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:

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:

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the Part II, Item 1A, “Risk Factors” and Part I, Item 7,2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, 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.

Table of Contents

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

- 1 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

- 2 -

Table of Contents

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

- 3 -

Table of Contents

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

- 4 -

Table of Contents

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

- 5 -

Table of Contents

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

- 26 -

Table of Contents

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

~~- 3 -~~

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

~~- 4 -~~

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

~~- 5 -~~

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

~~- 6 -~~

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

- 7 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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 condensed consolidated financial statements.

- 8 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

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

In August 2019, ~~Eagle and OBMT,~~the Company entered into an Agreement and Plan of Merger ("Merger Agreement") with Western Holding Company of Wolf Point (“WHC”), a Montana corporation, and WHC’s wholly-owned subsidiary, Western Bank of Wolf Point, ~~(“WB”),~~ a Montana chartered commercial ~~bank.~~bank (“WB”). The Merger Agreement provided that, upon the terms and subject to the conditions set forth in the Merger Agreement, WHC would merge with and into Eagle, with Eagle continuing as the surviving corporation. The merger closed on January 1, 2020. WB operated one branch in Wolf Point, Montana. In addition, Western Financial Services, Inc. ("WFS") was acquired through the WHC merger. WFS facilitates deferred payment contracts for Bank customers that produce agricultural products.

The Bank currently ~~has~~has 23 ~~full~~full service branches. The Bank’s principal business is accepting deposits and, together with funds generated from operations and borrowings, investing in various types of loans and securities. The Bank also operates certain branches under the names Dutton State Bank, Farmers State Bank of Denton and The State Bank of Townsend.

During 2021, the Bank established a subsidiary, Opportunity Housing Fund, LLC (“OHF”), to invest in Low-Income Housing Tax Credit (“LIHTC”) projects. OHF is owned 100% by OBMT. The LIHTC program is designed to encourage capital investment in construction and rehabilitation of low-income housing. Tax credits are allowable over a 10-year period. During the three months ended September 30, 2021, OHF made initial investments in two LIHTC projects. The Company has elected to apply the proportional amortization method of accounting for investments in LIHTC projects. The proportional amortization method allows the investor to amortize the cost of the investment in proportion to the tax credits and the amortization is recognized as a component of income tax expense. Investments in LIHTC projects are included in other assets on the statement of financial condition and totaled $935,000 as of September 30, 2021.

The Company completed a modified "Dutch auction" tender offer (the "Tender Offer") in June 2021. The Company accepted for purchase 250,000 shares of its common stock at a price of $24.00 per share. The aggregate purchase price for the shares purchased in the Tender Offer was approximately $6,279,000, including fees and expenses related to the Tender Offer. Therefore, the total price including fees and expenses was $25.12 per share.

The Company sold 251,256 shares of common stock to the Employee Stock Ownership Plan ("ESOP") at a price of $23.88 per share in June 2021. The shares were purchased from Eagle by the ESOP in exchange for a loan totaling $6,000,000. The loan has a ten-year term and bears interest at 3.00%. The shares held by the ESOP will be used for allocations to employees of the Company over a ten-year period.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). It is recommended that these unaudited interim condensed consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K with all of the audited information and footnotes required by U.S. GAAP for complete financial statements for the year ended December 31, ~~2019~~2020, as filed with the SEC on March ~~11, 2020.~~10, 2021. In the opinion of management, all normal adjustments and recurring accruals considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included.

The results of operations for the nine-month period ended September 30, ~~2020~~2021 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2020~~2021 or any other period. In preparing condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated statement of financial condition and reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, mortgage servicing rights, the fair value of financial instruments, the valuation of goodwill and deferred tax assets and liabilities.

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

- 9 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Certain prior period amounts were reclassified to conform to the presentation for ~~2020~~2021. These reclassifications had no impact on net income or shareholders’ equity.

The Company has evaluated events and transactions subsequent to September 30, ~~2020~~2021 for recognition and/or disclosure.

On October 1, 2021, Eagle announced that it had reached an agreement to acquire First Community Bancorp, Inc., a Montana corporation (“FCB”) and its wholly-owned subsidiary, First Community Bank, a Montana chartered commercial bank. The agreement provides that, upon the terms and subject to the conditions set forth in the agreement, FCB will merge with and into Eagle, with Eagle continuing as the surviving corporation. The transaction is subject to the approvals of bank regulatory agencies, the shareholders of Eagle and FCB and other customary closing conditions. The acquisition is expected to close during the fourth quarter of 2021.

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

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

~~These transactions were~~This transaction was accounted for under the acquisition method of accounting.

- 10 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

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

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

Goodwill recorded for the WHC acquisition during the three months ended March 31, 2020 was $4,962,000. ~~Goodwill recorded for the BMB acquisition during the~~ ~~three~~ ~~months ended~~ ~~March 31, 2019~~ ~~was $3,586,000. Certain estimates that existed at~~ ~~January 1, 2019~~ ~~were realized and a final true up of $126,000 was recorded to goodwill during the~~ ~~three~~ ~~months ended~~ ~~December 31, 2019.~~ ~~The final goodwill recorded related to the BMB acquisition was $3,712,000.~~

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

- 1110 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

The total accretable discount on WHC acquired loans was $1,166,000 as of January 1, 2020. During the ~~three~~ ~~and~~ ~~nine~~ ~~months~~year ended ~~September 30,~~December 31, 2020, accretion of the loan discount was ~~$264,000 and $512,000, respectively. The remaining accretable loan discount was $654,000 as of~~ ~~September 30, 2020~~.

~~The total accretable discount on BMB acquired loans was $2,813,000 as of~~ ~~January 1, 2019.~~ ~~During the year ended~~ ~~December 31, 2019,~~ ~~accretion of the loan discount was $1,480,000.~~$560,000. During the three and nine months ended September 30, ~~2020~~2021, accretion of the loan discount was ~~$182,000~~$42,000 and ~~$513,000,~~$149,000, respectively. The remaining accretable loan discount was ~~$820,000~~$457,000 as of September 30, ~~2020~~2021.

One impaired loan was acquired through the WHC acquisition with an insignificant balance as of January 1, 2020.~~Four impaired loans were acquired through the BMB acquisition with a net balance of $556,000 as of~~ ~~January 1, 2019.~~ ~~The remaining balance of the acquired impaired loans as of~~ ~~September 30, 2020~~ ~~was $129,000.~~

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

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

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

Direct costs related to the ~~acquisitions~~acquisition were expensed as incurred. There were 0 acquisition costs recorded related to the WHC acquisition during the three and ninemonths ended September 30, ~~2020.~~ 2021. The Company recorded acquisition costs related to WHC of $157,000 during the ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~and $818,000 during the~~ year ended December 31, ~~2019.~~ 2020~~The Company recorded acquisition costs related to BMB of $1,380,000 during the year ended~~ ~~December 31, 2019.~~ . Acquisition costs included professional fees and data processing expenses incurred related to the acquisitions.

Operations of acquired entities have been included in the condensed consolidated financial statements since date of acquisition. The Company does not consider them as separate reporting segments and does not track the amount of revenues and net income attributable since acquisition. As such, it is impracticable to determine such amounts for the period from acquisition date through September 30, ~~2020~~2021.

- 12 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

The accompanying condensed consolidated statements of income include the results of operations of WHC since the January 1, 2020 acquisition date. ~~The following table presents unaudited pro forma results of operations for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019~~ ~~as if the acquisition had occurred on~~ ~~January 1, 2019.~~ This pro forma information gives effect to certain adjustments, including purchase accounting fair value adjustments and amortization of the core deposit intangible asset. The pro forma information does ~~not~~ ~~necessarily reflect the results of operations that would have occurred had the Company purchased and assumed the assets and liabilities of WHC on~~ ~~January 1, 2019.~~ ~~Cost savings are also~~ ~~not~~ ~~reflected in the unaudited pro forma amounts for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019~~.

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

- 1311 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

- 14 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

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.

As of September 30, ~~2020~~2021 and December 31, ~~2019~~2020, securities with a fair value of ~~$21,238,000~~ $22,259,000 and ~~$18,897,000,~~$19,716,000, 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:

- 1512 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Unrealized losses associated with investments are believed to be caused by ~~changing~~changes in market ~~conditions, primarily~~interest rates or the widening of market spreads ~~related~~subsequent to ~~U.S. treasuries, that are considered~~the initial purchase of the securities and not due to ~~be temporary and~~concerns regarding the underlying credit of the issuers or the underlying collateral. 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~~Company's evaluation of these securities, no0 other-than-temporary impairment was recorded for the ~~three~~ ~~and~~ nine months ended September 30, ~~2020~~2021, or the year ended ~~2019~~December 31, 2020. As of September 30, ~~2020~~2021 and December 31, ~~2019~~2020, there were, respectively, 2125 and 288 securities in unrealized loss positions that were considered to be temporarily impaired and therefore an impairment charge has not been recorded.

~~As of~~ ~~September 30, 2020~~ ~~and~~ ~~December 31, 2019~~~~, there were 0 U.S. government or U.S. treasury obligations with unrealized losses. As of~~ ~~September 30, 2020~~~~, 8 municipal obligations had unrealized losses of approximately 0.63% of the amortized cost associated with these securities. At~~ ~~December 31, 2019~~~~, 10 municipal obligations had unrealized losses of approximately 0.83% of the amortized cost associated with these securities. As of~~ ~~September 30, 2020~~~~, 3 corporate obligations had unrealized losses of approximately 0.28% of the amortized cost associated with these securities. At~~ ~~December 31, 2019~~, 1 corporate obligation had an unrealized loss of approximately 0.80% of the amortized cost associated with these securities. As management has the ability to hold debt securities until maturity, or for the foreseeable future, no ~~declines are deemed to be other than temporary.~~

~~As of~~ ~~September 30, 2020~~, 2 mortgage-backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) had unrealized losses of approximately 0.27% of the amortized cost associated with these securities. At ~~December 31, 2019~~, 12 MBSs and CMOs had unrealized losses of approximately 0.63% of the amortized cost associated with these securities. Management believes that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and ~~not~~ ~~due to concerns regarding the underlying credit of the issuers or the underlying collateral.~~

~~As of~~ ~~September 30, 2020~~~~, 8 asset-backed securities (“ABSs”) had unrealized losses of approximately 3.04% of the amortized cost associated with these securities. At~~ ~~December 31, 2019~~, 5 ABSs had unrealized losses of approximately 2.68% of the amortized cost associated with these securities. Management believes that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and ~~not~~ ~~due to concerns regarding the underlying credit of the issuers or the underlying collateral.~~

- 16 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Within the commercial real estate loan ~~categories~~category above, ~~$11,274,000~~$10,459,000 and ~~$13,602,000~~$11,084,000 was guaranteed by the United States Department of Agriculture Rural Development at September 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively. Also within the loan categories above, ~~$9,460,000~~$5,644,000 and ~~$5,701,000~~$6,533,000 was guaranteed by the United States Department of Agriculture Farm Service Agency at September 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively. In addition, ~~$45,216,000~~within the commercial loan category above, $8,464,000 and $29,581,000 was guaranteed by the Small Business Administration ("SBA") under their Payroll Protection Program ("PPP") at September 30, 2021 and December 31, 2020., respectively. Deferred loan fees, net includes ~~$1,207,000~~$605,000 and $613,000 of remaining deferred fees related to the PPP at September 30, ~~2020.~~ 2021 and December 31, 2020, respectively.

- 13 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

- 14 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

- 15 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

- 16 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

- 17 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

- 18 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

- 19 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

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

- 20 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

- 21 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Interest income recognized on impaired loans for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 is considered insignificant. Interest payments received on a cash basis related to impaired loans were ~~$485,000~~$407,000 and ~~$394,000~~$327,000 for September 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively.

As of September 30, ~~2020~~2021 and December 31, ~~2019~~2020, there were troubled debt restructured (“TDR”) loans of ~~$1,825,000~~$2,116,000 and ~~$246,000,~~$1,824,000, respectively.

During the three months ended September 30, 2021, there were two new TDR loans. The recorded investments for both farmland loans at the time of restructure were $391,000 and $70,000. NaN charge-offs were incurred and the loans are on nonaccrual status. During the nine months ended September 30, 2021 there were three new TDR loans. The recorded investments for the two farmland loans at time of restructure as stated above were $391,000 and $70,000. The recorded investment for the commercial real estate loan at time of restructure during the first quarter of 2021 was $115,000. The commercial real estate loan was paid off during the three months ended September 30, 2021.

During the three months ended September 30, 2020, there were no0 new TDR loans. During the nine months ended September 30, 2020, there were ~~a total of 3~~three new TDR loans. The recorded ~~investment~~investments at the time of restructure ~~was~~were $94,000 for a commercial construction and development loan, $1,633,000 for a commercial real estate loan, and $160,000 for an agricultural loan. NoThe commercial construction and development loan was paid off during the nine months ended September 30, 2021. NaN charge-offs were incurred for the remaining loans and ~~the loans~~they are on accrual status. The recorded investments ~~were $14,000, $1,633,000 and $160,000, respectively~~for the remaining loans at September 30, ~~2020~~2021~~. There~~ were no$1,561,000 and $79,000, respectively. ~~new TDR loans during the~~ ~~three~~ or ~~nine~~ ~~months ended~~ ~~September 30, 2019~~.

There ~~was 1 loan~~were 0 loans modified as ~~a TDR~~TDRs that defaulted during the three and nine months ended September 30, ~~2020~~2021 where the default occurred within 12 months of restructuring. ~~As a result, a charge-off of $67,000 was incurred on this loan during the~~ ~~third~~ ~~quarter bringing the net book balance to $0.~~ A default for purposes of this disclosure is a TDR loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral.

As of September 30, ~~2020~~2021, the Company had 0 commitments to lend additional funds to loan customers whose terms had been modified in ~~troubled debt restructures.~~TDRs.

The Company has offered borrowers accommodations due to the impact from COVID-19, including 90-day deferrals, interest only payments and forbearances, which are not considered ~~TDR's~~TDRs as they met the criteria established in the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). In addition, ~~during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020,~~ the Montana Board of Investments ("MBOI") ~~began offering~~offered 12-months of interest payment assistance to 26qualified borrowers. As of September 30, 2021, remaining loan modifications for five nonresidential borrowers represented $98,000 in loans. As of December 31, 2020, loan modifications for 90~~-day deferrals, interest only payments and the MBOI program included 66~~40 borrowers ~~representing $55,210,000 in loans compared to 315 borrowers representing $125,713,000 as of~~ ~~June 30, 2020.~~ ~~As of~~ ~~September 30, 2020,~~ ~~there were approximately 76 forbearances approved for residential mortgage loans, of which 68 are sold and serviced.~~represented $28,994,000.

- 2218 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company is servicing mortgage loans for the benefit of others which are not included in the condensed consolidated statements of financial condition and have unpaid principal balances of ~~$1,395,326,000~~$1,748,096,000 and ~~$1,169,869,000~~$1,473,971,000 at September 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing. Mortgage loan servicing fees were ~~$815,000~~$1,060,000 and ~~$671,000~~$815,000 for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020, respectively. Mortgage loan servicing fees were ~~$2,320,000~~$2,984,000 and ~~$1,918,000~~$2,320,000 for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020~~, respectively. These~~.These fees, net of amortization, are included in mortgage banking, net which is a component of noninterest income on the condensed consolidated statements of income.

Custodial balances maintained in connection with the foregoing loan servicing ~~and~~are included in noninterest checking deposits and were ~~$16,253,000~~$20,947,000 and ~~$8,402,000~~$15,853,000 at September 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively.

~~After an impairment~~Impairment expense on mortgage servicing rights ~~assets~~ of ~~$1,216,000~~$878,000 was recorded ~~for~~during the ~~six~~nine months ended ~~June~~September 30, 2020, as a result of faster than expected prepayment speed assumptions. However, a recovery of $702,000 was recorded during the nine months ended September 30, 2021. In addition, recoveries of $14,000 and $338,000 ~~was~~were recorded for the three months ended September 30, 2021 and 2020 ~~as a result of slower than expected prepayment speed assumptions. Impairment~~, respectively. Recovery (impairment) of servicing rights is included in other noninterest expense on the condensed consolidated statements of income.

The fair values of these rights were ~~$9,518,000~~$13,666,000 and ~~$9,835,000~~$10,105,000 at September 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively. The fair value of servicing rights was determined at loan level, depending on the interest rate and term of the specific loan, using the following valuation assumptions:

- 2319 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Time certificates of ~~deposits~~deposit ("CDs") include$0 and $495,000 ~~and $10,180,000~~ related to fixed rate brokered CDs at September 30, ~~2020~~2021 and December 31, ~~2019~~, respectively. In addition, time certificates of deposits include $0 and $16,000,000 related to fixed rate brokered certificates through the Certificate of Deposit Account Registry Service (“CDARS”) at ~~September 30,~~ 2020 ~~and~~ ~~December 31, 2019~~~~, respectively.~~

In June 2020, the Company completed the issuance of $15,000,000 in aggregate principal amount of subordinated notes due in 2030 in a private placement transaction to certain qualified institutional accredited investors. The notes will bear interest at an annual fixed rate of 5.50% payable semi-annually. Starting July 1, 2025, interest will accrue at a floating rate per annum equal to a benchmark rate, which is expected to be three-month term Secured Overnight Financing Rate ("SOFR") plus a spread of 509.0 basis points, payable quarterly. The notes are subject to redemption at the option of the Company on or after July 1, 2025.The subordinated debentures qualify as Tier 2 capital for regulatory capital purposes.

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 had an annual fixed interest rate of 6.75% and interest was paid quarterly through redemption. The notes were subject to redemption at the option of the Company on or after June 19, 2020. The notes were redeemed on July 10, 2020.

- 24 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

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 three-month LIBOR plus 1.42%, making the rate ~~1.654%~~1.55% and ~~3.328%~~1.66% as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020, 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. The subordinated debentures qualify as Tier 1 capital for regulatory purposes.

- 20 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

- 25 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

There were 0 anti-dilutive shares atat September 30, ~~2020~~2021 and December 31, ~~2019~~.

~~For the year ended~~ ~~December 31, 2019~~~~, Eagle paid dividends of $0.0925 per share for the quarters ended~~ ~~March 31~~ ~~and~~ ~~June 30, 2019.~~ ~~Eagle paid dividends of $0.0950 per share for the quarters ended~~ ~~September 30~~ ~~and~~ ~~December 31, 2019~~~~. A dividend of~~ ~~$0.0950~~ ~~per share was declared on~~ ~~January 23, 2020~~ ~~and paid on~~ ~~March 6, 2020~~ ~~to shareholders of record on~~ ~~February 14,~~ 2020. ~~A dividend of~~ ~~$0.0950~~ ~~per share was declared on~~ ~~April 23, 2020~~ ~~and paid on~~ ~~June 5, 2020~~ ~~to shareholders of record on~~ ~~May 15, 2020~~~~. A dividend of $0.0975 per share was declared on~~ ~~July 23, 2020~~ ~~and paid on~~ ~~September 4, 2020~~ ~~to shareholders of record on~~ ~~August 14, 2020~~~~. A dividend of~~ ~~$0.0975~~ ~~per share was declared on~~ ~~October 22, 2020~~~~, payable on~~ ~~December 4, 2020~~ ~~to shareholders of record on~~ ~~November 13, 2020~~.

On ~~July 23, 2020~~, ~~Eagle's Board of Directors (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. During the ~~third~~ ~~quarter of~~ ~~2020~~, ~~the Company purchased 41,337 shares at an average price of $15.75 under this repurchase plan. The plan expires on~~ ~~July 23, 2021~~.

On ~~July 18, 2019,~~ 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. NaN shares were purchased under this plan during the year ended ~~December 31, 2019~~ ~~or the~~ ~~first~~ ~~quarter of~~ ~~2020~~~~. However, during the~~ ~~second~~ ~~quarter of~~ ~~2020~~~~, 1,281 shares were purchased at an average price of $16.95 per share. In addition, during the~~ ~~third~~ ~~quarter of~~ ~~2020,~~ ~~20,158 shares were purchased at an average price of $15.60 per share. This plan expired 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. This plan expired on~~ ~~July 19, 2019.~~

- 2621 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

Changes in the fair value of the derivatives are recorded in mortgage banking, net within noninterest income on the condensed consolidated statements of ~~income.~~income. Net gains of ~~$2,961,000 and $1,393,000~~$373,000 were recorded for the three months ended September 30, ~~2020~~ 2021~~and~~ ~~2019~~~~, respectively. Net~~ compared to net gains of ~~$6,363,000 and $864,000~~$2,961,000 for the three months ended September 30, 2020. Net losses of $1,953,000 were recorded for the nine months ended September 30, ~~2020~~ ~~and~~ ~~2019~~~~, respectively.~~

- 272021 -

~~Table~~compared to net gains of ~~Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

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

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

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

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

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

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

Impaired Loans – Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral or using a discounted cash flow if the loan is not collateral dependent. Collateral values are estimated using Level 3 inputs based on internally customized discounting criteria.

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

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

- 2822 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

- 2923 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

The following 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:

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.

- 30 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

The following tables provide a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the ~~three~~ ~~and~~ nine months ended September 30, ~~2020~~2021.

- 3124 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

- 3225 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 ~~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.~~

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) to remove disclosure requirements that no longer are considered cost beneficial, modify/clarify specific requirements of certain disclosures and add disclosure requirements identified as relevant. The amendment became effective for the Company on January 1, 2020 and did not have a significant impact on the condensed consolidated financial statements.

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.

In October 2019, the FASB amended the effective date of the standard. The amendments in this update are effective for fiscal years beginning after December 15, 2022, 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).

- 33 -

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~NOTE~~ ~~13.~~ ~~RECENT ACCOUNTING PRONOUNCEMENTS~~ ~~– continued~~

The Company believes the amendments in this update will have an impact on the Company’s condensed consolidated financial statements and is continuing to evaluate the significance of that impact, even though the adoption date has been deferred. In that regard, we have established a working group 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 is effective for the Company on January 1, 2023 and adoption of the standard is being evaluated to assess the impact on the Company’s condensed consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) which provides temporary optional expedients to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) to an alternative reference rate such as SOFR. The guidance was effective upon issuance and generally can be applied through December 31, 2022. The ~~Bank~~Company is currently evaluating this guidance to determine the date of adoption and the potential impact.

- 3426 -

Table of Contents

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

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. 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~~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~~our ability to manage ~~its~~our interest rate 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.

The Company previously offered wealth management services through financial advisors employed by the Bank. Income from wealth management services was included in noninterest income on the consolidated statement of income. The company discontinued its wealth management services during July of 2019.

Management continues to focus on improving the Bank’s earnings. Management believes the Bank needs to continue to concentrate on increasing net interest margin, other areas of fee income and control of operating expenses to achieve earnings growth going forward. Management’s strategy of growing the ~~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~~statement of financial condition 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 ~~2.50%~~1.75% to ~~1.75%~~0.25% during the year ended December 31, ~~2019.~~2020. The rate ~~decreased from 1.75% to~~remained at 0.25% ~~during~~during the nine months ended September 30, ~~2020.~~2021. The rate reductions add continued pressure on loan yields.

During 2021, The Bank established a subsidiary, Opportunity Housing Fund, LLC (“OHF”), to invest in Low-Income Housing Tax Credit (“LIHTC”) projects. The LIHTC program is designed to encourage capital investment in construction and rehabilitation of low-income housing. Tax credits are allowable over a 10-year period. During the three months ended September 30, 2021, OHF made initial investments in two LIHTC projects. Investments in LIHTC projects are included in other assets on the statement of financial condition and totaled $935,000 as of September 30, 2021.

The Company completed a modified "Dutch auction" tender offer (the "Tender Offer") in June 2021. The Company accepted for purchase 250,000 shares of its common stock at a price of $24.00 per share. The aggregate purchase price for the shares purchased in the Tender Offer was approximately $6.28 million, including fees and expenses related to the Tender Offer. Therefore, the total price including fees and expenses was $25.12 per share.

The Company sold 251,256 shares of common stock to the Employee Stock Ownership Plan ("ESOP") at a price of $23.88 per share in June 2021. The shares were purchased from Eagle by the ESOP in exchange for a loan totaling $6.00 million. The loan has a ten-year term and bears interest at 3.00%. The shares held by the ESOP will be used for allocations to employees of the Company over a ten-year period.

The Company’s performance for the third quarter ~~performance was strong due to~~of 2021 extended the momentum from the previous quarters of 2021, generating solid earnings supported by net interest income growth and higher ~~mortgage banking operations, as a result of a historically low interest rate environment, and substantial gains from~~ loan ~~sales.~~production. However, the Company ~~also~~ continues to see the impact of the COVID-19 pandemic and its consequences on our Montana communities. The Bank isremains focused on supporting our customers, communities and employees while prudently managing risk. The Bank is also still closely monitoring borrowers and businesses serviced and is ~~providing~~providing debt service relief for those that have been impacted.

Health care and social assistance, hotels and lodging, bars and restaurants, schools and childcare, farmers and ranchers, casinos, and nursing homes, among others, have seen dramatic changes in revenues for their business. The Bank evaluates exposure in the most affected industries. The Bank continues to reach out to specific borrowers to assess the risks and understand their needs.

- 3527 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) providing economic relief for the country, including the $349 billion Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) to fund short-term loans for small businesses. In April 2020, additional funding was approved for the PPP. Eagle began taking loan applications from its small business clients immediately after the program was implemented, and as of the close of the program, had helped 764 borrowers receive $45.71 million in SBA PPP loans. The Bank has processed applications for PPP loan forgiveness for customers, with 748 loans representing $45.21 million now paid in full. The remaining 16 PPP loans represent $496,000.

On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was signed into law, providing new COVID-19 stimulus relief, and it included $284 billion allocated for another round of PPP lending, extending the program to March 31, 2021. On March 31, 2021, the program was extended to May 31, 2021. The program offered new PPP loans for companies that did not receive a PPP loan in 2020, and also “second draw” loans targeted at hard-hit businesses that have already spent their initial PPP proceeds. As of the close of the program, Eagle supported 646 borrowers in receiving $19.51 million in new PPP funding. The Bank has processed applications for PPP loan forgiveness for customers, with 389 loans representing $11.26 million now paid in full. The remaining 257 PPP loans represent $8.25 million.

While all industries have and may continue to experience adverse impacts as a result of the COVID-19 pandemic, we had exposures in the following impacted industries, as a percentage of gross loans excluding loans held-for-sale and PPP loans as of September 30, 2021: hotels and lodging (5.4%), health and social assistance (3.8%), bars and restaurants (2.8%), casinos (0.9%) and nursing homes (0.5%). The Bank continues to reach out to specific borrowers to assess the risks and understand their needs.

The Bank has offered multiple accommodation options to its clients, including 90-day deferrals, forbearances and interest only payments. In addition, ~~during the three months ended September 30, 2020,~~ the Montana Board of Investments ("MBOI") ~~began offering~~offered 12-months of interest payment assistance to qualified borrowers. As of September 30, ~~2020,~~ 2021, remaining loan modifications for 66five nonresidential borrowers represented ~~$55.21 million~~$98,000 in loans, or 0.01% of gross loans excluding loans held-for-sale,compared to ~~315~~40 borrowers representing ~~$125.71~~$29.00 million, or 3.5% of gross loans excluding loans held-for-sale, as of ~~June 30,~~December 31, 2020. The Bank qualified 26approximately 32 borrowers for the MBOI program representing ~~$23.68~~$27.25 million in loans, of which ~~are included~~all have aged out of the program as of September 30, 2021. Only one loan in the ~~third quarter modifications.~~hotel and lodging industry was approved in the MBOI loan program and was considered a troubled debt restructured (“TDR”) loan as of December 31, 2020, prior to aging out of the program. No other loans that had been modified related to COVID-19 were reported as TDR’s due to the CARES Act exemption. As of September 30, ~~2020~~2021, there ~~were~~remain approximately 7611 forbearances approved for residential mortgage loans, of which 68all are sold and serviced. Our interest income in future periods could be reduced as a result of such measures. In addition, it is possible that our asset quality measures could worsen at future measurement periods if the effects of COVID-19 are prolonged. Utilization of credit lines were ~~83.4%~~76.4% at ~~the end of the third quarter and were consistent~~September 30, 2021 compared to 82.7% at December 31, 2020, which has declined slightly compared with ~~the previous quarter and~~ historical usage. The Paycheck Protection Program has provided some temporary relief to small business customers of Eagle but the extent of the impact the pandemic will have on businesses’ ability to sustain operations is unclear at this point. Eagle will continue to closely monitor each of its loans for risk.usage rates.

Our fee income could still be reduced due to COVID-19. In keeping with guidance from regulators, we are actively working with COVID-19 affected customers to waive fees from a variety of sources, such as, but not limited to, insufficient funds and overdraft fees, early withdrawal fees, ATM fees, account maintenance fees, etc. These reductions in fees are thought, at this time, to be temporary in conjunction with the length of the expected COVID-19 related economic crisis. At this time, we are unable to project the materiality of such an impact, but recognize the breadth of the economic impact is likely to impact our fee income in future periods.

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) providing economic relief for the country, including the $349 billion Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) to fund short-term loans for small businesses. In April 2020, additional funding was approved for the PPP. Eagle began taking loan applications from its small business clients immediately after the program was implemented, and as of September 30, 2020, had helped 758 customers receive $45.22 million in SBA PPP loans. The Bank has started to process applications for PPP loan forgiveness for customers, with 569 loans representing $9.92 million of the total SBA PPP loans qualifying for the streamlined PPP loan forgiveness application.

As of September 30, ~~2020, all of~~2021, our ~~capital ratios, and our subsidiary bank’s~~ capital ratios were in excess of all regulatory requirements. While we believe that we have sufficient capital to withstand an extended economic recession brought about by COVID-19, our reported and regulatory capital ratios could be adversely impacted by further credit losses. We rely on cash on hand as well as dividends from our subsidiary ~~bank~~Bank to service our debt. If our capital deteriorates such that our subsidiary ~~bank~~Bank is unable to pay dividends to us for an extended period of time, we may not be able to service our debt.

While certain valuation assumptions and judgments will change to account for pandemic-related circumstances such as widening credit spreads, we do not anticipate significant changes in methodology used to determine the fair value of assets measured in accordance with GAAP.

As of ~~September 30,~~December 31, 2020, our goodwill was not impaired. COVID-19 could cause a ~~further and sustained~~ decline in our stock price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform a goodwill impairment test and result in an impairment charge being recorded for that period. In the event that we conclude that all or a portion of our goodwill is impaired, a ~~non-cash~~noncash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital or regulatory capital. AtAs of September 30, ~~2020~~2021 we had goodwill of ~~$20.80~~$20.80 million.

~~While~~The State of Montana ended their phased approach to reopening and lifted the state-wide mask mandate on February 12, 2021. On March 22, 2021, all ~~industries have and will continue~~of our lobbies opened while still requiring everyone to ~~experience adverse impacts as a result~~practice necessary safeguards. As of May 7, 2021, masks were no longer required for the COVID-19 pandemic, we had exposures in the following impacted industries, as a percentage of loans as of September 30, 2020: health and social assistance (2.9%), hotels and lodging (4.2%), bars and restaurants (2.5%), casinos (1.2%) and nursing homes (0.4%).

Bank's branches, customers or vendors. The Company isremains committed to assisting our customers and communities as the vaccine rollout continues and COVID-19 restrictions lift in ~~this time of need. The State of Montana entered~~Montana. Management is encouraging its Phase 2 reopening on June 1, 2020 and Eagle reopened branch lobbies. However, due to increased COVID-19 cases throughout the state, branch lobbies were closed again. In addition, effective July 16, 2020, a mandatory mask directive for indoor areas open to the public was implemented for the State of Montana. Accommodations have been made for employees to ~~work from home when feasible while keeping drive-ups open and scheduling in-person appointments.~~

~~- 36 -~~

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

The Bank has used growth through mergers or acquisition in addition to its strategy of organic growth. In August 2018, the Company 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, a Montana chartered commercial bank (“SBOT”). 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. On January ~~1, 2019, BMB merged with and into~~2020, Eagle ~~with Eagle continuing as the surviving corporation. The total consideration paid was $16.44 million and it was primarily related to common stock issued.~~

~~On August 8, 2019, Eagle and OBMT, entered into an Agreement and Plan of Merger with~~acquired Western Holding Company of Wolf Point ~~(“WHC”~~("WHC"), a Montana corporation, and ~~WHC’s~~WHC's wholly-owned subsidiary, Western Bank of Wolf Point ~~(“WB”~~("WB"), a Montana chartered commercial bank. In the transaction, Eagle acquired one retail bank branch in Wolf Point, Montana.

On October 1, 2021, Eagle announced that it had reached an agreement to acquire First Community Bancorp, Inc., a Montana corporation (“FCB”) and its wholly-owned subsidiary, First Community Bank, a Montana chartered commercial bank. The ~~Merger Agreement provided~~agreement provides that, upon the terms and subject to the conditions set forth in the ~~Merger Agreement, WHC would~~agreement, FCB will merge with and into Eagle, with Eagle continuing as the surviving corporation. ~~The deal closed on January 1, 2020 after receipt~~Upon completion of ~~approvals from regulatory authorities, approval of WHC shareholders and the satisfaction of other closing conditions. In~~ the transaction, Eagle ~~acquired one retail~~will have an additional $374 million of assets, $307 million of deposits and $220 million in gross loans, based on June 30, 2021 information. Headquartered in Glasgow, Montana, FCB currently operates nine branches and two mortgage loan production offices. The transaction is subject to the approvals of bank ~~branch in Wolf Point, Montana.~~regulatory agencies, the shareholders of Eagle and FCB and other customary closing conditions. The ~~total consideration paid was $14.97 million and included cash consideration~~acquisition is expected to close during the fourth quarter of ~~$6.50 million and common stock issued of $8.47 million.~~2021.

- 3728 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Comparisons of financial condition in this section are between September 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Total assets were ~~$1.26~~$1.41 billion at September 30, ~~2020,~~2021, an increase ~~of $200.77 million,~~ of $149.29 million, or ~~19.0% from $1.05~~ 11.9% from $1.26 billion at December 31, ~~2019. The increase was largely due to the change in securities available-for sale and loans receivable. Securities available-for-sale~~2020. Securities available-for-sale increased by ~~$38.47~~$77.08 million from December 31, ~~2019.~~2020. Loans receivable, netincreased by ~~$66.54~~ $43.21million from December 31, ~~2019.~~2020. In addition, ~~total cash and cash equivalents~~interest-bearing deposits in banks increased ~~by $47.89~~$23.88 million from December 31, ~~2019 and has been impacted by PPP funds deposited by borrowers and FRB's Payroll Protection Program Loan Funding ("PPPLF") facility. Total~~2020. Total liabilities were ~~$1.11~~$1.25 billion at September 30, ~~2020,~~2021, an increase of ~~$175.07~~$145.70 million, or ~~18.8%~~13.2%, from ~~$932.60 million~~$1.10 billion at December 31, ~~2019.~~2020. The increase was largely due to an increase in deposits, partially offset by a reduction in FHLB advances and other borrowings. Total ~~deposits~~deposits increased by ~~$189.34~~$161.47 million from December 31, ~~2019.~~2020. However, FHLB advances and other borrowings decreased $12.07 million from December 31, 2020. Total shareholders’ equityincreased ~~by $25.70~~ by $3.58 million ~~from~~or 2.3% from December 31, ~~2019.~~2020.

Securities available-for-sale were ~~$165.35~~$240.03 million at September 30, ~~2020, an~~2021, an increaseof ~~$38.47~~$77.08 million, or ~~30.3%~~47.3%, from ~~$126.88~~$162.95 million at December 31, ~~2019. Securities increased during the period~~2020. The increase was largely driven by purchase activity due to the WHC acquisition, which included acquired securities of $43.71 million. Excluding securities acquired, securities decreased by $5.23 million. Sales and maturities of securities were largely offset by purchases during the period.excess liquidity levels.

- 3829 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

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

Loans receivable, ~~net~~net increased ~~$66.54~~$43.21 million, or ~~8.6%~~5.2%, to ~~$837.18~~$872.71 million at September 30, ~~2020~~2021 from ~~$770.64~~$829.50 million at December 31, ~~2019.~~2020. The increase was impacted by the WHC acquisition. The WHC acquisition included $43.42 million of acquired loans. Excluding acquired loans, loans receivable increased by $23.12 million. Including acquired loans, total commercial loans increased $70.29 million,an increase in total commercial real estate ~~loans decreased $1.56 million,~~loans of $75.08 million. However, this was partially offset by decreases in total residential loans ~~decreased $5.06~~of $14.17 million, total commercial loans of $12.25 million, home equity loans ~~increased $5.05~~of $3.57 million ~~and~~and consumer loans ~~increased $1.81~~of $1.23 million.

~~- 39 -~~

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

Total loan originations were ~~$928.87 million~~$1.15 billion for the nine months ended September 30, ~~2020.~~2021. Total residential 1-4 family originations were ~~$678.24~~$877.07 million, which includes ~~$636.77~~$814.86 million of loans held-for-sale originations. Total commercial real estate originations were ~~$101.58~~$175.99 million. Total commercial originations were ~~$115.63~~$77.12 million ~~which~~which includes ~~$45.71~~$19.51 million of SBA PPP loans. Home equity loan originations totaled ~~$23.93~~$16.57 million. Consumer loan originations totaled ~~$9.49~~$6.63 million. Loans ~~held-for-sale increased~~held-for-sale decreased by ~~$15.87~~$12.56 million to ~~$41.48~~$42.06 million at September 30, ~~2020~~2021 from ~~$25.61~~$54.62 million at December 31, ~~2019.~~2020.

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 September 30, ~~2020~~2021 there was $117,000 of real estate owned and other repossessed property. As of December 31, ~~2019, the Bank had~~2020, there was $25,000 ~~and $26,000, respectively,~~ of real estate owned and other repossessed property.

The State of Montana placed a freeze on foreclosures on March 28, 2020. Subsequently it released the freeze effective May 24, 2020 with the exception of continued protection for those individuals deemed vulnerable to the coronavirus. The Federal foreclosure moratorium that began March 18, 2020 was extended to June 30, 2021. However, the Bank has had minimal impact due to foreclosures affected by ~~this freeze.~~these freezes.

- 4030 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

~~Non-accrual~~Nonaccrual loans as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 include ~~$1.97 million and $1.05~~$782,000 and $1.28 million, respectively of acquired loans that deteriorated subsequent to the acquisition date.

As of September 30, ~~2020,~~2021, loan modifications for 66five borrowers represented ~~$55.21 million~~$98,000 in loans compared to ~~315~~40 borrowers representing ~~$125.71~~$29.00 million as of ~~June 30,~~December 31, 2020. As of September 30, ~~2020~~2021 there are approximately 7611 forbearances ~~approved~~remaining for residential mortgage loans, of which 6811 are sold and serviced.

- 4131 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

~~Deposits~~Deposits increased by ~~$189.34 million,~~$161.47 million, or ~~23.4%~~ 15.6%, to ~~$998.33 million~~$1.19 billion at September 30, ~~2020~~2021 from ~~$808.99 million~~$1.03 billion at December 31, ~~2019. The increase was due in part to the WHC acquisition. Excluding acquired deposits, total deposits~~2020. Money market increased by ~~$102.77 million. Including acquired deposits,~~$59.46 million, noninterest ~~checking~~checking increased by ~~$95.02~~$48.74 million, ~~money market~~interest-bearing checking increased by ~~$54.74 million, savings increased by $42.99~~$37.52 million, and ~~interest bearing checking~~savings increased by ~~$39.27~~ $34.03 million. However, certificates of deposit decreased by $18.27 million. ~~Certificates of deposit decreased by $42.68 million.~~ The decrease in time certificates of deposit was ~~impacted~~driven by ~~a decrease of $9.68 million in fixed rate brokered CDs, as well as~~ a decrease in other certificates of ~~$32.52~~$18.69 million. Due to the continued low interest rate environment, some depositors have been compelled to move funds from other certificates to non-maturity deposits upon maturity.

Total borrowings decreased by $12.01 million, or 25.6% to $34.85 million at September 30, 2021 from $46.86 million at December 31, 2020. This decrease is largely due to a decrease in FHLB advances and other borrowings ~~decreased by $28.57~~of $12.07 million or 32.3%, to $59.78 million at September 30, 2020 from $88.35 million at December 31, 2019. The FHLB advances and other borrowings at September 30, 2020 include $23.79 million of FRB borrowings as Eagle used the FRB's "PPPLF" facility as a partial source of funding for its SBA PPP loans. Excluding FRB borrowings, FHLB advances decreased by $52.36 million from December 31, 2019. This decrease is due to slower than expected loan growth coupled with increased liquidity resulting from the WHC acquisition and growth in non-maturity deposits fueled by PPP funding and economic stimulus. Total other long-term debt increased by $4.83 million primarily due to the issuance in June 2020 of $15.00 million in subordinated notes due 2030, partially offset by the redemption in July 2020 of $10.00 million, 6.75% subordinated notes due 2025.maturities.

Total shareholders’ ~~equity~~equity increased ~~$25.70~~ slightly by $3.58 million, or ~~21.1%~~2.3%, to ~~$147.36~~$156.52 million at September 30, ~~2020~~2021 from ~~$121.66~~$152.94 million at December 31, ~~2019. This~~2020. The increase was ~~primarily the result of stock issued in connection with the WHC acquisition of $8.47 million,~~impacted by net income of ~~$16.04~~$12.69 million. This increase was partially offset due to treasury stock purchased through the tender offer for $6.28 million, dividends paid of $2.17 million and other comprehensive ~~income~~loss of ~~$3.69~~$1.35 million. ~~These increases were slightly offset by dividends paid of $1.96 million and stock repurchases of $987,000.~~

- 4232 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

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~~interest-bearing deposits and borrowings (the “interest rate spread”) and (ii) the relative amounts of loans and investments and ~~interest bearing~~interest-bearing deposits and borrowings.

The following table includes average balances for ~~balance sheet~~financial condition items, as well as, interest and dividends and average yields related to the average balances. All average balances are daily average balances. ~~Non-accrual~~Nonaccrual 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.

- 4333 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

~~- 44 -~~

~~Table of Contents~~

~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~

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

- 34 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

The following tables present the dollar amount of changes in interest income and interest expense for major components of ~~interest earning~~interest-earning assets and ~~interest bearing~~interest-bearing liabilities. For each category of ~~interest earning~~interest-earning assets and ~~interest bearing~~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.

- 4535 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

~~Rate/Volume Analysis – continued~~

For the Nine Months Ended September 30,

2020

2019

Due to

Due to

Volume

Rate

Net

Volume

Rate

Net

(In Thousands)

Interest earning assets:

Investment securities
$ 624 $ (573 ) $ 51 $ (300 ) $ 56 $ (244 )
FHLB and FRB stock (25 ) 12 (13 ) 54 10 64
Loans receivable⁽¹⁾ 4,854 (2,400 ) 2,454 6,549 2,394 8,943
Other earning assets 419 (340 ) 79 7 4 11
Total interest earning assets
5,872 (3,301 ) 2,571 6,310 2,464 8,774

Interest bearing liabilities:

Savings, money market and checking accounts 121 7 128 29 147 176
Certificates of deposit 214 (12 ) 202 311 792 1,103
Advances from FHLB and other borrowings including long-term debt (351 ) (318 ) (669 ) 451 410 861
Total interest bearing liabilities
(16 ) (323 ) (339 ) 791 1,349 2,140

Change in net interest income
$ 5,888 $ (2,978 ) $ 2,910 $ 5,519 $ 1,115 $ 6,634

⁽¹⁾	~~Includes loans held-for-sale.~~

Results of Operations for the Three Months Ended September 30, ~~2020~~2021 and ~~2019~~2020

Net Income. Eagle’s net income for the three months ended September 30, ~~2020~~2021 was ~~$6.38~~$4.75 million compared to ~~$4.11~~$6.38 million for the three months ended September 30, ~~2019.~~2020. The ~~increase~~decrease of ~~$2.27~~$1.63 million was largely due to an increase in noninterest expense of $2.45 million and a decrease in noninterest income of ~~$6.55 million,~~$1.62 million. These changes were partially offset by an increase in ~~noninterest expense~~net interest income after loan loss provision of ~~$4.13~~$1.86 million and ~~an increase~~a decrease in provision for income taxes of ~~$1.07 million.~~$587,000. Basic and diluted earnings per share were both ~~$0.94~~$0.73 for the current period. Basic ~~earnings per share was $0.64~~ and diluted earnings per share ~~was $0.63~~were both $0.94 for the prior year comparable period.

Net Interest Income. Net interest ~~income~~income increased ~~to $10.78~~to $12.03 million for the three months ended September 30, ~~2020,~~2021, from ~~$9.70~~$10.78 million for the same quarter in the prior ~~year.~~year. The increase of ~~$1.08~~$1.25 million, or ~~11.1%~~11.6%, was the result of a decrease in interest expense of $785,000 and an increase in interest and dividend income of ~~$566,000 and a decrease in interest expense of $513,000.~~$468,000.

Interest and Dividend Income. Interest and dividend income was $12.81 million for the three months ended September 30, 2021 compared to $12.34 million for the three months ended September 30, ~~2020, compared~~2020. Interest and fees on loans increased slightly to ~~$11.77~~$11.62 million for the three months ended September 30, ~~2019, an increase of $566,000, or 4.8%. Interest and fees on loans increased to~~2021 from $11.34 million for the three months ended September 30, ~~2020 from $10.73 million for the three months ended September 30, 2019.~~2020. This increase of ~~$609,000,~~$279,000, or ~~5.7%~~2.5%, was largely due to an increase in the average balance of loans ~~partially offset by a decrease in the average yield of loans~~ for the quarter ended September 30, ~~2020. Net fee income of $431,000 earned on PPP loans for the three months ended September 30, 2020, along with the 1.0% contractual rate on PPP loans contributed to the downward push on loan yield.~~2021. Average balances for loans receivable, including loans held-for-sale, for the three months ended September 30, ~~2020~~2021 were ~~$902.54~~$926.75 million, compared to ~~$779.77~~$902.54 million for the prior year period. This represents an increase of ~~$122.77~~$24.21 million, or ~~15.7% and was impacted by the WHC acquisition, as well as organic growth.~~2.7%. The average interest rate earned on loans receivable decreased slightly by 481 basis ~~points,~~point, from ~~5.46%~~4.98% for the three months ended September 30, 2020 to ~~4.98%.~~4.97% for the current period. Interest accretion on purchased loans was $94,000 for the three months ended September 30, 2021 which resulted in a 3 basis point increase in net interest margin compared to $468,000 for the three months ended September 30, 2020 which resulted in a 17 basis point increase in net interest ~~margin compared to $289,000 for the three months ended September 30, 2019 which resulted in a 12 basis point increase in net interest~~ margin. Interest ~~and dividends~~ on investment securities available-for-sale ~~decreased~~increased by ~~$42,000,~~$220,000, or ~~4.6%~~25.2% period over period. Average balances for investments increased to $233.88 million for the three months ended September 30, 2021, from $163.10 million for the three months ended September 30, ~~2020, from $134.98 million for~~2020. Investments have increased in the ~~three months ended September 30, 2019. The increase in average investments is primarily~~current period due to ~~the WHC acquisition.~~excess liquidity. However, average interest rates earned on investments decreased to 1.86% for the three months ended September 30, 2021 from 2.13% for the three months ended September 30, ~~2020 from 2.69%~~2020.

Interest Expense. Total interest expense was $776,000 for the three months ended September 30, ~~2019.~~

~~- 46 -~~

~~Table of Contents~~

~~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 September 30, 2020 and 2019 – continued~~

~~Interest Expense.~~ ~~Total interest expense was~~2021 compared to $1.56 million for the three months ended September 30, ~~2020 compared to $2.07 million for the three months ended September 30, 2019.~~2020. The decrease of ~~$513,000~~$785,000, or ~~24.7%~~50.3%, was due to a decrease in interest expense on deposits of ~~$243,000,~~$429,000, as well as a net decrease in interest expense on total borrowings of ~~$270,000.~~$356,000. The overall average rate on total deposits was 0.12% for the three months ended September 30, 2021 compared to 0.32% for the three months ended September 30, 2020. However, the average balance for total deposits was ~~$971.04 million~~$1.16 billion for three months ended September 30, ~~2020~~2021 compared to ~~$757.33~~$971.04 million for the three months ended September 30, ~~2019. This increase was~~2020. Deposit balances have been impacted by PPP funding and economic stimulus. Due to the ~~WHC acquisition. However, the overall average~~continued low interest rate ~~on total deposits was 0.32% for the three months ended September 30, 2020 compared~~environment though, some depositors have moved funds from certificates of deposit to ~~0.54% for the three months ended September 30, 2019.~~other non-maturity deposit accounts that earn lower yields. The average balance for total borrowings decreased from ~~$136.31 million for the three months ended September 30, 2019 to~~ $108.43 million for the three months ended September 30, ~~2020. The average rate paid on total borrowings also decreased from 3.06%~~2020 to $38.02 million for the three months ended September 30, ~~2019,~~2021 due to increased liquidity levels. However, the average rate paid on total borrowings increased from 2.86% for the three months ended September 30, ~~2020.~~2020, to 4.45% for the three months ended September 30, 2021. The increase in the average rate paid is due to the change in the mix of the outstanding borrowings.

Loan Loss Provision. Loan loss provisions are charged to earnings to maintain the total allowance for loan losses at a level considered adequate by the Bank to provide for probable loan losses based on prior loss experience, volume and type of lending we conduct and past due loans in portfolio. The Bank’s ~~policies~~policies require the review of assets on a quarterly basis. The Bank classifies loans 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. Using this methodology, the Bank recorded ~~$450,000~~$255,000 in loan loss provisions for the three months ended September 30, ~~2020. Additionally, management considered~~2021. Management made the ~~potential impact of COVID-19. Due~~decision that due to the ~~economic slowdown, an increase~~strength of the local economy, in conjunction with loan activity, no additional loan loss provision was necessary in the ~~related economic factors was included in~~three months ended September 30, 2021 when considering the ~~allowance for loan losses analysis and the loan~~COVID-19 pandemic. Loan loss ~~reserves was increased by approximately $404,000. Therefore, the total loan loss provision~~provisions were $854,000 for the three months ended September 30, 2020, ~~was $854,000. Loan loss provisions were $694,000 for~~which included $404,000 related to the ~~three months ended September 30, 2019.~~potential impact of Covid-19. Management believes the level of total allowances is adequate to cover estimated losses inherent in the portfolio. However, if the economic forecast worsens relative to the assumptions we utilized, our allowance for credit losses will increase accordingly in future ~~periods~~periods.

Noninterest Income. Total noninterest income was $13.35 million for the three months ended September 30, 2021, compared to $14.97 million for the three months ended September 30, 2020 ~~compared to $8.42~~. The decrease of $1.62 million ~~for the three months ended September 30, 2019. The increase~~was primarily driven by a decrease in mortgage banking, net of ~~$6.55 million is largely due to an increase in~~$1.64 million. Mortgage banking, net includes net gain on sale of mortgage loans which increased $402,000 compared to ~~$11.10 million for~~ the ~~three months ended September 30, 2020 from $5.49 million for~~same period in the ~~three months ended September 30, 2019. This increase was impacted by increased mortgage originations and higher margins on mortgage loans sold.~~prior year. During the three months ended September 30, ~~2020, $266.76~~2021, $270.84 million residential mortgage loans were sold compared to ~~$155.37~~$266.76 million in the same period in the prior year. ~~In addition, gross margin on sale~~Mortgage banking, net also includes the impact of ~~mortgage~~changes in fair value of loans held-for-sale and derivatives. The net change in fair value of loans held-for-sale and derivatives was a loss of $35,000 for the three months ended September 30, ~~2020 was 4.17%~~2021 compared to ~~3.53%~~a gain of $2.24 million for the ~~three months ended September 30, 2019.~~same period in the prior year.

Noninterest Expense. Noninterest expense was $18.80 million for the three months ended September 30, 2021 compared to $16.35 million for the three months ended September 30, ~~2020 compared to $12.22 million for the three months ended September 30, 2019.~~2020. The increase of ~~$4.13~~$2.45 million, or ~~33.8% is primarily due to increased~~15.0%, was impacted by an increase in salaries and employee benefits expense of $3.77 million. The increase in salaries expense is due in part to higher commission-based compensation related to mortgage loan growth and additional staff related to compliance with mortgage rules. Mortgage compensation and benefits increased $1.64 million for the three months ended September 30, 2020 compared to the same period in the prior year. Salaries and employee benefits expense was also impacted by the addition of staff partly$937,000 due to ~~the WHC acquisition.~~increased staff levels.

Provision for Income Taxes. Provision for income taxes was $1.58 million for the three months ended September 30, 2021, compared to $2.17 million for the three months ended September 30, 2020 ~~compared to $1.10 million for the three months ended September 30, 2019~~ due to ~~increased~~decreased income before provision for income taxes. The effective tax rate for the three months ended September 30, ~~2020~~2021 was ~~25.4%~~25.0% compared to ~~21.1%~~25.4% for the three months ended September 30, ~~2019.~~2020.

- 36 -

Table of Contents

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

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

Results of Operations for the Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020

Net Income. Eagle’s net income for the nine months ended September 30, 2021 was $12.69 million compared to $16.04 million for the nine months ended September 30, 2020 ~~was $16.04 million compared to $8.54 million for the nine months ended September 30, 2019.~~. The ~~increase~~ decrease of ~~$7.50~~$3.35 million was ~~due to~~impacted by an increase in noninterest expense of $10.72 million. This increase was partially offset by an increase in net interest income after loan loss provision of ~~$2.16~~$4.99 million, ~~and noninterest income of $17.62 million, partially offset by~~ an increase in noninterest ~~expense~~income of ~~$10.61~~$1.08 million and ~~an increase~~decrease in provision for income taxes of ~~$3.39~~$1.30 million. Basic and diluted earnings per share were $1.90 and $1.89 for the current period, respectively. Basic earnings per share was $2.36 and diluted earnings per share was $2.35 for the ~~current period. Basic earnings per share was $1.33 and diluted earnings per share was $1.32 for the~~ prior ~~year comparable~~ period.

Net Interest Income. Net interest income increased to ~~$31.68~~$34.50 million for the nine months ended September 30, ~~2020,~~2021, from ~~$28.77~~$31.68 million for the same period in the prior year. The increase of ~~$2.91~~$2.82 million, or ~~10.1%~~8.9%, was primarily the result of ~~an increase in interest and dividend income of $2.57 million and~~ a decrease in interest expense of ~~$339,000.~~$2.99 million.

Interest and Dividend Income. Interest and dividend income was $36.93 million for the nine months ended September 30, 2021, compared to $37.10 million for the nine months ended September 30, 2020, ~~compared~~a decrease of $170,000. Interest and fees on loans decreased to ~~$34.53~~$33.66 million for the nine months ended September 30, ~~2019, an increase of $2.57 million, or 7.4%. Interest and fees on loans increased to~~2021 from $33.83 million for the nine months ended September 30, ~~2020 from $31.38 million for the nine months ended September 30, 2019.~~2020. This ~~increase~~slight decrease of ~~$2.45 million,~~$172,000, or ~~7.8%~~0.5%, was due to ~~an increase in the average balance of loans partially offset by~~ a decrease in the average yield of loans, for the nine months ended September 30, 2020. Net fee income of $509,000 earned on PPP loans for the nine months ended September 30, 2020, along with the 1.0% contractual rate on PPP loans contributed to the downward push on loan yield. Average balances for loans receivable, including loans held-for-sale, for the nine months ended September 30, 2020 were $870.11 million, compared to $753.54 million for the prior year period. This representslargely offset by an increase in the average balance of ~~$116.57 million, or 15.5% and was impacted by the WHC acquisition, as well as organic growth and PPP funding. However, the~~loans. The average interest rate earned on loans receivable decreased by 3921 basis points, from ~~5.57%~~5.18% to 4.97%. Interest accretion on purchased loans was $408,000 for the nine months ended September 30, ~~2019~~2021 which resulted in a 4 basis point increase in net interest margin compared to ~~5.18% for the nine months ended September 30, 2020. Interest accretion on purchased loans was~~ $1.38 million for the nine months ended September 30, 2020 which resulted in a 17 basis point increase in net interest ~~margin compared to $1.35 million~~margin. Average balances for loans receivable, including loans held-for-sale, for the nine months ended September 30, ~~2019 which resulted in a 20 basis point~~2021 were $905.48 million, compared to $870.11 million for the prior year period. This represents an increase ~~in net interest margin.~~of $35.37 million, or 4.1% and was impacted by organic growth and PPP funding. Interest ~~and dividends~~ on investment securities available-for-sale increased by ~~$51,000,~~$136,000, or ~~1.8%~~4.8% period over period. Average balances for investments increased to $200.39 million for the nine months ended September 30, 2021, from $168.17 million for the nine months ended September 30, ~~2020, from $137.53 million for~~2020. Investments have increased in the ~~nine months ended September 30, 2019. The increase in average investments is primarily~~current period due to ~~the WHC acquisition.~~excess liquidity. However, average interest rates earned on investments decreased to 1.99% for the nine months ended September 30, 2021 from 2.26% for the nine months ended September 30, ~~2020 from 2.72% for the nine months ended September 30, 2019.~~

~~- 47 -~~

~~Table of Contents~~
~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~
~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Results of Operations for the Nine Months Ended~~ ~~September 30, 2020 and 2019~~~~– continued~~2020.

Interest Expense. Total interest expense was ~~$5.43~~$2.44 million for the nine months ended September 30, ~~2020~~2021 compared to $5.76 million for the nine months ended September 30, 2019. The decrease of $339,000 or 5.9% was due to a decrease in interest expense on total borrowings of $669,000, partially offset by an increase in interest expense on deposits of $330,000. The average balance for total deposits was $931.04 million for nine months ended September 30, 2020 compared to $741.36 million for the nine months ended September 30, 2019. This increase was impacted by the WHC acquisition and also increased non-maturing deposits due to PPP funding and economic stimulus. However, the overall average rate on total deposits decreased to 0.44% for the nine months ended September 30, 2020 compared to 0.49% for the nine months ended September 30, 2019. The average balance for total borrowings decreased from $131.01 million for the nine months ended September 30, 2019 to $115.86$5.43 million for the nine months ended September 30, 2020. The decrease of $2.99 million, or 55.1%, was due to a decrease of $1.94 million in interest expense on deposits and a net decrease of $1.05 million in interest expense on total borrowings. The overall average rate ~~paid~~ on total ~~borrowings also decreased from 3.09%~~deposits was 0.13% for the nine months ended September 30, ~~2019,~~2021 compared to 0.44% for the nine months ended September 30, 2020. However, the average balance for total deposits was $1.11 billion for nine months ended September 30, 2021 compared to $931.04 million for the nine months ended September 30, 2020. This increase was impacted by PPP funding and economic stimulus. Due to the continued low interest rate environment though, some depositors have moved funds from certificates of deposit to other non-maturity deposit accounts that earn lower yields. The average balance for total borrowings decreased from $115.86 million for the nine months ended September 30, 2020 to $40.70 million for the nine months ended September 30, 2021. However, the average rate paid on total borrowings increased from 2.72% for the nine months ended September 30, ~~2020.~~2020, to 4.34% for the nine months ended September 30, 2021. The increase in the average rate paid is due to the change in the mix of the outstanding borrowings.

Loan Loss Provision. Loan loss provisions are charged to earnings to maintain the total allowance for loan losses at a level considered adequate by the Bank to provide for probable loan losses based on prior loss experience, volume and type of lending we conduct and past due loans in portfolio. The Bank’s policies require the review of assets on a quarterly basis. The Bank classifies loans 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. Using this methodology, the Bank recorded ~~$1.35 million~~$576,000 in loan loss provisions for the nine months ended September 30, ~~2020. Additionally, management considered~~2021. Management made the ~~potential impact of COVID-19. Due~~decision that due to the ~~economic slowdown, an increase~~strength of the local economy, in conjunction with loan credit quality, no additional loan loss provision was necessary in the ~~related economic factors was included in~~nine months ended September 30, 2021 when considering the ~~allowance for loan losses analysis and the loan~~COVID-19 pandemic. Loan loss ~~reserves was increased by approximately $1.40 million. Therefore, the total loan loss provision~~provisions were $2.75 million for the nine months ended September 30, 2020, ~~was $2.75 million. Loan loss provisions were $2.00~~which included $1.40 million ~~for~~related to the ~~nine months ended September 30, 2019.~~potential impact of COVID-19. Management believes the level of total allowances is adequate to cover estimated losses inherent in the portfolio. However, if the economic ~~forecast~~outlook worsens relative to the assumptions we utilized, our allowance for ~~credit~~loan losses will increase accordingly in future periods. Total nonperforming loans, including restructured loans, net, was ~~$7.48~~$7.81 million at September 30, ~~2020~~2021 compared to ~~$5.45~~$8.47 million at December 31, ~~2019.~~2020. The Bank had ~~$25,000~~$117,000 in other real estate owned and other repossessed assets at September 30, ~~2020~~2021 compared to ~~$26,000~~$25,000 at December 31, ~~2019.~~2020.

Noninterest Income. Total noninterest income was $38.05 million for the nine months ended September 30, 2021, compared to $36.97 million for the nine months ended September 30, ~~2020, compared~~2020. The increase of $1.08 million, or 2.9%, is largely due to ~~$17.62~~an increase in mortgage banking, net of $1.76 million for the nine months ended September 30, ~~2019. The increase of $19.35 million is largely due to an increase in~~2021. Mortgage banking, net includes net gain on sale of mortgage loans which increased $11.83 million compared to ~~$24.43 million for~~ the ~~nine months ended September 30, 2020 from $11.45 million for~~same period in the ~~nine months ended September 30, 2019. This increase was impacted by increased mortgage originations and higher margins on mortgage loans sold.~~prior year. During the nine months ended September 30, ~~2020, $621.11~~2021, $823.41 million residential mortgage loans were sold compared to ~~$329.05~~$621.11 million in the same period in the prior year. In addition, gross margin on sale of mortgage loans for the nine months ended September 30, ~~2020~~2021 was ~~3.93%~~4.40% compared to ~~3.48%~~3.93% for the nine months ended September 30, ~~2019.~~2020. Mortgage banking, net also includes the impact of changes fair value of loans held-for-sale and derivatives. The ~~increase~~net change in ~~noninterest income~~fair value of loans held-for-sale and derivatives was ~~also impacted by mortgage banking activity~~a loss of ~~$7.16~~$3.00 million for the nine months ended September 30, ~~2020~~2021 compared to ~~$2.48~~a gain of $7.32 million for the same period in the prior year. The prior period also included a gain on sale of available-for-sale securities of $1.07 million compared to $11,000 in the current period.

Noninterest Expense. Noninterest expense was $55.05 million for the nine months ended September 30, ~~2019.~~

~~Noninterest Expense.~~ ~~Noninterest expense was~~2021 compared to $44.33 million for the nine months ended September 30, ~~2020 compared to $33.72 million for the nine months ended September 30, 2019. The~~2020. The increase of ~~$10.61~~$10.72 million, or ~~31.5% is~~24.2%, was largely ~~due to~~driven by increased salaries and employee benefits expense of ~~$8.21~~$8.82 million. The increase in salaries expense is due in part to higher commission-based compensation related to mortgage loan growth, as well as overall increased staff levels. In addition, occupancy and ~~additional staff related~~equipment expense increased $1.07 million due to ~~compliance with mortgage rules. Mortgage compensation~~office expansion and ~~benefits increased $4.28~~the corresponding depreciation and amortization expense, as well as utilization and maintenance costs.

Provision for Income Taxes. Provision for income taxes was $4.23 million for the nine months ended September 30, ~~2020~~2021, compared to the same period in the prior year. Salaries and employee benefits expense was also impacted by the addition of staff partly due to the WHC acquisition. Other noninterest expense includes $878,000 of impairment of servicing rights incurred during the nine months ended September 30, 2020.

~~Provision~~ ~~for Income Taxes~~. ~~Provision for income taxes was~~ $5.53 million for the nine months ended September 30, 2020 ~~compared to $2.14 million for the nine months ended September 30, 2019~~ due ~~to increased~~to decreased income before provision for income taxes. The effective tax rate for the nine months ended September 30, ~~2020~~2021 was ~~25.6%~~25.0% compared to ~~20.0%~~25.6% for the nine months ended September 30, ~~2019.~~2020.

- 37 -

Table of Contents
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 by the Montana Division of Banking and FRB regulations. The liquidity requirement is retained for safety and soundness purposes, and that 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 the FHLB of Des Moines. The Bank exceeded those minimum ratiosas of September 30, ~~2020~~2021 and December 31, ~~2019.~~

~~- 48 -~~

~~Table of Contents~~
~~EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES~~
~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Liquidity and Capital Resources - continued~~2020.

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

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

Through the ~~quarter~~nine months ended September 30, ~~2020,~~2021, liquidity levels remained ~~relatively consistent with the prior quarters. Despite significant liquidity events during the quarter ended September 30, 2020, liquidity levels remained stable. Elevated cash levels from~~strong, as a result of PPP loan payoffs and deposit ~~growth sparked by PPP funds deposited, tax refunds, economic stimulus money and flight to quality was only partially offset by the increase in PPP loans. Subsequent to the end~~growth. A portion of the ~~first quarter, and in coordination with the roll out of the PPP, Eagle~~excess funds was approved for short-term funding through the FRB Discount Window. The discount window has not been utilized; however, Eagle has utilized the FRB's PPPLF facility as a partial source for its SBA PPP loans. As of September 30, 2020, the Bank had $23.79 million in PPPLF borrowings secured by $23.79 million PPP loans at a rate of 0.35%. As the PPP loans are repaid, it is currently anticipated Eagle will repay Federal Reserve borrowings. The Company closed a $15.00 million subordinated debt offering in June of 2020, adding to borrowings. In July, $10.00 million in callable subordinated debt was paid off, reducing overall borrowings.deployed into investment securities.

Capital Resources

As of September 30, ~~2020,~~2021, 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 ~~34.0% compared~~25.6% compared to an increase of ~~10.6%~~15.0% at December 31, ~~2019.~~2020. The Bank is within the guidelines set forth by the Board of Directors for interest rate risk sensitivity in rising interest rate scenarios.

The ~~Banks’s~~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 September 30, ~~2020.~~2021. The Bank's Tier I leverage ratio ~~increased~~decreased slightly from ~~11.08%~~11.72% as of December 31, ~~2019~~2020 to ~~11.54%~~ 11.25%as of September 30, ~~2020,~~2021, compared to a regulatory requirement of 4.00%. The Bank’s total capital, Tier 1 capital and common equity Tier 1 capital leverage ratios ~~were 16.17%~~were 15.83%, ~~14.93%~~14.65% and ~~14.93%~~14.65%, ~~respectively,~~ respectively, compared to regulatory requirements of 10.50%, 8.50% and 7.00%, respectively. All of these ratios with the exception of the Tier 1 leverage ratio include the capital conservation buffer of 2.50%. The Bank’s capital position helps to mitigate its interest rate risk exposure.

	September 30, 2020					September 30, 2021
	(Unaudited)					(Unaudited)
	Dollar		% of			Dollar			% of
	Amount		Assets			Amount			Assets
	(Dollars in Thousands)					(Dollars in Thousands)
Total risk-based capital to risk weighted assets:
Actual capital level	$	147,332		16.17	%	$	163,492			15.83	%
Minimum required for capital adequacy purposes		95,660		10.50	%		108,438			10.50
Excess capital	$	51,672		5.67	%	$	55,054			5.33	%

Tier I capital to risk weighted assets:
Actual capital level	$	136,032		14.93	%	$	151,292			14.65	%
Minimum required for capital adequacy purposes		77,439		8.50	%		87,783			8.50
Excess capital	$	58,593		6.43	%	$	63,509			6.15	%

Common equity tier I capital to risk weighted assets:
Actual capital level	$	136,032		14.93	%	$	151,292			14.65	%
Minimum required for capital adequacy purposes		63,773		7.00	%		72,292			7.00
Excess capital	$	72,259		7.93	%	$	79,000			7.65	%

Tier I capital to adjusted total average assets:
Actual capital level	$	136,032		11.54	%	$	151,292			11.25	%
Minimum required for capital adequacy purposes		47,138		4.00	%		53,775	��		4.00
Excess capital	$	88,894		7.54	%	$	97,517			7.25	%

- 4938 -

Table of Contents
EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Impact of Inflation and Changing Prices

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

Interest Rate Risk

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

The Bank has established acceptable levels of interest rate risk as follows for an instantaneous and permanent shock in rates: Projected net interest income over the next twelve months (i.e. year-1) and the subsequent twelve months (i.e. year-2) will not be reduced by more than 15.0% given an immediate increase in interest rates of up to 200 basis points or by more than 10.0% given an immediate decrease in interest rates of up to 100 basis points.

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


Changes in Market	Rate Sensitivity			Rate Sensitivity
Interest Rates	As of September 30, 2020		Policy	As of September 30, 2021		Policy
(Basis Points)	Year 1	Year 2	Limits	Year 1	Year 2	Limits

+200	4.70%	9.20%	-15.00%	6.7%	11.0%	-15.0%
-100	-1.10%	-3.00%	-10.00%	-3.0%	-7.8%	-10.0%

- 5039 -

Table of Contents
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.

- 5140 -

Table of Contents
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 September 30, ~~2020,~~2021, 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.

- 5241 -

Table of Contents
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 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and any subsequently filed Quarterly Reports on Form 10-Q.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sale of Securities

The Company sold 251,256 shares of common stock to the Employee Stock Ownership Plan at a price of $23.88 per share on June 23, 2021 pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Exchange Act of 1934, as amended. The shares were purchased from Eagle by the ESOP in exchange for a loan totaling $6.00 million. The loan has a ten-year term and bears interest at 3.00%.

Tender Offer

On ~~July 23, 2020, Eagle's~~May 20, 2021, the Company's Board of Directors (the "Board") authorized a modified "Dutch auction" tender offer (the "Tender Offer") to purchase up to $6.00 million of its shares of common stock, at a price not greater than $26.25 per share nor less than $24.00 per share. The Tender Offer expired on June 22, 2021. The Company accepted for purchase 250,000 shares of its common stock at a price of $24.00 per share on June 23, 2021. The aggregate purchase price for the shares purchased in the Tender Offer was approximately $6.28 million, including fees and expenses related to the Tender Offer. Therefore, the total price including fees and expenses was $25.12 per share.

Stock Repurchase Program

On July 22, 2021, Eagle's 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. However, no shares were purchased during the third quarter of 2021. The plan expires on July 22, 2022.

On July 23, ~~2021. The following table summarizes~~2020, Eagle's Board authorized the ~~Company's purchase~~repurchase of up to 100,000 shares of its common ~~stock for~~stock. Under the ~~three months ended September 30,~~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 repurchases depended upon market conditions and other corporate considerations. During the third quarter of 2020, 41,337 shares were purchased under this ~~plan.~~plan at an average price of $15.75 per share. However, no shares were purchased during the fourth quarter of 2020 or during 2021. The plan expired on July 23, 2021.

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

July 1, 2020 through July 31, 2020
1,696 $ 16.00 1,696 98,304

August 1, 2020 through August 31, 2020
39,041 15.72 39,041 59,263

September 1, 2020 through September 30, 2020
600 16.95 600 58,663

Total
41,337 $ 15.75 41,337

On July 18, 2019, 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~~repurchases depended upon market conditions and other corporate considerations. No shares were purchased under this plan during the year ended December 31, 2019 or the first quarter of 2020. However, during the second quarter of 2020, 1,281 shares were purchased at an average price of $16.95 per share. ~~The following table summarizes the Company's purchase of its common stock for the three months ended September 30, 2020 under this plan. The plan expired on July 18, 2020.~~

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

July 1, 2020 through July 31, 2020
20,158 $ 15.60 20,158 78,561

August 1, 2020 through August 31, 2020 - - - 78,561

September 1, 2020 through September 30, 2020 - - - 78,561

Total
20,158 $ 15.60 20,158
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 planIn addition, during the ~~year ended December 31, 2018. However, during the first~~third quarter of ~~2019, 42,000~~2020, 20,158 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~~$15.60 per share. The plan expired on July ~~19, 2019.~~18, 2020.

Item 3.
Defaults Upon Senior Securities.

Not applicable.

Item 4.
Mine Safety Disclosures

Not applicable.

- 5342 -

Table of Contents
EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

Part II - OTHER INFORMATION - continued

Item 5.
Other Information.

None.

Item 6.
Exhibits.

Exhibit
Number
Description

2.1
Agreement and Plan of Merger, dated as of September 30, 2021, by and among Eagle Bancorp Montana, Inc., Opportunity Bank of Montana, First Community Bancorp, Inc. and First Community Bank (incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed on October 1, 2021).
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).

10.1 Salary Continuation Agreement between Opportunity Bank of Montana and ~~Linda Chilton~~Alana Binde (filed herewith).

10.2 ~~Third~~Second Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and ~~Laura F. Clark,~~Dale Field, dated ~~September 21, 2020~~August 20, 2021 (filed herewith).
10.3 Second Amendment to the Salary Continuation Agreement between Opportunity Bank of Montana and Peter J. Johnson dated August 20, 2021 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on ~~September 22, 2020)~~August 24, 2021).

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 Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)⁽¹⁾

101.SCH
Inline XBRL Taxonomy Extension Schema Document⁽¹⁾

101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document⁽¹⁾

101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document⁽¹⁾

101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document⁽¹⁾

101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document⁽¹⁾

104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
⁽¹⁾These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

- 5443 -

Table of Contents

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: November ~~5, 2020~~ 4, 2021
By:
/s/ Peter J. Johnson

Peter J. Johnson

President/CEO






Date: November ~~5, 2020~~ 4, 2021
By:
/s/ Laura F. Clark

Laura F. Clark

Executive Vice President/CFO/COO

- 5544 -

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

Large accelerated filer ☐	Accelerated filer ☒☐
Non-accelerated filer ☐☒	Smaller reporting company ☒
	Emerging growth company ☐

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

●	statements regarding the current global COVID-19 pandemic;
●	statements regarding the asset quality of our loan and investment portfolios; and

	●	the negative impacts and disruptions resulting from the continuing outbreak of the novel coronavirus, or COVID-19, and the steps taken by governmental and other authorities to contain, mitigate and combat the pandemic, on the economies and communities we serve, which may likely have an adverse impact on our credit portfolio, goodwill, stock price, borrowers and the economy as a whole both globally and domestically;
	●	local, regional, national and international economic and market conditions and events and the impact they may have on us, our customers and our assets and liabilities;

PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Financial Condition as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020	1

	Condensed Consolidated Statements of Income for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020	3

	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020	5

	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020	7

	Notes to the Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3527

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5140

Item 4.	Controls and Procedures	5241

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	5342
Item 1A.	Risk Factors	5342
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5342
Item 3.	Defaults Upon Senior Securities	5342
Item 4.	Mine Safety Disclosures	5342
Item 5.	Other Information	5443
Item 6.	Exhibits	5443

Signatures		5544

	●	the need to retain capital for strategic or regulatory reasons;
	●	changes in consumer spending, borrowing and savings habits;

	September 30,		December 31,		September 30,		December 31,
	2020		2019		2021		2020
ASSETS:
Cash and due from banks	$	19,879	$	18,094	$	16,320	$	14,455
Interest bearing deposits in banks		7,672		4,284
Interest-bearing deposits in banks						71,609		47,733
Federal funds sold		45,260		2,540		7,011		7,614
Total cash and cash equivalents		72,811		24,918		94,940		69,802

Securities available-for-sale, at fair value		165,353		126,875
Securities available-for-sale						240,033		162,946
Federal Home Loan Bank ("FHLB") stock		2,817		4,683		1,702		2,060
Federal Reserve Bank ("FRB") stock		2,974		2,526		2,974		2,974
Mortgage loans held-for-sale, at fair value		41,484		25,612		42,059		54,615
Loans receivable, net of allowance for loan losses of $11,300 at September 30, 2020 and $8,600 at December 31, 2019		837,178		770,635
Loans receivable, net of allowance for loan losses of $12,200 at September 30, 2021 and $11,600 at December 31, 2020						872,705		829,503
Accrued interest and dividends receivable		6,615		4,577		6,218		5,765
Mortgage servicing rights, net		9,518		8,739		12,941		10,105
Premises and equipment, net		54,450		40,082		66,537		58,762
Cash surrender value of life insurance, net		27,064		23,608		36,265		27,753
Goodwill		20,798		15,836		20,798		20,798
Core deposit intangible, net		2,505		2,786		1,919		2,343
Other assets		11,461		3,383		7,832		10,208

Total assets	$	1,255,028	$	1,054,260	$	1,406,923	$	1,257,634

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans	$	11,619	$	11,340	$	33,660	$	33,832
Securities available-for-sale		1,094		874		2,989		2,853
FHLB and FRB dividends		62		95		194		284
Other interest income		32		30		90		134
Total interest and dividend income		12,807		12,339		36,933		37,103

INTEREST EXPENSE:
Deposits		350		779		1,118		3,063
FHLB advances and other borrowings		37		261		152		1,066
Other long-term debt		389		521		1,168		1,296
Total interest expense		776		1,561		2,438		5,425

NET INTEREST INCOME		12,031		10,778		34,495		31,678

Loan loss provision		255		854		576		2,751

NET INTEREST INCOME AFTER LOAN LOSS PROVISION		11,776		9,924		33,919		28,927

NONINTEREST INCOME:
Service charges on deposit accounts		318		282		884		814
Mortgage banking, net		11,665		13,305		33,360		31,596
Interchange and ATM fees		570		407		1,489		1,123
Appreciation in cash surrender value of life insurance		181		160		512		480
Net gain on sale of available-for-sale securities		11		0		11		1,068
Other noninterest income		608		817		1,798		1,892
Total noninterest income		13,353		14,971		38,054		36,973

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

NET INCOME	$	4,746		$	6,380		$	12,692		$	16,042

OTHER ITEMS OF COMPREHENSIVE (LOSS) INCOME BEFORE TAX:
Change in fair value of securities available-for-sale		(578	)		1,263			(1,818	)		6,074
Reclassification for net realized gains on investment securities available-for-sale		(11	)		0			(11	)		(1,068	)
Total other comprehensive (loss) income		(589	)		1,263			(1,829	)		5,006

Income tax benefit (provision) related to securities available-for-sale		155			(332	)		482			(1,318	)

COMPREHENSIVE INCOME	$	4,312		$	7,311		$	11,345		$	19,730

																*ACCUMULATED*
					*ADDITIONAL*		*UNALLOCATED*									*OTHER*
	*PREFERRED*		*COMMON*		*PAID-IN*		*ESOP*			*TREASURY*			*RETAINED*			*COMPREHENSIVE*
	*STOCK*		*STOCK*		*CAPITAL*		*SHARES*			*STOCK*			*EARNINGS*			*INCOME (LOSS)*			*TOTAL*

Balance at July 1, 2021	$	0	$	71	$	80,820	$	(6,061	)	$	(7,631	)	$	80,607		$	4,938		$	152,744
Net income		0		0		0		0			0			4,746			0			4,746
Other comprehensive loss		0		0		0		0			0			0			(434	)		(434	)
Dividends paid ($0.1250 per share)		0		0		0		0			0			(848	)		0			(848	)
Stock compensation expense		0		0		90		0			0			0			0			90
ESOP shares allocated (9,831 shares)		0		0		47		178			0			0			0			225
Balance at September 30, 2021	$	0	$	71	$	80,957	$	(5,883	)	$	(7,631	)	$	84,505		$	4,504		$	156,523

Balance at July 1, 2020	$	0	$	71	$	77,506	$	(227	)	$	(3,664	)	$	63,757		$	4,086		$	141,529
Net income		0		0		0		0			0			6,380			0			6,380
Other comprehensive income		0		0		0		0			0			0			931			931
Dividends paid ($0.0975 per share)		0		0		0		0			0			(659	)		0			(659	)
Stock compensation expense		0		0		78		0			0			0			0			78
ESOP shares allocated (4,154 shares)		0		0		28		42			0			0			0			70
Treasury stock purchased (61,495 shares at $15.70 average cost per share)		0		0		0		0			(966	)		0			0			(966	)
Balance at September 30, 2020	$	0	$	71	$	77,612	$	(185	)	$	(4,630	)	$	69,478		$	5,017		$	147,363

Balance at January 1, 2021	$	0	$	71	$	77,602	$	(145	)	$	(4,423	)	$	73,982		$	5,851		$	152,938
Net income		0		0		0		0			0			12,692			0			12,692
Other comprehensive loss		0		0		0		0			0			0			(1,347	)		(1,347	)
Dividends paid ($0.3200 per share)		0		0		0		0			0			(2,169	)		0			(2,169	)
Stock compensation expense		0		0		270		0			0			0			0			270
ESOP shares allocated (18,139 shares)		0		0		156		262			0			0			0			418
Treasury stock purchased through tender offer (250,000 shares at $25.12 average cost per share)		0		0		0		0			(6,279	)		0			0			(6,279	)
Sale of shares to ESOP (251,256 shares at $23.88 average price per share)		0		0		2,929		(6,000	)		3,071			0			0			0
Balance at September 30, 2021	$	0	$	71	$	80,957	$	(5,883	)	$	(7,631	)	$	84,505		$	4,504		$	156,523

Balance at January 1, 2020	$	0	$	67	$	68,826	$	(311	)	$	(3,643	)	$	55,391		$	1,329		$	121,659
Net income		0		0		0		0			0			16,042			0			16,042
Other comprehensive income		0		0		0		0			0			0			3,688			3,688
Dividends paid ($0.2875 per share)		0		0		0		0			0			(1,955	)		0			(1,955	)
Stock issued in connection with Western Holding Company of Wolf Point acquisition		0		4		8,463		0			0			0			0			8,467
Stock compensation expense		0		0		226		0			0			0			0			226
ESOP shares allocated (12,462 shares)		0		0		97		126			0			0			0			223
Treasury stock purchased (62,776 shares at $15.73 average cost per share)		0		0		0		0			(987	)		0			0			(987	)
Balance at September 30, 2020	$	0	$	71	$	77,612	$	(185	)	$	(4,630	)	$	69,478		$	5,017		$	147,363

	WHC		BMB		WHC
	January 1,		January 1,		January 1,
	2020		2019		2020
	(In Thousands)				(In Thousands)
Assets acquired:
Cash and cash equivalents	$	11,544	$	6,902	$	11,544
Securities available-for-sale		43,710		2,096		43,710
Loans receivable		43,424		89,204		43,424
Premises and equipment		740		2,246		740
Cash surrender value of life insurance		2,131		2,862		2,131
Other real estate owned		0		223
Core deposit intangible		208		1,988		208
Other assets		1,874		1,995		1,874
Total assets acquired	$	103,631	$	107,516	$	103,631

Liabilities assumed:
Deposits	$	86,572	$	92,706	$	86,572
Accrued expenses and other liabilities		4,554		1,960		4,554
Other borrowings		2,500		0		2,500
Total liabilities assumed	$	93,626	$	94,666	$	93,626

Net assets acquired	$	10,005	$	12,850	$	10,005

Consideration paid:
Cash	$	6,500	$	1	$	6,500
Common stock issued (395,850 shares WHC and 996,041 shares BMB)		8,467		16,435
Common stock issued (395,850 shares)						8,467
Total consideration paid	$	14,967	$	16,436	$	14,967

Goodwill resulting from acquisition	$	4,962	$	3,586	$	4,962

	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
	(Dollars in Thousands, Except Per Share Data)		(Dollars in Thousands, Except Per Share Data)
Pro forma net income⁽¹⁾
Net interest income after loan loss provision	$	9,720	$	28,918
Noninterest income		8,709		18,484
Noninterest expense		12,913		35,785
Income before provision for income taxes		5,516		11,617
Income tax provision		1,103		2,323
Net income	$	4,413	$	9,294

Pro forma earnings per share⁽¹⁾
Basic earnings per share	$	0.69	$	1.45
Diluted earnings per share	$	0.68	$	1.44

Basic weighted average shares outstanding		6,403,693		6,420,711
Diluted weighted average shares outstanding		6,425,380		6,442,934

	September 30, 2020									December 31, 2019									September 30, 2021									December 31, 2020
			Gross									Gross									Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair		Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)																		(In Thousands)
Available-for-Sale:
U.S. government obligations	$	2,269	$	39	$	0		$	2,308	$	686	$	9	$	0		$	695	$	1,748	$	20	$	0		$	1,768	$	2,214	$	31	$	0		$	2,245
U.S. treasury obligations		5,144		544		0			5,688		12,632		270		0			12,902		33,148		615		(12	)		33,751		5,153		504		0			5,657
Municipal obligations		90,182		5,495		(6	)		95,671		50,699		1,616		(93	)		52,222		113,975		5,000		(114	)		118,861		92,914		6,175		(1	)		99,088
Corporate obligations		10,586		87		(9	)		10,664		8,356		40		(8	)		8,388		10,558		158		0			10,716		10,579		91		(7	)		10,663
Mortgage-backed securities		8,156		146		(6	)		8,296		9,460		56		(21	)		9,495		15,585		165		(50	)		15,700		7,513		161		(5	)		7,669
Collateralized mortgage obligations		25,041		884		(3	)		25,922		33,129		297		(92	)		33,334		53,117		602		(397	)		53,322		30,339		852		(2	)		31,189
Asset-backed securities		17,166		15		(377	)		16,804		10,110		0		(271	)		9,839		5,790		125		0			5,915		6,293		142		0			6,435
Total	$	158,544	$	7,210	$	(401	)	$	165,353	$	125,072	$	2,288	$	(485	)	$	126,875	$	233,921	$	6,685	$	(573	)	$	240,033	$	155,005	$	7,956	$	(15	)	$	162,946

	September 30, 2020										September 30, 2021
	Less Than 12 Months					12 Months or Longer					Less Than 12 Months					12 Months or Longer
			Gross					Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses			Value		Losses
	(In Thousands)										(In Thousands)
U.S. government obligations	$	0	$	0		$	0	$	0
U.S. treasury obligations		0		0			0		0		$	10,533	$	(12	)	$	0	$	0
Municipal obligations		950		(6	)		0		0			8,962		(114	)		0		0
Corporate obligations		3,241		(9	)		0		0			0		0			0		0
Mortgage-backed securities and collateralized mortgage obligations		1,748		(3	)		1,614		(6	)		33,706		(439	)		1,413		(8	)
Asset-backed securities		2,476		(14	)		9,555		(363	)
Total	$	8,415	$	(32	)	$	11,169	$	(369	)	$	53,201	$	(565	)	$	1,413	$	(8	)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
NONINTEREST EXPENSE:
Salaries and employee benefits	$	12,262	$	11,325	$	37,093	$	28,274
Occupancy and equipment expense		1,665		1,280		4,746		3,677
Data processing		1,171		1,168		3,666		3,507
Advertising		326		208		850		624
Amortization of core deposit intangible		144		165		431		495
Loan costs		654		566		2,126		1,211
Federal Deposit Insurance Corporation ("FDIC") insurance premiums		81		75		243		147
Postage		93		76		302		260
Professional and examination fees		790		389		1,400		1,081
Acquisition costs		35		0		35		157
Other noninterest expense		1,579		1,093		4,158		4,893
Total noninterest expense		18,800		16,345		55,050		44,326

INCOME BEFORE PROVISION FOR INCOME TAXES		6,329		8,550		16,923		21,574

Provision for income taxes		1,583		2,170		4,231		5,532

NET INCOME	$	4,746	$	6,380	$	12,692	$	16,042

BASIC EARNINGS PER SHARE	$	0.73	$	0.94	$	1.90	$	2.36

DILUTED EARNINGS PER SHARE	$	0.73	$	0.94	$	1.89	$	2.35

	Residential		Commercial			Home
	1-4 Family		Real Estate			Equity		Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning Balance, July 1, 2021	$	1,544	$	7,127		$	522	$	363		$	2,344		$	11,900
Charge-offs		0		0			0		(4	)		0			(4	)
Recoveries		0		6			0		1			42			49
Provision		26		155			8		3			63			255
Ending balance, September 30, 2021	$	1,570	$	7,288		$	530	$	363		$	2,449		$	12,200

Allowance for loan losses:
Beginning balance, January 1, 2021	$	1,506	$	6,951		$	515	$	364		$	2,264		$	11,600
Charge-offs		0		(35	)		0		(14	)		(6	)		(55	)
Recoveries		0		15			0		7			57			79
Provision		64		357			15		6			134			576
Ending balance, September 30, 2021	$	1,570	$	7,288		$	530	$	363		$	2,449		$	12,200

Ending balance, September 30, 2021 allocated to loans individually evaluated for impairment	$	199	$	0		$	0	$	0		$	109		$	308

Ending balance, September 30, 2021 allocated to loans collectively evaluated for impairment	$	1,371	$	7,288		$	530	$	363		$	2,340		$	11,892

Loans receivable:
Ending balance, September 30, 2021	$	142,921	$	522,953		$	52,990	$	18,940		$	149,199		$	887,003

Ending balance, September 30, 2021 of loans individually evaluated for impairment	$	1,122	$	4,341		$	121	$	78		$	2,111		$	7,773

Ending balance, September 30, 2021 of loans collectively evaluated for impairment	$	141,799	$	518,612		$	52,869	$	18,862		$	147,088		$	879,230

	September 30, 2021
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	98,560	$	219	$	469	$	199	$	0	$	99,447
Residential 1-4 family construction		43,137		0		337		0		0		43,474
Commercial real estate		374,699		3,200		2,172		0		0		380,071
Commercial construction and development		78,058		0		0		0		0		78,058
Farmland		62,410		276		2,091		47		0		64,824
Other loans:
Home equity		52,559		264		167		0		0		52,990
Consumer		18,861		0		79		0		0		18,940
Commercial		94,057		954		543		0		0		95,554
Agricultural		51,691		387		1,512		55		0		53,645
Total	$	874,032	$	5,300	$	7,370	$	301	$	0	$	887,003

	September 30, 2021
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Nonaccrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	2	$	0	$	2	$	785	$	98,660	$	99,447
Residential 1-4 family construction		0		0		0		337		43,137		43,474
Commercial real estate		241		0		241		507		379,323		380,071
Commercial construction and development		0		0		0		0		78,058		78,058
Farmland		38		0		38		2,273		62,513		64,824
Other loans:
Home equity		0		0		0		121		52,869		52,990
Consumer		67		0		67		78		18,795		18,940
Commercial		31		34		65		534		94,955		95,554
Agricultural		0		0		0		1,498		52,147		53,645
Total	$	379	$	34	$	413	$	6,133	$	880,457	$	887,003

	September 30, 2021
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	785	$	867	$	199
Residential 1-4 family construction		337		387		0
Commercial real estate		2,068		2,116		0
Commercial construction and development		0		0		0
Farmland		2,273		2,333		0
Other loans:
Home equity		121		150		0
Consumer		78		87		0
Commercial		534		658		0
Agricultural		1,577		2,162		109
Total	$	7,773	$	8,760	$	308

	December 31, 2019
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	118,116	$	0	$	1,180	$	0	$	0	$	119,296
Residential 1-4 family construction		38,265		0		337		0		0		38,602
Commercial real estate		328,750		0		2,312		0		0		331,062
Commercial construction and development		52,620		0		50		0		0		52,670
Farmland		49,959		108		168		58		0		50,293
Other loans:
Home equity		56,039		78		297		0		0		56,414
Consumer		18,694		0		188		0		0		18,882
Commercial		71,868		159		707		63		0		72,797
Agricultural		39,347		138		570		467		0		40,522
Total	$	773,658	$	483	$	5,809	$	588	$	0	$	780,538

	December 31, 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	$	702	$	4	$	706	$	618	$	117,972	$	119,296
Residential 1-4 family construction		260		0		260		337		38,005		38,602
Commercial real estate		793		0		793		583		329,686		331,062
Commercial construction and development		72		0		72		50		52,548		52,670
Farmland		1,039		0		1,039		476		48,778		50,293
Other loans:
Home equity		420		0		420		98		55,896		56,414
Consumer		128		0		128		156		18,598		18,882
Commercial		484		0		484		824		71,489		72,797
Agricultural		702		1,805		2,507		499		37,516		40,522
Total	$	4,600	$	1,809	$	6,409	$	3,641	$	770,488	$	780,538

	December 31, 2019
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	618	$	657	$	0
Residential 1-4 family construction		337		387		0
Commercial real estate		583		766		0
Commercial construction and development		50		225		0
Farmland		476		513		0
Other loans:
Home equity		98		115		0
Consumer		156		169		0
Commercial		824		887		74
Agricultural		499		756		0
Total	$	3,641	$	4,475	$	74

	As of or For the						As of or For the
	Three Months Ended						Three Months Ended
	September 30,						September 30,
	2020			2019			2021			2020
	(In Thousands)						(In Thousands)
Mortgage servicing rights:
Beginning balance	$	9,550		$	7,666		$	12,232		$	9,550
Mortgage servicing rights capitalized		1,700			1,030			1,662			1,700
Amortization of mortgage servicing rights		(854	)		(478	)		(863	)		(854	)
Ending balance	$	10,396		$	8,218		$	13,031		$	10,396
Valuation allowance:
Beginning balance		(1,216	)		0		$	(104	)	$	(1,216	)
Recovery of servicing rights		338			0
Recovery of mortgage servicing rights								14			338
Ending balance		(878	)		0		$	(90	)	$	(878	)
Mortgage servicing rights, net	$	9,518		$	8,218		$	12,941		$	9,518

				Unrealized
	Unrealized			Gains (Losses)
	Gains (Losses)			on Investment
	on Loans			Securities
	Held-for-Sale			Available-for-Sale			Total
				(In Thousands)
Balance, January 1, 2020	$	0		$	1,329		$	1,329
Other comprehensive income, before reclassifications and income taxes		0			4,811			4,811
Amounts reclassified from accumulated other comprehensive income, before income taxes		0			(1,068	)		(1,068	)
Income tax provision		0			(986	)		(986	)
Total other comprehensive income		0			2,757			2,757
Balance, June 30, 2020		0			4,086			4,086
Other comprehensive income, before reclassifications and income taxes		0			1,263			1,263
Amounts reclassified from accumulated other comprehensive income, before income taxes		0			0			0
Income tax provision		0			(332	)		(332	)
Total other comprehensive income		0			931			931
Balance, September 30, 2020	$	0		$	5,017		$	5,017

Balance, January 1, 2019	$	227		$	(1,338	)	$	(1,111	)
Other comprehensive income, before reclassifications and income taxes		296			3,451			3,747
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(605	)		(49	)		(654	)
Income tax benefit (provision)		82			(896	)		(814	)
Total other comprehensive (loss) income		(227	)		2,506			2,279
Balance, June 30, 2019		0			1,168			1,168
Other comprehensive income, before reclassifications and income taxes		0			1,166			1,166
Amounts reclassified from accumulated other comprehensive income, before income taxes		0			0			0
Income tax provision		0			(307	)		(307	)
Total other comprehensive income		0			859			859
Balance, September 30, 2019	$	0		$	2,027		$	2,027

	Unrealized
	Gains (Losses)
	on Securities
	Available-for-Sale
	(In Thousands)
Balance at July 1, 2021	$	4,938
Other comprehensive loss, before reclassifications and income taxes		(578	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(11	)
Income tax benefit		155
Total other comprehensive loss		(434	)
Balance at September 30, 2021	$	4,504

Balance at July 1, 2020	$	4,086
Other comprehensive income, before reclassifications and income taxes		1,263
Amounts reclassified from accumulated other comprehensive income, before income taxes		0
Income tax provision		(332	)
Total other comprehensive income		931
Balance at September 30, 2020	$	5,017

Balance at January 1, 2021	$	5,851
Other comprehensive loss, before reclassifications and income taxes		(1,818	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(11	)
Income tax benefit		482
Total other comprehensive loss		(1,347	)
Balance at September 30, 2021	$	4,504

Balance at January 1, 2020	$	1,329
Other comprehensive income, before reclassifications and income taxes		6,074
Amounts reclassified from accumulated other comprehensive income, before income taxes		(1,068	)
Income tax provision		(1,318	)
Total other comprehensive income		3,688
Balance at September 30, 2020	$	5,017

	September 30, 2020									September 30, 2021
	Level 1			Level 2		Level 3		Total Fair		Level 1		Level 2		Level 3		Total Fair
	Inputs			Inputs		Inputs		Value		Inputs		Inputs		Inputs		Value
	(In Thousands)									(In Thousands)
Financial assets:
Available-for-sale securities			��
Available-for-sale securities:
U.S. government obligations		0		$	2,308	$	0	$	2,308	$	0	$	1,768	$	0	$	1,768
U.S. treasury obligations		5,688			0		0		5,688		33,751		0		0		33,751
Municipal obligations		0			95,671		0		95,671		0		118,861		0		118,861
Corporate obligations		0			10,664		0		10,664		0		10,716		0		10,716
Mortgage-backed securities		0			8,296		0		8,296		0		15,700		0		15,700
Collateralized mortgage obligations		0			25,922		0		25,922		0		53,322		0		53,322
Asset-backed securities		0			16,804		0		16,804		0		5,915		0		5,915
Loans held-for-sale		0			41,484		0		41,484		0		42,059		0		42,059
Interest rate lock commitments		0			0		7,148		7,148		0		0		2,328		2,328
Financial liabilities:
Forward TBA mortgage-backed securities		0			432		0		432		0		680		0		680

	December 31, 2019								December 31, 2020
	Level 1		Level 2		Level 3		Total Fair		Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value		Inputs		Inputs		Inputs		Value
	(In Thousands)								(In Thousands)
Impaired loans	$	0	$	0	$	491	$	491	$	0	$	0	$	728	$	728
Real estate and other repossessed assets		0		0		25		25		0		0		0		0
Mortgage servicing rights		0		0		0		0		0		0		10,105		10,105

	Principal	Significant	Range of
	Valuation	Unobservable	~~Signficant~~Significant Input
Instrument	Technique	Inputs	Values

Impaired loans	Fair value of underlying collateral	Discount applied to the obtained appraisal	10 - 30%
Real estate and other repossessed assets	Fair value of collateral	Discount applied to the obtained appraisal	10 - 30%
Mortgage servicing rights	Discounted cash flows	Discount rate	10 - 15%
		Prepayment speeds	~~100~~180 - ~~350%~~330%
Interest rate lock commitments	Internal pricing model	Pull-through expectations	8085 - ~~90%~~95%

	Interest
	Rate Lock
	Commitments
	(In Thousands)
Balance, July, 1 2020	$	5,501
Purchases and issuances		8,360
Sales and settlements		(6,713	)
Balance, September 30, 2020	$	7,148

Net change in unrealized gains relating to items held at end of period	$	1,647

	September 30,					December 31,					September 30,					December 31,
	2020					2019					2021					2020
	Fair Value		Percentage of Total			Fair Value		Percentage of Total			Fair Value		Percentage of Total			Fair Value		Percentage of Total
	(Dollars in Thousands)										(Dollars in Thousands)
Securities available-for-sale:
U.S. government obligations	$	2,308		1.40	%	$	695		0.55	%	$	1,768		0.74	%	$	2,245		1.38	%
U.S. treasury obligations		5,688		3.44	%		12,902		10.17	%		33,751		14.06			5,657		3.47
Municipal obligations		95,671		57.85	%		52,222		41.17	%		118,861		49.53			99,088		60.81
Corporate obligations		10,664		6.45	%		8,388		6.61	%		10,716		4.46			10,663		6.54
Mortgage-backed securities		8,296		5.02	%		9,495		7.48	%		15,700		6.54			7,669		4.71
Collateralized mortgage obligations		25,922		15.68	%		33,334		26.27	%		53,322		22.21			31,189		19.14
Asset-backed securities		16,804		10.16	%		9,839		7.75	%		5,915		2.46			6,435		3.95
Total securities available-for-sale	$	165,353		100.00	%	$	126,875		100.00	%	$	240,033		100.00	%	$	162,946		100.00	%

	For the Three Months Ended September 30,														Three Months Ended September 30,
	2020							2019							2021								2020
	Average		Interest					Average		Interest					Average		Interest						Average		Interest
	Daily		and		Yield/			Daily		and		Yield/			Daily		and		Yield/				Daily		and		Yield/
	Balance		Dividends		Cost⁽⁴⁾			Balance		Dividends		Cost⁽⁴⁾			Balance		Dividends		Cost(4)				Balance		Dividends		Cost(4)
	(Dollars in Thousands)														(Dollars in Thousands)
Assets:
Interest earning assets:
Investment securities	$	163,102	$	874		2.13	%	$	134,980	$	916		2.69	%
Interest-earning assets:
Securities available-for-sale															$	233,882	$	1,094		1.86	%		$	163,102	$	874		2.13	%
FHLB and FRB stock		6,299		95		5.98	%		8,049		107		5.27	%		4,812		62		5.11				6,299		95		5.98
Loans receivable⁽¹⁾		902,543		11,340		4.98	%		779,770		10,731		5.46	%		926,748		11,619		4.97				902,543		11,340		4.98
Other earning assets		43,662		30		0.27	%		4,188		19		1.80	%		68,058		32		0.19				43,662		30		0.27
Total interest earning assets		1,115,606		12,339		4.39	%		926,987		11,773		5.04	%
Noninterest earning assets		129,312							100,911
Total interest-earning assets																1,233,500		12,807		4.12				1,115,606		12,339		4.39
Noninterest-earning assets																148,686								129,312
Total assets	$	1,244,918						$	1,027,898						$	1,382,186							$	1,244,918

Liabilities and equity:
Interest bearing liabilities:
Interest-bearing liabilities:
Deposit accounts:
Checking	$	157,542	$	13		0.03	%	$	114,820	$	11		0.04	%	$	197,245	$	12		0.02	%		$	157,542	$	13		0.03	%
Savings		160,118		33		0.08	%		119,555		24		0.08	%		204,223		30		0.06				160,118		33		0.08
Money market		176,276		102		0.23	%		121,588		109		0.36	%		254,019		146		0.23				176,276		102		0.23
Certificates of deposit		200,527		631		1.25	%		213,073		878		1.63	%		155,006		162		0.41				200,527		631		1.25
Advances from FHLB and other borrowings including long-term debt		108,427		782		2.86	%		136,306		1,052		3.06	%		38,022		426		4.45				108,427		782		2.86
Total interest bearing liabilities		802,890		1,561		0.77	%		705,342		2,074		1.17	%
Total interest-bearing liabilities																848,515		776		0.36				802,890		1,561		0.77
Noninterest checking		276,580							188,291							353,486								276,580		��
Other noninterest bearing liabilities		21,840							15,753
Other noninterest-bearing liabilities																23,107								21,840
Total liabilities		1,101,310							909,386							1,225,108								1,101,310

Total equity		143,608							118,512							157,078								143,608

Total liabilities and equity	$	1,244,918						$	1,027,898						$	1,382,186							$	1,244,918
Net interest income/interest rate spread⁽²⁾			$	10,778		3.62	%			$	9,699		3.87	%			$	12,031		3.76	%				$	10,778		3.62	%
																						��
Net interest margin⁽³⁾						3.83	%						4.15	%						3.87	%							3.83	%
Total interest earning assets to interest bearing liabilities						138.95	%						131.42	%
Total interest-earning assets to interest-bearing liabilities																				145.37	%							138.95	%

⁽¹⁾	Includes loans held-for-sale.
⁽²⁾	Interest rate spread represents the difference between the average yield on ~~interest earning~~interest-earning assets and the average rate on ~~interest bearing~~interest-bearing liabilities.
⁽³⁾	Net interest margin represents income before the provision for loan losses divided by average ~~interest earning~~interest-earning assets.
⁽⁴⁾	For purposes of this table, tax exempt income is not calculated on a tax equivalent basis.

	For the Nine Months Ended September 30,
	2020							2019
	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	$	168,170	$	2,853		2.26	%	$	137,533	$	2,802		2.72	%
FHLB and FRB stock		6,934		284		5.46	%		7,582		297		5.24	%
Loans receivable⁽¹⁾		870,114		33,832		5.18	%		753,541		31,378		5.57	%
Other earning assets		34,309		134		0.52	%		3,984		55		1.85	%
Total interest earning assets		1,079,527		37,103		4.58	%		902,640		34,532		5.11	%
Noninterest earning assets		124,192							95,835
Total assets	$	1,203,719						$	998,475

Liabilities and equity:
Interest bearing liabilities:
Deposit accounts:
Checking	$	147,054	$	47		0.04	%	$	115,549	$	33		0.04	%
Savings		149,129		118		0.11	%		118,972		61		0.07	%
Money market		160,477		362		0.30	%		121,907		305		0.33	%
Certificates of deposit		224,251		2,536		1.51	%		205,396		2,334		1.52	%
Advances from FHLB and other borrowings including long-term debt		115,861		2,362		2.72	%		131,011		3,031		3.09	%
Total interest bearing liabilities		796,772		5,425		0.91	%		692,835		5,764		1.11	%
Noninterest checking		250,132							179,539
Other noninterest bearing liabilities		18,935							12,487
Total liabilities		1,065,839							884,861

Total equity		137,880							113,614

Total liabilities and equity	$	1,203,719						$	998,475
Net interest income/interest rate spread⁽²⁾			$	31,678		3.67	%			$	28,768		4.00	%

Net interest margin⁽³⁾						3.91	%						4.26	%
Total interest earning assets to interest bearing liabilities						135.49	%						130.28	%

	Nine Months Ended September 30,
	2021									2020
				Due to									Due to
	Volume			Rate			Net			Volume			Rate			Net
	(In Thousands)
Interest earning assets:
Securities available-for-sale	$	547		$	(411	)	$	136		$	624		$	(573	)	$	51
FHLB and FRB stock		(84	)		(6	)		(90	)		(25	)		12			(13	)
Loans receivable⁽¹⁾		1,374			(1,546	)		(172	)		4,854			(2,400	)		2,454
Other earning assets		168			(212	)		(44	)		419			(340	)		79
Total interest earning assets		2,005			(2,175	)		(170	)		5,872			(3,301	)		2,571

Interest bearing liabilities:
Savings, money market and checking accounts		214			(240	)		(26	)		121			7			128
Certificates of deposit		(710	)		(1,209	)		(1,919	)		214			(12	)		202
Advances from FHLB and other borrowings including long-term debt		(1,532	)		490			(1,042	)		(351	)		(318	)		(669	)
Total interest bearing liabilities		(2,028	)		(959	)		(2,987	)		(16	)		(323	)		(339	)

Change in net interest income	$	4,033		$	(1,216	)	$	2,817		$	5,888		$	(2,978	)	$	2,910

					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

July 1, 2020 through July 31, 2020		1,696	$	16.00		1,696		98,304

August 1, 2020 through August 31, 2020		39,041		15.72		39,041		59,263

September 1, 2020 through September 30, 2020		600		16.95		600		58,663

Total		41,337	$	15.75		41,337