility in the securities markets;

● political developments, uncertainties or instability;

● our ability to enter new markets successfully and capitalize on growth opportunities;

● our ability to successfully perform due diligence and integrate acquired businesses including our recent acquisition of Big Muddy Bancorp, Inc.;

● changes in consumer spending, borrowing and savings habits;

● our ability to continue to increase and manage our commercial and residential real estate, multi-family and commercial business loans;

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

● the level of future deposit insurance premium assessments;

● the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits, including any anticipated cost savings or synergies, associated with any such mergers, acquisitions or dispositions, including the recent merger of The State Bank of Townsend with and into Opportunity Bank of Montana;

● 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;

● the possibility of goodwill impairment charges in the future;

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

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

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2018, any subsequent Reports on Form 10-Q and Form 8-K, and other filings with the SEC. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware.

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	June 30,		December 31,
	2019		2018
ASSETS:
Cash and due from banks	$	10,581	$	10,144
Interest bearing deposits in banks		2,855		1,057
Total cash and cash equivalents		13,436		11,201
Securities available-for-sale, at fair value		124,065		142,165
Federal Home Loan Bank ("FHLB") stock		5,384		5,011
Federal Reserve Bank ("FRB") stock		2,526		2,033
Investment in Eagle Bancorp Statutory Trust I		155		155
Mortgage loans held-for-sale, at fair value		23,760		7,318
Loans receivable, net of deferred loan fees of $1,215 at June 30, 2019 and $1,098 at December 31, 2018 and allowance for loan losses of $7,750 at June 30, 2019 and $6,600 at December 31, 2018		744,684		610,333
Accrued interest and dividends receivable		4,903		3,479
Mortgage servicing rights, net		7,666		7,100
Premises and equipment, net		36,992		29,343
Cash surrender value of life insurance, net		23,724		20,545
Real estate and other repossessed assets acquired in settlement of loans, net		91		107
Goodwill		15,710		12,124
Core deposit intangible, net		3,136		1,498
Deferred tax asset, net		75		1,190
Other assets		1,418		301
Total assets	$	1,007,725	$	853,903

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

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	June 30,			December 31,
	2019			2018
LIABILITIES:
Deposit accounts:
Noninterest bearing	$	183,116		$	142,788
Interest bearing		565,272			483,823
Total deposits		748,388			626,611
Accrued expenses and other liabilities		11,987			5,388
FHLB advances and other borrowings		106,748			102,222
Other long-term debt:
Principal amount		25,155			25,155
Unamortized debt issuance costs		(247	)		(279	)
Total other long-term debt, net		24,908			24,876
Total liabilities		892,031			759,097
SHAREHOLDERS' EQUITY:
Preferred stock (par value $0.01 per share; 1,000,000 shares authorized; no shares issued or outstanding)		-			-
Common stock (par value $0.01 per share; 20,000,000 and 8,000,000 shares authorized; 6,714,983 and 5,718,942 shares issued; 6,403,693 and 5,477,652 shares outstanding at June 30, 2019 and December 31, 2018, respectively)		67			57
Additional paid-in capital		68,535			52,051
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")		(393	)		(477	)
Treasury stock, at cost		(3,850	)		(2,640	)
Retained earnings		50,167			46,926
Accumulated other comprehensive income (loss), net of tax		1,168			(1,111	)
Total shareholders' equity		115,694			94,806
Total liabilities and shareholders' equity	$	1,007,725		$	853,903

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

-2-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 (Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans	$	10,599	$	7,862		$	20,647		$	14,734
Securities available-for-sale		928		1,021			1,886			2,010
FHLB and FRB dividends		95		74			190			153
Interest on deposits in banks		13		18			31			35
Other interest income		3		1			5			1
Total interest and dividend income		11,638		8,976			22,759			16,933
INTEREST EXPENSE:
Deposits		924		494			1,711			920
FHLB advances and other borrowings		656		315			1,250			652
Other long-term debt		364		357			729			704
Total interest expense		1,944		1,166			3,690			2,276
NET INTEREST INCOME		9,694		7,810			19,069			14,657
Loan loss provision		697		24			1,301			526
NET INTEREST INCOME AFTER LOAN LOSS PROVISION		8,997		7,786			17,768			14,131
NONINTEREST INCOME:
Service charges on deposit accounts		292		214			553			440
Net gain on sale of loans		3,360		1,720			5,959			3,159
Mortgage banking		722		194			1,087			513
Wealth management income		135		147			247			279
Interchange and ATM fees		338		271			613			496
Appreciation in cash surrender value of life insurance		160		146			317			270
Net gain (loss) on sale of available-for-sale securities		104		15			49			(90	)
Net gain (loss) on sale of real estate owned and other repossessed property		19		(32	)		(18	)		(57	)
Other noninterest income		373		40			390			143
Total noninterest income		5,503		2,715			9,197			5,153

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

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
NONINTEREST EXPENSE:
Salaries and employee benefits	$	6,510	$	5,461	$	12,502	$	10,370
Occupancy and equipment expense		1,043		835		2,077		1,663
Data processing		854		673		1,782		1,310
Advertising		212		298		480		576
Amortization of core deposit intangible and tax credits		253		235		507		337
Loan costs		177		179		312		315
Federal insurance premiums		55		69		115		138
Postage		79		84		147		134
Legal, accounting and examination fees		236		184		510		326
Consulting fees		44		25		75		42
Acquisition costs		5		131		1,176		365
Other noninterest expense		1,005		701		1,811		1,382
Total noninterest expense		10,473		8,875		21,494		16,958
INCOME BEFORE PROVISION FOR INCOME TAXES		4,027		1,626		5,471		2,326
Income tax provision (includes ($105) and ($73) for the three months ended June 30, 2019 and 2018, respectively, and ($172) and ($132) for the six months ended June 30, 2019 and 2018, respectively related to income tax benefit from reclassification items)		780		293		1,041		420
NET INCOME	$	3,247	$	1,333	$	4,430	$	1,906
BASIC EARNINGS PER SHARE	$	0.51	$	0.24	$	0.69	$	0.35
DILUTED EARNINGS PER SHARE	$	0.51	$	0.24	$	0.69	$	0.35
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING		6,408,627		5,460,452		6,429,362		5,386,401
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING		6,425,015		5,524,912		6,446,368		5,450,861

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

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
NET INCOME	$	3,247		$	1,333		$	4,430		$	1,906
OTHER ITEMS OF COMPREHENSIVE INCOME (LOSS) BEFORE TAX:
Change in fair value of investment securities available-for-sale		1,965			(216	)		3,451			(2,799	)
Reclassification for net realized (gains) losses on investment securities included in income		(104	)		(15	)		(49	)		90
Change in fair value of loans held-for-sale		-			402			296			664
Reclassification for net realized gains on loans held-for-sale		(296	)		(262	)		(605	)		(587	)
Total other items of comprehensive income (loss)		1,565			(91	)		3,093			(2,632	)
Income tax (provision) benefit related to:
Investment securities		(489	)		60			(896	)		720
Loans held-for-sale		78			(37	)		82			(20	)
Total income tax (provision) benefit		(411	)		23			(814	)		700
COMPREHENSIVE INCOME (LOSS)	$	4,401		$	1,265		$	6,709		$	(26	)

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

-5-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Six Months Ended June 30, 2019 and 2018

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

																ACCUMULATED
							UNALLOCATED									OTHER
	PREFERRED		COMMON		PAID-IN		ESOP			TREASURY			RETAINED			COMPREHENSIVE
	STOCK		STOCK		CAPITAL		SHARES			STOCK			EARNINGS			(LOSS) INCOME			TOTAL
Balance at January 1, 2019	$	-	$	57	$	52,051	$	(477	)	$	(2,640	)	$	46,926		$	(1,111	)	$	94,806
Net income		-		-		-		-			-			1,183			-			1,183
Other comprehensive income		-		-		-		-			-			-			1,125			1,125
Dividends paid ($0.0925 per share)		-		-		-		-			-			(597	)		-			(597	)
Stock issued in connection with Big Muddy Bancorp, Inc. acquisition		-		10		16,425		-			-			-			-			16,435
ESOP shares allocated (4,154 shares)		-		-		30		42			-			-			-			72
Treasury stock purchased (42,000 shares at $17.43 average cost per share)		-		-		-		-			(732	)		-			-			(732	)
Balance at March 31, 2019		-		67		68,506		(435	)		(3,372	)		47,512			14			112,292
Net income		-		-		-		-			-			3,247			-			3,247
Other comprehensive income		-		-		-		-			-			-			1,154			1,154
Dividends paid ($0.0925 per share)		-		-		-		-			-			(592	)		-			(592	)
ESOP shares allocated (4,154 shares)		-		-		29		42			-			-			-			71
Treasury stock purchased (28,000 shares at $17.09 average cost per share)		-		-		-		-			(478	)		-			-			(478	)
Balance at June 30, 2019	$	-	$	67	$	68,535	$	(393	)	$	(3,850	)	$	50,167		$	1,168		$	115,694
Balance at January 1, 2018	$	-	$	53	$	42,780	$	(643	)	$	(2,826	)	$	43,939		$	313		$	83,616
Net income		-		-		-		-			-			573			-			573
Other comprehensive loss		-		-		-		-			-			-			(1,864	)		(1,864	)
Dividends paid ($0.0900 per share)		-		-		-		-			-			(492	)		-			(492	)
Stock issued in connection with TwinCo acquisition		-		4		9,026		-			-			-			-			9,030
ESOP shares allocated (4,154 shares)		-		-		43		42			-			-			-			85
Balance at March 31, 2018		-		57		51,849		(601	)		(2,826	)		44,020			(1,551	)		90,948
Net income		-		-		-		-			-			1,333			-			1,333
Other comprehensive loss		-		-		-		-			-			-			(68	)		(68	)
Dividends paid ($0.0900 per share)		-		-		-		-			-			(491	)		-			(491	)
ESOP shares allocated (4,154 shares)		-		-		41		42			-			-			-			83
Balance at June 30, 2018	$	-	$	57	$	51,890	$	(559	)	$	(2,826	)	$	44,862		$	(1,619	)	$	91,805

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

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,430		$	1,906
Adjustments to reconcile net income to net cash provided by operating activities:
Loan loss provision		1,301			526
Depreciation		861			578
Net amortization of investment securities premium and discounts		537			648
Amortization of mortgage servicing rights		635			610
Amortization of right of use assets		235			-
Amortization of core deposit intangible and tax credits		507			337
ESOP compensation expense for allocated shares		143			168
Deferred income tax provision		229			240
Net gain on sale of loans		(5,959	)		(3,159	)
Net (gain) loss on sale of available-for-sale securities		(49	)		90
Net loss on sale of real estate owned and other repossessed assets		18			57
Net appreciation in cash surrender value of life insurance		(317	)		(211	)
Net change in:
Accrued interest and dividends receivable		(168	)		(408	)
Loans held-for-sale		(10,792	)		485
Other assets		(892	)		167
Accrued expenses and other liabilities		2,462			694
Net cash (used in) provided by operating activities		(6,819	)		2,728
CASH FLOWS FROM INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales		53,257			45,080
Maturities, principal payments and calls		6,986			5,950
Purchases		(37,133	)		(45,970	)
FHLB stock purchased		(109	)		(362	)
FRB stock purchased		(493	)		(554	)
Net cash received (paid) for acquisitions		6,901			(4,243	)
Loan origination and principal collection, net		(47,780	)		(14,395	)
Proceeds from sale of bank owned life insurance		-			205
Proceeds from sale of real estate and other repossessed assets acquired in settlement of loans		352			150
Purchases of premises and equipment		(4,125	)		(4,984	)
Net cash used in investing activities		(22,144	)		(19,123	)

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

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in Thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2019			2018
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	$	29,071		$	10,421
Net short-term (payments) advances on FHLB and other borrowings		(1,625	)		23,376
Long-term advances from FHLB and other borrowings		28,000			-
Payments on long-term FHLB and other borrowings		(21,849	)		(14,876	)
Purchase of treasury stock		(1,210	)		-
Dividends paid		(1,189	)		(983	)
Net cash provided by financing activities		31,198			17,938
NET INCREASE IN CASH AND CASH EQUIVALENTS		2,235			1,543
CASH AND CASH EQUIVALENTS, beginning of period		11,201			7,437
CASH AND CASH EQUIVALENTS, end of period	$	13,436		$	8,980
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest	$	3,352		$	2,120
Cash paid during the period for income taxes	$	170		$	230
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase (decrease) in market value of securities available-for-sale	$	3,402		$	(2,709	)
Mortgage servicing rights recognized	$	1,201		$	748
Right of use assets obtained in exchange for lease liabilities	$	2,374		$	-
Loans transferred to real estate and other assets acquired in foreclosure	$	131		$	4
Stock issued in connection with acquisitions	$	16,435		$	9,030

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

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

-8-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

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

On August 21, 2018, Eagle entered into an Agreement and Plan of Merger with Big Muddy Bancorp, Inc. (“BMB”), a Montana corporation and BMB’s wholly-owned subsidiary, The State Bank of Townsend (“SBOT”), a Montana chartered commercial bank to acquire 100% of BMB’s equity voting interests. On January 1, 2019, BMB merged with and into Eagle, with Eagle continuing as the surviving corporation. SBOT operated four branches in Townsend, Dutton, Denton and Choteau, Montana.

The Bank currently has 21 full service branches. The Bank’s principal business is accepting deposits and, together with funds generated from operations and borrowings, investing in various types of loans and securities. The Bank also operates certain branches under the brand names Dutton State Bank, Farmers State Bank of Denton and The State Bank of Townsend.

Principles of Consolidation

The consolidated financial statements include Eagle, the Bank, Eagle Bancorp Statutory Trust I (the “Trust”) and AFSB NMTC Investment Fund, LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

Consolidated Financial Statement Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). It is recommended that these unaudited interim consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K with all of the audited information and footnotes required by U.S. GAAP for complete financial statements for the year ended December 31, 2018, as filed with the SEC on March 12, 2019. 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.

Certain prior period amounts were reclassified to conform to the presentation for 2019. These reclassifications had no impact on net income or shareholders’ equity.

The results of operations for the six-month period ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any other period.

The Company has evaluated events and transactions subsequent to June 30, 2019 for recognition and/or disclosure.

NOTE 2. MERGERS AND ACQUISITIONS

Effective January 1, 2019, Eagle completed its previously announced merger with BMB, pursuant to an Agreement and Plan of Merger, dated as of August 21, 2018, by and among Eagle, Opportunity Bank of Montana, BMB and BMB’s wholly-owned subsidiary, SBOT, a Montana chartered commercial bank. BMB merged with and into Eagle, with Eagle continuing as the surviving corporation. SBOT operated four branches in Townsend, Dutton, Denton and Choteau, Montana. The transaction provided an opportunity to expand market presence and lending activities throughout the state. The acquisition closed after receipt of approvals from regulatory authorities, approval of BMB shareholders and the satisfaction of other closing conditions. The total consideration paid was $16,436,000 and included cash consideration of $1,000 and common stock issued of $16,435,000.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. MERGERS AND ACQUISITIONS - continued

On September 5, 2017, the Company entered into an Agreement and Plan of Merger with TwinCo, a Montana corporation, and TwinCo’s wholly-owned subsidiary, Ruby Valley Bank, a Montana chartered commercial bank to acquire 100% of TwinCo’s equity voting interests. The merger agreement provided that Ruby Valley Bank would merge with and into Opportunity Bank of Montana and that TwinCo would merge with and into the Company. Ruby Valley Bank operated 2 branches in Madison County, Montana. The transaction provided an opportunity to expand market presence and lending activities, particularly in agricultural lending. The acquisition closed January 31, 2018, after receipt of approvals from regulatory authorities, approval of TwinCo shareholders and the satisfaction of other closing conditions. The total consideration paid was $18,930,000 and included cash consideration of $9,900,000 and common stock issued of $9,030,000.

These transactions were accounted for under the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations. In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, a more reliable measure.

Under FASB ASC 805, all of the assets acquired and liabilities assumed in a business combination are recognized at acquisition at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Goodwill recorded in the acquisitions was accounted for in accordance with the authoritative business combination guidance. Accordingly, goodwill will not be amortized, but will be tested for impairment annually. The goodwill recorded is not deductible for federal income tax purposes.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. MERGERS AND ACQUISITIONS - continued

The assets acquired and liabilities assumed were recorded on the consolidated statement of financial condition at estimated fair value on acquisition date. The following table summarizes the fair values of the assets acquired and liabilities assumed, consideration paid and the resulting goodwill.

	BMB		TwinCo
	January 1,		January 31,
	2019		2018
	(In Thousands)
Assets acquired:
Cash and cash equivalents	$	6,902	$	5,657
Investment securities		2,096		30,728
Loans		89,204		55,057
Premises and equipment		2,246		1,605
Cash surrender value of life insurance		2,862		-
Other real estate owned		223		135
Core deposit intangible		1,988		1,609
Other assets		1,995		1,258
Total assets acquired	$	107,516	$	96,049
Liabilities assumed:
Deposits	$	92,706	$	82,190
Accrued expenses and other liabilities		1,960		19
Total liabilities assumed	$	94,666	$	82,209
Net assets acquired	$	12,850	$	13,840
Consideration paid:
Cash	$	1	$	9,900
Common stock issued (996,041 shares BMB and 446,774 shares TwinCo)		16,435		9,030
Total consideration paid	$	16,436	$	18,930
Goodwill resulting from acquisition	$	3,586	$	5,090

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

The total discount on BMB acquired loans was $2,813,000 as of January 1, 2019. During the six months ended June 30, 2019, accretion of the loan discount was $909,000. The remaining loan discount was $1,904,000 as of June 30, 2019.

The total discount on TwinCo acquired loans was $1,834,000 as of January 31, 2018. During the six months ended June 30, 2019, accretion of the loan discount was $149,000. During the year ended December 31, 2018, accretion of the loan discount was $589,000. The remaining loan discount was $1,096,000 as of June 30, 2019.

Four impaired loans were acquired through the BMB acquisition with a net balance of $556,000 as of January 1, 2019. The balance of the loans as of June 30, 2019 was $395,000. Two impaired loans were acquired through the TwinCo acquisition with a balance of $1,188,000 as of January 31, 2018. The balance of the loans as of June 30, 2019 was $1,161,000. Acquired impaired loans are considered immaterial for separate disclosure in Note 4. Loans Receivable.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. MERGERS AND ACQUISITIONS – continued

Core deposit intangible assets of $1,988,000 were recorded for BMB and are being amortized using an accelerated method over the estimated useful lives of the related deposits of 10 years. Core deposit intangible assets of $1,609,000 were recorded for TwinCo and are being amortized using an accelerated method over the estimated useful lives of the related deposits of 10 years.

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

Direct costs related to the acquisitions were expensed as incurred. The Company recorded acquisition costs related to BMB of $5,000 during the quarter ended June 30, 2019, $1,171,000 during the quarter ended March 31, 2019 and $804,000 during the year ended December 31, 2018. The Company recorded total acquisition costs related to the TwinCo acquisition of $1,041,000, of which $365,000 was recognized during the year ended December 31, 2018. Acquisition costs included legal and professional fees and data processing expenses incurred related to the acquisitions.

Operations of BMB have been included in the consolidated financial statements since January 1, 2019. The Company does not consider BMB a separate reporting segment and does not track the amount of revenues and net income attributable to BMB since acquisition. As such, it is impracticable to determine such amounts for the period from January 1, 2019 through June 30, 2019.

Operations of TwinCo have been included in the consolidated financial statements since February 1, 2018. The Company does not consider TwinCo a separate reporting segment and does not track the amount of revenues and net income attributable to TwinCo since acquisition. As such, it is impracticable to determine such amounts for the period from February 1, 2018 through June 30, 2019.

NOTE 3. INVESTMENT SECURITIES

Investment securities are summarized as follows:

	June 30, 2019									December 31, 2018
			Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	13,892	$	269	$	-		$	14,161	$	9,333	$	58	$	(44	)	$	9,347
Municipal obligations		38,176		1,285		(6	)		39,455		69,024		244		(990	)		68,278
Corporate obligations		11,393		21		(42	)		11,372		11,411		8		(300	)		11,119
Mortgage-backed securities		13,807		83		(76	)		13,814		19,635		86		(373	)		19,348
Collateralized mortgage obligations		34,988		271		(91	)		35,168		24,229		6		(360	)		23,875
Asset-backed securities		10,224		-		(129	)		10,095		10,350		6		(158	)		10,198
Total	$	122,480	$	1,929	$	(344	)	$	124,065	$	143,982	$	408	$	(2,225	)	$	142,165

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. INVESTMENT SECURITIES - continued

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	49,357		$	19,086		$	53,257		$	45,080
Gross realized gain on sale of available-for-sale securities	$	538		$	191		$	549		$	191
Gross realized loss on sale of available-for-sale securities		(434	)		(176	)		(500	)		(281	)
Net realized gain (loss) on sale of available-for-sale securities	$	104		$	15		$	49		$	(90	)

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.

	June 30, 2019
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	9,635	$	9,643
Due from one to five years		13,048		13,079
Due from five to ten years		8,709		9,047
Due after ten years		42,293		43,314
		73,685		75,083
Mortgage-backed securities		13,807		13,814
Collateralized mortgage obligations		34,988		35,168
Total	$	122,480	$	124,065

Maturities of securities do not reflect repricing opportunities present in adjustable rate securities.

As of June 30, 2019 and December 31, 2018, securities with a fair value of $18,796,000 and $21,408,000, respectively were pledged to secure public deposits and for other purposes required or permitted by law.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. 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:

	June 30, 2019
	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	$	-	$	-		$	-	$	-
Municipal obligations		-		-			1,401		(6	)
Corporate obligations		4,864		(19	)		4,041		(23	)
Mortgage-backed securities and collateralized mortgage obligations		-		-			11,697		(167	)
Asset-backed securities		982		(52	)		5,231		(77	)
Total	$	5,846	$	(71	)	$	22,370	$	(273	)

	December 31, 2018
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
U.S. government and agency	$	-	$	-		$	3,385	$	(44	)
Municipal obligations		17,887		(140	)		32,712		(850	)
Corporate obligations		2,890		(110	)		7,220		(190	)
Mortgage-backed securities and collateralized mortgage obligations		5,575		(98	)		22,559		(635	)
Asset-backed securities		8,200		(158	)		-		-
Total	$	34,552	$	(506	)	$	65,876	$	(1,719	)

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. The unrealized losses associated with these investments are believed to be caused by changing market conditions that are considered to be temporary and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity. Based on the Company’s evaluation of these securities, no other-than-temporary impairment was recorded for the six months ended June 30, 2019, or 2018. As of June 30, 2019 and December 31, 2018, there were, respectively, 24 and 108 securities in unrealized loss positions that were considered to be temporarily impaired and therefore an impairment charge has not been recorded.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. INVESTMENT SECURITIES - continued

As of June 30, 2019, 3 U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately 0.43% from the Company’s amortized cost basis of these securities. At December 31, 2018, 74 U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately 1.88% from the Company’s amortized cost basis of these securities. As of June 30, 2019, 5 corporate obligations had unrealized losses of approximately 0.47% from the Company’s amortized cost basis of these securities. At December 31, 2018, 11 corporate obligations had an unrealized loss with aggregate depreciation of approximately 2.88% from the Company's amortized cost basis of these securities. As management has the ability to hold debt securities until maturity, or for the foreseeable future, no declines are deemed to be other than temporary.

As of June 30, 2019, 11 mortgage-backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) had unrealized losses with aggregate depreciation of approximately 1.41% from the Company’s amortized cost basis of these securities. At December 31, 2018, 19 MBSs and CMOs had unrealized losses with aggregate depreciation of approximately 2.54% from the Company’s amortized cost basis of these securities. Management’s analysis as of June 30, 2019 revealed no expected credit losses on the securities and therefore, declines are not deemed to be other than temporary.

As of June 30, 2019, 5 asset-backed securities (“ABSs”) had unrealized losses with aggregate depreciation of approximately 2.03% from the Company’s amortized cost basis of these securities. At December 31, 2018, 4 ABSs had unrealized losses with aggregate depreciation of approximately 1.89% from the Company’s amortized cost basis of these securities. Management’s analysis as of June 30, 2019 revealed no expected credit losses on the securities and therefore, declines are not deemed to be other than temporary.

NOTE 4. LOANS RECEIVABLE

Loans receivable consisted of the following:

	June 30,			December 31,
	2019			2018
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	145,148		$	144,107
Commercial real estate		412,690			328,438
Other loans:
Home equity		55,582			52,159
Consumer		19,181			16,565
Commercial		121,048			76,762
Total		753,649			618,031
Deferred loan fees, net		(1,215	)		(1,098	)
Allowance for loan losses		(7,750	)		(6,600	)
Total loans, net	$	744,684		$	610,333

Within the commercial real estate loan category, $12,136,000 and $12,476,000 was guaranteed by the United States Department of Agriculture Rural Development, at June 30, 2019 and December 31, 2018, respectively. The commercial real estate category includes $5,414,000 and $2,575,000 of loans guaranteed by the United States Department of Agriculture Farm Service Agency at June 30, 2019 and December 31, 2018, respectively. The commercial category also includes $1,804,000 and $1,303,000 of loans guaranteed by the United States Department of Agriculture Farm Service Agency at June 30, 2019 and December 31, 2018, respectively. The United States Department of Agriculture Farm Service Agency guaranteed loans have increased as a result of recent acquisitions.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. LOANS RECEIVABLE - continued

Allowance for loan losses activity was as follows:

	Residential		Commercial			Home
	1-4 Family		Real Estate			Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, April 1, 2019	$	1,301	$	3,923		$	477		$	197		$	1,202		$	7,100
Charge-offs		-		-			(75	)		(4	)		(2	)		(81	)
Recoveries		-		3			-			9			22			34
Provision		-		350			75			22			250			697
Ending balance, June 30, 2019	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Allowance for loan losses:
Beginning balance, January 1, 2019	$	1,301	$	3,593		$	477		$	190		$	1,039		$	6,600
Charge-offs		-		(20	)		(75	)		(13	)		(97	)		(205	)
Recoveries		-		9			-			15			30			54
Provision		-		694			75			32			500			1,301
Ending balance, June 30, 2019	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Ending balance, June 30, 2019 allocated to loans individually evaluated for impairment	$	-	$	-		$	-		$	-		$	-		$	-
Ending balance, June 30, 2019 allocated to loans collectively evaluated for impairment	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Loans receivable:
Ending balance, June 30, 2019	$	145,148	$	412,690		$	55,582		$	19,181		$	121,048		$	753,649
Ending balance, June 30, 2019 of loans individually evaluated for impairment	$	680	$	1,156		$	199		$	132		$	1,462		$	3,629
Ending balance, June 30, 2019 of loans collectively evaluated for impairment	$	144,468	$	411,534		$	55,383		$	19,049		$	119,586		$	750,020

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. LOANS RECEIVABLE - continued

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, April 1, 2018	$	1,301	$	3,202	$	427		$	200		$	1,000		$	6,130
Charge-offs		-		-		-			(23	)		(1	)		(24	)
Recoveries		-		4		-			8			8			20
Provision		-		24		-			-			-			24
Ending balance, June 30, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Allowance for loan losses:
Beginning balance, January 1, 2018	$	1,301	$	2,778	$	506		$	225		$	940		$	5,750
Charge-offs		-		-		(80	)		(50	)		(24	)		(154	)
Recoveries		-		7		1			10			10			28
Provision		-		445		-			-			81			526
Ending balance, June 30, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Ending balance, June 30, 2018 allocated to loans individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-		$	-
Ending balance, June 30, 2018 allocated to loans collectively evaluated for impairment	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Loans receivable:
Ending balance, June 30, 2018	$	143,323	$	281,525	$	53,178		$	16,635		$	88,096		$	582,757
Ending balance, June 30, 2018 of loans individually evaluated for impairment	$	573	$	527	$	207		$	101		$	92		$	1,500
Ending balance, June 30, 2018 of loans collectively evaluated for impairment	$	142,750	$	280,998	$	52,971		$	16,534		$	88,004		$	581,257

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. LOANS RECEIVABLE - continued

Internal classification of the loan portfolio was as follows:

	June 30, 2019
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	113,896	$	-	$	1,002	$	-	$	-	$	114,898
Residential 1-4 family construction		29,913		-		337		-		-		30,250
Commercial real estate		312,340		1,676		2,596		-		-		316,612
Commercial construction and development		50,027		-		-		-		-		50,027
Farmland		45,821		-		172		58		-		46,051
Other loans:
Home equity		55,383		-		199		-		-		55,582
Consumer		19,010		-		171		-		-		19,181
Commercial		72,341		796		808		63		-		74,008
Agricultural		45,707		73		573		687		-		47,040
Total	$	744,438	$	2,545	$	5,858	$	808	$	-	$	753,649

	December 31, 2018
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	116,065	$	-	$	874	$	-	$	-	$	116,939
Residential 1-4 family construction		26,533		-		635		-		-		27,168
Commercial real estate		252,731		1,731		2,322		-		-		256,784
Commercial construction and development		41,726		-		13		-		-		41,739
Farmland		29,915		-		-		-		-		29,915
Other loans:
Home equity		51,668		-		491		-		-		52,159
Consumer		16,394		-		171		-		-		16,565
Commercial		57,778		950		244		81		-		59,053
Agricultural		17,305		-		404		-		-		17,709
Total	$	610,115	$	2,681	$	5,154	$	81	$	-	$	618,031

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. LOANS RECEIVABLE - continued

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

	June 30, 2019
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	542	$	50	$	592	$	343	$	113,963	$	114,898
Residential 1-4 family construction		126		-		126		337		29,787		30,250
Commercial real estate		170		-		170		680		315,762		316,612
Commercial construction and development		112		-		112		-		49,915		50,027
Farmland		33		-		33		476		45,542		46,051
Other loans:
Home equity		261		-		261		199		55,122		55,582
Consumer		179		-		179		132		18,870		19,181
Commercial		272		76		348		743		72,917		74,008
Agricultural		67		-		67		719		46,254		47,040
Total	$	1,762	$	126	$	1,888	$	3,629	$	748,132	$	753,649

	December 31, 2018
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	381	$	130	$	511	$	253	$	116,175	$	116,939
Residential 1-4 family construction		118		-		118		634		26,416		27,168
Commercial real estate		975		1,347		2,322		432		254,030		256,784
Commercial construction and development		9		-		9		13		41,717		41,739
Farmland		-		-		-		-		29,915		29,915
Other loans:
Home equity		39		-		39		491		51,629		52,159
Consumer		135		-		135		127		16,303		16,565
Commercial		284		-		284		308		58,461		59,053
Agricultural		91		-		91		32		17,586		17,709
Total	$	2,032	$	1,477	$	3,509	$	2,290	$	612,232	$	618,031

-19-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. LOANS RECEIVABLE - continued

The following tables include information regarding impaired loans.

	June 30, 2019
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	343	$	373	$	-
Residential 1-4 family construction		337		387		-
Commercial real estate		680		824		-
Commercial construction and development		-		-		-
Farmland		476		513		-
Other loans:
Home equity		199		225		-
Consumer		132		143		-
Commercial		743		854		-
Agricultural		719		768		-
Total	$	3,629	$	4,087	$	-

	December 31, 2018
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
Real estate loans:
Residential 1-4 family	$	253	$	277	$	-
Residential 1-4 family construction		634		684		-
Commercial real estate		432		527		-
Commercial construction and development		13		26		-
Farmland		-		-		-
Other loans:
Home equity		491		522		-
Consumer		127		181		-
Commercial		308		310		-
Agricultural		32		32		-
Total	$	2,290	$	2,559	$	-

-20-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. LOANS RECEIVABLE - continued

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	Average Recorded Investment
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	346	$	553	$	298	$	356
Residential 1-4 family construction		486		396		485		168
Commercial real estate		614		1,026		556		264
Commercial construction and development		-		-		7		-
Farmland		584		-		238		-
Other loans:
Home equity		316		224		345		225
Consumer		130		105		130		127
Commercial		781		127		525		99
Agricultural		822		-		376		-
Total	$	4,079	$	2,431	$	2,960	$	1,239

Interest income recognized on impaired loans for the three and six months ended June 30, 2019 and 2018 is considered insignificant.

NOTE 5. TROUBLED DEBT RESTRUCTURINGS

A TDR loan is a loan in which the Bank grants a concession to the borrower that it would not otherwise consider, for reasons related to a borrower's financial difficulties. The loan terms which have been modified or restructured due to a borrower's financial difficulty, include but are not limited to a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market rates; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-aging, extensions, deferrals, renewals and rewrites or a combination of these modification methods.

The Company offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories:

Rate Modification – A modification in which the interest rate is changed.

Term Modification – A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Interest Only Modification – A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification – A modification in which the dollar amount of the payment is changed, other than an interest only modification described above.

Combination Modification – Any other type of modification, including the use of multiple categories above.

During the year ended December 31, 2018, there was one new restructured loan. The recorded investment at time of restructure was $23,000 and no charge-off was incurred. The loan is a home equity loan and is on non-accrual status. The recorded investment was $21,000 at June 30, 2019 and $22,000 at December 31, 2018.

-21-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5. TROUBLED DEBT RESTRUCTURINGS - continued

There were no loans modified as a troubled debt restructured loan that defaulted during the quarter ended June 30, 2019 where the default occurred within 12 months of restructuring. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral.

As of June 30, 2019, the Company had no commitments to lend additional funds to loan customers whose terms had been modified in trouble debt restructures.

NOTE 6. MORTGAGE SERVICING RIGHTS

The Company is servicing mortgage loans for the benefit of others totaling $1,051,443,000 and $964,967,000 at June 30, 2019 and December 31, 2018, respectively and are carried at lower of cost or market. 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 $635,000 and $563,000 for the three months ended June 30, 2019 and 2018, respectively. Mortgage loan servicing fees were $1,247,000 and $1,123,000 for the six months ended June 30, 2019 and 2018, respectively. These fees, net of amortization, are included mortgage banking which is a component of noninterest income on the consolidated statement of income.

Custodial balances maintained in connection with the foregoing loan servicing, and included in noninterest checking deposits, were $8,436,000 and $5,618,000 at June 30, 2019 and December 31, 2018, respectively.

The following tables are a summary of activity in mortgage servicing rights:

	As of or For the
	Three Months Ended
	June 30,
	2019			2018
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	7,318		$	6,613
Mortgage servicing rights capitalized		736			472
Amortization of mortgage servicing rights		(388	)		(369	)
Ending balance	$	7,666		$	6,716

	As of or For the
	Six Months Ended
	June 30,
	2019			2018
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	7,100		$	6,578
Mortgage servicing rights capitalized		1,201			748
Amortization of mortgage servicing rights		(635	)		(610	)
Ending balance	$	7,666		$	6,716

The fair values of these rights were $8,672,000 and $8,700,000 at June 30, 2019 and December 31, 2018, respectively. The fair value of servicing rights was determined at loan level using a discount rate of 12.00% for all investor types. Prepayment speeds ranged from 98.00% to 255.00% PSA (Public Securities Association prepayment model) at June 30, 2019, depending on the interest rate and term of the specific loan. Prepayment speeds ranged from 83.00% to 226.00% PSA at December 31, 2018. The weighted average prepayment speed was 166.00% PSA and 119.00% PSA at June 30, 2019 and December 31, 2018, respectively. Individual mortgage servicing rights values were capped at a maximum of 1.25% for all investor types.

-22-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7. DEPOSITS

Deposits are summarized as follows:

	June 30,		December 31,
	2019		2018
	(In Thousands)
Noninterest checking	$	183,116	$	142,788
Interest bearing checking		110,779		105,115
Savings		123,767		108,234
Money market		123,000		108,050
Time certificates of deposit		207,726		162,424
Total	$	748,388	$	626,611

NOTE 8. OTHER LONG-TERM DEBT

Other long-term debt consisted of the following:

	June 30, 2019					December 31, 2018
			Unamortized					Unamortized
			Debt					Debt
	Principal		Issuance			Principal		Issuance
	Amount		Costs			Amount		Costs
	(In Thousands)
Senior notes fixed at 5.75%, due 2022	$	10,000	$	(114	)	$	10,000	$	(136	)
Subordinated debentures fixed at 6.75%, due 2025		10,000		(133	)		10,000		(143	)
Subordinated debentures variable at 3-Month Libor plus 1.42%, due 2035		5,155		-			5,155		-
Total other long-term debt	$	25,155	$	(247	)	$	25,155	$	(279	)

In February 2017, the Company completed the issuance, through a private placement, of $10,000,000 aggregate principal amount of 5.75% fixed senior unsecured notes due in 2022. The interest will be paid semi-annually through maturity date. The notes are not subject to redemption at the option of the Company.

In June 2015, the Company completed the issuance of $10,000,000 in aggregate principal amount of subordinated notes due in 2025 in a private placement transaction to an institutional accredited investor. The notes will bear interest at an annual fixed rate of 6.75% and interest will be paid quarterly through maturity date or earlier redemption.

In September 2005, the Company completed the private placement of $5,155,000 in subordinated debentures to the Trust. The Trust funded the purchase of the subordinated debentures through the sale of trust preferred securities to First Tennessee Bank, N.A. with a liquidation value of $5,155,000. Using interest payments made by the Company on the debentures, the Trust began paying quarterly dividends to preferred security holders in December 2005. The annual percentage rate of the interest payable on the subordinated debentures and distributions payable on the preferred securities was fixed at 6.02% until December 2010 then became variable at 3-Month LIBOR plus 1.42%, making the rate 3.740% and 4.228% as of June 30, 2019 and December 31, 2018, respectively. 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.

For the three months ended June 30, 2019 and 2018, interest expense on other long-term debt was $364,000 and $357,000, respectively. For the six months ended June 30, 2019 and 2018, interest expense on other long-term debt was $729,000 and $704,000, respectively.

-23-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 9. EARNINGS PER SHARE

Basic earnings per share for the three months ended June 30, 2019 was computed using 6,408,627 weighted average shares outstanding. Basic earnings per share for the three months ended June 30, 2018 was computed using 5,460,452 weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method. The weighted average shares outstanding for the diluted earnings per share calculations was 6,425,015 for the three months ended June 30, 2019 and 5,524,912 for the three months ended June 30, 2018. There were no antidilutive shares for the three months ended June 30, 2019 or 2018.

Basic earnings per share for the six months ended June 30, 2019 was computed using 6,429,362 weighted average shares outstanding. Basic earnings per share for the six months ended June 30, 2018 was computed using 5,386,401 weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method. The weighted average shares outstanding for the diluted earnings per share calculations was 6,446,368 for the six months ended June 30, 2019 and 5,450,861 for the six months ended June 30, 2018. There were no antidilutive shares for the six months ended June 30, 2019 or 2018.

NOTE 10. DIVIDENDS AND STOCK REPURCHASE PROGRAM

For the year ended December 31, 2018, Eagle paid dividends of $0.09 per share for the quarters ended March 31 and June 30, 2018. Eagle paid dividends of $0.0925 per share for the quarters ended September 30 and December 31, 2018. A dividend of $0.0925 per share was declared on January 24, 2019 and paid March 1, 2019 to shareholders of record on February 8, 2019. A dividend of $0.0925 per share was declared on April 18, 2019, payable on June 7, 2019 to shareholders of record on May 17, 2019. A dividend of $0.095 per share was declared on July 18, 2019, payable on September 6, 2019 to shareholders of record on August 16, 2019.

On July 18, 2019, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares may be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations. The plan expires on July 18, 2020.

On July 19, 2018, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchased its shares and the timing of such repurchase depended upon market conditions and other corporate considerations. No shares were purchased under this plan during the year ended December 31, 2018. However, during the first quarter of 2019, 42,000 shares were purchased at an average price of $17.43 per share. In addition, 28,000 shares were purchased during the second quarter of 2019 at an average price of $17.09 per share. The plan expired on July 19, 2019.

On July 20, 2017, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. No shares were purchased under this plan. The plan expired on July 20, 2018.

-24-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

				Unrealized
	Unrealized			(Losses) Gains
	Gains (Losses)			on Investment
	on Loans			Securities
	Held-for-Sale			Available-for-Sale			Total
				(In Thousands)
Balance, January 1, 2019	$	227		$	(1,338	)	$	(1,111	)
Other comprehensive income, before reclassifications and income taxes		296			1,486			1,782
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(309	)		55			(254	)
Income tax benefit (provision)		4			(407	)		(403	)
Total other comprehensive (loss) income		(9	)		1,134			1,125
Balance, March 31, 2019		218			(204	)		14
Other comprehensive income, before reclassifications and income taxes		-			1,965			1,965
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(296	)		(104	)		(400	)
Income tax (provision) benefit		78			(489	)		(411	)
Total other comprehensive (loss) income		(218	)		1,372			1,154
Balance, June 30, 2019	$	-		$	1,168		$	1,168
Balance, January 1, 2018	$	234		$	79		$	313
Other comprehensive income (loss), before reclassifications and income taxes		262			(2,583	)		(2,321	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(325	)		105			(220	)
Income tax benefit		17			660			677
Total other comprehensive loss		(46	)		(1,818	)		(1,864	)
Balance, March 31, 2018		188			(1,739	)		(1,551	)
Other comprehensive income (loss), before reclassifications and income taxes		402			(216	)		186
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(262	)		(15	)		(277	)
Income tax (provision) benefit		(37	)		60			23
Total other comprehensive income (loss)		103			(171	)		(68	)
Balance, June 30, 2018	$	291		$	(1,910	)	$	(1,619	)

-25-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12. DERIVATIVES AND HEDGING ACTIVITIES

Interest Rate Lock and Forward Commitments

The company enters into mandatory and best efforts interest rate lock commitments to finance mortgage loans. Outstanding loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. The Company also enters into forward commitments to hedge against adverse price or interest rate movements on loan commitments. These commitments are accounted for as free-standing or economic derivatives and are measured at fair value. The derivatives are recorded as either other assets or other liabilities on the consolidated statements of condition and the changes in the fair value of the derivatives are recorded in noninterest income on the consolidated statements of income. A net loss of $529,000 was recorded in noninterest income for the quarter ended June 30, 2019.

Derivatives are summarized as follows:

	June 30, 2019						December 31, 2018
	Notional		Fair Value				Notional		Fair Value
	Amount		Asset		Liability		Amount		Asset		Liability
	(In Thousands)
Interest rate lock commitments	$	61,832	$	1,314	$	-	$	18,745	$	-	$	-
Forward sales commitments		60,000		-		1,843		16,000		-		-

NOTE 13. FAIR VALUE DISCLOSURES

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 levels are 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 judgement 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, is set forth below.

Available-for-Sale Securities – Securities classified as available-for-sale are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include 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, among other things.

Loans Held-for-Sale – These loans are reported at fair value. Fair value is determined based on expected proceeds from sales contracts and commitments and are considered Level 2 inputs.

Derivative Instruments – The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, 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 the forward sales commitments are considered Level 2 inputs.

-26-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13. FAIR VALUE DISCLOSURES – continued

Impaired Loans – Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on internally customized discounting criteria.

Real Estate and Other Repossessed Assets – Fair values are valued 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. The appraisals are generally discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and result in Level 3 classification of the inputs for determining fair value. Repossessed assets are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on same or similar factors above.

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.

	June 30, 2019
	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	$	-	$	14,161	$	-	$	14,161
Municipal obligations		-		39,455		-		39,455
Corporate obligations		-		11,372		-		11,372
Mortgage-backed securities		-		13,814		-		13,814
Collateralized mortgage obligations		-		35,168		-		35,168
Asset-backed securities		-		10,095		-		10,095
Loans held-for-sale		-		23,760		-		23,760
Interest rate lock commitments		-		-		1,314		1,314
Financial liabilities:
Forward sales commitments		-		1,843		-		1,843

	December 31, 2018
	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	$	-	$	9,347	$	-	$	9,347
Municipal obligations		-		68,278		-		68,278
Corporate obligations		-		11,119		-		11,119
Mortgage-backed securities		-		19,348		-		19,348
Collateralized mortgage obligations		-		23,875		-		23,875
Asset-backed securities		-		10,198		-		10,198
Loans held-for-sale		-		7,318		-		7,318
Interest rate lock commitments		-		-		-		-
Financial liabilities:
Forward sales commitments		-		-		-		-

-27-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13. FAIR VALUE DISCLOSURES - 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 and real estate and other repossessed assets.

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

	June 30, 2019
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Real estate and other repossessed assets	$	-	$	-	$	-	$	-

	December 31, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Real estate and other repossessed assets	$	-	$	-	$	107	$	107

As of June 30, 2019, impaired loans with a carrying value of $3,629,000 were not reduced by specific valuation allowance allocations and therefore resulted in a total reported value of $3,629,000.

As of December 31, 2018, impaired loans with a carrying value of $2,290,000 were not reduced by specific valuation allowance allocations and therefore resulted in a total reported value of $2,290,000.

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

	Fair Value at				Principal	Significant	Range of
	June 30,		December 31,		Valuation	Unobservable	Signficant Input
Instrument	2019		2018		Technique	Inputs	Values
(Dollars In Thousands)
Real estate and other repossessed assets	$	-	$	107	Appraisal of collateral	Liquidation expenses		10	-	30%

-28-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13. FAIR VALUE DISCLOSURES - continued

The tables below summarize the estimated fair values of financial instruments of the Company at June 30, 2019 and December 31, 2018, whether or not recognized at fair value on the 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.

	June 30, 2019
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	13,436	$	-	$	-	$	13,436	$	13,436
Federal Home Loan Bank stock		5,384		-		-		5,384		5,384
Federal Reserve Bank stock		2,526		-		-		2,526		2,526
Loans receivable, net		-		-		747,290		747,290		744,684
Accrued interest and dividends receivable		4,903		-		-		4,903		4,903
Mortgage servicing rights		-		-		8,672		8,672		7,666
Financial liabilities:
Non-maturing interest bearing deposits		-		357,546		-		357,546		357,546
Noninterest bearing deposits		183,116		-		-		183,116		183,116
Time certificates of deposit		-		-		207,207		207,207		207,726
Accrued expenses and other liabilities		11,987		-		-		11,987		11,987
Federal Home Loan Bank advances and other borrowings		-		-		106,801		106,801		106,748
Other long-term debt		-		-		24,672		24,672		25,155

	December 31, 2018
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	11,201	$	-	$	-	$	11,201	$	11,201
Federal Home Loan Bank stock		5,011		-		-		5,011		5,011
Federal Reserve Bank stock		2,033		-		-		2,033		2,033
Loans receivable, net		-		-		603,361		603,361		608,043
Accrued interest and dividends receivable		3,479		-		-		3,479		3,479
Mortgage servicing rights		-		-		8,670		8,670		7,100
Financial liabilities:
Non-maturing interest bearing deposits		-		321,399		-		321,399		321,399
Noninterest bearing deposits		142,788		-		-		142,788		142,788
Time certificates of deposit		-		-		160,735		160,735		162,424
Accrued expenses and other liabilities		5,388		-		-		5,388		5,388
Federal Home Loan Bank advances and other borrowings		-		-		101,885		101,885		102,222
Other long-term debt		-		-		24,002		24,002		25,155

-29-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13. FAIR VALUE DISCLOSURES – continued

The following methods and assumptions were used by the Company in estimating the fair value of the following classes of financial instruments. However, the Form 10-K for the year ended December 31, 2018 provides additional description of valuation methodologies used in estimating fair value of these financial instruments.

Cash, Interest Bearing Accounts, Accrued Interest and Dividend Receivable and Accrued Expenses and Other Liabilities – The carrying amounts approximate fair value due to the relatively short period of time between the origination of these instruments and their expected realization.

Stock in the FHLB of Des Moines and FRB – The fair value of stock approximates redemption value.

Loans Receivable – Fair values are estimated by stratifying the loan portfolio into groups of loans with similar financial characteristics. Loans are segregated by type such as real estate, commercial, and consumer, with each category further segmented into fixed and adjustable rate interest terms. For mortgage loans, the Company uses the secondary market rates in effect for loans that have similar characteristics. The fair value of other fixed rate loans is calculated by discounting scheduled cash flows through the anticipated maturities adjusted for prepayment estimates. Adjustable interest rate loans are assumed to approximate fair value because they generally reprice within the short term.

Fair values are adjusted for credit risk based on assessment of risk identified with specific loans, and risk adjustments on the remaining portfolio based on credit loss experience.

Mortgage Servicing Rights – the fair value of servicing rights was determined at loan level using a discount rate of 12.00% for all investor types and prepayment speeds ranging from 98.00% to 255.00% PSA (Public Securities Association prepayment model), depending on the interest rate and term of the specific loan. The weighted average prepayment speed was 166.00% PSA. Individual mortgage servicing rights values were capped at a maximum of 1.25% for all investor types.

Deposits and Time Certificates of Deposit – The fair value of deposits with no stated maturity, such as checking, passbook, and money market, is equal to the amount payable on demand. The fair value of time certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar maturities.

Advances from the FHLB/Other Borrowings and Other Long-Term Debt – The fair value of the Company’s advances and debentures are estimated using discounted cash flow analysis based on the interest rate that would be effective June 30, 2019 and December 31, 2018, respectively if the borrowings repriced according to their stated terms.

NOTE 14. RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) intended to improve financial reporting regarding leasing transactions. The new standard affects all companies and organizations that lease assets. The standard requires organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases if the lease terms are more than 12 months. The guidance also requires qualitative and quantitative disclosures providing additional information about the amounts recorded in the financial statements. The amendments in this update were effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and was adopted by the Company in the first quarter of 2019. The adoption of the standard did not have a significant impact on our consolidated financial statements. The Company’s operating leases primarily relate to branch locations. We currently lease six locations that are full-service branches and one mortgage lending branch. The leases expire on various dates through 2028. As a result of adopting the lease standard on January 1, 2019, the Company recorded right of use assets of $2,374,000 and corresponding lease liabilities. The right of use assets are included in premises and equipment, net and the lease liabilities are included in accrued expenses and other liabilities on the consolidated statement of financial condition.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 14. RECENT ACCOUNTING PRONOUNCEMENTS – continued

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The standard requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The standard also requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the standard amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. 

The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. An entity will apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). 

The Company believes the amendments in this update will have an impact on the Company’s consolidated financial statements and is working to evaluate the significance of that impact. In that regard, we have established a working group under the direction of our Chief Financial Officer and Chief Credit Officer. The group is composed of individuals from the finance and credit administration areas of the Company. We are currently developing an implementation plan, including assessment of processes, segmentation of the loan portfolio and identifying and adding data fields necessary for analysis. The adoption of this standard is likely to result in an increase in the allowance for loan and lease losses as a result of changing from an “incurred loss” model to an “expected loss” model. While we currently cannot reasonably estimate the impact of adopting this standard, we expect the impact will be influenced by the composition, characteristics and quality of our loan and securities portfolios, as well as the general economic conditions and forecasts as of the adoption date.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) to amend and simplify current goodwill impairment testing to eliminate Step 2 from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. The guidance will be effective for the Company on January 1, 2020 and is not expected to have a significant impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, Receivables–Nonrefundable Fees and Other Costs (Subtopic 310-20) to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. Currently, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The guidance does not change the accounting for callable debt securities held at a discount. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The adoption of this standard in the first quarter of 2019 did not have a significant impact on our consolidated financial statements, as we typically do not invest in these types of securities.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

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

Overview

The Company’s primary business activity is the ownership of its wholly owned subsidiary, Opportunity Bank of Montana (the “Bank”). The Bank is a Montana chartered commercial bank that focuses on both consumer and commercial lending. It engages in typical banking activities: acquiring deposits from local markets and originating loans and investing in securities. Its deposits are insured by the Federal Deposit Insurance Corporation. The Bank’s primary component of earnings is its net interest margin (also called spread or margin), the difference between interest income and interest expense. The net interest margin is managed by management (through the pricing of its products and by the types of products offered and kept in portfolio), and is affected by changes in market interest rates. The Bank also generates noninterest income in the form of fee income and gain on sale of loans.

The Bank has a strong mortgage lending focus, with a large portion of its loan originations represented by single-family residential mortgages, which has enabled it 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.). In recent years, the Bank has also focused on adding commercial loans to its portfolio, both real estate and non-real estate. We have made significant progress in this initiative. The purpose of this diversification is to mitigate the Bank’s dependence on the residential mortgage market, as well as to improve its ability to manage its spread. Recent acquisitions have added to our agricultural loans, which generally have shorter maturities and nominally higher interest rates. 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 the Bank’s 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 adversely affected in periods of lower mortgage activity.

Management continues to focus on improving the Bank’s core earnings. Core earnings can be described as income before taxes, with the exclusion of gain on sale of loans and adjustments to the market value of the Bank’s loan servicing portfolio. Management believes that the Bank will need 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 bank’s 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 the strategy is funding the growth of the Bank’s balance sheet in an efficient manner. Though deposit growth has been steady, it may become more difficult to maintain due to significant competition 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 changed the federal funds target rate from 1.50% to 2.50% during the year ended December 31, 2018. The rate remained at 2.50% at June 30, 2019.

From time to time the Bank has considered growth through mergers or acquisition as an alternative to its strategy of organic growth. On September 5, 2017, the Company entered into an Agreement and Plan of Merger with TwinCo, a Montana corporation, and TwinCo’s wholly-owned subsidiary, Ruby Valley Bank, a Montana chartered commercial bank to acquire 100% of TwinCo’s equity voting interests. The merger agreement provided that Ruby Valley Bank would merge with and into Opportunity Bank of Montana and that TwinCo would merge with and into the Company. Ruby Valley Bank operated 2 branches in Madison County, Montana. The transaction provided an opportunity to expand market presence and lending activities, particularly in agricultural lending. The acquisition closed January 31, 2018, after receipt of approvals from regulatory authorities, approval of TwinCo shareholders and the satisfaction of other closing conditions. The total consideration paid was $18.93 million and included cash consideration of $9.90 million and common stock issued of $9.03 million.

Effective January 1, 2019, Eagle completed its previously announced merger with Big Muddy Bancorp, Inc. (“BMB”), pursuant to an Agreement and Plan of Merger, dated as of August 21, 2018, by and among Eagle, Opportunity Bank of Montana, BMB and BMB’s wholly-owned subsidiary, The State Bank of Townsend, a Montana chartered commercial bank. At the effective time of the Merger, BMB merged with and into Eagle, with Eagle continuing as the surviving corporation. The State Bank of Townsend operated four branches in Townsend, Dutton, Denton and Choteau, Montana. The transaction provided an opportunity to expand market presence and lending activities, throughout the state. The acquisition closed after receipt of approvals from regulatory authorities, approval of BMB shareholders and the satisfaction of other closing conditions. The total consideration paid was $16.44 million and it was primarily related to common stock issued.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Financial Condition

Comparisons of financial condition in this section are between June 30, 2019 and December 31, 2018.

Total assets were $1.01 billion at June 30, 2019, an increase of $153.83 million, or 18.0%, from $853.90 million at December 31, 2018. The increase was largely due to the change in loans receivable which was impacted by the acquisition of BMB. Loans receivable increased by $134.35 million, or 22.0%, to $744.68 million at June 30, 2019, from $610.33 million at December 31, 2018. Total liabilities were $892.03 million at June 30, 2019, an increase of $132.93 million, or 17.5%, from $759.10 million at December 31, 2018. The increase was mainly due to an increase in deposits which was impacted by the BMB acquisition. Total deposits increased by $121.78 million, or 19.4%, to $748.39 million at June 30, 2019, from $626.61 million at December 31, 2018.

Balance Sheet Details

Investment Activities

The following table summarizes investment activities:

	June 30,					December 31,
	2019					2018
	Fair Value		Percentage of Total			Fair Value		Percentage of Total
	(Dollars in Thousands)
Securities available-for-sale:
U.S. government and agency	$	14,161		10.50	%	$	9,347		6.22	%
Municipal obligations		39,455		29.27	%		68,278		45.44	%
Corporate obligations		11,372		8.43	%		11,119		7.40	%
Mortgage-backed securities		13,814		10.25	%		19,348		12.88	%
Collateralized mortgage obligations		35,168		26.08	%		23,875		15.89	%
Asset-backed securities		10,095		7.49	%		10,198		6.79	%
Total securities available-for-sale		124,065		92.02	%		142,165		94.62	%
Interest bearing deposits		2,855		2.12	%		1,057		0.70	%
Federal Home Loan Bank ("FHLB") capital stock, at cost		5,384		3.99	%		5,011		3.33	%
Federal Reserve Bank ("FRB") capital stock, at cost		2,526		1.87	%		2,033		1.35	%
Total	$	134,830		100.00	%	$	150,266		100.00	%

Securities available-for-sale were $124.07 million at June 30, 2019, a decrease of $18.10 million, or 12.7%, from $142.17 million at December 31, 2018. The largest decrease in securities available-for-sale was in municipal obligations which decreased by $28.82 million primarily due to sales activity. This decrease was partially offset by an increase in collateralized mortgage obligations which increased by $11.29 million largely due to purchase activity.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Financial Condition – continued

Lending Activities

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

	June 30,						December 31,
	2019						2018
	Amount			Percent of Total			Amount			Percent of T otal
	(Dollars in thousands)
Real estate loans:
Residential 1-4 family (1)	$	114,898			15.25	%	$	116,939			18.92	%
Residential 1-4 family construction		30,250			4.01	%		27,168			4.40	%
Total residential 1-4 family		145,148			19.26	%		144,107			23.32	%
Commercial real estate		316,612			42.01	%		256,784			41.54	%
Commercial construction and development		50,027			6.64	%		41,739			6.75	%
Farmland		46,051			6.11	%		29,915			4.84	%
Total commercial real estate		412,690			54.76	%		328,438			53.13	%
Total real estate loans		557,838			74.02	%		472,545			76.45	%
Other loans:
Home equity		55,582			7.37	%		52,159			8.44	%
Consumer		19,181			2.55	%		16,565			2.68	%
Commercial		74,008			9.82	%		59,053			9.56	%
Agricultural		47,040			6.24	%		17,709			2.87	%
Total commercial loans		121,048			16.06	%		76,762			12.43	%
Total other loans		195,811			25.98	%		145,486			23.55	%
Total loans		753,649			100.00	%		618,031			100.00	%
Deferred loan fees		(1,215	)					(1,098	)
Allowance for loan losses		(7,750	)					(6,600	)
Total loans, net	$	744,684					$	610,333

⁽¹⁾ Excludes loans held-for-sale.

Loans receivable, net increased $134.35 million to $744.68 million at June 30, 2019 due to the BMB acquisition as well as organic growth. The BMB acquisition included $89.20 million of acquired loans. Excluding acquired loans, loans receivable increased by $45.15 million. Including acquired loans, total commercial real estate loans increased $84.25 million, total commercial loans increased $44.29 million, home equity loans increased $3.42 million, consumer loans increased $2.62 million and total residential loans increased $1.04 million. Total loan originations were $324.82 million for the six months ended June 30, 2019, with total residential 1-4 family accounting for $206.73 million of the total. Total commercial real estate originations were $67.09 million. Total commercial and home equity loan originations totaled $35.72 million and $10.33 million, respectively, for the same period. Consumer loan originations totaled $4.95 million. Loans held-for-sale increased by $16.44 million, to $23.76 million at June 30, 2019 from $7.32 million at December 31, 2018.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Financial Condition – continued

Lending Activities– continued

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

For mortgage loans and home equity loans, if the borrower is unable to cure the delinquency or reach a payment agreement, we will institute foreclosure actions. If a foreclosure action is taken and the loan is not reinstated, paid in full or refinanced, the property is sold at judicial sale at which we may be the buyer if there are no adequate offers to satisfy the debt. Any property acquired as the result of foreclosure, or by deed in lieu of foreclosure, is classified as real estate owned until such time as it is sold or otherwise disposed of. When real estate owned is acquired, it is recorded at its fair market value less estimated selling costs. The initial recording of any loss is charged to the allowance for loan losses. Subsequent write-downs are recorded as a charge to operations. As of June 30, 2019, the Bank had $91,000 of real estate owned.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Financial Condition – continued

Lending Activities– continued

The following table sets forth information regarding nonperforming assets:

	June 30,			December 31,
	2019			2018
	(Dollars in Thousands)
Non-accrual loans
Real estate loans:
Residential 1-4 family	$	343		$	253
Residential 1-4 family construction		337			634
Commercial real estate		680			432
Commercial construction and development		-			13
Farmland		476			-
Other loans:
Home equity		178			469
Consumer		132			127
Commercial		743			308
Agricultural		719			32
Accruing loans delinquent 90 days or more
Real estate loans:
Residential 1-4 family		50			130
Commercial real estate		-			1,347
Other loans:
Commercial		76			-
Restructured loans:
Other loans:
Home equity		21			22
Total nonperforming loans		3,755			3,767
Real estate owned and other repossed property, net		91			107
Total nonperforming assets	$	3,846		$	3,874
Total nonperforming loans to total loans		0.50	%		0.61	%
Total nonperforming loans to total assets		0.37	%		0.44	%
Total allowance for loan loss to nonperforming loans		206.39	%		175.21	%
Total nonperforming assets to total assets		0.38	%		0.45	%

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Financial Condition – continued

Deposits and Other Sources of Funds

The following table includes deposit accounts by category:

	June 30,					December 31,
	2019					2018
			Percent					Percent
	Amount		of Total			Amount		of Total
	(Dollars in Thousands)
Noninterest checking	$	183,116		24.46	%	$	142,788		22.79	%
Interest bearing checking		110,779		14.80	%		105,115		16.78	%
Savings		123,767		16.54	%		108,234		17.27	%
Money market		123,000		16.44	%		108,050		17.24	%
Total		540,662		72.24	%		464,187		74.08	%
Certificates of deposit accounts:
IRA certificates		29,972		4.00	%		28,198		4.50	%
Brokered certificates		7,308		0.98	%		-		0.00	%
Other certificates		170,446		22.78	%		134,226		21.42	%
Total certificates of deposit		207,726		27.76	%		162,424		25.92	%
Total deposits	$	748,388		100.00	%	$	626,611		100.00	%

Deposits increased by $121.78 million, or 19.4%, to $748.39 million at June 30, 2019 from $626.61 million at December 31, 2018. The increase was largely due to increased deposits as a result of the BMB acquisition. Excluding acquired deposits, total deposits increased by $29.07 million. Including acquired deposits, certificates of deposit increased by $45.30 million, noninterest checking increased by $40.33 million, savings increased by $15.54 million, money market increased by $14.95 million and interest bearing checking increased by $5.66 million.

The following table summarizes borrowing activity:

	June 30,					December 31,
	2019					2018
	Net		Percent			Net		Percent
	Amount		of Total			Amount		of Total
	(Dollars in Thousands)
FHLB advances and other borrowings	$	106,748		81.08	%	$	102,222		80.43	%
Other long-term debt:
Senior notes fixed at 5.75%, due 2022		9,886		7.51	%		9,864		7.76	%
Subordinated debentures fixed at 6.75%, due 2025		9,867		7.49	%		9,857		7.76	%
Subordinated debentures variable, due 2035		5,155		3.92	%		5,155		4.05	%
Total other long-term debt		24,908		18.92	%		24,876		19.57	%
Total borrowings		131,656		100.00	%		127,098		100.00	%

FHLB advances and other borrowings increased by $4.53 million, or 4.4%, to $106.75 million at June 30, 2019 from $102.22 million at December 31, 2018. Borrowings are used to help fund continued loan growth.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Financial Condition – continued

Shareholders’ Equity

Total shareholders’ equity increased $20.88 million, or 22.0%, to $115.69 million at June 30, 2019 from $94.81 million at December 31, 2018. This was primarily the result of stock issued in connection with the BMB acquisition of $16.44 million. The increase was also due to net income of $4.43 million and other comprehensive income of $2.28 million. These increases were slightly offset by treasury stock purchased for $1.21 million and dividends paid of $1.19 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.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Analysis of Net Interest Income – continued

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

	For the Three Months Ended June 30,
			2019							2018
	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	$	136,817	$	928		2.72	%	$	154,673	$	1,021		2.65	%
FHLB and FRB stock		7,576		95		5.03	%		6,019		74		4.93	%
Loans receivable(1)		754,197		10,599		5.64	%		585,366		7,862		5.39	%
Other earning assets		3,673		16		1.75	%		3,667		19		2.08	%
Total interest earning assets		902,263		11,638		5.17	%		749,725		8,976		4.80	%
Noninterest earning assets		98,438							74,191
Total assets	$	1,000,701						$	823,916
Liabilities and equity:
Interest bearing liabilities:
Deposit accounts:
Checking	$	114,259	$	11		0.04	%	$	108,339	$	9		0.03	%
Savings		118,810		21		0.07	%		103,907		12		0.05	%
Money market		122,274		100		0.33	%		110,656		56		0.20	%
Certificates of deposit		207,450		792		1.53	%		166,919		417		1.00	%
Advances from FHLB and other borrowings including long-term debt		131,222		1,020		3.12	%		102,128		672		2.64	%
Total interest bearing liabilities		694,015		1,944		1.12	%		591,949		1,166		0.79	%
Noninterest checking		179,150							133,464
Other noninterest bearing liabilities		13,328							7,041
Total liabilities		886,493							732,454
Total equity		114,208							91,462
Total liabilities and equity	$	1,000,701						$	823,916
Net interest income/interest rate spread(2)			$	9,694		4.05	%			$	7,810		4.01	%
Net interest margin(3)						4.31	%						4.18	%
Total interest earning assets to interest bearing liabilities						130.01	%						126.65	%

⁽¹⁾ Includes loans held-for-sale.

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

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

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

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Analysis of Net Interest Income – continued

	For the Six Months Ended June 30,
			2019							2018
	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	$	138,809	$	1,886		2.74	%	$	165,549	$	2,010		2.45	%
FHLB and FRB stock		7,349		190		5.21	%		6,013		153		5.13	%
Loans receivable(1)		740,427		20,647		5.62	%		579,191		14,734		5.13	%
Other earning assets		3,883		36		1.87	%		5,132		36		1.41	%
Total interest earning assets		890,468		22,759		5.15	%		755,885		16,933		4.52	%
Noninterest earning assets		93,296							79,758
Total assets	$	983,764						$	835,643
Liabilities and equity:
Interest bearing liabilities:
Deposit accounts:
Checking	$	115,914	$	22		0.04	%	$	108,588	$	19		0.04	%
Savings		118,680		36		0.06	%		102,545		26		0.05	%
Money market		122,067		196		0.32	%		108,581		104		0.19	%
Certificates of deposit		201,558		1,457		1.46	%		164,577		771		0.94	%
Advances from FHLB and other borrowings including long-term debt		128,364		1,979		3.11	%		130,337		1,356		2.10	%
Total interest bearing liabilities		686,583		3,690		1.08	%		614,628		2,276		0.75	%
Noninterest checking		175,162							130,009
Other noninterest bearing liabilities		10,854							13,836
Total liabilities		872,599							758,473
Total equity		111,165							77,170
Total liabilities and equity	$	983,764						$	835,643
Net interest income/interest rate spread(2)			$	19,069		4.07	%			$	14,657		3.77	%
Net interest margin(3)						4.32	%						3.91	%
Total interest earning assets to interest bearing liabilities						129.70	%						122.98	%

⁽¹⁾ Includes loans held-for-sale.

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

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

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

-40-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Rate/Volume Analysis

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

	For the Three Months Ended June 30,
	2019									2018
				Due to									Due to
	Volume			Rate			Net			Volume			Rate		Net
	(In Thousands)
Interest earning assets:
Investment securities	$	(118	)	$	25		$	(93	)	$	156		$	151	$	307
FHLB and FRB stock		19			2			21			4			34		38
Loans receivable(1)		2,268			469			2,737			883			805		1,688
Other earning assets		-			(3	)		(3	)		9			9		18
Total interest earning assets		2,169			493			2,662			1,052			999		2,051
Interest bearing liabilities:
Savings, money market and checking accounts		8			47			55			10			14		24
Certificates of deposit		101			274			375			31			63		94
Advances from FHLB and other borrowings including long-term debt		191			157			348			(112	)		115		3
Total interest bearing liabilities		300			478			778			(71	)		192		121
Change in net interest income	$	1,869		$	15		$	1,884		$	1,123		$	807	$	1,930

⁽¹⁾ Includes loans held-for-sale.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Rate/Volume Analysis – continued

	For the Six Months Ended June 30,
	2019								2018
				Due to							Due to
	Volume			Rate		Net			Volume		Rate			Net
	(In Thousands)
Interest earning assets:
Investment securities	$	(325	)	$	201	$	(124	)	$	428	$	139		$	567
FHLB and FRB stock		34			3		37			20		57			77
Loans receivable(1)		4,102			1,811		5,913			2,042		948			2,990
Other earning assets		(9	)		9		-			9		25			34
Total interest earning assets		3,802			2,024		5,826			2,499		1,169			3,668
Interest bearing liabilities:
Savings, money market and checking accounts		18			87		105			17		38			55
Certificates of deposit		174			512		686			29		80			109
Advances from FHLB and other borrowings including long-term debt		(21	)		644		623			301		(91	)		210
Total interest bearing liabilities		171			1,243		1,414			347		27			374
Change in net interest income	$	3,631		$	781	$	4,412		$	2,152	$	1,142		$	3,294

⁽¹⁾ Includes loans held-for-sale.

Results of Operations for the Three Months Ended June 30, 2019 and 2018

Net Income. Eagle’s net income for the three months ended June 30, 2019 was $3.25 million compared to $1.33 million for the three months ended June 30, 2018. The increase of $1.92 million was due to an increase in net interest income after loan loss provision of $1.21 million and an increase in noninterest income of $2.78 million, offset by an increase in noninterest expense of $1.59 million and an increase in income tax provision of $487,000. Basic and diluted earnings per share were both $0.51 for the current period. Basic and diluted earnings per share were both $0.24 for the prior year comparable period.

Net Interest Income. Net interest income increased to $9.69 million for the three months ended June 30, 2019, from $7.81 million for the same quarter in the prior year. This increase of $1.88 million, or 24.1%, was the result of an increase in interest and dividend income of $2.66 million, partially offset by an increase in interest expense of $778,000.

Interest and Dividend Income. Interest and dividend income was $11.64 million for the three months ended June 30, 2019, compared to $8.98 million for the three months ended June 30, 2018, an increase of $2.66 million, or 29.6%. Interest and fees on loans increased to $10.60 million for the three months ended June 30, 2019 from $7.86 million for the three months ended June 30, 2018. This increase of $2.74 million, or 34.9%, was due to an increase in the average balance of loans, as well as, an increase in the average yield of loans for the quarter ended June 30, 2019. Average balances for loans receivable, including loans held-for-sale, for the three months ended June 30, 2019 were $754.20 million, compared to $585.37 million for the prior year period. This represents an increase of $168.83 million, or 28.8% and was impacted by the BMB acquisition. The average interest rate earned on loans receivable increased by 25 basis points, from 5.39% to 5.64%. Interest and fees on loans also includes $538,000 related to accretion of the loan purchase discount for the BMB and TwinCo acquisitions. Interest and dividends on investment securities available-for-sale decreased by $93,000, or 9.1% period over period. Average balances for investments decreased to $136.82 million for the three months ended June 30, 2019, from $154.67 million for the three months ended June 30, 2018. However, average interest rates earned on investments increased slightly to 2.72% for the three months ended June 30, 2019 from 2.65% for the three months ended June 30, 2018.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Results of Operations for the Three Months Ended June 30, 2019 and 2018 – continued

Interest Expense. Total interest expense was $1.94 million for the three months ended June 30, 2019 compared to $1.17 million for the three months ended June 30, 2018. The increase of $778,000 or 66.7% was due to an increase in interest expense on deposits, as well as an increase in total borrowings. The average balance for total deposits was $741.94 million for three months ended June 30, 2019 compared to $623.29 million for the three months ended June 30, 2018. This increase was impacted by the BMB acquisition. The overall average rate on total deposits was 0.50% for the three months ended June 30, 2019 compared to 0.32% for the three months ended June 30, 2018. The average balance for total borrowings increased from $102.13 million for the three months ended June 30, 2018 to $131.22 million for the three months ended June 30, 2019. The average rate paid on total borrowings also increased from 2.64% for the three months ended June 30, 2018, to 3.12% for the three months ended June 30, 2019.

Loan Loss Provision. Loan loss provisions are charged to earnings to maintain total allowance for loan losses at a level considered adequate by management of the Bank, to provide for probable loan losses based on prior loss experience, volume and type of lending conducted by the Bank and past due loans in the portfolio. The Bank’s policies require review of assets on a quarterly basis. The Bank classifies loans as well as other assets if warranted. While management believes it uses the best information available to make a determination with respect to the allowance for loan losses, it recognizes that future adjustments may be necessary. The Bank recorded $697,000 in provision for loan losses for the three months ended June 30, 2019 and $24,000 for the three months ended June 30, 2018. Management believes the level of total allowances is adequate.

Noninterest Income. Total noninterest income was $5.50 million for the three months ended June 30, 2019, compared to $2.72 million for the three months ended June 30, 2018. The increase of $2.78 million is largely due to an increase in net gain on sale of loans which increased to $3.36 million for the three months ended June 30, 2019 from $1.72 million for the three months ended June 30, 2018. This increase was also impacted by increased mortgage originations and higher margins on mortgage loans sold.

Noninterest Expense. Noninterest expense was $10.47 million for the three months ended June 30, 2019 compared to $8.88 million for the three months ended June 30, 2018. The increase of $1.59 million or 17.9% is largely due to increased salaries and employee benefits expense of $1.05 million. The increase is due in part to higher commission-based compensation related to the continued loan growth, additional mortgage lenders hired in the past year and staff hired related to compliance with mortgage rules. Salaries and employee benefits expense was also impacted by the addition of staff related to the BMB acquisition.

Income Tax Provision. Income tax provision was $780,000 for the three months ended June 30, 2019, compared to $293,000 for the three months ended June 30, 2018. The effective tax rate for the three months ended June 30, 2019 was 19.4% compared to 18.0% for the three months ended June 30, 2018.

Results of Operations for the Six Months Ended June 30, 2019 and 2018

Net Income. Eagle’s net income for the six months ended June 30, 2019 was $4.43 million compared to $1.91 million for the six months ended June 30, 2018. The increase of $2.52 million was due to an increase in net interest income after loan loss provision of $3.64 million and an increase in noninterest income of $4.05 million, offset by an increase in noninterest expense of $4.53 million and an increase in income tax provision of $621,000. Basic and diluted earnings per share were both $0.69 for the current year period. Basic and diluted earnings per share were both $0.35 for the prior year period.

Net Interest Income. Net interest income increased to $19.07 million for the six months ended June 30, 2019, from $14.66 million for the previous year’s six-month period. This increase of $4.41 million, or 30.1%, was the result of an increase in interest and dividend income of $5.83 million, partially offset by an increase in interest expense of $1.41 million.

-43-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Results of Operations for the Six Months Ended June 30, 2019 and 2018 – continued

Interest and Dividend Income. Interest and dividend income was $22.76 million for the six months ended June 30, 2019, compared to $16.93 million for the six months ended June 30, 2018, an increase of $5.83 million, or 34.4%. Interest and fees on loans increased to $20.65 million for the six months ended June 30, 2019 from $14.73 million for the same period ended June 30, 2018. This increase of $5.92 million, or 40.2%, was due to an increase in the average balance of loans, as well as, an increase in the average yield on loans. Average balances for loans receivable, including loans held-for-sale, for the six months ended June 30, 2019 were $740.43 million, compared to $579.19 million for the prior year period. This represents an increase of $161.24 million, or 27.8% and was impacted by the BMB acquisition. The average interest rate earned on loans receivable increased by 49 basis points, from 5.13% to 5.62%. Interest and fees on loans also includes $1.06 million related to accretion of the loan purchase discount for the BMB and TwinCo acquisitions. Interest and dividends on investment securities available-for-sale decreased $124,000, or 6.2% period over period. Average balances for investments decreased to $138.81 million for the six months ended June 30, 2019, from $165.55 million for the six months ended June 30, 2018. However, average interest rates earned on investments increased to 2.74% for the six months ended June 30, 2019 from 2.45% for the six months ended June 30, 2018.

Interest Expense. Total interest expense for the six months ended June 30, 2019 was $3.69 million compared to $2.28 million for the six months ended June 30, 2018. The increase of $1.41 million was due to an increase in interest expense on deposits, as well as an increase in total borrowings. Interest expense on deposits increased $791,000 for the six months ended June 30, 2019 compared to the same period in the prior year. The increase is due to higher overall average balances for total deposits which increased from $614.30 million for the six months ended June 30, 2018 to $733.38 million for the six months ended June 30, 2019. This increase was impacted by the BMB acquisition. The overall average rate on total deposits was also increased to 0.47% for the six months ended June 30, 2019 compared to 0.30% for the prior period. Interest expense on total borrowings increased $623,000 for the six months ended June 30, 2019 compared to the same period in the prior year. The average borrowing balance decreased slightly from $130.34 million for the six months ended June 30, 2018 to $128.36 million for the six months ended June 30, 2019. However, the average rate paid increased from 2.10% for the six months ended June 30, 2018, to 3.11% for the six months ended June 30, 2019.

Loan Loss Provision. Loan loss provisions are charged to earnings to maintain the total allowance for loan losses at a level considered adequate by management of the Bank, to provide for probable loan losses based on prior loss experience, volume and type of lending conducted by the Bank and past due loans in the portfolio. The Bank’s policies require a review of assets on a quarterly basis. The Bank classifies loans as well as other assets if warranted. While management believes it uses the best information available to make a determination with respect to the allowance for loan losses, it recognizes that future adjustments may be necessary. The Bank recorded $1.30 million in loan loss provisions for the six months ended June 30, 2019 and $526,000 for the six months ended June 30, 2018. Management believes the level of total allowances is adequate. Total nonperforming loans was $3.76 million at June 30, 2019 compared to $3.77 million at December 31, 2018. The Bank has $91,000 in other real estate owned and other repossessed assets at June 30, 2019 compared to $107,000 at December 31, 2018.

Noninterest Income. Total noninterest income increased to $9.20 million for the six months ended June 30, 2019, from $5.15 million for the six months ended June 30, 2018, an increase of $4.05 million or 78.6%. The increase is largely due to an increase in net gain on sale of loans which increased to $5.96 million for the six months ended June 30, 2019 from $3.16 million for the six months ended June 30, 2018. During the six months ended June 30, 2019, $173.68 million mortgage loans were sold compared to $120.64 million in the same period in the prior year. In addition, the gross margin on sale of mortgage loans for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 increased.

Noninterest Expense. Noninterest expense was $21.49 million for the six months ended June 30, 2019 compared to $16.96 million for the six months ended June 30, 2018. The increase of $4.53 million, or 26.7%, is largely due to increased salaries and employee benefits expense of $2.13 million. The increase in salaries expense is due in part to higher commission-based compensation related to the continued loan growth and additional staff related to compliance with mortgage rules. Salaries and employee benefits expense was also impacted by the addition of staff related to the BMB acquisition. In addition, acquisition costs increased $811,000 due to the BMB acquisition.

Income Tax Provision. Income tax provision was $1.04 million for the six months ended June 30, 2019, compared to $420,000 for the six months ended June 30, 2018. The effective tax rate for the six months ended June 30, 2019 was 19.0% compared to 18.1% for the six months ended June 30, 2018.

-44-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Liquidity and Capital Resources

Liquidity

The Bank is required to maintain minimum levels of liquid assets as defined in the regulations of the Montana Division of Banking and Financial Institutions and FRB regulations. The liquidity requirement is retained for safety and soundness purposes, and appropriate levels of liquidity will depend upon the types of activities in which the company engages. For internal reporting purposes, the Bank uses policy minimums of 1.0%, and 8.0% for “basic surplus” and “basic surplus with FHLB” as internally defined. In general, the “basic surplus” is a calculation of the ratio of unencumbered short-term assets reduced by estimated percentages of CD maturities and other deposits that may leave the Bank in the next 90 days divided by total assets. “Basic surplus with FHLB” adds to “basic surplus” the additional borrowing capacity the Bank has with FHLB. The Bank exceeded those minimum ratios as of both June 30, 2019 and December 31, 2018.

The Bank’s primary sources of funds are deposits, repayment of loans and mortgage-backed and collateralized mortgage obligation securities, maturities of investments, funds provided from operations and advances from FHLB and other borrowings. Scheduled repayments of loans and mortgage-backed and collateralized mortgage obligation 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 Bank uses liquidity resources principally to fund existing and future loan commitments. It also uses them to fund maturing certificates of deposit, demand deposit withdrawals and to invest in other loans and investments, maintain liquidity and meet operating expenses.

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 commitments to make loans and management’s assessment of the Bank’s ability to generate funds.

Capital Resources

As of June 30, 2019, 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 10.5% compared to an increase of 2.3% at December 31, 2018. The Bank is within the guidelines set forth by the Board of Directors for interest rate risk sensitivity in rising interest rate scenarios.

Beginning January 1, 2015, community banking organizations became subject to a new regulatory rule recently adopted by federal banking agencies (commonly referred to as Basel III). The new rule establishes a new regulatory capital framework that incorporates revisions to the Basel capital framework, strengthens the definition of regulatory capital, increases risk-based capital requirements, and amends the methodologies for determining risk-weighted assets. These changes are expected to increase the amount of capital required by community banking organizations. Basel III includes a multiyear transition period from January 1, 2015 through December 31, 2019.

The Banks’s Tier I leverage ratio, as measured under State of Montana and FRB rules, increased from 11.22% as of December 31, 2018 to 11.18% as of June 30, 2019. The Bank’s capital position helps to mitigate its interest rate risk exposure.

As of June 30, 2019, 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 June 30, 2019, the Bank’s total capital, Tier 1 capital, common equity Tier 1 capital and Tier 1 leverage ratios were 14.98%, 13.98%, 13.98% and 11.18%, respectively, compared to regulatory requirements of 10.50%, 8.50%, 7.00% and 4.00%, respectively. All of these ratios with the exception of the Tier 1 leverage ratio include the capital conservation buffer of 2.50% phased-in beginning January 1, 2019.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Liquidity and Capital Resources – continued

	June 30, 2019
	(Unaudited)
	Dollar		% of
	Amount		Assets
	(Dollars in Thousands)
Total risk-based capital to risk weighted assets:
Actual capital level	$	116,357		14.98	%
Minimum required for capital adequacy Basel III phase-in schedule		81,559		10.50
Excess capital	$	34,798		4.48	%
Tier I capital to risk weighted assets:
Actual capital level	$	108,607		13.98	%
Minimum required for capital adequacy Basel III phase-in schedule		66,024		8.50
Excess capital	$	42,583		5.48	%
Common equity tier I capital to risk weighted assets:
Actual capital level	$	108,607		13.98	%
Minimum required for capital adequacy Basel III phase-in schedule		54,372		7.00
Excess capital	$	54,235		6.98	%
Tier I capital to adjusted total average assets:
Actual capital level	$	108,607		11.18	%
Minimum required for capital adequacy Basel III phase-in schedule		38,863		4.00
Excess capital	$	69,744		7.18	%

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 primary source of income. Net interest income is affected by changes in interest rates, the relationship between rates on interest bearing assets and liabilities, the impact of interest 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. Our asset and liability policy and strategies are expected to continue as described so long as competitive and regulatory conditions in the financial institution industry and market interest rates continue as they have in recent years.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Interest Rate Risk – continued

The Bank has established acceptable levels of interest rate risk for an instantaneous and permanent shock in rates as follows: 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 change in interest rates of up to 200 basis points (+ or -). Furthermore, projected net interest income over the subsequent twelve months (i.e. year-2) will not be reduced by more than 15.0%.

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

Changes in Market	Rate Sensitivity
Interest Rates	As of June 30, 2019				Policy
(Basis Points)	Year 1		Year 2		Limits
+200		1.10%		3.40%		-15.00%
-200		-6.20%		-11.10%		-15.00%

Impact of Inflation and Changing Prices

Our financial statements and the accompanying notes 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.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

-48-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONTROLS AND PROCEDURES

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 June 30, 2019, our disclosure controls and procedures were effective. During the last quarter, there were no changes in the Company’s internal control over financial reporting that have materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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 I, Item 1A of our Annual Report on Form10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On July 19, 2018, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchased its shares and the timing of such repurchase depended upon market conditions and other corporate considerations. No shares were purchased under this plan during the year ended December 31, 2018. During the first quarter of 2019, 42,000 shares were purchased at an average price of $17.43 per share. In addition, 28,000 shares were purchased during the second quarter of 2019 at an average price of $17.09 per share. The plan expired on July 19, 2019.

The following table summarizes the Company’s purchase of its common stock for the three months ended June 30, 2019.

					Total Number		Maximum
					of Shares		Number of
					Purchased		Shares that
	Total				as Part of		May Yet Be
	Number of		Average		Publicly		Purchased
	Shares		Price Paid		Announced Plans		Under the Plans
	Purchased		Per Share		or Programs		or Programs
April 1, 2019 through April 30, 2019		28,000	$	17.09		28,000		30,000
May 1, 2019 through May 31, 2019		-	$	-		-		30,000
June 1, 2019 through June 30, 2019		-	$	-		-		30,000
Total		28,000	$	17.09		28,000

On July 18, 2019, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares may be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations. The plan expires on July 18, 2020.

-50-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

Part II - OTHER INFORMATION (CONTINUED)

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information.

None.

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 Peter J. Johnson, 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 Laura F. Clark, 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 Peter J. Johnson, Chief Executive Officer, and Laura F. Clark, 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	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

-51-

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: August 7, 2019	By:	/s/ Peter J. Johnson
		Peter J. Johnson
		President/CEO
Date: August 7, 2019	By:	/s/ Laura F. Clark
		Laura F. Clark
		Executive Vice President/CFO

-52-

EX-31.1

 Exhibit 31.1

CERTIFICATION 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

I, Peter J. Johnson certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eagle Bancorp Montana, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2019

/s/ Peter J. Johnson                    

Peter J. Johnson

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION 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

I, Laura F. Clark certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eagle Bancorp Montana, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2019

/s/ Laura F. Clark

Laura F. Clark

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Eagle Bancorp Montana, Inc. (the ‘Company’) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the ‘Report’), we, Peter J. Johnson, Chief Executive Officer of the Company, and Laura F. Clark, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the undersigned’s best knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Peter J. Johnson	/s/ Laura F. Clark
Peter J. Johnson	Laura F. Clark
Chief Executive Officer (Principal Executive Officer) August 7, 2019	Chief Financial Officer and Principal Accounting Officer (Principal Financial Officer) August 7, 2019

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission and shall not be considered filed as part of the Report.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 07, 2019
Document Information [Line Items]
Entity Registrant Name	Eagle Bancorp Montana, Inc.
Entity Central Index Key	0001478454
Trading Symbol	ebmt
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		6,403,693
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Title of 12(b) Security	Common Stock

XML

Consolidated Statements of Financial Condition (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
ASSETS:
Cash and due from banks	$ 10,581	$ 10,144
Interest bearing deposits in banks	2,855	1,057
Total cash and cash equivalents	13,436	11,201
Securities available-for-sale, at fair value	124,065	142,165
Federal Home Loan Bank ("FHLB") stock	5,384	5,011
Federal Reserve Bank ("FRB") stock	2,526	2,033
Investment in Eagle Bancorp Statutory Trust I	155	155
Mortgage loans held-for-sale, at fair value	23,760	7,318
Loans receivable, net of deferred loan fees of $1,215 at June 30, 2019 and $1,098 at December 31, 2018 and allowance for loan losses of $7,750 at June 30, 2019 and $6,600 at December 31, 2018	744,684	610,333
Accrued interest and dividends receivable	4,903	3,479
Mortgage servicing rights, net	7,666	7,100
Premises and equipment, net	36,992	29,343
Cash surrender value of life insurance, net	23,724	20,545
Real estate and other repossessed assets acquired in settlement of loans, net	91	107
Goodwill	15,710	12,124
Core deposit intangible, net	3,136	1,498
Deferred tax asset, net	75	1,190
Other assets	1,418	301
Total assets	1,007,725	853,903
LIABILITIES:
Noninterest bearing	183,116	142,788
Interest bearing	565,272	483,823
Total deposits	748,388	626,611
Accrued expenses and other liabilities	11,987	5,388
FHLB advances and other borrowings	106,748	102,222
Other long-term debt:
Principal amount	25,155	25,155
Unamortized debt issuance costs	(247)	(279)
Total other long-term debt, net	24,908	24,876
Total liabilities	892,031	759,097
SHAREHOLDERS' EQUITY:
Preferred stock (par value $0.01 per share; 1,000,000 shares authorized; no shares issued or outstanding)	0	0
Common stock (par value $0.01 per share; 20,000,000 and 8,000,000 shares authorized; 6,714,983 and 5,718,942 shares issued; 6,403,693 and 5,477,652 shares outstanding at June 30, 2019 and December 31, 2018, respectively)	67	57
Additional paid-in capital	68,535	52,051
Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")	(393)	(477)
Treasury stock, at cost	(3,850)	(2,640)
Retained earnings	50,167	46,926
Accumulated other comprehensive income (loss), net of tax	1,168	(1,111)
Total shareholders' equity	115,694	94,806
Total liabilities and shareholders' equity	$ 1,007,725	$ 853,903

XML

Consolidated Statements of Financial Condition (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Deferred loan fees	$ 1,215	$ 1,098
Allowance for loan losses	$ 7,750	$ 6,600
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	20,000,000	8,000,000
Common stock, shares issued (in shares)	6,714,983	5,718,942
Common stock, shares outstanding (in shares)	6,403,693	5,477,652

XML

Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans	$ 10,599,000	$ 7,862,000	$ 20,647,000	$ 14,734,000
Securities available-for-sale	928,000	1,021,000	1,886,000	2,010,000
FHLB and FRB dividends	95,000	74,000	190,000	153,000
Interest on deposits in banks	13,000	18,000	31,000	35,000
Other interest income	3,000	1,000	5,000	1,000
Total interest and dividend income	11,638,000	8,976,000	22,759,000	16,933,000
INTEREST EXPENSE:
Deposits	924,000	494,000	1,711,000	920,000
FHLB advances and other borrowings	656,000	315,000	1,250,000	652,000
Other long-term debt	364,000	357,000	729,000	704,000
Total interest expense	1,944,000	1,166,000	3,690,000	2,276,000
NET INTEREST INCOME	9,694,000	7,810,000	19,069,000	14,657,000
Loan loss provision	697,000	24,000	1,301,000	526,000
NET INTEREST INCOME AFTER LOAN LOSS PROVISION	8,997,000	7,786,000	17,768,000	14,131,000
NONINTEREST INCOME:
Net gain on sale of loans	3,360,000	1,720,000	5,959,000	3,159,000
Appreciation in cash surrender value of life insurance	160,000	146,000	317,000	270,000
Net gain (loss) on sale of available-for-sale securities	104,000	15,000	49,000	(90,000)
Net gain (loss) on sale of real estate owned and other repossessed property	19,000	(32,000)	(18,000)	(57,000)
Other noninterest income	373,000	40,000	390,000	143,000
Total noninterest income	5,503,000	2,715,000	9,197,000	5,153,000
NONINTEREST EXPENSE:
Salaries and employee benefits	6,510,000	5,461,000	12,502,000	10,370,000
Occupancy and equipment expense	1,043,000	835,000	2,077,000	1,663,000
Data processing	854,000	673,000	1,782,000	1,310,000
Advertising	212,000	298,000	480,000	576,000
Amortization of core deposit intangible and tax credits	253,000	235,000	507,000	337,000
Loan costs	177,000	179,000	312,000	315,000
Federal insurance premiums	55,000	69,000	115,000	138,000
Postage	79,000	84,000	147,000	134,000
Legal, accounting and examination fees	236,000	184,000	510,000	326,000
Consulting fees	44,000	25,000	75,000	42,000
Acquisition costs	5,000	131,000	1,176,000	365,000
Other noninterest expense	1,005,000	701,000	1,811,000	1,382,000
Total noninterest expense	10,473,000	8,875,000	21,494,000	16,958,000
INCOME BEFORE PROVISION FOR INCOME TAXES	4,027,000	1,626,000	5,471,000	2,326,000
Income tax provision (includes ($105) and ($73) for the three months ended June 30, 2019 and 2018, respectively, and ($172) and ($132) for the six months ended June 30, 2019 and 2018, respectively related to income tax benefit from reclassification items)	780,000	293,000	1,041,000	420,000
NET INCOME	$ 3,247,000	$ 1,333,000	$ 4,430,000	$ 1,906,000
BASIC EARNINGS PER SHARE (in dollars per share)	$ 0.51	$ 0.24	$ 0.69	$ 0.35
DILUTED EARNINGS PER SHARE (in dollars per share)	$ 0.51	$ 0.24	$ 0.69	$ 0.35
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (in shares)	6,408,627	5,460,452	6,429,362	5,386,401
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (in shares)	6,425,015	5,524,912	6,446,368	5,450,861
Deposit Account [Member]
NONINTEREST INCOME:
Noninterest income revenue	$ 292,000	$ 214,000	$ 553,000	$ 440,000
Bank Servicing [Member]
NONINTEREST INCOME:
Noninterest income revenue	722,000	194,000	1,087,000	513,000
Investment Advisory, Management and Administrative Service [Member]
NONINTEREST INCOME:
Noninterest income revenue	135,000	147,000	247,000	279,000
Debit Card [Member]
NONINTEREST INCOME:
Noninterest income revenue	$ 338,000	$ 271,000	$ 613,000	$ 496,000

XML

Consolidated Statements of Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income tax expense, reclassification items	$ (105)	$ (73)	$ (172)	$ (132)

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net income	$ 3,247	$ 1,333	$ 4,430	$ 1,906
OTHER ITEMS OF COMPREHENSIVE INCOME (LOSS) BEFORE TAX:
Change in fair value of investment securities available-for-sale	1,965	(216)	3,451	(2,799)
Reclassification for net realized (gains) losses on investment securities included in income	(104)	(15)	(49)	90
Change in fair value of loans held-for-sale		402	296	664
Reclassification for net realized gains on loans held-for-sale	(296)	(262)	(605)	(587)
Total other items of comprehensive income (loss)	1,565	(91)	3,093	(2,632)
Income tax (provision) benefit related to:
Investment securities	(489)	60	(896)	720
Loans held-for-sale	78	(37)	82	(20)
Total income tax (provision) benefit	(411)	23	(814)	700
COMPREHENSIVE INCOME (LOSS)	$ 4,401	$ 1,265	$ 6,709	$ (26)

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Unallocated ESOP Shares [Member]	Treasury Stock [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance at Dec. 31, 2017		$ 53	$ 42,780	$ (643)	$ (2,826)	$ 43,939	$ 313	$ 83,616
Net income						573		573
Other comprehensive income (loss)							(1,864)	(1,864)
Dividends paid						(492)		(492)
Stock issued in connection with acquisition		4	9,026					9,030
ESOP shares allocated			43	42				85
Balance at Mar. 31, 2018		57	51,849	(601)	(2,826)	44,020	(1,551)	90,948
Balance at Dec. 31, 2017		53	42,780	(643)	(2,826)	43,939	313	83,616
Net income								1,906
Balance at Jun. 30, 2018		57	51,890	(559)	(2,826)	44,862	(1,619)	91,805
Balance at Mar. 31, 2018		57	51,849	(601)	(2,826)	44,020	(1,551)	90,948
Net income						1,333		1,333
Other comprehensive income (loss)							(68)	(68)
Dividends paid						(491)		(491)
ESOP shares allocated			41	42				83
Balance at Jun. 30, 2018		57	51,890	(559)	(2,826)	44,862	(1,619)	91,805
Balance at Dec. 31, 2018		57	52,051	(477)	(2,640)	46,926	(1,111)	94,806
Net income						1,183		1,183
Other comprehensive income (loss)							1,125	1,125
Dividends paid						(597)		(597)
Stock issued in connection with acquisition		10	16,425					16,435
ESOP shares allocated			30	42				72
Treasury stock purchased					(732)			(732)
Balance at Mar. 31, 2019		67	68,506	(435)	(3,372)	47,512	14	112,292
Balance at Dec. 31, 2018		57	52,051	(477)	(2,640)	46,926	(1,111)	94,806
Net income								4,430
Balance at Jun. 30, 2019		67	68,535	(393)	(3,850)	50,167	1,168	115,694
Balance at Mar. 31, 2019		67	68,506	(435)	(3,372)	47,512	14	112,292
Net income						3,247		3,247
Other comprehensive income (loss)							1,154	1,154
Dividends paid						(592)		(592)
ESOP shares allocated			29	42				71
Treasury stock purchased					(478)			(478)
Balance at Jun. 30, 2019		$ 67	$ 68,535	$ (393)	$ (3,850)	$ 50,167	$ 1,168	$ 115,694

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
Unallocated ESOP Shares [Member]
ESOP shares allocated or committed to be released for allocation, shares (in shares)	4,154	4,154	4,154	4,154
Dividends paid, per share (in dollars per share)	$ 0.0925	$ 0.0925	$ 0.09	$ 0.09
Treasury stock, shares (in shares)	28,000	42,000
Treasury stock, average cost per share (in dollars per share)	$ 17.09	$ 17.43

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 4,430	$ 1,906
Adjustments to reconcile net income to net cash provided by operating activities:
Loan loss provision	1,301	526
Depreciation	861	578
Net amortization of investment securities premium and discounts	537	648
Amortization of mortgage servicing rights	635	610
Amortization of right of use assets	235
Amortization of core deposit intangible and tax credits	507	337
ESOP compensation expense for allocated shares	143	168
Deferred income tax provision	229	240
Net gain on sale of loans	(5,959)	(3,159)
Net (gain) loss on sale of available-for-sale securities	(49)	90
Net loss on sale of real estate owned and other repossessed assets	18	57
Net appreciation in cash surrender value of life insurance	(317)	(211)
Net change in:
Accrued interest and dividends receivable	(168)	(408)
Loans held-for-sale	(10,792)	485
Other assets	(892)	167
Accrued expenses and other liabilities	2,462	694
Net cash (used in) provided by operating activities	(6,819)	2,728
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales	53,257	45,080
Maturities, principal payments and calls	6,986	5,950
Purchases	(37,133)	(45,970)
FHLB stock purchased	(109)	(362)
FRB stock purchased	(493)	(554)
Net cash received (paid) for acquisitions	6,901	(4,243)
Loan origination and principal collection, net	(47,780)	(14,395)
Proceeds from sale of bank owned life insurance		205
Proceeds from sale of real estate and other repossessed assets acquired in settlement of loans	352	150
Purchases of premises and equipment	(4,125)	(4,984)
Net cash used in investing activities	(22,144)	(19,123)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	29,071	10,421
Net short-term (payments) advances on FHLB and other borrowings	(1,625)	23,376
Long-term advances from FHLB and other borrowings	28,000
Payments on long-term FHLB and other borrowings	(21,849)	(14,876)
Purchase of treasury stock	(1,210)
Dividends paid	(1,189)	(983)
Net cash provided by financing activities	31,198	17,938
NET INCREASE IN CASH AND CASH EQUIVALENTS	2,235	1,543
CASH AND CASH EQUIVALENTS, beginning of period	11,201	7,437
CASH AND CASH EQUIVALENTS, end of period	13,436	8,980
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest	3,352	2,120
Cash paid during the period for income taxes	170	230
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase (decrease) in market value of securities available-for-sale	3,402	(2,709)
Mortgage servicing rights recognized	1,201	748
Right of use assets obtained in exchange for lease liabilities	2,374
Loans transferred to real estate and other assets acquired in foreclosure	131	4
Stock issued in connection with acquisitions	$ 16,435	$ 9,030

XML

Note 1 - Basis of Presentation

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE

1.

 BASIS OF PRESENTATION

Eagle Bancorp Montana, Inc. (“Eagle” or the “Company”), is a Delaware corporation that holds

100%

of the capital stock of Opportunity Bank of Montana (“OBMT” or the “Bank”). The Bank was founded in

1922

as a Montana-chartered building and loan association and has conducted operations and maintained its administrative office in Helena, Montana since that time. In

1975,

the Bank adopted a federal thrift charter and in

October 2014

converted to a Montana chartered commercial bank and became a member bank in the Federal Reserve System.

On

August 21, 2018,

Eagle entered into an Agreement and Plan of Merger with Big Muddy Bancorp, Inc. (“BMB”), a Montana corporation and BMB’s wholly-owned subsidiary, The State Bank of Townsend (“SBOT”), a Montana chartered commercial bank to acquire

100%

of BMB’s equity voting interests. On

January 1, 2019,

BMB merged with and into Eagle, with Eagle continuing as the surviving corporation. SBOT operated

four

branches in Townsend, Dutton, Denton and Choteau, Montana.

The Bank currently has

21

full service branches. The Bank’s principal business is accepting deposits and, together with funds generated from operations and borrowings, investing in various types of loans and securities. The Bank also operates certain branches under the brand names Dutton State Bank, Farmers State Bank of Denton and The State Bank of Townsend.

Principles of Consolidation

The consolidated financial statements include Eagle, the Bank, Eagle Bancorp Statutory Trust I (the “Trust”) and AFSB NMTC Investment Fund, LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

Consolidated Financial Statement Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form

10

-Q and Article

10

of Regulation S-

X

as promulgated by the Securities and Exchange Commission (“SEC”). It is recommended that these unaudited interim consolidated financial statements be read in conjunction with the Company’s Annual Report on Form

10

-K with all of the audited information and footnotes required by U.S. GAAP for complete financial statements for the year ended

December 31, 2018,

as filed with the SEC on

March 12, 2019.

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.

Certain prior period amounts were reclassified to conform to the presentation for

2019.

These reclassifications had

no

impact on net income or shareholders’ equity.

The results of operations for the

six

-month period ended

June 30, 2019

are

not

necessarily indicative of the results to be expected for the year ending

December 31, 2019

or any other period.

The Company has evaluated events and transactions subsequent to

June 30, 2019

for recognition and/or disclosure.

XML

Note 2 - Mergers and Acquisitions

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE

2

. MERGERS AND ACQUISITIONS

Effective

January 1, 2019,

Eagle completed its previously announced merger with BMB, pursuant to an Agreement and Plan of Merger, dated as of

August 21, 2018,

by and among Eagle, Opportunity Bank of Montana, BMB and BMB’s wholly-owned subsidiary, SBOT, a Montana chartered commercial bank. BMB merged with and into Eagle, with Eagle continuing as the surviving corporation. SBOT operated

four

branches in Townsend, Dutton, Denton and Choteau, Montana. The transaction provided an opportunity to expand market presence and lending activities throughout the state. The acquisition closed after receipt of approvals from regulatory authorities, approval of BMB shareholders and the satisfaction of other closing conditions. The total consideration paid was

$16,436,000

and included cash consideration of

$1,000

and common stock issued of

$16,435,000.

On

September 5, 2017,

the Company entered into an Agreement and Plan of Merger with TwinCo, a Montana corporation, and TwinCo’s wholly-owned subsidiary, Ruby Valley Bank, a Montana chartered commercial bank to acquire

100%

of TwinCo’s equity voting interests. The merger agreement provided that Ruby Valley Bank would merge with and into Opportunity Bank of Montana and that TwinCo would merge with and into the Company. Ruby Valley Bank operated

2

branches in Madison County, Montana. The transaction provided an opportunity to expand market presence and lending activities, particularly in agricultural lending. The acquisition closed

January 31, 2018,

after receipt of approvals from regulatory authorities, approval of TwinCo shareholders and the satisfaction of other closing conditions. The total consideration paid was

$18,930,000

and included cash consideration of

$9,900,000

and common stock issued of

$9,030,000.

These transactions were accounted for under the acquisition method of accounting in accordance with FASB ASC

805,

Business Combinations. In business combination transactions in which the consideration given is

not

in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, a more reliable measure.

Under FASB ASC

805,

all of the assets acquired and liabilities assumed in a business combination are recognized at acquisition at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Goodwill recorded in the acquisitions was accounted for in accordance with the authoritative business combination guidance. Accordingly, goodwill will

not

be amortized, but will be tested for impairment annually. The goodwill recorded is

not

deductible for federal income tax purposes.

The assets acquired and liabilities assumed were recorded on the consolidated statement of financial condition at estimated fair value on acquisition date. The following table summarizes the fair values of the assets acquired and liabilities assumed, consideration paid and the resulting goodwill.

	BMB		TwinCo
	January 1,		January 31,
	2019		2018
	(In Thousands)
Assets acquired:
Cash and cash equivalents	$	6,902	$	5,657
Investment securities		2,096		30,728
Loans		89,204		55,057
Premises and equipment		2,246		1,605
Cash surrender value of life insurance		2,862		-
Other real estate owned		223		135
Core deposit intangible		1,988		1,609
Other assets		1,995		1,258
Total assets acquired	$	107,516	$	96,049
Liabilities assumed:
Deposits	$	92,706	$	82,190
Accrued expenses and other liabilities		1,960		19
Total liabilities assumed	$	94,666	$	82,209
Net assets acquired	$	12,850	$	13,840
Consideration paid:
Cash	$	1	$	9,900
Common stock issued (996,041 shares BMB and 446,774 shares TwinCo)		16,435		9,030
Total consideration paid	$	16,436	$	18,930
Goodwill resulting from acquisition	$	3,586	$	5,090

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

The total discount on BMB acquired loans was

$2,813,000

as of

January 1, 2019.

During the

six

months ended

June 30, 2019,

accretion of the loan discount was

$909,000.

The remaining loan discount was

$1,904,000

as of

June 30, 2019.

The total discount on TwinCo acquired loans was

$1,834,000

as of

January 31, 2018.

During the

six

months ended

June 30, 2019,

accretion of the loan discount was

$149,000.

During the year ended

December 31, 2018,

accretion of the loan discount was

$589,000.

The remaining loan discount was

$1,096,000

as of

June 30, 2019.

Four impaired loans were acquired through the BMB acquisition with a net balance of

$556,000

as of

January 1, 2019.

The balance of the loans as of

June 30, 2019

was

$395,000.

Two impaired loans were acquired through the TwinCo acquisition with a balance of

$1,188,000

as of

January 31, 2018.

The balance of the loans as of

June 30, 2019

was

$1,161,000.

Acquired impaired loans are considered immaterial for separate disclosure in Note

4.

Loans Receivable.

Core deposit intangible assets of

$1,988,000

were recorded for BMB and are being amortized using an accelerated method over the estimated useful lives of the related deposits of

10

years. Core deposit intangible assets of

$1,609,000

were recorded for TwinCo and are being amortized using an accelerated method over the estimated useful lives of the related deposits of

10

years.

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

Direct costs related to the acquisitions were expensed as incurred. The Company recorded acquisition costs related to BMB of

$5,000

during the quarter ended

June 30, 2019,

$1,171,000

during the quarter ended

March 31, 2019

and

$804,000

during the year ended

December 31, 2018.

The Company recorded total acquisition costs related to the TwinCo acquisition of

$1,041,000,

of which

$365,000

was recognized during the year ended

December 31, 2018.

Acquisition costs included legal and professional fees and data processing expenses incurred related to the acquisitions.

Operations of BMB have been included in the consolidated financial statements since

January 1, 2019.

The Company does

not

consider BMB a separate reporting segment and does

not

track the amount of revenues and net income attributable to BMB since acquisition. As such, it is impracticable to determine such amounts for the period from

January 1, 2019

through

June 

30,

2019.

Operations of TwinCo have been included in the consolidated financial statements since

February 1, 2018.

The Company does

not

consider TwinCo a separate reporting segment and does

not

track the amount of revenues and net income attributable to TwinCo since acquisition. As such, it is impracticable to determine such amounts for the period from

February 1, 2018

through

June 

30,

2019.

XML

Note 3 - Investment Securities

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE

3

.

INVESTMENT SECURITIES

Investment securities are summarized as follows:

	June 30, 2019									December 31, 2018
			Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	13,892	$	269	$	-		$	14,161	$	9,333	$	58	$	(44	)	$	9,347
Municipal obligations		38,176		1,285		(6	)		39,455		69,024		244		(990	)		68,278
Corporate obligations		11,393		21		(42	)		11,372		11,411		8		(300	)		11,119
Mortgage-backed securities		13,807		83		(76	)		13,814		19,635		86		(373	)		19,348
Collateralized mortgage obligations		34,988		271		(91	)		35,168		24,229		6		(360	)		23,875
Asset-backed securities		10,224		-		(129	)		10,095		10,350		6		(158	)		10,198
Total	$	122,480	$	1,929	$	(344	)	$	124,065	$	143,982	$	408	$	(2,225	)	$	142,165

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	49,357		$	19,086		$	53,257		$	45,080
Gross realized gain on sale of available-for-sale securities	$	538		$	191		$	549		$	191
Gross realized loss on sale of available-for-sale securities		(434	)		(176	)		(500	)		(281	)
Net realized gain (loss) on sale of available-for-sale securities	$	104		$	15		$	49		$	(90	)

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.

	June 30, 2019
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	9,635	$	9,643
Due from one to five years		13,048		13,079
Due from five to ten years		8,709		9,047
Due after ten years		42,293		43,314
		73,685		75,083
Mortgage-backed securities		13,807		13,814
Collateralized mortgage obligations		34,988		35,168
Total	$	122,480	$	124,065

Maturities of securities do

not

reflect repricing opportunities present in adjustable rate securities.

As of

June 30, 2019

and

December 31, 2018,

securities with a fair value of

$18,796,000

and

$21,408,000,

respectively were pledged to secure public deposits and for other purposes required or permitted by law.

The Company’s investment securities that have been in a continuous unrealized loss position for less than

twelve

months and those that have been in a continuous unrealized loss position for

twelve

or more months were as follows:

	June 30, 2019
	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	$	-	$	-		$	-	$	-
Municipal obligations		-		-			1,401		(6	)
Corporate obligations		4,864		(19	)		4,041		(23	)
Mortgage-backed securities and collateralized mortgage obligations		-		-			11,697		(167	)
Asset-backed securities		982		(52	)		5,231		(77	)
Total	$	5,846	$	(71	)	$	22,370	$	(273	)

	December 31, 2018
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
U.S. government and agency	$	-	$	-		$	3,385	$	(44	)
Municipal obligations		17,887		(140	)		32,712		(850	)
Corporate obligations		2,890		(110	)		7,220		(190	)
Mortgage-backed securities and collateralized mortgage obligations		5,575		(98	)		22,559		(635	)
Asset-backed securities		8,200		(158	)		-		-
Total	$	34,552	$	(506	)	$	65,876	$	(1,719	)

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. The unrealized losses associated with these investments are believed to be caused by changing market conditions that are considered to be temporary and the Company does

not

intend to sell the securities, and it is

not

likely to be required to sell these securities prior to maturity. Based on the Company’s evaluation of these securities,

no

other-than-temporary impairment was recorded for the

six

months ended

June 30, 2019,

or

2018.

As of

June 30, 2019

and

December 31, 2018,

there were, respectively,

24

and

108

securities in unrealized loss positions that were considered to be temporarily impaired and therefore an impairment charge has

not

been recorded.

As of

June 30, 2019,

3

U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately

0.43%

from the Company’s amortized cost basis of these securities. At

December 31, 2018,

74

U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately

1.88%

from the Company’s amortized cost basis of these securities. As of

June 30, 2019,

5

corporate obligations had unrealized losses of approximately

0.47%

from the Company’s amortized cost basis of these securities. At

December 31, 2018,

11

corporate obligations had an unrealized loss with aggregate depreciation of approximately

2.88%

from the Company's amortized cost basis of these securities. As management has the ability to hold debt securities until maturity, or for the foreseeable future,

no

declines are deemed to be other than temporary.

As of

June 30, 2019,

11

mortgage-backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) had unrealized losses with aggregate depreciation of approximately

1.41%

from the Company’s amortized cost basis of these securities. At

December 31, 2018,

19

MBSs and CMOs had unrealized losses with aggregate depreciation of approximately

2.54%

from the Company’s amortized cost basis of these securities. Management’s analysis as of

June 30, 2019

revealed

no

expected credit losses on the securities and therefore, declines are

not

deemed to be other than temporary.

As of

June 30, 2019,

5

asset-backed securities (“ABSs”) had unrealized losses with aggregate depreciation of approximately

2.03%

from the Company’s amortized cost basis of these securities. At

December 31, 2018,

4

ABSs had unrealized losses with aggregate depreciation of approximately

1.89%

from the Company’s amortized cost basis of these securities. Management’s analysis as of

June 30, 2019

revealed

no

expected credit losses on the securities and therefore, declines are

not

deemed to be other than temporary.

XML

Note 4 - Loans Receivable

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE

4

.

LOANS RECEIVABLE

Loans receivable consisted of the following:

	June 30,			December 31,
	2019			2018
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	145,148		$	144,107
Commercial real estate		412,690			328,438
Other loans:
Home equity		55,582			52,159
Consumer		19,181			16,565
Commercial		121,048			76,762
Total		753,649			618,031
Deferred loan fees, net		(1,215	)		(1,098	)
Allowance for loan losses		(7,750	)		(6,600	)
Total loans, net	$	744,684		$	610,333

Within the commercial real estate loan category,

$12,136,000

and

$12,476,000

was guaranteed by the United States Department of Agriculture Rural Development, at

June 30, 2019

and

December 31, 2018,

respectively. The commercial real estate category includes

$5,414,000

and

$2,575,000

of loans guaranteed by the United States Department of Agriculture Farm Service Agency at

June 30, 2019

and

December 31, 2018,

respectively. The commercial category also includes

$1,804,000

and

$1,303,000

of loans guaranteed by the United States Department of Agriculture Farm Service Agency at

June 30, 2019

and

December 31, 2018,

respectively. The United States Department of Agriculture Farm Service Agency guaranteed loans have increased as a result of recent acquisitions.

Allowance for loan losses activity was as follows:

	Residential		Commercial			Home
	1-4 Family		Real Estate			Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, April 1, 2019	$	1,301	$	3,923		$	477		$	197		$	1,202		$	7,100
Charge-offs		-		-			(75	)		(4	)		(2	)		(81	)
Recoveries		-		3			-			9			22			34
Provision		-		350			75			22			250			697
Ending balance, June 30, 2019	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Allowance for loan losses:
Beginning balance, January 1, 2019	$	1,301	$	3,593		$	477		$	190		$	1,039		$	6,600
Charge-offs		-		(20	)		(75	)		(13	)		(97	)		(205	)
Recoveries		-		9			-			15			30			54
Provision		-		694			75			32			500			1,301
Ending balance, June 30, 2019	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Ending balance, June 30, 2019 allocated to loans individually evaluated for impairment	$	-	$	-		$	-		$	-		$	-		$	-
Ending balance, June 30, 2019 allocated to loans collectively evaluated for impairment	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Loans receivable:
Ending balance, June 30, 2019	$	145,148	$	412,690		$	55,582		$	19,181		$	121,048		$	753,649
Ending balance, June 30, 2019 of loans individually evaluated for impairment	$	680	$	1,156		$	199		$	132		$	1,462		$	3,629
Ending balance, June 30, 2019 of loans collectively evaluated for impairment	$	144,468	$	411,534		$	55,383		$	19,049		$	119,586		$	750,020

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, April 1, 2018	$	1,301	$	3,202	$	427		$	200		$	1,000		$	6,130
Charge-offs		-		-		-			(23	)		(1	)		(24	)
Recoveries		-		4		-			8			8			20
Provision		-		24		-			-			-			24
Ending balance, June 30, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Allowance for loan losses:
Beginning balance, January 1, 2018	$	1,301	$	2,778	$	506		$	225		$	940		$	5,750
Charge-offs		-		-		(80	)		(50	)		(24	)		(154	)
Recoveries		-		7		1			10			10			28
Provision		-		445		-			-			81			526
Ending balance, June 30, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Ending balance, June 30, 2018 allocated to loans individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-		$	-
Ending balance, June 30, 2018 allocated to loans collectively evaluated for impairment	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Loans receivable:
Ending balance, June 30, 2018	$	143,323	$	281,525	$	53,178		$	16,635		$	88,096		$	582,757
Ending balance, June 30, 2018 of loans individually evaluated for impairment	$	573	$	527	$	207		$	101		$	92		$	1,500
Ending balance, June 30, 2018 of loans collectively evaluated for impairment	$	142,750	$	280,998	$	52,971		$	16,534		$	88,004		$	581,257

Internal classification of the loan portfolio was as follows:

	June 30, 2019
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	113,896	$	-	$	1,002	$	-	$	-	$	114,898
Residential 1-4 family construction		29,913		-		337		-		-		30,250
Commercial real estate		312,340		1,676		2,596		-		-		316,612
Commercial construction and development		50,027		-		-		-		-		50,027
Farmland		45,821		-		172		58		-		46,051
Other loans:
Home equity		55,383		-		199		-		-		55,582
Consumer		19,010		-		171		-		-		19,181
Commercial		72,341		796		808		63		-		74,008
Agricultural		45,707		73		573		687		-		47,040
Total	$	744,438	$	2,545	$	5,858	$	808	$	-	$	753,649

	December 31, 2018
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	116,065	$	-	$	874	$	-	$	-	$	116,939
Residential 1-4 family construction		26,533		-		635		-		-		27,168
Commercial real estate		252,731		1,731		2,322		-		-		256,784
Commercial construction and development		41,726		-		13		-		-		41,739
Farmland		29,915		-		-		-		-		29,915
Other loans:
Home equity		51,668		-		491		-		-		52,159
Consumer		16,394		-		171		-		-		16,565
Commercial		57,778		950		244		81		-		59,053
Agricultural		17,305		-		404		-		-		17,709
Total	$	610,115	$	2,681	$	5,154	$	81	$	-	$	618,031

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

	June 30, 2019
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	542	$	50	$	592	$	343	$	113,963	$	114,898
Residential 1-4 family construction		126		-		126		337		29,787		30,250
Commercial real estate		170		-		170		680		315,762		316,612
Commercial construction and development		112		-		112		-		49,915		50,027
Farmland		33		-		33		476		45,542		46,051
Other loans:
Home equity		261		-		261		199		55,122		55,582
Consumer		179		-		179		132		18,870		19,181
Commercial		272		76		348		743		72,917		74,008
Agricultural		67		-		67		719		46,254		47,040
Total	$	1,762	$	126	$	1,888	$	3,629	$	748,132	$	753,649

	December 31, 2018
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	381	$	130	$	511	$	253	$	116,175	$	116,939
Residential 1-4 family construction		118		-		118		634		26,416		27,168
Commercial real estate		975		1,347		2,322		432		254,030		256,784
Commercial construction and development		9		-		9		13		41,717		41,739
Farmland		-		-		-		-		29,915		29,915
Other loans:
Home equity		39		-		39		491		51,629		52,159
Consumer		135		-		135		127		16,303		16,565
Commercial		284		-		284		308		58,461		59,053
Agricultural		91		-		91		32		17,586		17,709
Total	$	2,032	$	1,477	$	3,509	$	2,290	$	612,232	$	618,031

The following tables include information regarding impaired loans.

	June 30, 2019
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	343	$	373	$	-
Residential 1-4 family construction		337		387		-
Commercial real estate		680		824		-
Commercial construction and development		-		-		-
Farmland		476		513		-
Other loans:
Home equity		199		225		-
Consumer		132		143		-
Commercial		743		854		-
Agricultural		719		768		-
Total	$	3,629	$	4,087	$	-

	December 31, 2018
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
Real estate loans:
Residential 1-4 family	$	253	$	277	$	-
Residential 1-4 family construction		634		684		-
Commercial real estate		432		527		-
Commercial construction and development		13		26		-
Farmland		-		-		-
Other loans:
Home equity		491		522		-
Consumer		127		181		-
Commercial		308		310		-
Agricultural		32		32		-
Total	$	2,290	$	2,559	$	-

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	Average Recorded Investment
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	346	$	553	$	298	$	356
Residential 1-4 family construction		486		396		485		168
Commercial real estate		614		1,026		556		264
Commercial construction and development		-		-		7		-
Farmland		584		-		238		-
Other loans:
Home equity		316		224		345		225
Consumer		130		105		130		127
Commercial		781		127		525		99
Agricultural		822		-		376		-
Total	$	4,079	$	2,431	$	2,960	$	1,239

Interest income recognized on impaired loans for the

three

and

six

months ended

June 30, 2019

and

2018

is considered insignificant.

XML

Note 5 - Troubled Debt Restructurings

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Troubled Debt Restructurings [Text Block]

NOTE

5

.

TROUBLE

D

DEBT RESTRUCTURINGS

A TDR loan is a loan in which the Bank grants a concession to the borrower that it would

not

otherwise consider, for reasons related to a borrower's financial difficulties. The loan terms which have been modified or restructured due to a borrower's financial difficulty, include but are

not

limited to a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market rates; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-aging, extensions, deferrals, renewals and rewrites or a combination of these modification methods.

The Company offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories:

Rate Modification

– A modification in which the interest rate is changed.

Term Modification

– A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Interest Only Modification

– A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification

– A modification in which the dollar amount of the payment is changed, other than an interest only modification described above.

Combination Modification

– Any other type of modification, including the use of multiple categories above.

During the year ended

December 31, 2018,

there was

one

new restructured loan. The recorded investment at time of restructure was

$23,000

and

no

charge-off was incurred. The loan is a home equity loan and is on non-accrual status. The recorded investment was

$21,000

at

June 30, 2019

and

$22,000

at

December 31, 2018.

There were

no

loans modified as a troubled debt restructured loan that defaulted during the quarter ended

June 30, 2019

where the default occurred within

12

months of restructuring. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is

90

days past due or results in the foreclosure and repossession of the applicable collateral.

As of

June 30, 2019,

the Company had

no

commitments to lend additional funds to loan customers whose terms had been modified in trouble debt restructures.

XML

Note 6 - Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Transfers and Servicing of Financial Assets [Text Block]

NOTE

6

.

MORTGAGE SERVICING RIGHTS

The Company is servicing mortgage loans for the benefit of others totaling

$1,051,443,000

and

$964,967,000

at

June 30, 2019

and

December 31, 2018,

respectively and are carried at lower of cost or market. 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

$635,000

and

$563,000

for the

three

months ended

June 30, 2019

and

2018,

respectively. Mortgage loan servicing fees were

$1,247,000

and

$1,123,000

for the

six

months ended

June 30, 2019

and

2018,

respectively. These fees, net of amortization, are included mortgage banking which is a component of noninterest income on the consolidated statement of income.

Custodial balances maintained in connection with the foregoing loan servicing, and included in noninterest checking deposits, were

$8,436,000

and

$5,618,000

at

June 30, 2019

and

December 31, 2018,

respectively.

The following tables are a summary of activity in mortgage servicing rights:

	As of or For the
	Three Months Ended
	June 30,
	2019			2018
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	7,318		$	6,613
Mortgage servicing rights capitalized		736			472
Amortization of mortgage servicing rights		(388	)		(369	)
Ending balance	$	7,666		$	6,716

	As of or For the
	Six Months Ended
	June 30,
	2019			2018
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	7,100		$	6,578
Mortgage servicing rights capitalized		1,201			748
Amortization of mortgage servicing rights		(635	)		(610	)
Ending balance	$	7,666		$	6,716

The fair values of these rights were

$8,672,000

and

$8,700,000

at

June 30, 2019

and

December 31, 2018,

respectively. The fair value of servicing rights was determined at loan level using a discount rate of

12.00%

for all investor types. Prepayment speeds ranged from

98.00%

to

255.00%

PSA (Public Securities Association prepayment model) at

June 30, 2019,

depending on the interest rate and term of the specific loan. Prepayment speeds ranged from

83.00%

to

226.00%

PSA at

December 31, 2018.

The weighted average prepayment speed was

166.00%

PSA and

119.00%

PSA at

June 30, 2019

and

December 31, 2018,

respectively. Individual mortgage servicing rights values were capped at a maximum of

1.25%

for all investor types.

XML

Note 7 - Deposits

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Deposit Liabilities Disclosures [Text Block]

NOTE

7

.

DEPOSITS

Deposits are summarized as follows:

	June 30,		December 31,
	2019		2018
	(In Thousands)
Noninterest checking	$	183,116	$	142,788
Interest bearing checking		110,779		105,115
Savings		123,767		108,234
Money market		123,000		108,050
Time certificates of deposit		207,726		162,424
Total	$	748,388	$	626,611

XML

Note 8 - Other Long-term Debt

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Long-term Debt [Text Block]

NOTE

8

.

OTHER L

ONG-TERM

DEBT

Other long-term debt consisted of the following:

	June 30, 2019					December 31, 2018
			Unamortized					Unamortized
			Debt					Debt
	Principal		Issuance			Principal		Issuance
	Amount		Costs			Amount		Costs
	(In Thousands)
Senior notes fixed at 5.75%, due 2022	$	10,000	$	(114	)	$	10,000	$	(136	)
Subordinated debentures fixed at 6.75%, due 2025		10,000		(133	)		10,000		(143	)
Subordinated debentures variable at 3-Month Libor plus 1.42%, due 2035		5,155		-			5,155		-
Total other long-term debt	$	25,155	$	(247	)	$	25,155	$	(279	)

In

February 2017,

the Company completed the issuance, through a private placement, of

$10,000,000

aggregate principal amount of

5.75%

fixed senior unsecured notes due in

2022.

The interest will be paid semi-annually through maturity date. The notes are

not

subject to redemption at the option of the Company.

In

June 2015,

the Company completed the issuance of

$10,000,000

in aggregate principal amount of subordinated notes due in

2025

in a private placement transaction to an institutional accredited investor. The notes will bear interest at an annual fixed rate of

6.75%

and interest will be paid quarterly through maturity date or earlier redemption.

In

September 2005,

the Company completed the private placement of

$5,155,000

in subordinated debentures to the Trust. The Trust funded the purchase of the subordinated debentures through the sale of trust preferred securities to First Tennessee Bank, N.A. with a liquidation value of

$5,155,000.

Using interest payments made by the Company on the debentures, the Trust began paying quarterly dividends to preferred security holders in

December 2005.

The annual percentage rate of the interest payable on the subordinated debentures and distributions payable on the preferred securities was fixed at

6.02%

until

December 2010

then became variable at

3

-Month LIBOR plus

1.42%,

making the rate

3.740%

and

4.228%

as of

June 30, 2019

and

December 31, 2018,

respectively. 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.

For the

three

months ended

June 30, 2019

and

2018,

interest expense on other long-term debt was

$364,000

and

$357,000,

respectively. For the

six

months ended

June 30, 2019

and

2018,

interest expense on other long-term debt was

$729,000

and

$704,000,

respectively.

XML

Note 9 - Earnings Per Share

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

9

.

EARNINGS PER SHARE

Basic earnings per share for the

three

months ended

June 30, 2019

was computed using

6,408,627

weighted average shares outstanding. Basic earnings per share for the

three

months ended

June 30, 2018

was computed using

5,460,452

weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method. The weighted average shares outstanding for the diluted earnings per share calculations was

6,425,015

for the

three

months ended

June 30, 2019

and

5,524,912

for the

three

months ended

June 30, 2018.

There were

no

antidilutive shares for the

three

months ended

June 30, 2019

or

2018.

Basic earnings per share for the

six

months ended

June 30, 2019

was computed using

6,429,362

weighted average shares outstanding. Basic earnings per share for the

six

months ended

June 30, 2018

was computed using

5,386,401

weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method. The weighted average shares outstanding for the diluted earnings per share calculations was

6,446,368

for the

six

months ended

June 30, 2019

and

5,450,861

for the

six

months ended

June 30, 2018.

There were

no

antidilutive shares for the

six

months ended

June 30, 2019

or

2018.

XML

Note 10 - Dividends and Stock Repurchase Program

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

10

.

DIVIDENDS AND STOCK REPURCHASE PROGRAM

For the year ended

December 31, 2018,

Eagle paid dividends of

$0.09

per share for the quarters ended

March 31

and

June 30, 2018.

Eagle paid dividends of

$0.0925

per share for the quarters ended

September 30

and

December 31, 2018.

A dividend of

$0.0925

per share was declared on

January 24, 2019

and paid

March 1, 2019

to shareholders of record on

February 8, 2019.

A dividend of

$0.0925

per share was declared on

April 18, 2019,

payable on

June 7, 2019

to shareholders of record on

May 17, 2019.

A dividend of

$0.095

per share was declared on

July 18, 2019,

payable on

September 6, 2019

to shareholders of record on

August 16, 2019.

On

July 18, 2019,

the Board authorized the repurchase of up to

100,000

shares of its common stock. Under the plan, shares

may

be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations. The plan expires on

July 18, 2020.

On

July 19, 2018,

the Board authorized the repurchase of up to

100,000

shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchased its shares and the timing of such repurchase depended upon market conditions and other corporate considerations.

No

shares were purchased under this plan during the year ended

December 31, 2018.

However, during the

first

quarter of

2019,

42,000

shares were purchased at an average price of

$17.43

per share. In addition,

28,000

shares were purchased during the

second

quarter of

2019

at an average price of

$17.09

per share. The plan expired on

July 19, 2019.

On

July 20, 2017,

the Board authorized the repurchase of up to

100,000

shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions.

No

shares were purchased under this plan. The plan expired on

July 20, 2018.

XML

Note 11 - Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

NOTE

1

1

. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

				Unrealized
	Unrealized			(Losses) Gains
	Gains (Losses)			on Investment
	on Loans			Securities
	Held-for-Sale			Available-for-Sale			Total
				(In Thousands)
Balance, January 1, 2019	$	227		$	(1,338	)	$	(1,111	)
Other comprehensive income, before reclassifications and income taxes		296			1,486			1,782
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(309	)		55			(254	)
Income tax benefit (provision)		4			(407	)		(403	)
Total other comprehensive (loss) income		(9	)		1,134			1,125
Balance, March 31, 2019		218			(204	)		14
Other comprehensive income, before reclassifications and income taxes		-			1,965			1,965
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(296	)		(104	)		(400	)
Income tax (provision) benefit		78			(489	)		(411	)
Total other comprehensive (loss) income		(218	)		1,372			1,154
Balance, June 30, 2019	$	-		$	1,168		$	1,168
Balance, January 1, 2018	$	234		$	79		$	313
Other comprehensive income (loss), before reclassifications and income taxes		262			(2,583	)		(2,321	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(325	)		105			(220	)
Income tax benefit		17			660			677
Total other comprehensive loss		(46	)		(1,818	)		(1,864	)
Balance, March 31, 2018		188			(1,739	)		(1,551	)
Other comprehensive income (loss), before reclassifications and income taxes		402			(216	)		186
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(262	)		(15	)		(277	)
Income tax (provision) benefit		(37	)		60			23
Total other comprehensive income (loss)		103			(171	)		(68	)
Balance, June 30, 2018	$	291		$	(1,910	)	$	(1,619	)

XML

Note 12 - Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE

1

2

.

DERIVATIVES AND HEDGING ACTIVITIES

Interest Rate Lock

and Forward

Commitments

The company enters into mandatory and best efforts interest rate lock commitments to finance mortgage loans. Outstanding loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. The Company also enters into forward commitments to hedge against adverse price or interest rate movements on loan commitments. These commitments are accounted for as free-standing or economic derivatives and are measured at fair value. The derivatives are recorded as either other assets or other liabilities on the consolidated statements of condition and the changes in the fair value of the derivatives are recorded in noninterest income on the consolidated statements of income. A net loss of

$529,000

was recorded in noninterest income for the quarter ended

June 30, 2019.

Derivatives are summarized as follows:

	June 30, 2019						December 31, 2018
	Notional		Fair Value				Notional		Fair Value
	Amount		Asset		Liability		Amount		Asset		Liability
	(In Thousands)
Interest rate lock commitments	$	61,832	$	1,314	$	-	$	18,745	$	-	$	-
Forward sales commitments		60,000		-		1,843		16,000		-		-

XML

Note 13 - Fair Value Disclosures

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

NOTE

1

3

.

FAIR VALUE DISCLOSURES

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 levels are 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 judgement 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, is set forth below.

Available-for-Sale Securities

– Securities classified as available-for-sale are reported at fair value utilizing Level

1

and Level

2

inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that

may

include 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, among other things.

Loans Held-for-Sale

– These loans are reported at fair value. Fair value is determined based on expected proceeds from sales contracts and commitments and are considered Level

2

inputs.

Derivative Instruments 

–The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, 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 the forward sales commitments are considered Level

2

inputs.

Impaired Loans

– Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level

3

inputs based on internally customized discounting criteria.

Real

Estate and Other

Repossessed Assets

– Fair values are valued 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. The appraisals are generally discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and result in Level

3

classification of the inputs for determining fair value. Repossessed assets are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on same or similar factors above.

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.

	June 30, 2019
	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	$	-	$	14,161	$	-	$	14,161
Municipal obligations		-		39,455		-		39,455
Corporate obligations		-		11,372		-		11,372
Mortgage-backed securities		-		13,814		-		13,814
Collateralized mortgage obligations		-		35,168		-		35,168
Asset-backed securities		-		10,095		-		10,095
Loans held-for-sale		-		23,760		-		23,760
Interest rate lock commitments		-		-		1,314		1,314
Financial liabilities:
Forward sales commitments		-		1,843		-		1,843

	December 31, 2018
	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	$	-	$	9,347	$	-	$	9,347
Municipal obligations		-		68,278		-		68,278
Corporate obligations		-		11,119		-		11,119
Mortgage-backed securities		-		19,348		-		19,348
Collateralized mortgage obligations		-		23,875		-		23,875
Asset-backed securities		-		10,198		-		10,198
Loans held-for-sale		-		7,318		-		7,318
Interest rate lock commitments		-		-		-		-
Financial liabilities:
Forward sales commitments		-		-		-		-

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 and real estate and other repossessed assets.

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

	June 30, 2019
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Real estate and other repossessed assets	$	-	$	-	$	-	$	-

	December 31, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Real estate and other repossessed assets	$	-	$	-	$	107	$	107

As of

June 30, 2019,

impaired loans with a carrying value of

$3,629,000

were

not

reduced by specific valuation allowance allocations and therefore resulted in a total reported value of

$3,629,000.

As of

December 31, 2018,

impaired loans with a carrying value of

$2,290,000

were

not

reduced by specific valuation allowance allocations and therefore resulted in a total reported value of

$2,290,000.

The following table represents the Banks’s Level

3

financial assets and liabilities, the valuation techniques used to measure the fair value of those financial assets and liabilities, and the significant unobservable inputs and the ranges of values for those inputs.

	Fair Value at				Principal	Significant	Range of
	June 30,		December 31,		Valuation	Unobservable	Signficant Input
Instrument	2019		2018		Technique	Inputs	Values
(Dollars In Thousands)
Real estate and other repossessed assets	$	-	$	107	Appraisal of collateral	Liquidation expenses		10	-	30%

The tables below summarize the estimated fair values of financial instruments of the Company at

June 30, 2019

and

December 31, 2018,

whether or

not

recognized at fair value on the 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.

	June 30, 2019
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	13,436	$	-	$	-	$	13,436	$	13,436
Federal Home Loan Bank stock		5,384		-		-		5,384		5,384
Federal Reserve Bank stock		2,526		-		-		2,526		2,526
Loans receivable, net		-		-		747,290		747,290		744,684
Accrued interest and dividends receivable		4,903		-		-		4,903		4,903
Mortgage servicing rights		-		-		8,672		8,672		7,666
Financial liabilities:
Non-maturing interest bearing deposits		-		357,546		-		357,546		357,546
Noninterest bearing deposits		183,116		-		-		183,116		183,116
Time certificates of deposit		-		-		207,207		207,207		207,726
Accrued expenses and other liabilities		11,987		-		-		11,987		11,987
Federal Home Loan Bank advances and other borrowings		-		-		106,801		106,801		106,748
Other long-term debt		-		-		24,672		24,672		25,155

	December 31, 2018
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	11,201	$	-	$	-	$	11,201	$	11,201
Federal Home Loan Bank stock		5,011		-		-		5,011		5,011
Federal Reserve Bank stock		2,033		-		-		2,033		2,033
Loans receivable, net		-		-		603,361		603,361		608,043
Accrued interest and dividends receivable		3,479		-		-		3,479		3,479
Mortgage servicing rights		-		-		8,670		8,670		7,100
Financial liabilities:
Non-maturing interest bearing deposits		-		321,399		-		321,399		321,399
Noninterest bearing deposits		142,788		-		-		142,788		142,788
Time certificates of deposit		-		-		160,735		160,735		162,424
Accrued expenses and other liabilities		5,388		-		-		5,388		5,388
Federal Home Loan Bank advances and other borrowings		-		-		101,885		101,885		102,222
Other long-term debt		-		-		24,002		24,002		25,155

The following methods and assumptions were used by the Company in estimating the fair value of the following classes of financial instruments. However, the Form

10

-K for the year ended

December 31, 2018

provides additional description of valuation methodologies used in estimating fair value of these financial instruments.

Cash,

I

nterest

B

earing

A

ccounts,

A

ccrued

I

nterest and

D

ividend

R

eceivable and

A

ccrued

E

xpenses and

O

ther

L

iabilities

– The carrying amounts approximate fair value due to the relatively short period of time between the origination of these instruments and their expected realization.

Stock in the F

HLB of Des Moines

and F

RB

– The fair value of stock approximates redemption value.

Loans

R

eceivable

– Fair values are estimated by stratifying the loan portfolio into groups of loans with similar financial characteristics. Loans are segregated by type such as real estate, commercial, and consumer, with each category further segmented into fixed and adjustable rate interest terms. For mortgage loans, the Company uses the secondary market rates in effect for loans that have similar characteristics. The fair value of other fixed rate loans is calculated by discounting scheduled cash flows through the anticipated maturities adjusted for prepayment estimates. Adjustable interest rate loans are assumed to approximate fair value because they generally reprice within the short term.

Fair values are adjusted for credit risk based on assessment of risk identified with specific loans, and risk adjustments on the remaining portfolio based on credit loss experience.

Mortgage

S

ervicing

R

ights

– the fair value of servicing rights was determined at loan level using a discount rate of

12.00%

for all investor types and prepayment speeds ranging from

98.00%

to

255.00%

PSA (Public Securities Association prepayment model), depending on the interest rate and term of the specific loan. The weighted average prepayment speed was

166.00%

PSA. Individual mortgage servicing rights values were capped at a maximum of

1.25%

for all investor types.

Deposits and Time C

ertificates of

D

eposit

– The fair value of deposits with

no

stated maturity, such as checking, passbook, and money market, is equal to the amount payable on demand. The fair value of time certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar maturities.

Advances from the FHLB

/Other Borrowings

and

Other Long-Term

Deb

t

– The fair value of the Company’s advances and debentures are estimated using discounted cash flow analysis based on the interest rate that would be effective

June 30, 2019

and

December 31, 2018,

respectively if the borrowings repriced according to their stated terms.

XML

Note 14 - Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE

1

4

. RECENT ACCOUNTING PRONOUNCEMENTS

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

Leases (Topic

842

) intended to improve financial reporting regarding leasing transactions. The new standard affects all companies and organizations that lease assets. The standard requires organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases if the lease terms are more than

12

months. The guidance also requires qualitative and quantitative disclosures providing additional information about the amounts recorded in the financial statements. The amendments in this update were effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years and was adopted by the Company in the

first

quarter of

2019.

The adoption of the standard did

not

have a significant impact on our consolidated financial statements. The Company’s operating leases primarily relate to branch locations. We currently lease

six

locations that are full-service branches and

one

mortgage lending branch. The leases expire on various dates through

2028.

As a result of adopting the lease standard on

January 1, 2019,

the Company recorded right of use assets of

$2,374,000

and corresponding lease liabilities. The right of use assets are included in premises and equipment, net and the lease liabilities are included in accrued expenses and other liabilities on the consolidated statement of financial condition.

In

September 2016,

the FASB issued ASU

No.

2016

-

13,

Financial Instruments – Credit Losses (Topic

326

) intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The standard requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The standard also requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the standard amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. 

The amendments in this update are effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. All entities

may

adopt the amendments in this update earlier as of the fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. An entity will apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the

first

reporting period in which the guidance is effective (that is, a modified-retrospective approach). 

The Company believes the amendments in this update will have an impact on the Company’s consolidated financial statements and is working to evaluate the significance of that impact. In that regard, we have established a working group under the direction of our Chief Financial Officer and Chief Credit Officer. The group is composed of individuals from the finance and credit administration areas of the Company. We are currently developing an implementation plan, including assessment of processes, segmentation of the loan portfolio and identifying and adding data fields necessary for analysis. The adoption of this standard is likely to result in an increase in the allowance for loan and lease losses as a result of changing from an “incurred loss” model to an “expected loss” model. While we currently cannot reasonably estimate the impact of adopting this standard, we expect the impact will be influenced by the composition, characteristics and quality of our loan and securities portfolios, as well as the general economic conditions and forecasts as of the adoption date.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

Intangibles – Goodwill and Other (Topic

350

) to amend and simplify current goodwill impairment testing to eliminate Step

2

from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. The guidance will be effective for the Company on

January 1, 2020

and is

not

expected to have a significant impact on the Company’s consolidated financial statements.

In

March 2017,

the FASB issued ASU

No.

2017

-

08,

Receivables–Nonrefundable Fees and Other Costs (Subtopic

310

-

20

) to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. Currently, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The guidance does

not

change the accounting for callable debt securities held at a discount. For public business entities, the guidance is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. The adoption of this standard in the

first

quarter of

2019

did

not

have a significant impact on our consolidated financial statements, as we typically do

not

invest in these types of securities.

XML

Note 2 - Mergers and Acquisitions (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	BMB		TwinCo
	January 1,		January 31,
	2019		2018
	(In Thousands)
Assets acquired:
Cash and cash equivalents	$	6,902	$	5,657
Investment securities		2,096		30,728
Loans		89,204		55,057
Premises and equipment		2,246		1,605
Cash surrender value of life insurance		2,862		-
Other real estate owned		223		135
Core deposit intangible		1,988		1,609
Other assets		1,995		1,258
Total assets acquired	$	107,516	$	96,049
Liabilities assumed:
Deposits	$	92,706	$	82,190
Accrued expenses and other liabilities		1,960		19
Total liabilities assumed	$	94,666	$	82,209
Net assets acquired	$	12,850	$	13,840
Consideration paid:
Cash	$	1	$	9,900
Common stock issued (996,041 shares BMB and 446,774 shares TwinCo)		16,435		9,030
Total consideration paid	$	16,436	$	18,930
Goodwill resulting from acquisition	$	3,586	$	5,090

XML

Note 3 - Investment Securities (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Marketable Securities [Table Text Block]

	June 30, 2019									December 31, 2018
			Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	13,892	$	269	$	-		$	14,161	$	9,333	$	58	$	(44	)	$	9,347
Municipal obligations		38,176		1,285		(6	)		39,455		69,024		244		(990	)		68,278
Corporate obligations		11,393		21		(42	)		11,372		11,411		8		(300	)		11,119
Mortgage-backed securities		13,807		83		(76	)		13,814		19,635		86		(373	)		19,348
Collateralized mortgage obligations		34,988		271		(91	)		35,168		24,229		6		(360	)		23,875
Asset-backed securities		10,224		-		(129	)		10,095		10,350		6		(158	)		10,198
Total	$	122,480	$	1,929	$	(344	)	$	124,065	$	143,982	$	408	$	(2,225	)	$	142,165

Schedule of Realized Gain (Loss) [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	49,357		$	19,086		$	53,257		$	45,080
Gross realized gain on sale of available-for-sale securities	$	538		$	191		$	549		$	191
Gross realized loss on sale of available-for-sale securities		(434	)		(176	)		(500	)		(281	)
Net realized gain (loss) on sale of available-for-sale securities	$	104		$	15		$	49		$	(90	)

Investments Classified by Contractual Maturity Date [Table Text Block]

	June 30, 2019
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	9,635	$	9,643
Due from one to five years		13,048		13,079
Due from five to ten years		8,709		9,047
Due after ten years		42,293		43,314
		73,685		75,083
Mortgage-backed securities		13,807		13,814
Collateralized mortgage obligations		34,988		35,168
Total	$	122,480	$	124,065

Schedule of Unrealized Loss on Investments [Table Text Block]

	June 30, 2019
	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	$	-	$	-		$	-	$	-
Municipal obligations		-		-			1,401		(6	)
Corporate obligations		4,864		(19	)		4,041		(23	)
Mortgage-backed securities and collateralized mortgage obligations		-		-			11,697		(167	)
Asset-backed securities		982		(52	)		5,231		(77	)
Total	$	5,846	$	(71	)	$	22,370	$	(273	)

	December 31, 2018
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
U.S. government and agency	$	-	$	-		$	3,385	$	(44	)
Municipal obligations		17,887		(140	)		32,712		(850	)
Corporate obligations		2,890		(110	)		7,220		(190	)
Mortgage-backed securities and collateralized mortgage obligations		5,575		(98	)		22,559		(635	)
Asset-backed securities		8,200		(158	)		-		-
Total	$	34,552	$	(506	)	$	65,876	$	(1,719	)

XML

Note 4 - Loans Receivable (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	June 30,			December 31,
	2019			2018
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	145,148		$	144,107
Commercial real estate		412,690			328,438
Other loans:
Home equity		55,582			52,159
Consumer		19,181			16,565
Commercial		121,048			76,762
Total		753,649			618,031
Deferred loan fees, net		(1,215	)		(1,098	)
Allowance for loan losses		(7,750	)		(6,600	)
Total loans, net	$	744,684		$	610,333

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	Residential		Commercial			Home
	1-4 Family		Real Estate			Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, April 1, 2019	$	1,301	$	3,923		$	477		$	197		$	1,202		$	7,100
Charge-offs		-		-			(75	)		(4	)		(2	)		(81	)
Recoveries		-		3			-			9			22			34
Provision		-		350			75			22			250			697
Ending balance, June 30, 2019	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Allowance for loan losses:
Beginning balance, January 1, 2019	$	1,301	$	3,593		$	477		$	190		$	1,039		$	6,600
Charge-offs		-		(20	)		(75	)		(13	)		(97	)		(205	)
Recoveries		-		9			-			15			30			54
Provision		-		694			75			32			500			1,301
Ending balance, June 30, 2019	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Ending balance, June 30, 2019 allocated to loans individually evaluated for impairment	$	-	$	-		$	-		$	-		$	-		$	-
Ending balance, June 30, 2019 allocated to loans collectively evaluated for impairment	$	1,301	$	4,276		$	477		$	224		$	1,472		$	7,750
Loans receivable:
Ending balance, June 30, 2019	$	145,148	$	412,690		$	55,582		$	19,181		$	121,048		$	753,649
Ending balance, June 30, 2019 of loans individually evaluated for impairment	$	680	$	1,156		$	199		$	132		$	1,462		$	3,629
Ending balance, June 30, 2019 of loans collectively evaluated for impairment	$	144,468	$	411,534		$	55,383		$	19,049		$	119,586		$	750,020

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, April 1, 2018	$	1,301	$	3,202	$	427		$	200		$	1,000		$	6,130
Charge-offs		-		-		-			(23	)		(1	)		(24	)
Recoveries		-		4		-			8			8			20
Provision		-		24		-			-			-			24
Ending balance, June 30, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Allowance for loan losses:
Beginning balance, January 1, 2018	$	1,301	$	2,778	$	506		$	225		$	940		$	5,750
Charge-offs		-		-		(80	)		(50	)		(24	)		(154	)
Recoveries		-		7		1			10			10			28
Provision		-		445		-			-			81			526
Ending balance, June 30, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Ending balance, June 30, 2018 allocated to loans individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-		$	-
Ending balance, June 30, 2018 allocated to loans collectively evaluated for impairment	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Loans receivable:
Ending balance, June 30, 2018	$	143,323	$	281,525	$	53,178		$	16,635		$	88,096		$	582,757
Ending balance, June 30, 2018 of loans individually evaluated for impairment	$	573	$	527	$	207		$	101		$	92		$	1,500
Ending balance, June 30, 2018 of loans collectively evaluated for impairment	$	142,750	$	280,998	$	52,971		$	16,534		$	88,004		$	581,257

Financing Receivable Credit Quality Indicators [Table Text Block]

	June 30, 2019
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	113,896	$	-	$	1,002	$	-	$	-	$	114,898
Residential 1-4 family construction		29,913		-		337		-		-		30,250
Commercial real estate		312,340		1,676		2,596		-		-		316,612
Commercial construction and development		50,027		-		-		-		-		50,027
Farmland		45,821		-		172		58		-		46,051
Other loans:
Home equity		55,383		-		199		-		-		55,582
Consumer		19,010		-		171		-		-		19,181
Commercial		72,341		796		808		63		-		74,008
Agricultural		45,707		73		573		687		-		47,040
Total	$	744,438	$	2,545	$	5,858	$	808	$	-	$	753,649

	December 31, 2018
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	116,065	$	-	$	874	$	-	$	-	$	116,939
Residential 1-4 family construction		26,533		-		635		-		-		27,168
Commercial real estate		252,731		1,731		2,322		-		-		256,784
Commercial construction and development		41,726		-		13		-		-		41,739
Farmland		29,915		-		-		-		-		29,915
Other loans:
Home equity		51,668		-		491		-		-		52,159
Consumer		16,394		-		171		-		-		16,565
Commercial		57,778		950		244		81		-		59,053
Agricultural		17,305		-		404		-		-		17,709
Total	$	610,115	$	2,681	$	5,154	$	81	$	-	$	618,031

Financing Receivable, Past Due [Table Text Block]

	June 30, 2019
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	542	$	50	$	592	$	343	$	113,963	$	114,898
Residential 1-4 family construction		126		-		126		337		29,787		30,250
Commercial real estate		170		-		170		680		315,762		316,612
Commercial construction and development		112		-		112		-		49,915		50,027
Farmland		33		-		33		476		45,542		46,051
Other loans:
Home equity		261		-		261		199		55,122		55,582
Consumer		179		-		179		132		18,870		19,181
Commercial		272		76		348		743		72,917		74,008
Agricultural		67		-		67		719		46,254		47,040
Total	$	1,762	$	126	$	1,888	$	3,629	$	748,132	$	753,649

	December 31, 2018
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	381	$	130	$	511	$	253	$	116,175	$	116,939
Residential 1-4 family construction		118		-		118		634		26,416		27,168
Commercial real estate		975		1,347		2,322		432		254,030		256,784
Commercial construction and development		9		-		9		13		41,717		41,739
Farmland		-		-		-		-		29,915		29,915
Other loans:
Home equity		39		-		39		491		51,629		52,159
Consumer		135		-		135		127		16,303		16,565
Commercial		284		-		284		308		58,461		59,053
Agricultural		91		-		91		32		17,586		17,709
Total	$	2,032	$	1,477	$	3,509	$	2,290	$	612,232	$	618,031

Impaired Financing Receivables [Table Text Block]

	June 30, 2019
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	343	$	373	$	-
Residential 1-4 family construction		337		387		-
Commercial real estate		680		824		-
Commercial construction and development		-		-		-
Farmland		476		513		-
Other loans:
Home equity		199		225		-
Consumer		132		143		-
Commercial		743		854		-
Agricultural		719		768		-
Total	$	3,629	$	4,087	$	-

	December 31, 2018
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
Real estate loans:
Residential 1-4 family	$	253	$	277	$	-
Residential 1-4 family construction		634		684		-
Commercial real estate		432		527		-
Commercial construction and development		13		26		-
Farmland		-		-		-
Other loans:
Home equity		491		522		-
Consumer		127		181		-
Commercial		308		310		-
Agricultural		32		32		-
Total	$	2,290	$	2,559	$	-

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	Average Recorded Investment
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	346	$	553	$	298	$	356
Residential 1-4 family construction		486		396		485		168
Commercial real estate		614		1,026		556		264
Commercial construction and development		-		-		7		-
Farmland		584		-		238		-
Other loans:
Home equity		316		224		345		225
Consumer		130		105		130		127
Commercial		781		127		525		99
Agricultural		822		-		376		-
Total	$	4,079	$	2,431	$	2,960	$	1,239

XML

Note 6 - Mortgage Servicing Rights (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Activities in Mortgage Servicing Rights [Table Text Block]

	As of or For the
	Three Months Ended
	June 30,
	2019			2018
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	7,318		$	6,613
Mortgage servicing rights capitalized		736			472
Amortization of mortgage servicing rights		(388	)		(369	)
Ending balance	$	7,666		$	6,716

	As of or For the
	Six Months Ended
	June 30,
	2019			2018
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	7,100		$	6,578
Mortgage servicing rights capitalized		1,201			748
Amortization of mortgage servicing rights		(635	)		(610	)
Ending balance	$	7,666		$	6,716

XML

Note 7 - Deposits (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Deposit Liabilities, Type [Table Text Block]

	June 30,		December 31,
	2019		2018
	(In Thousands)
Noninterest checking	$	183,116	$	142,788
Interest bearing checking		110,779		105,115
Savings		123,767		108,234
Money market		123,000		108,050
Time certificates of deposit		207,726		162,424
Total	$	748,388	$	626,611

XML

Note 8 - Other Long-term Debt (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	June 30, 2019					December 31, 2018
			Unamortized					Unamortized
			Debt					Debt
	Principal		Issuance			Principal		Issuance
	Amount		Costs			Amount		Costs
	(In Thousands)
Senior notes fixed at 5.75%, due 2022	$	10,000	$	(114	)	$	10,000	$	(136	)
Subordinated debentures fixed at 6.75%, due 2025		10,000		(133	)		10,000		(143	)
Subordinated debentures variable at 3-Month Libor plus 1.42%, due 2035		5,155		-			5,155		-
Total other long-term debt	$	25,155	$	(247	)	$	25,155	$	(279	)

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Note 11 - Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

				Unrealized
	Unrealized			(Losses) Gains
	Gains (Losses)			on Investment
	on Loans			Securities
	Held-for-Sale			Available-for-Sale			Total
				(In Thousands)
Balance, January 1, 2019	$	227		$	(1,338	)	$	(1,111	)
Other comprehensive income, before reclassifications and income taxes		296			1,486			1,782
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(309	)		55			(254	)
Income tax benefit (provision)		4			(407	)		(403	)
Total other comprehensive (loss) income		(9	)		1,134			1,125
Balance, March 31, 2019		218			(204	)		14
Other comprehensive income, before reclassifications and income taxes		-			1,965			1,965
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(296	)		(104	)		(400	)
Income tax (provision) benefit		78			(489	)		(411	)
Total other comprehensive (loss) income		(218	)		1,372			1,154
Balance, June 30, 2019	$	-		$	1,168		$	1,168
Balance, January 1, 2018	$	234		$	79		$	313
Other comprehensive income (loss), before reclassifications and income taxes		262			(2,583	)		(2,321	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(325	)		105			(220	)
Income tax benefit		17			660			677
Total other comprehensive loss		(46	)		(1,818	)		(1,864	)
Balance, March 31, 2018		188			(1,739	)		(1,551	)
Other comprehensive income (loss), before reclassifications and income taxes		402			(216	)		186
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(262	)		(15	)		(277	)
Income tax (provision) benefit		(37	)		60			23
Total other comprehensive income (loss)		103			(171	)		(68	)
Balance, June 30, 2018	$	291		$	(1,910	)	$	(1,619	)

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Note 12 - Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Derivative Instruments [Table Text Block]

	June 30, 2019						December 31, 2018
	Notional		Fair Value				Notional		Fair Value
	Amount		Asset		Liability		Amount		Asset		Liability
	(In Thousands)
Interest rate lock commitments	$	61,832	$	1,314	$	-	$	18,745	$	-	$	-
Forward sales commitments		60,000		-		1,843		16,000		-		-

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Note 13 - Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	June 30, 2019
	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	$	-	$	14,161	$	-	$	14,161
Municipal obligations		-		39,455		-		39,455
Corporate obligations		-		11,372		-		11,372
Mortgage-backed securities		-		13,814		-		13,814
Collateralized mortgage obligations		-		35,168		-		35,168
Asset-backed securities		-		10,095		-		10,095
Loans held-for-sale		-		23,760		-		23,760
Interest rate lock commitments		-		-		1,314		1,314
Financial liabilities:
Forward sales commitments		-		1,843		-		1,843

	December 31, 2018
	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	$	-	$	9,347	$	-	$	9,347
Municipal obligations		-		68,278		-		68,278
Corporate obligations		-		11,119		-		11,119
Mortgage-backed securities		-		19,348		-		19,348
Collateralized mortgage obligations		-		23,875		-		23,875
Asset-backed securities		-		10,198		-		10,198
Loans held-for-sale		-		7,318		-		7,318
Interest rate lock commitments		-		-		-		-
Financial liabilities:
Forward sales commitments		-		-		-		-

Fair Value Measurements, Nonrecurring [Table Text Block]

	June 30, 2019
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Real estate and other repossessed assets	$	-	$	-	$	-	$	-

	December 31, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Real estate and other repossessed assets	$	-	$	-	$	107	$	107

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

	Fair Value at				Principal	Significant	Range of
	June 30,		December 31,		Valuation	Unobservable	Signficant Input
Instrument	2019		2018		Technique	Inputs	Values
(Dollars In Thousands)
Real estate and other repossessed assets	$	-	$	107	Appraisal of collateral	Liquidation expenses		10	-	30%

Fair Value, by Balance Sheet Grouping [Table Text Block]

	June 30, 2019
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	13,436	$	-	$	-	$	13,436	$	13,436
Federal Home Loan Bank stock		5,384		-		-		5,384		5,384
Federal Reserve Bank stock		2,526		-		-		2,526		2,526
Loans receivable, net		-		-		747,290		747,290		744,684
Accrued interest and dividends receivable		4,903		-		-		4,903		4,903
Mortgage servicing rights		-		-		8,672		8,672		7,666
Financial liabilities:
Non-maturing interest bearing deposits		-		357,546		-		357,546		357,546
Noninterest bearing deposits		183,116		-		-		183,116		183,116
Time certificates of deposit		-		-		207,207		207,207		207,726
Accrued expenses and other liabilities		11,987		-		-		11,987		11,987
Federal Home Loan Bank advances and other borrowings		-		-		106,801		106,801		106,748
Other long-term debt		-		-		24,672		24,672		25,155

	December 31, 2018
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	11,201	$	-	$	-	$	11,201	$	11,201
Federal Home Loan Bank stock		5,011		-		-		5,011		5,011
Federal Reserve Bank stock		2,033		-		-		2,033		2,033
Loans receivable, net		-		-		603,361		603,361		608,043
Accrued interest and dividends receivable		3,479		-		-		3,479		3,479
Mortgage servicing rights		-		-		8,670		8,670		7,100
Financial liabilities:
Non-maturing interest bearing deposits		-		321,399		-		321,399		321,399
Noninterest bearing deposits		142,788		-		-		142,788		142,788
Time certificates of deposit		-		-		160,735		160,735		162,424
Accrued expenses and other liabilities		5,388		-		-		5,388		5,388
Federal Home Loan Bank advances and other borrowings		-		-		101,885		101,885		102,222
Other long-term debt		-		-		24,002		24,002		25,155

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Note 1 - Basis of Presentation (Details Textual)	Jun. 30, 2019	Jan. 01, 2019
Big Muddy Bancorp Acquisition [Member]
Business Acquisition, Percentage of Voting Interests Acquired		100.00%
Opportunity Bank of Montana [Member]
Noncontrolling Interest, Ownership Percentage by Parent	100.00%

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Note 2 - Mergers and Acquisitions (Details Textual)			3 Months Ended			6 Months Ended		12 Months Ended
	Jan. 01, 2019 USD ($)	Jan. 31, 2018 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Finite-Lived Intangible Assets, Net, Ending Balance			$ 3,136,000			$ 3,136,000		$ 1,498,000
Business Combination, Acquisition Related Costs			5,000		$ 131,000	$ 1,176,000	$ 365,000
Core Deposits [Member]
Finite-Lived Intangible Asset, Useful Life						10 years
Big Muddy Bancorp Acquisition [Member]
Business Combination, Consideration Transferred, Total	$ 16,436,000
Payments to Acquire Businesses, Gross	1,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 16,435,000
Business Acquisition, Percentage of Voting Interests Acquired	100.00%
Business Combination, Acquired Loans Discount	$ 2,813,000		1,904,000			$ 1,904,000
Business Combination, Accretion of Loan Discount						909,000
Business Acquisition, Impairment Loans	$ 556,000					395,000
Business Combination, Acquisition Related Costs			5,000	$ 1,171,000				804,000
Big Muddy Bancorp Acquisition [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets, Net, Ending Balance			1,988,000			1,988,000
TwinCo Acquisition [Member]
Business Combination, Consideration Transferred, Total		$ 18,930,000
Payments to Acquire Businesses, Gross		9,900,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable		$ 9,030,000
Business Acquisition, Percentage of Voting Interests Acquired		100.00%
Business Combination, Acquired Loans Discount		$ 1,834,000	1,096,000			1,096,000
Business Combination, Accretion of Loan Discount						149,000		589,000
Business Acquisition, Impairment Loans		$ 1,188,000				1,161,000
Business Combination, Acquisition Related Costs						1,041,000		$ 365,000
TwinCo Acquisition [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets, Net, Ending Balance			$ 1,609,000			$ 1,609,000
SBOT [Member] | Townsend, Dutton, Denton and Choteau, Montana [Member]
Number of Bank Branches	4
Ruby Valley Bank [Member] | Madison County, Montana [Member]
Number of Bank Branches		2

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Note 2 - Mergers and Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($)	Jan. 01, 2019	Jan. 31, 2018	Jun. 30, 2019	Dec. 31, 2018
Goodwill			$ 15,710,000	$ 12,124,000
Big Muddy Bancorp Acquisition [Member]
Cash and cash equivalents	$ 6,902,000
Investment securities	2,096,000
Loans	89,204,000
Premises and equipment	2,246,000
Cash surrender value of life insurance	2,862,000
Other real estate owned	223,000
Core deposit intangible	1,988,000
Other assets	1,995,000
Total assets acquired	107,516,000
Deposits	92,706,000
Accrued expenses and other liabilities	1,960,000
Total liabilities assumed	94,666,000
Net assets acquired	12,850,000
Cash	1,000
Common stock issued (996,041 shares BMB and 446,774 shares TwinCo)	16,435,000
Total consideration paid	16,436,000
Goodwill	$ 3,586,000
TwinCo Acquisition [Member]
Cash and cash equivalents		$ 5,657,000
Investment securities		30,728,000
Loans		55,057,000
Premises and equipment		1,605,000
Cash surrender value of life insurance
Other real estate owned		135,000
Core deposit intangible		1,609,000
Other assets		1,258,000
Total assets acquired		96,049,000
Deposits		82,190,000
Accrued expenses and other liabilities		19,000
Total liabilities assumed		82,209,000
Net assets acquired		13,840,000
Cash		9,900,000
Common stock issued (996,041 shares BMB and 446,774 shares TwinCo)		9,030,000
Total consideration paid		18,930,000
Goodwill		$ 5,090,000

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Note 2 - Mergers and Acquisitions - Assets Acquired and Liabilities Assumed (Details) (Parentheticals) - shares	Jan. 01, 2019	Jan. 31, 2018
Big Muddy Bancorp Acquisition [Member]
Common stock issued, shares (in shares)	996,041
TwinCo Acquisition [Member]
Common stock issued, shares (in shares)		446,774

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Note 3 - Investment Securities (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Pledged Financial Instruments, Not Separately Reported, Securities, Total	$ 18,796,000		$ 21,408,000
Other-than-temporary Impairment Loss, Debt Securities, Available-for-sale, Total	$ 0	$ 0
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	24		108
US Government Agencies Debt Securities [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	3		74
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	0.43%		1.88%
Corporate Debt Securities [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	5		11
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	0.47%		2.88%
Mortgage-backed Securities and Collateralized Mortgage Obligations [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	11		19
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	1.41%		2.54%
Expected Credit Loss on Securities	$ 0
Asset-backed Securities [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	5		4
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	2.03%		1.89%
Expected Credit Loss on Securities	$ 0

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Note 3 - Investment Securities - Summary of Investment Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Securities available-for-sale, amortized cost	$ 122,480	$ 143,982
Securities available-for-sale, gross unrealized gains	1,929	408
Securities available-for-sale, gross unrealized losses	(344)	(2,225)
Securities available-for-sale, at fair value	124,065	142,165
US Government Agencies Debt Securities [Member]
Securities available-for-sale, amortized cost	13,892	9,333
Securities available-for-sale, gross unrealized gains	269	58
Securities available-for-sale, gross unrealized losses		(44)
Securities available-for-sale, at fair value	14,161	9,347
US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale, amortized cost	38,176	69,024
Securities available-for-sale, gross unrealized gains	1,285	244
Securities available-for-sale, gross unrealized losses	(6)	(990)
Securities available-for-sale, at fair value	39,455	68,278
Corporate Debt Securities [Member]
Securities available-for-sale, amortized cost	11,393	11,411
Securities available-for-sale, gross unrealized gains	21	8
Securities available-for-sale, gross unrealized losses	(42)	(300)
Securities available-for-sale, at fair value	11,372	11,119
Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale, amortized cost	13,807	19,635
Securities available-for-sale, gross unrealized gains	83	86
Securities available-for-sale, gross unrealized losses	(76)	(373)
Securities available-for-sale, at fair value	13,814	19,348
Collateralized Mortgage Obligations [Member]
Securities available-for-sale, amortized cost	34,988	24,229
Securities available-for-sale, gross unrealized gains	271	6
Securities available-for-sale, gross unrealized losses	(91)	(360)
Securities available-for-sale, at fair value	35,168	23,875
Asset-backed Securities [Member]
Securities available-for-sale, amortized cost	10,224	10,350
Securities available-for-sale, gross unrealized gains		6
Securities available-for-sale, gross unrealized losses	(129)	(158)
Securities available-for-sale, at fair value	$ 10,095	$ 10,198

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Note 3 - Investment Securities - Proceeds From Sale of Available-for-sale Securities and the Associated Gross Realized Gains and Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Proceeds from sale of available-for-sale securities	$ 49,357	$ 19,086	$ 53,257	$ 45,080
Gross realized gain on sale of available-for-sale securities	538	191	549	191
Gross realized loss on sale of available-for-sale securities	(434)	(176)	(500)	(281)
Net realized gain (loss) on sale of available-for-sale securities	$ 104	$ 15	$ 49	$ (90)

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Note 3 - Investment Securities - Amortized Cost and Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Available for sale securities, due in one year or less, amortized cost	$ 9,635
Available for sale securities, due in one year or less, fair value	9,643
Available for sale securities, due from one to five years, amortized cost	13,048
Available for sale securities, due from one to five years, fair value	13,079
Available for sale securities, due from five to ten years, amortized cost	8,709
Available for sale securities, due from five to ten years, fair value	9,047
Available for sale securities, due after ten years, amortized cost	42,293
Available for sale securities, due after ten years, fair value	43,314
Total available for sale securities debt maturities, amortized cost	73,685
Total available for sale securities, debt maturities, fair value	75,083
Securities available-for-sale, amortized cost	122,480	$ 143,982
Securities available-for-sale, at fair value	124,065	142,165
Collateralized Mortgage Backed Securities [Member]
Available for sale securities, without single maturity, amortized cost	13,807
Available for sale securities, without single maturity, fair value	13,814
Securities available-for-sale, amortized cost	13,807	19,635
Securities available-for-sale, at fair value	13,814	19,348
Collateralized Mortgage Obligations [Member]
Available for sale securities, without single maturity, amortized cost	34,988
Available for sale securities, without single maturity, fair value	35,168
Securities available-for-sale, amortized cost	34,988	24,229
Securities available-for-sale, at fair value	$ 35,168	$ 23,875

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Note 3 - Investment Securities - Investment Securities in a Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	$ 5,846	$ 34,552
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(71)	(506)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	22,370	65,876
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(273)	(1,719)
US Government Corporations and Agencies Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value		3,385
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses		(44)
US States and Political Subdivisions Debt Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value		17,887
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses		(140)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	1,401	32,712
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(6)	(850)
Corporate Debt Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	4,864	2,890
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(19)	(110)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	4,041	7,220
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(23)	(190)
Mortgage-backed Securities and Collateralized Mortgage Obligations [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value		5,575
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses		(98)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	11,697	22,559
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(167)	(635)
Asset-backed Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	982	8,200
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(52)	(158)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	5,231
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	$ (77)

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Note 4 - Loans Receivable (Details Textual) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Loans and Leases Receivable, Gross, Total	$ 753,649,000	$ 618,031,000	$ 582,757,000
Commercial Real Estate Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	412,690,000	328,438,000	281,525,000
Commercial Real Estate Portfolio Segment [Member] | United States Department of Agriculture Rural Development [Member]
Loans and Leases Receivable, Gross, Total	12,136,000	12,476,000
Loans and Leases Receivable, Gross, Carrying Amount, Covered	5,414,000	2,575,000
Commercial Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	121,048,000	76,762,000	$ 88,096,000
Commercial Portfolio Segment [Member] | United States Department of Agriculture Rural Development [Member]
Loans and Leases Receivable, Gross, Carrying Amount, Covered	$ 1,804,000	$ 1,303,000

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Note 4 - Loans Receivable - Summary of Loans Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Loans receivable	$ 753,649		$ 618,031	$ 582,757
Deferred loan fees, net	(1,215)		(1,098)
Allowance for loan losses	(7,750)	$ (7,100)	(6,600)	(6,150)	$ (6,130)	$ (5,750)
Total loans, net	744,684		610,333
Residential Portfolio Segment [Member]
Loans receivable	145,148		144,107	143,323
Allowance for loan losses	(1,301)	(1,301)	(1,301)	(1,301)	(1,301)	(1,301)
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	412,690		328,438	281,525
Allowance for loan losses	(4,276)	(3,923)	(3,593)	(3,230)	(3,202)	(2,778)
Home Equity Portfolio Segment [Member]
Loans receivable	55,582		52,159	53,178
Allowance for loan losses	(477)	(477)	(477)	(427)	(427)	(506)
Consumer Portfolio Segment [Member]
Loans receivable	19,181		16,565	16,635
Allowance for loan losses	(224)	(197)	(190)	(185)	(200)	(225)
Commercial Portfolio Segment [Member]
Loans receivable	121,048		76,762	88,096
Allowance for loan losses	$ (1,472)	$ (1,202)	$ (1,039)	$ (1,007)	$ (1,000)	$ (940)

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Note 4 - Loans Receivable - Allowance for Loan Losses Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Allowance for loan losses, beginning balance	$ 7,100	$ 6,130	$ 6,600	$ 5,750
Charge-offs	(81)	(24)	(205)	(154)
Recoveries	34	20	54	28
Provision	697	24	1,301	526
Allowance for loan losses, ending balance	7,750	6,150	7,750	6,150
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	7,750	6,150	7,750	6,150
Loans receivable	753,649	582,757	753,649	582,757	$ 618,031
Loans receivable, ending balance, loans individually evaluated for impairment	3,629	1,500	3,629	1,500
Loans receivable, ending balance, loans collectively evaluated for impairment	750,020	581,257	750,020	581,257
Residential Portfolio Segment [Member]
Allowance for loan losses, beginning balance	1,301	1,301	1,301	1,301
Charge-offs	0	0
Recoveries	0	0
Provision	0
Allowance for loan losses, ending balance	1,301	1,301	1,301	1,301
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	1,301	1,301	1,301	1,301
Loans receivable	145,148	143,323	145,148	143,323	144,107
Loans receivable, ending balance, loans individually evaluated for impairment	680	573	680	573
Loans receivable, ending balance, loans collectively evaluated for impairment	144,468	142,750	144,468	142,750
Commercial Real Estate Portfolio Segment [Member]
Allowance for loan losses, beginning balance	3,923	3,202	3,593	2,778
Charge-offs		0	(20)
Recoveries	3	4	9	7
Provision	350	24	694	445
Allowance for loan losses, ending balance	4,276	3,230	4,276	3,230
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	4,276	3,230	4,276	3,230
Loans receivable	412,690	281,525	412,690	281,525	328,438
Loans receivable, ending balance, loans individually evaluated for impairment	1,156	527	1,156	527
Loans receivable, ending balance, loans collectively evaluated for impairment	411,534	280,998	411,534	280,998
Home Equity Portfolio Segment [Member]
Allowance for loan losses, beginning balance	477	427	477	506
Charge-offs	(75)		(75)	(80)
Recoveries				1
Provision	75		75
Allowance for loan losses, ending balance	477	427	477	427
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	477	427	477	427
Loans receivable	55,582	53,178	55,582	53,178	52,159
Loans receivable, ending balance, loans individually evaluated for impairment	199	207	199	207
Loans receivable, ending balance, loans collectively evaluated for impairment	55,383	52,971	55,383	52,971
Consumer Portfolio Segment [Member]
Allowance for loan losses, beginning balance	197	200	190	225
Charge-offs	(4)	(23)	(13)	(50)
Recoveries	9	8	15	10
Provision	22		32
Allowance for loan losses, ending balance	224	185	224	185
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	224	185	224	185
Loans receivable	19,181	16,635	19,181	16,635	16,565
Loans receivable, ending balance, loans individually evaluated for impairment	132	101	132	101
Loans receivable, ending balance, loans collectively evaluated for impairment	19,049	16,534	19,049	16,534
Commercial Portfolio Segment [Member]
Allowance for loan losses, beginning balance	1,202	1,000	1,039	940
Charge-offs	(2)	(1)	(97)	(24)
Recoveries	22	8	30	10
Provision	250		500	81
Allowance for loan losses, ending balance	1,472	1,007	1,472	1,007
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	1,472	1,007	1,472	1,007
Loans receivable	121,048	88,096	121,048	88,096	$ 76,762
Loans receivable, ending balance, loans individually evaluated for impairment	1,462	92	1,462	92
Loans receivable, ending balance, loans collectively evaluated for impairment	$ 119,586	$ 88,004	$ 119,586	$ 88,004

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Note 4 - Loans Receivable - Internal Classification of the Loan Portfolio (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Loans receivable	$ 753,649	$ 618,031	$ 582,757
Residential Portfolio Segment [Member]
Loans receivable	145,148	144,107	143,323
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	114,898	116,939
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	30,250	27,168
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	412,690	328,438	281,525
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	316,612	256,784
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	50,027	41,739
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	46,051	29,915
Home Equity Portfolio Segment [Member]
Loans receivable	55,582	52,159	53,178
Consumer Portfolio Segment [Member]
Loans receivable	19,181	16,565	16,635
Commercial Portfolio Segment [Member]
Loans receivable	121,048	76,762	$ 88,096
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	74,008	59,053
Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	47,040	17,709
Pass [Member]
Loans receivable	744,438	610,115
Pass [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	113,896	116,065
Pass [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	29,913	26,533
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	312,340	252,731
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	50,027	41,726
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	45,821	29,915
Pass [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	55,383	51,668
Pass [Member] | Consumer Portfolio Segment [Member]
Loans receivable	19,010	16,394
Pass [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	72,341	57,778
Pass [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	45,707	17,305
Special Mention [Member]
Loans receivable	2,545	2,681
Special Mention [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	0	0
Special Mention [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	0	0
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	1,676	1,731
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	0	0
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	0	0
Special Mention [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	0	0
Special Mention [Member] | Consumer Portfolio Segment [Member]
Loans receivable	0	0
Special Mention [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	796	950
Special Mention [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	73	0
Substandard [Member]
Loans receivable	5,858	5,154
Substandard [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	1,002	874
Substandard [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	337	635
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	2,596	2,322
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable		13
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	172	0
Substandard [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	199	491
Substandard [Member] | Consumer Portfolio Segment [Member]
Loans receivable	171	171
Substandard [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	808	244
Substandard [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	573	404
Doubtful [Member]
Loans receivable	808	81
Doubtful [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	0	0
Doubtful [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	58	0
Doubtful [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	0	0
Doubtful [Member] | Consumer Portfolio Segment [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	63	81
Doubtful [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	687	0
Unlikely to be Collected Financing Receivable [Member]
Loans receivable	0
Unlikely to be Collected Financing Receivable [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Consumer Portfolio Segment [Member]
Loans receivable	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	$ 0	$ 0

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Note 4 - Loans Receivable - Delinquencies Within the Loan Portfolio (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Past due	$ 1,888	$ 3,509
Non-accrual Loans	3,629	2,290
Current Loans	748,132	612,232
Loans receivable	753,649	618,031	$ 582,757
Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	1,762	2,032
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due	126	1,477
Residential Portfolio Segment [Member]
Loans receivable	145,148	144,107	143,323
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Past due	592	511
Non-accrual Loans	343	253
Current Loans	113,963	116,175
Loans receivable	114,898	116,939
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	542	381
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due	50	130
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Past due	126	118
Non-accrual Loans	337	634
Current Loans	29,787	26,416
Loans receivable	30,250	27,168
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	126	118
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	412,690	328,438	281,525
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Past due	170	2,322
Non-accrual Loans	680	432
Current Loans	315,762	254,030
Loans receivable	316,612	256,784
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	170	975
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due		1,347
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Past due	112	9
Non-accrual Loans		13
Current Loans	49,915	41,717
Loans receivable	50,027	41,739
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	112	9
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Past due	33
Non-accrual Loans	476
Current Loans	45,542	29,915
Loans receivable	46,051	29,915
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	33
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due
Home Equity Portfolio Segment [Member]
Past due	261	39
Non-accrual Loans	199	491
Current Loans	55,122	51,629
Loans receivable	55,582	52,159	53,178
Home Equity Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	261	39
Home Equity Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due
Consumer Portfolio Segment [Member]
Past due	179	135
Non-accrual Loans	132	127
Current Loans	18,870	16,303
Loans receivable	19,181	16,565	16,635
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	179	135
Consumer Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due
Commercial Portfolio Segment [Member]
Loans receivable	121,048	76,762	$ 88,096
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Past due	348	284
Non-accrual Loans	743	308
Current Loans	72,917	58,461
Loans receivable	74,008	59,053
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	272	284
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due	76	0
Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Past due	67	91
Non-accrual Loans	719	32
Current Loans	46,254	17,586
Loans receivable	47,040	17,709
Commercial Portfolio Segment [Member] | Agricultural Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	67	91
Commercial Portfolio Segment [Member] | Agricultural Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Past due

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Note 4 - Loans Receivable - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Recorded investment	$ 3,629		$ 3,629		$ 2,290
Unpaid principal balance	4,087		4,087		2,559
Related allowance	0		0
Average recorded investment	4,079	$ 2,431	2,960	$ 1,239
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Recorded investment, with no related allowance	343		343		253
Unpaid principal balance, with no related allowance	373		373		277
Average recorded investment	346	553	298	356
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Recorded investment, with no related allowance	337		337		634
Unpaid principal balance, with no related allowance	387		387		684
Average recorded investment	486	396	485	168
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Recorded investment, with no related allowance	680		680		432
Unpaid principal balance, with no related allowance	824		824		527
Average recorded investment	614	1,026	556	264
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Recorded investment, with no related allowance	0		0		13
Unpaid principal balance, with no related allowance	0		0		26
Average recorded investment			7
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Recorded investment, with no related allowance	476		476		0
Unpaid principal balance, with no related allowance	513		513		0
Average recorded investment	584		238
Home Equity Portfolio Segment [Member]
Recorded investment, with no related allowance	199		199		491
Unpaid principal balance, with no related allowance	225		225		522
Average recorded investment	316	224	345	225
Consumer Portfolio Segment [Member]
Recorded investment, with no related allowance	132		132		127
Unpaid principal balance, with no related allowance	143		143		181
Average recorded investment	130	105	130	127
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Recorded investment, with no related allowance	743		743		308
Unpaid principal balance, with no related allowance	854		854		310
Average recorded investment	781	127	525	99
Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Recorded investment, with no related allowance	719		719		32
Unpaid principal balance, with no related allowance	768		768		$ 32
Average recorded investment	$ 822		$ 376

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Note 5 - Troubled Debt Restructurings (Details Textual)	3 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Financing Receivable, Modifications, Number of Contracts		1
Financing Receivable, Troubled Debt Restructuring, Recorded Investment		$ 23,000
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down		0
Financing Receivable, Troubled Debt Restructuring	$ 21,000	$ 22,000
Financing Receivable, Troubled Debt Restructuring, Subsequent Default	0
Financing Receivable, Troubled Debt Restructuring, Commitment to Lend	$ 0

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Note 6 - Mortgage Servicing Rights (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Loans Serviced During the Period			$ 1,051,443,000		$ 964,967,000
Fees and Commissions, Mortgage Banking and Servicing	$ 635,000	$ 563,000	1,247,000	$ 1,123,000
Escrow Deposit	8,436,000		8,436,000		5,618,000
Mortgage Servicing Rights Measured at Fair Value	$ 8,672,000		$ 8,672,000		$ 8,700,000
Mortgage Servicing Rights [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate			12.00%
Mortgage Servicing Rights [Member] | Minimum [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed			98.00%		83.00%
Mortgage Servicing Rights [Member] | Maximum [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed			255.00%		226.00%
Mortgage Servicing Rights [Member] | Maximum [Member] | Agency Investors [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate			1.25%
Mortgage Servicing Rights [Member] | Weighted Average [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed			166.00%		119.00%

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Note 6 - Mortgage Servicing Rights - Schedule of Activity in Mortgage Servicing Rights and the Valuation Allowance (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Beginning balance	$ 7,318	$ 6,613	$ 7,100	$ 6,578
Mortgage servicing rights recognized	736	472	1,201	748
Amortization of mortgage servicing rights	(388)	(369)	(635)	(610)
Ending balance	$ 7,666	$ 6,716	$ 7,666	$ 6,716

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Note 7 - Deposits - Summary of Deposits (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Noninterest checking	$ 183,116	$ 142,788
Interest bearing checking	110,779	105,115
Savings	123,767	108,234
Money market	123,000	108,050
Time certificates of deposit	207,726	162,424
Total	$ 748,388	$ 626,611

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Note 8 - Other Long-term Debt (Details Textual) - USD ($)	1 Months Ended			3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 28, 2017	Jun. 30, 2015	Dec. 31, 2010	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Sep. 30, 2005
Debt Instrument, Face Amount				$ 25,155,000		$ 25,155,000		$ 25,155,000
Interest Expense, Long-term Debt, Total				$ 364,000	$ 357,000	$ 729,000	$ 704,000
First Tennessee Bank, N.A. [Member]
Temporary Equity, Liquidation Preference									$ 5,155,000
Trust Preferred Securities, Maximum Dividend Deferring Period						5 years
Eagle Bancorp Statutory Trust I [Member] | Subordinated Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage									6.02%
Eagle Bancorp Statutory Trust I [Member] | Variable Interest Rate Subordinated Debentures Due in 2035 [Member]
Debt Instrument, Interest Rate, Effective Percentage				3.74%		3.74%		4.228%
Eagle Bancorp Statutory Trust I [Member] | Variable Interest Rate Subordinated Debentures Due in 2035 [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			1.42%
5.75% Senior Unsecured Notes Due February 15, 2022 [Member]
Debt Instrument, Face Amount	$ 10,000,000			$ 10,000,000		$ 10,000,000		$ 10,000,000
Debt Instrument, Interest Rate, Stated Percentage	5.75%			5.75%		5.75%		5.75%
Debt Instrument, Maturity Year	2022					2022		2022
6.75% Subordinated Notes Due in 2025 [Member]
Debt Instrument, Face Amount		$ 10,000,000		$ 10,000,000		$ 10,000,000		$ 10,000,000
Debt Instrument, Interest Rate, Stated Percentage		6.75%		6.75%		6.75%		6.75%
Debt Instrument, Maturity Year		2025				2025		2025
Eagle Bancorp Statutory Trust I [Member]
Subordinated Debt, Ending Balance									$ 5,155,000

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Note 8 - Other Long-term Debt - Summary of Other Long-term Debt (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	Feb. 28, 2017	Jun. 30, 2015
Principal amount	$ 25,155,000	$ 25,155,000
Unamortized debt issuance costs	(247,000)	(279,000)
5.75% Senior Unsecured Notes Due February 15, 2022 [Member]
Principal amount	10,000,000	10,000,000	$ 10,000,000
Unamortized debt issuance costs	(114,000)	(136,000)
6.75% Subordinated Notes Due in 2025 [Member]
Principal amount	10,000,000	10,000,000		$ 10,000,000
Unamortized debt issuance costs	(133,000)	(143,000)
Variable Interest Rate Subordinated Debentures Due in 2035 [Member]
Principal amount	5,155,000	5,155,000
Unamortized debt issuance costs

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Note 8 - Other Long-term Debt - Summary of Other Long-term Debt (Details) (Parentheticals)	1 Months Ended		6 Months Ended	12 Months Ended
	Feb. 28, 2017	Jun. 30, 2015	Jun. 30, 2019	Dec. 31, 2018
5.75% Senior Unsecured Notes Due February 15, 2022 [Member]
Debt instrument, fixed interest rate	5.75%		5.75%	5.75%
Debt instrument, maturity year	2022		2022	2022
6.75% Subordinated Notes Due in 2025 [Member]
Debt instrument, fixed interest rate		6.75%	6.75%	6.75%
Debt instrument, maturity year		2025	2025	2025
Variable Interest Rate Subordinated Debentures Due in 2035 [Member]
Debt instrument, maturity year			2035	2035
Debt instrument, interest rate above LIBOR rate			1.42%	1.42%

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Note 9 - Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Weighted Average Number of Shares Outstanding, Basic, Total	6,408,627	5,460,452	6,429,362	5,386,401
Weighted Average Number of Shares Outstanding, Diluted, Total	6,425,015	5,524,912	6,446,368	5,450,861
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	0	0	0

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Note 10 - Dividends and Stock Repurchase Program (Details Textual) - $ / shares				3 Months Ended						12 Months Ended
	Jul. 18, 2019	Apr. 18, 2019	Jan. 24, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2018	Jul. 20, 2018	Jul. 19, 2018	Jul. 20, 2017
Common Stock, Dividends, Per Share, Cash Paid				$ 0.0925	$ 0.0925			$ 0.09	$ 0.09
Common Stock, Dividends, Per Share, Declared	$ 0.095	$ 0.0925	$ 0.0925			$ 0.0925	$ 0.0925
Stock Repurchase Program, Number of Shares Authorized to be Repurchased												100,000	100,000
Treasury Stock, Shares, Acquired				28,000	42,000					0	0
Stock Issued During Period Treasury Stock Reissued Average Cost Per Share				$ 17.09	$ 17.43
Subsequent Event [Member]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased	100,000

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Note 11 - Accumulated Other Comprehensive Income (Loss) - Activity in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
Balance	$ 112,292	$ 94,806	$ 90,948	$ 83,616
Balance	115,694	112,292	91,805	90,948
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Balance	218	227	188	234
Other comprehensive income (loss), before reclassifications and income taxes		296	402	262
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes	(296)	(309)	(262)	(325)
Income tax benefit (expense)	78	4	(37)	17
Total other comprehensive (loss) income	(218)	(9)	103	(46)
Balance		218	291	188
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent [Member]
Balance	(204)	(1,338)	(1,739)	79
Other comprehensive income (loss), before reclassifications and income taxes	1,965	1,486	(216)	(2,583)
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes	(104)	55	(15)	105
Income tax benefit (expense)	(489)	(407)	60	660
Total other comprehensive (loss) income	1,372	1,134	(171)	(1,818)
Balance	1,168	(204)	(1,910)	(1,739)
AOCI Attributable to Parent [Member]
Balance	14	(1,111)	(1,551)	313
Other comprehensive income (loss), before reclassifications and income taxes	1,965	1,782	186	(2,321)
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes	(400)	(254)	(277)	(220)
Income tax benefit (expense)	(411)	(403)	23	677
Total other comprehensive (loss) income	1,154	1,125	(68)	(1,864)
Balance	$ 1,168	$ 14	$ (1,619)	$ (1,551)

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Note 12 - Derivatives and Hedging Activities - Derivatives (Details) - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Interest Rate Lock Commitments [Member]
Notional amount	$ 61,832	$ 18,745
Fair value, asset	1,314
Fair value, liability
Interest Rate Forward Commitments [Member]
Notional amount	60,000	16,000
Fair value, asset
Fair value, liability	$ 1,843

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Note 13 - Fair Value Disclosures (Details Textual) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Loans and Leases Receivable, Gross, Total	$ 753,649,000	$ 618,031,000	$ 582,757,000
Impaired Loans [Member]
Loans and Leases Receivable, Gross, Total	$ 3,629,000	$ 2,290,000
Mortgage Servicing Rights [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	12.00%
Mortgage Servicing Rights [Member] | Minimum [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	98.00%	83.00%
Mortgage Servicing Rights [Member] | Maximum [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	255.00%	226.00%
Mortgage Servicing Rights [Member] | Maximum [Member] | Agency Investors [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	1.25%
Mortgage Servicing Rights [Member] | Weighted Average [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	166.00%	119.00%

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Note 13 - Fair Value Disclosures - Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Loans held-for-sale	$ 23,760	$ 7,318
Fair Value, Inputs, Level 1 [Member]
Loans held-for-sale
Fair Value, Inputs, Level 2 [Member]
Loans held-for-sale	23,760	7,318
Fair Value, Inputs, Level 3 [Member]
Loans held-for-sale
US Government Agencies Debt Securities [Member]
Securities available-for-sale	14,161	9,347
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale	14,161	9,347
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale	39,455	68,278
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale	39,455	68,278
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Corporate Debt Securities [Member]
Securities available-for-sale	11,372	11,119
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale	11,372	11,119
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale	13,814	19,348
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale	13,814	19,348
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Collateralized Mortgage Obligations [Member]
Securities available-for-sale	35,168	23,875
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale	35,168	23,875
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Asset-backed Securities [Member]
Securities available-for-sale	10,095	10,198
Asset-backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale	10,095	10,198
Asset-backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Interest Rate Lock Commitments [Member]
Interest rate lock commitments	1,314
Interest Rate Lock Commitments [Member] | Fair Value, Inputs, Level 1 [Member]
Interest rate lock commitments
Interest Rate Lock Commitments [Member] | Fair Value, Inputs, Level 2 [Member]
Interest rate lock commitments
Interest Rate Lock Commitments [Member] | Fair Value, Inputs, Level 3 [Member]
Interest rate lock commitments	1,314
Forward Loan Sales Commitments [Member]
Forward sales commitments	1,843
Forward Loan Sales Commitments [Member] | Fair Value, Inputs, Level 1 [Member]
Forward sales commitments
Forward Loan Sales Commitments [Member] | Fair Value, Inputs, Level 2 [Member]
Forward sales commitments	1,843
Forward Loan Sales Commitments [Member] | Fair Value, Inputs, Level 3 [Member]
Forward sales commitments

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Note 13 - Fair Value Disclosures - Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis (Details) - Fair Value, Nonrecurring [Member] - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Real estate and other repossessed assets		$ 107
Fair Value, Inputs, Level 1 [Member]
Real estate and other repossessed assets
Fair Value, Inputs, Level 2 [Member]
Real estate and other repossessed assets
Fair Value, Inputs, Level 3 [Member]
Real estate and other repossessed assets		$ 107

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Note 13 - Fair Value Disclosures - Financial Assets and Liabilities, Valuation Techniques and Significant Unobservable Inputs (Details) - Repossessed Assets [Member]	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Fair value		$ 107
Minimum [Member] | Measurement Input, Discount Rate [Member]
Repossessed assets, discount rate	0.1
Maximum [Member] | Measurement Input, Discount Rate [Member]
Repossessed assets, discount rate	0.3

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Note 13 - Fair Value Disclosures - Estimated Fair Value and Carrying Amounts of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	$ 13,436	$ 11,201
Federal Home Loan Bank stock	5,384	5,011
Federal Reserve Bank stock	2,526	2,033
Loans receivable, net	747,290	603,361
Accrued interest and dividends receivable	4,903	3,479
Mortgage servicing rights	8,672	8,670
Financial liabilities:
Non-maturing interest bearing deposits	357,546	321,399
Noninterest bearing deposits	183,116	142,788
Time certificates of deposit	207,207	160,735
Accrued expenses and other liabilities	11,987	5,388
Federal Home Loan Bank advances and other borrowings	106,801	101,885
Other long-term debt	24,672	24,002
Reported Value Measurement [Member]
Financial assets:
Cash and cash equivalents	13,436	11,201
Federal Home Loan Bank stock	5,384	5,011
Federal Reserve Bank stock	2,526	2,033
Loans receivable, net	744,684	608,043
Accrued interest and dividends receivable	4,903	3,479
Mortgage servicing rights	7,666	7,100
Financial liabilities:
Non-maturing interest bearing deposits	357,546	321,399
Noninterest bearing deposits	183,116	142,788
Time certificates of deposit	207,726	162,424
Accrued expenses and other liabilities	11,987	5,388
Federal Home Loan Bank advances and other borrowings	106,748	102,222
Other long-term debt	25,155	25,155
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	13,436	11,201
Federal Home Loan Bank stock	5,384	5,011
Federal Reserve Bank stock	2,526	2,033
Loans receivable, net	0	0
Accrued interest and dividends receivable	4,903	3,479
Mortgage servicing rights	0	0
Financial liabilities:
Non-maturing interest bearing deposits	0	0
Noninterest bearing deposits	183,116	142,788
Time certificates of deposit	0	0
Accrued expenses and other liabilities	11,987	5,388
Federal Home Loan Bank advances and other borrowings	0	0
Other long-term debt	0	0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Loans receivable, net	0	0
Accrued interest and dividends receivable	0	0
Mortgage servicing rights	0	0
Financial liabilities:
Non-maturing interest bearing deposits	357,546	321,399
Noninterest bearing deposits	0	0
Time certificates of deposit	0	0
Accrued expenses and other liabilities	0	0
Federal Home Loan Bank advances and other borrowings	0	0
Other long-term debt	0	0
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Loans receivable, net	747,290	603,361
Accrued interest and dividends receivable	0	0
Mortgage servicing rights	8,672	8,670
Financial liabilities:
Non-maturing interest bearing deposits	0	0
Noninterest bearing deposits	0	0
Time certificates of deposit	207,207	160,735
Accrued expenses and other liabilities	0	0
Federal Home Loan Bank advances and other borrowings	106,801	101,885
Other long-term debt	$ 24,672	$ 24,002

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Note 14 - Recent Accounting Pronouncements (Details Textual) - Accounting Standards Update 2016-02 [Member]	Jan. 01, 2019 USD ($)
Operating Lease, Right-of-Use Asset	$ 2,374,000
Operating Lease, Liability, Total	$ 2,374,000