Eagle Bancorp Montana Earns $5.2 Million, or $0.76 per Diluted Share, in Fourth Quarter 2020; Reports Record Earnings of $21.2 Million, or $3.11 per Diluted Share for the Year 2020; Declares Quarterly Cash Dividend of $0.0975 per Share

HELENA, Mont., Jan. 26, 2021 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported net income in the fourth quarter of 2020 increased 121.0% to $5.2 million, or $0.76 per diluted share, compared to $2.3 million, or $0.36 per diluted share, in the fourth quarter a year ago, reflecting the high level of contributions from mortgage banking and gains from sale of loans. Net income was a record $6.4 million, or $0.94 per diluted share, in the third quarter of 2020.

For the year 2020, net income nearly doubled to a record $21.2 million, or $3.11 per diluted share, compared to $10.9 million, or $1.69 per diluted share, for 2019.

Eagle’s board of directors declared a quarterly cash dividend of $0.0975 per share on January 21, 2021. The dividend will be payable March 5, 2021 to shareholders of record February 12, 2021. The current annualized dividend yield is 1.75% based on recent market prices.

“We had a strong fourth quarter and record earnings for the year, with net interest income expansion, record loan production and solid deposit growth,” said Peter J. Johnson, President and CEO. “While our fourth quarter operating performance was strong, we continued to see the economic impact from the COVID-19 pandemic and its effect on our Montana communities. We actively participated in the SBA’s initial Paycheck Protection Program (PPP) that expired in August, helping service the needs of our customers, and we plan to support the SBA’s new round of PPP funding to help our clients whose businesses have been hardest hit by the pandemic. Earlier in the year, the Montana Board of Investments (MBOI) offered 12-months of interest payment assistance to qualified borrowers. We are closely monitoring borrowers and businesses in our communities and are providing debt service relief for those who have been impacted.”

*COVID-19 Preparations as of December 31, 2020:*

· *Industry Exposure: *Eagle’s exposure, as a percentage of total loans, to some of the industries with business revenues dramatically impacted by the pandemic includes health care and social assistance (2.64%), hotels and lodging (4.14%), bars and restaurants (2.58%), casinos (1.19%), and nursing homes (0.47%).
· *Loan Accommodations: *The bank has offered multiple accommodation options to its clients, including 90-day deferrals, interest only payments, and forbearances. As of December 31, 2020, remaining loan modifications for 40 nonresidential borrowers represented $29.0 million in loans or 3.45% of total loans, compared to 66 borrowers, representing $55.3 million or 6.51% of total loans, three months earlier. Approximately 78.45% of loans originally modified, or 275 borrowers, are now performing according to adapted loan agreements. The bank qualified 32 borrowers for the MBOI program representing $26.6 million in loans, which are included in the fourth quarter modification totals. There remain approximately 54 forbearances approved for residential mortgage loans, of which 49 are sold and serviced. Utilization of credit lines were 82.7% at the end of the fourth quarter, compared to 83.4% at the end of the previous quarter, which aligns with historical usage rates.     
· *Small Business Administration (SBA) Paycheck Protection Program (PPP):* Eagle began taking loan applications from its small business clients immediately after the program was implemented in April 2020, and as of the close of the program, Eagle had helped 764 of its customers receive $45.7 million in SBA PPP loans. Eagle has processed applications for PPP loan forgiveness for customers, with 195 loans, representing over $15.0 million now paid in full. The remaining 569 PPP loans represent $29.6 million.

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. The program offers 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. Eagle began assisting customers with the new round of funding on January 13, 2021.· *Provision for Loan Losses: *Due to the economic slowdown resulting from the COVID-19 pandemic, Eagle recorded total provision of $3.1 million for the full year 2020, compared to $2.6 million in 2019. The provision for loan losses was $379,000 in the fourth quarter, compared to $854,000 in the third quarter of 2020 and $632,000 in the fourth quarter a year ago. Loan loss provisioning for the fourth quarter of 2020 was reflective of steady portfolio balances due to a high volume of mortgages intended for sale. The performance of modified loans exceeded expectations and the qualitative factors were not adjusted.
· *Deposit Accommodations: *The Bank halted deposit fees associated with early withdrawal requests to assist depositors with funding needs.
· *Liquidity Changes:* Through the quarter ended December 31, 2020, the liquidity level remained consistent with the prior quarters. Eagle used Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) as a partial source of funding for its SBA PPP loans.*Fourth Quarter 2020 Highlights *(at or for the three-month period ended December 31, 2020, except where noted)

· Net income increased 121.0% to $5.2 million, or $0.76 per diluted share, in the fourth quarter of 2020, compared to $2.3 million, or $0.36 per diluted share, in the fourth quarter of 2019, and decreased 19.1% compared to a record $6.4 million, or $0.94 per diluted share in the preceding quarter.
· Annualized return on average assets was 1.63%.
· Annualized return on average equity was 13.68%.
· Net interest margin (“NIM”) was 4.03% in the fourth quarter of 2020, compared to 3.83% in the preceding quarter, and 4.22% in the fourth quarter a year ago.
· Revenues (net interest income before the provision for loan losses, plus non-interest income) were $23.6 million in the fourth quarter of 2020, compared to a record $25.7 million in the previous quarter, and increased 42.9% compared to $16.5 million in the fourth quarter a year ago.
· Purchase discount on loans from the Western Holding Company of Wolf Point portfolio was $1.2 million at January 1, 2020, of which $606,000 remained as of December 31, 2020.
· Remaining purchase discount on loans from acquisitions prior to 2020 totaled $962,000 as of December 31, 2020.
· The accretion of the loan purchase discount into loan interest income from the Western Holding Company of Wolf Point, and previous acquisitions was $170,000 in the fourth quarter of 2020, compared to interest accretion on purchased loans from acquisitions of $467,000 in the preceding quarter.
· The allowance for loan losses represented 136.9% of nonperforming loans at December 31, 2020, compared to 157.8% a year earlier.
· Total loans increased 7.9% to $841.1 million at December 31, 2020, compared to $779.2 million a year earlier.
· Total deposits increased 27.7% to $1.03 billion at December 31, 2020, from $809.0 million a year ago.
· Eagle remained well capitalized with a tangible common shareholders’ equity ratio of 10.51% at December* *31, 2020.
· Declared a quarterly cash dividend of $0.0975 per share.*Recent Events*

On June 10, 2020, Eagle issued $15 million in subordinated notes to certain qualified institutional accredited investors through a private placement offering. The net cash proceeds from the sale of the subordinated notes was approximately $14.7 million, and the subordinated notes qualify as Tier 2 capital for regulatory purposes. Eagle intends to use the net proceeds from the offering for general corporate purposes. On July 10, 2020, the Company redeemed $10 million of existing 6.75% subordinated notes due 2025.

*Acquisitions*

On January 1, 2020, Eagle completed its acquisition of Western Holding Company of Wolf Point, and its wholly owned subsidiary, Western Bank of Wolf Point, in a transaction valued at approximately $15.0 million. In the transaction, Eagle acquired one retail bank branch and approximately $104 million in assets, $87 million in deposits and $43 million in gross loans.

On January 1, 2019, Eagle completed its acquisition of Big Muddy Bancorp, Inc. and its wholly owned subsidiary, The State Bank of Townsend, located in Townsend, Montana, which added approximately $108 million in assets, $93 million in deposits and $89 million in gross loans.

*Balance Sheet Results *

Eagle’s total assets increased 19.3% to $1.26 billion at December 31, 2020, compared to $1.05 billion a year ago, in large part due to the Western Holding Company of Wolf Point acquisition, and remained unchanged from $1.26 billion three months earlier.

“Strong PPP loan originations, and robust residential mortgage business fueled balance sheet growth over the year, with total loans increasing 7.9% year-over-year, resulting in solid overall expansion of the loan portfolio,” said Johnson. Total loans were $841.1 million at December 31, 2020, compared to $779.2 million a year earlier, and $848.5 million three months earlier.

Eagle originated $273.7 million in new residential mortgages during the quarter, excluding construction loans, and sold $253.6 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 4.72%. This production compares to residential mortgage originations of $254.0 million in the preceding quarter with sales of $266.5 million.

Commercial real estate loans decreased 4.3% to $316.7 million at December 31, 2020, compared to $331.1 million a year earlier. Agricultural and farmland loans increased 30.1% to $118.2 million at December 31, 2020, compared to $90.8 million a year earlier. Residential mortgage loans decreased to $110.8 million, compared to $119.3 million a year earlier. Commercial loans increased 50.0% to $109.2 million, compared to $72.8 million a year ago, reflecting SBA PPP loans originated during the second quarter and third quarter of 2020. Commercial construction and development loans increased 23.9% to $65.3 million, home equity loans remained relatively unchanged at $56.6 million, residential construction loans increased 19.9% to $46.3 million, and consumer loans increased 6.8% to $20.2 million, compared to a year ago.  

Total deposits increased 27.7% to $1.03 billion at December 31, 2020, compared to $809.0 million at December 31, 2019, and increased 3.5% compared to $998.3 million at September 30, 2020. Federal programs such as the PPP, stimulus checks and increased weekly unemployment benefits have boosted deposit balances. Noninterest-bearing checking accounts represent 30.9%, interest-bearing checking accounts represent 15.5%, savings accounts represent 17.4%, money market accounts comprise 19.6% and time certificates of deposit make up 16.6% of the total deposit portfolio, at December 31, 2020.

Shareholders’ equity increased 25.7% to $152.9 million at December 31, 2020, compared to $121.7 million a year earlier and increased 3.8% compared to $147.4 million three months earlier. Tangible book value increased to $19.16 per share, at December 31, 2020, compared to $16.04 per share a year earlier and $18.36 per share three months earlier.  

*Operating Results*

Eagle’s NIM was 4.03% in the fourth quarter of 2020, compared to 3.83% in the preceding quarter, and 4.22% in the fourth quarter a year ago. “While our year-over-year NIM contracted due to the 150 basis-point decrease in the Federal Funds rate over the last year, we had NIM expansion over the prior quarter partially due to PPP loan payoffs and lower cost of funds,” said Johnson. The interest accretion on purchased loans totaled $170,000 and resulted in a six basis-point increase in the NIM during the fourth quarter, compared to $467,000 and a 14 basis-point increase in the NIM during the preceding quarter. For the year, Eagle’s NIM was 3.94% compared with 4.25% for 2019. The investment securities portfolio was $162.9 million at December 31, 2020, compared to $165.4 million at September 30, 2020, and $126.9 million at December 31, 2019. Average yields on earning assets for the fourth quarter decreased to 4.41% from 5.05% a year ago, largely due to adding PPP loans at a lower rate.

Eagle’s fourth quarter revenues were $23.6 million, a decrease compared to $25.7 million in the preceding quarter and a 42.9% increase when compared to $16.5 million in the fourth quarter a year ago. The year-over-year increase was primarily a result of increased mortgage banking income and gain on sale of mortgages.   For the year, revenues increased 47.3%, to $92.2 million compared to $62.6 million in 2019.

Net interest income, before the provision for loan losses, increased 6.6% to $11.5 million in the fourth quarter, compared to $10.8 million in the third quarter 2020, and increased 14.7% compared to $10.0 million in the fourth quarter of 2019. For the year 2020, net interest income increased 11.3% to $43.2 million, compared to $38.8 million in 2019.

Noninterest income was $12.1 million in the fourth quarter of 2020, compared to $15.0 million in the preceding quarter, and increased 86.3% compared to $6.5 million in the fourth quarter a year ago. The net gain on sale of mortgage loans totaled $12.0 million in the fourth quarter of 2020, compared to $11.1 million in the preceding quarter and $5.2 million in the fourth quarter a year ago. A loss of $1.5 million during the fourth quarter of 2020 in mortgage banking activity was primarily due to a loss on mortgage banking derivatives. This compares to a net gain of $2.2 million in the preceding quarter and a net loss of $156,000 in the fourth quarter of 2019. Year-to-date, noninterest income grew 105.8% to $49.1 million, compared to $23.8 million in 2019.

Eagle’s fourth quarter noninterest expenses were $16.3 million which was unchanged compared to the preceding quarter. Noninterest expense was $12.6 million in the fourth quarter a year ago. The year-over-year increase is largely attributable to an increase in salary and employee benefits. For the year, noninterest expenses totaled $60.7 million, compared to $46.0 million in 2019.

For the fourth quarter of 2020, the income tax provision totaled $1.7 million, for an effective tax rate of 24.8%, compared to $2.2 million in the preceding quarter and $959,000 in the fourth quarter of 2019.

*Credit Quality *

The provision for loan losses was $379,000 in the fourth quarter of 2020, compared to $854,000 in the preceding quarter and $632,000 in the fourth quarter a year ago. For the year, the provision for loan losses was $3.1 million, compared to $2.6 million in 2019. The allowance for loan losses represented 136.9% of nonperforming loans at December 31, 2020, compared to 151.0% three months earlier and 157.8% a year earlier.

Nonperforming loans were $8.5 million at December 31, 2020, compared to $7.5 million at September 30, 2020, and $5.5 million a year earlier. The increase year-over-year in nonperforming loans was impacted by acquired loans which make up approximately $1.3 million of the balance as of December 31, 2020.

Eagle’s total other real estate owned (“OREO”) and other repossessed assets was $25,000 at December 31, 2020, unchanged from September 30, 2020. Nonperforming assets, consisting of nonaccrual loans, OREO and other repossessed assets, loans delinquent 90 days or more and restructured loans, were $8.5 million at December 31, 2020, or 0.68% of total assets, compared to $7.5 million, or 0.60% of total assets three months earlier and $5.5 million, or 0.52% of total assets a year earlier.

Net loan charge-offs totaled $78,000 in the fourth quarter, compared to charge-offs of $55,000 in the preceding quarter and charge-offs of $233,000 in the fourth quarter a year ago. The allowance for loan losses was $11.6 million, or 1.38% of total loans, at December 31, 2020, compared to $11.3 million, or 1.33% of total loans, at September 30, 2020, and $8.6 million, or 1.10% of total loans, a year ago.

*Capital Management*

Eagle Bancorp Montana, Inc. continues to be well capitalized with the ratio of tangible common shareholders’ equity to tangible assets of 10.51% as of December 31, 2020. (Shareholders’ equity, less goodwill and core deposit intangible to tangible assets).

*About the Company*

Eagle Bancorp Montana, Inc. is a bank holding company headquartered in Helena, Montana, and is the holding company of Opportunity Bank of Montana, a community bank established in 1922 that serves consumers and small businesses in Montana through 23 banking offices. Additional information is available on the bank’s website at www.opportunitybank.com. The shares of Eagle Bancorp Montana, Inc. are traded on the NASDAQ Global Market under the symbol “EBMT.”

*Forward Looking Statements*

This release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and may be identified by the use of such words as "believe," “will”’ "expect," "anticipate," "should," "planned," "estimated," and "potential." These forward-looking statements include, but are not limited to statements of our goals, intentions and expectations; statements regarding our business plans, prospects, mergers with Western Bank of Wolf Point, Ruby Valley Bank and The State Bank of Townsend, growth and operating strategies; statements regarding the current global COVID-19 pandemic, statements regarding the asset quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. These factors include, but are not limited to, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; general economic conditions and political events, either nationally or in our market areas, that are worse than expected; the duration and impact of the COVID-19 pandemic, including but not limited to steps taken by governmental and other authorities to contain, mitigate and combat the pandemic, adverse effects on our employees, customers and third-party service providers, the ultimate extent of the impacts on our business, financial position, results of operations, liquidity and prospects, continued deterioration in general business and economic conditions could adversely affect our revenues and the values of our assets and liabilities, lead to a tightening of credit and increase stock price volatility, and potential impairment charges; competition among depository and other financial institutions; loan demand or residential and commercial real estate values in Montana; the concentration of our business in Montana; our ability to continue to increase and manage our commercial real estate, commercial business and agricultural loans; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (including any securities, bank operations, consumer or employee litigation); inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; adverse changes in the securities markets; other economic, governmental, competitive, regulatory and technological factors that may affect our operations; cyber incidents, or theft or loss of Company or customer data or money; the effect of our recent acquisitions, including the failure to achieve expected revenue growth and/or expense savings, the failure to effectively integrate their operations and the diversion of management time on issues related to the integration. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. All information set forth in this press release is current as of the date of this release and the company undertakes no duty or obligation to update this information.

*Use of Non-GAAP Financial Measures*

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

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

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Further, the non-GAAP financial measure of tangible book value per share should not be considered in isolation or as a substitute for book value per share or total shareholders’ equity determined in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Reconciliation of the GAAP and non-GAAP financial measures are presented below.
               
*Balance Sheet*                
(Dollars in thousands, except per share data)     (Unaudited) (Unaudited) (Unaudited)             December 31, September 30, December 31,             2020     2020     2019                      
Assets:                 Cash and due from banks       $ 14,455   $ 19,879   $ 18,094     Interest bearing deposits in banks       47,733     7,672     4,284     Federal funds sold           7,614     45,260     2,540     Total cash and cash equivalents       69,802     72,811     24,918     Securities available-for-sale         162,946     165,353     126,875     FHLB stock           2,060     2,817     4,683     FRB stock           2,974     2,974     2,526     Mortgage loans held-for-sale, at fair value       54,615     41,484     25,612     Loans:                 Real estate loans:               Residential 1-4 family         110,802     110,021     119,296     Residential 1-4 family construction       46,290     42,814     38,602     Commercial real estate         316,668     308,485     331,062     Commercial construction and development     65,281     56,927     52,670     Farmland           65,918     67,061     50,293     Other loans:                 Home equity           56,563     61,460     56,414     Consumer           20,168     20,694     18,882     Commercial           109,209     123,303     72,797     Agricultural           52,242     60,308     40,522     Unearned loan fees         (2,038 )   (2,595 )   (1,303 )   Total loans           841,103     848,478     779,235     Allowance for loan losses         (11,600 )   (11,300 )   (8,600 )   Net loans           829,503     837,178     770,635     Accrued interest and dividends receivable       5,765     6,615     4,577     Mortgage servicing rights, net         10,105     9,518     8,739     Premises and equipment, net         58,762     54,450     40,082     Cash surrender value of life insurance, net       27,753     27,064     23,608     Goodwill           20,798     20,798     15,836     Core deposit intangible, net         2,343     2,505     2,786     Other assets           10,208     11,461     3,383     Total assets         $ 1,257,634   $ 1,255,028   $ 1,054,260                      
Liabilities:                 Deposit accounts:                 Noninterest bearing         318,389     295,058     200,035     Interest bearing           714,694     703,272     608,958     Total deposits         1,033,083     998,330     808,993     Accrued expenses and other liabilities       24,752     19,786     10,317     FHLB advances and other borrowings       17,070     59,777     88,350     Other long-term debt, net         29,791     29,772     24,941     Total liabilities         1,104,696     1,107,665     932,601                      
Shareholders' Equity:                 Preferred stock (par value $0.01 per share; 1,000,000 shares authorized; no shares issued or outstanding)     -     -     -     Common stock (par value $0.01; 20,000,000 shares authorized; 7,110,833, 7,110,833 and 6,714,983 shares issued; 6,775,447, 6,756,107 and 6,423,033 shares outstanding at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)     71     71     67     Additional paid-in capital         77,602     77,612     68,826     Unallocated common stock held by Employee Stock Ownership Plan   (145 )   (185 )   (311 )   Treasury stock, at cost (335,386, 354,726 and 291,950 shares at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)           (4,423 )   (4,630 )   (3,643 )   Retained earnings           73,982     69,478     55,391     Accumulated other comprehensive income, net of tax     5,851     5,017     1,329     Total shareholders' equity       152,938     147,363     121,659     Total liabilities and shareholders' equity   $ 1,257,634   $ 1,255,028   $ 1,054,260                      

               
*Income Statement*      (Unaudited)    (Unaudited)  
(Dollars in thousands, except per share data)     Three Months Ended   Years Ended               December 31, September 30, December 31,   December 31,                 2020     2020   2019      2020   2019  
Interest and dividend income:                   Interest and fees on loans     $ 11,549   $ 11,340 $ 10,966     $ 45,381 $ 42,344   Securities available-for-sale       889     874   870       3,742   3,672   FRB and FHLB dividends       86     95   111       370   408   Other interest income       27     30   32       161   87     Total interest and dividend income       12,551     12,339   11,979       49,654   46,511  
Interest expense:                     Interest expense on deposits       551     779   1,160       3,614   3,893   FHLB advances and other borrowings       117     261   445       1,183   2,387   Other long-term debt       391     521   357       1,687   1,446     Total interest expense       1,059     1,561   1,962       6,484   7,726  
Net interest income         11,492     10,778   10,017       43,170   38,785  
Loan loss provision         379     854   632       3,130   2,627     Net interest income after loan loss provision     11,113     9,924   9,385       40,040   36,158                            
Noninterest income:                   Service charges on deposit accounts       282     282   337       1,096   1,219   Net gain on sale of mortgage loans       11,959     11,101   5,224       36,391   16,675   Mortgage banking, net       (1,504 )   2,204   (156 )     5,660   2,321   Interchange and ATM fees       415     407   350       1,538   1,327   Appreciation in cash surrender value of life insurance     165     160   148       645   720   Net (loss) gain on sale of available-for-sale securities     (335 )   -   20       733   69   Net gain on sale/disposal of premises and equipment     -     -   48       4   486   Other noninterest income       1,112     817   522       3,000   1,024     Total noninterest income       12,094     14,971   6,493       49,067   23,841                            
Noninterest expense:                   Salaries and employee benefits       10,562     11,325   7,576       38,836   27,633   Occupancy and equipment expense       1,342     1,280   1,193       5,019   4,422   Data processing       1,215     1,168   1,007       4,722   3,722   Advertising         287     208   228       911   1,028   Amortization         164     165   320       659   812   Loan costs         669     566   251       1,880   805   FDIC insurance premiums       75     75   2       222   81   Postage           103     76   52       363   289   Professional and examination fees       254     389   285       1,335   1,052   Acquisition costs       -     -   505       157   2,198   Other noninterest expense       1,670     1,093   1,163       6,563   3,989     Total noninterest expense       16,341     16,345   12,582       60,667   46,031                            
Income before provision for income taxes       6,866     8,550   3,296       28,440   13,968  
Provision for Income taxes       1,702     2,170   959       7,234   3,096  
Net income         $ 5,164   $ 6,380 $ 2,337     $ 21,206 $ 10,872                            
Basic earnings per share     $ 0.76   $ 0.94 $ 0.36     $ 3.12 $ 1.69  
Diluted earnings per share     $ 0.76   $ 0.94 $ 0.36     $ 3.11 $ 1.69                            
Basic weighted average shares outstanding       6,768,720     6,776,417   6,416,516       6,795,503   6,419,654                            
Diluted weighted average shares outstanding       6,815,072     6,813,739   6,430,454       6,820,306   6,437,604                            


*ADDITIONAL FINANCIAL INFORMATION*  (Unaudited)
(Dollars in thousands, except per share data) Three Months Ended     December 31, September 30, December 31,       2020     2020     2019            
*Mortgage Banking Activity (For the quarter):*       Mortgage servicing (loss) income, net $ (152 ) $ (39 ) $ 179   Net (loss) gain on mortgage banking derivatives   (1,755 )   2,961     (511 ) Net gain (loss) on fair value of loans held-for-sale   403     (718 )   176   Mortgage banking, net   $ (1,504 ) $ 2,204   $ (156 )          
*Mortgage Banking Activity (Year-to-date):*       Mortgage servicing (loss) income, net $ (308 ) $ (156 ) $ 984   Net gain on mortgage banking derivatives   4,608     6,363     353   Net gain on fair value of loans held-for-sale   1,360     957     984   Mortgage banking, net   $ 5,660   $ 7,164   $ 2,321            
*Performance Ratios (For the quarter):*       Return on average assets   1.63 %   2.05 %   0.89 % Return on average equity   13.68 %   17.77 %   7.64 % Net interest margin   4.03 %   3.85 %   4.22 % Core efficiency ratio*   68.59 %   62.84 %   71.21 %          
*Performance Ratios (Year-to-date):*       Return on average assets   1.74 %   1.78 %   1.08 % Return on average equity   15.02 %   15.51 %   9.39 % Net interest margin   3.94 %   3.91 %   4.25 % Core efficiency ratio*   64.89 %   63.62 %   68.70 %          
*Asset Quality Ratios and Data:* As of or for the Three Months Ended     December 31, September 30, December 31,       2020     2020     2019             Nonaccrual loans   $ 6,257   $ 5,600   $ 3,395   Loans 90 days past due and still accruing   392     57     1,809   Restructured loans, net   1,824     1,825     246   Total nonperforming loans     8,473     7,482     5,450   Other real estate owned and other repossessed assets   25     25     26   Total nonperforming assets   $ 8,498   $ 7,507   $ 5,476             Nonperforming loans / portfolio loans   1.01 %   0.88 %   0.70 % Nonperforming assets / assets   0.68 %   0.60 %   0.52 % Allowance for loan losses / portfolio loans   1.38 %   1.33 %   1.10 % Allowance / nonperforming loans   136.91 %   151.03 %   157.80 % Gross loan charge-offs for the quarter $ 98   $ 82   $ 271   Gross loan recoveries for the quarter $ 20   $ 27   $ 38   Net loan charge-offs for the quarter $ 78   $ 55   $ 233            
*ADDITIONAL FINANCIAL INFORMATION (Continued)*   (Unaudited)  
(Dollars in thousands, except per share data) December 31, September 30, December 31,       2020     2020     2019  
*Capital Data (At quarter end):*       Tangible book value per share** $ 19.16   $ 18.36   $ 16.04   Shares outstanding   6,775,447     6,756,107     6,423,033   Tangible common equity to tangible assets***   10.51 %   10.07 %   9.95 %          
*Other Information:*       Average total assets for the quarter $ 1,268,402   $ 1,244,918   $ 1,044,642   Average total assets year-to-date $ 1,219,890   $ 1,203,719   $ 1,010,017   Average earning assets for the quarter $ 1,131,621   $ 1,115,606   $ 941,568   Average earning assets year-to-date $ 1,092,551   $ 1,079,527   $ 912,372   Average loans for the quarter **** $ 888,331   $ 902,543   $ 795,678   Average loans year-to-date **** $ 874,669   $ 870,114   $ 764,075   Average equity for the quarter $ 151,002   $ 143,608   $ 122,334   Average equity year-to-date $ 141,160   $ 137,880   $ 115,794   Average deposits for the quarter $ 1,024,871   $ 971,043   $ 807,539   Average deposits year-to-date $ 954,500   $ 931,043   $ 757,907            
* The core efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of acquisition costs and intangible asset amortization, by the sum of net interest income and non-interest income.
** The tangible book value per share is a non-GAAP ratio that is calculated by dividing shareholders' equity, less goodwill and core deposit intangible, by common shares outstanding.
*** The tangible common equity to tangible assets is a non-GAAP ratio that is calculated by dividing shareholders' equity, less goodwill and core deposit intangible, by total assets, less goodwill and core deposit intangible.
**** Includes loans held for sale


*Core Efficiency Ratio* (Unaudited)   (Unaudited)  
(Dollars in thousands) Three Months Ended   Years Ended           December 31, September 30, December 31,   December 31,             2020     2020     2019       2020     2019    
Calculation of Core Efficiency Ratio:               Noninterest expense $ 16,341   $ 16,345   $ 12,582     $ 60,667   $ 46,031     Acquisition costs   -     -     (505 )     (157 )   (2,198 )   Intangible asset amortization   (164 )   (165 )   (320 )     (659 )   (812 )     Core efficiency ratio numerator   16,177     16,180     11,757       59,851     43,021                           Net interest income   11,492     10,778     10,017       43,170     38,785     Noninterest income   12,094     14,971     6,493       49,067     23,841       Core efficiency ratio denominator   23,586     25,749     16,510       92,237     62,626                           Core efficiency ratio   68.59 %   62.84 %   71.21 %     64.89 %   68.70 %                        


*Tangible Book Value and Tangible Assets*   (Unaudited)  
(Dollars in thousands, except per share data)   December 31, September 30, December 31,               2020     2020     2019    
Tangible Book Value:               Shareholders' equity     $ 152,938   $ 147,363   $ 121,659     Goodwill and core deposit intangible, net     (23,141 )   (23,303 )   (18,622 )   Tangible common shareholders' equity   $ 129,797   $ 124,060   $ 103,037                       Common shares outstanding at end of period   6,775,447     6,756,107     6,423,033                       Common shareholders' equity (book value) per share (GAAP) $ 22.57   $ 21.81   $ 18.94                       Tangible common shareholders' equity (tangible book value) per share (non-GAAP)     $ 19.16   $ 18.36   $ 16.04                      
Tangible Assets:               Total assets       $ 1,257,634   $ 1,255,028   $ 1,054,260     Goodwill and core deposit intangible, net     (23,141 )   (23,303 )   (18,622 )   Tangible assets (non-GAAP)     $ 1,234,493   $ 1,231,725   $ 1,035,638                       Tangible common shareholders' equity to tangible assets (non-GAAP)         10.51 %   10.07 %   9.95 %                    

 
*Earnings Per Diluted Share, Excluding Acquisition Costs* (Unaudited)   (Unaudited)  
(Dollars in thousands, except per share data) Three Months Ended   Years Ended           December 31, September 30, December 31,   December 31,           2020 2020 2019     2020     2019                          
Net interest income after loan loss provision $ 11,113 $ 9,924 $ 9,385     $ 40,040   $ 36,158    
Noninterest income       12,094   14,971   6,493       49,067     23,841                          
Noninterest expense       16,341   16,345   12,582       60,667     46,031     Acquisition costs       -   -   (505 )     (157 )   (2,198 )  
Noninterest expense, excluding acquisition costs   16,341   16,345   12,077       60,510     43,833                          
Income before income taxes     6,866   8,550   3,801       28,597     16,166    
Income tax expense, excluding acquisition costs related taxes     1,702   2,170   1,106       7,274     3,583    
Net Income, excluding acquisition costs $ 5,164 $ 6,380 $ 2,695     $ 21,323   $ 12,583                          
Diluted earnings per share (GAAP)   $ 0.76 $ 0.94 $ 0.36     $ 3.11   $ 1.69    
Diluted earnings per share, excluding acquisition costs (non-GAAP)   $ 0.76 $ 0.94 $ 0.42     $ 3.13   $ 1.95                          

*Return on Average Assets, Excluding Acquisition Costs*   (Unaudited)
(Dollars in thousands)     December 31, September 30, December 31,           2020     2020     2019  
*For the quarter:*           Net income, excluding acquisition costs (non-GAAP)*   $ 5,164   $ 6,380   $ 2,695   Average total assets quarter-to-date     $ 1,268,402   $ 1,244,918   $ 1,044,642   Return on average assets, excluding acquisition costs (non-GAAP)   1.63 %   2.05 %   1.03 %              
*Year-to-date:*           Net income, excluding acquisition costs (non-GAAP)*   $ 21,323   $ 16,159   $ 12,583   Average total assets year-to-date     $ 1,219,890   $ 1,203,719   $ 1,010,017   Return on average assets, excluding acquisition costs (non-GAAP)   1.75 %   1.79 %   1.25 %              
* See Earnings Per Diluted Share, Excluding Acquisition Costs table for GAAP to non-GAAP reconciliation.
   
Contacts:   Peter J. Johnson, President and CEO   (406) 457-4006   Laura F. Clark, EVP and CFO   (406) 457-4007