EBMT Eagle Bancorp Montana Inc

Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana (the “Bank”), today reported net income of $2.2 million, or $0.28 per diluted share, in the fourth quarter of 2023, compared to $2.6 million, or $0.34 per diluted share, in the preceding quarter, and $3.6 million, or $0.47 per diluted share, in the fourth quarter of 2022. For the year 2023, net income was $10.1 million, or $1.29 per diluted share, compared to $10.7 million, or $1.45 per diluted share, in 2022.

Eagle’s board of directors declared a quarterly cash dividend to $0.14 per share on January 18, 2024. The dividend will be payable March 1, 2024 to shareholders of record February 9, 2024. The current dividend represents an annualized yield of 3.81% based on recent market prices.

“Our full year 2023 results reflect steady organic loan growth,” said Laura F. Clark, President and CEO. “We made efforts to attract high quality loans and were successful, achieving loan growth of 9.7% for the year. The total loan portfolio yield of 5.70% improved four basis points from the prior quarter. Additionally, we have maintained strong credit fundamentals, and our asset quality metrics continue to be solid. While the high interest rate environment continues to be a challenge, we are well positioned with a strong balance sheet to continue our steady growth in 2024.”

Fourth Quarter 2023 Highlights (at or for the three-month period ended December 31, 2023, except where noted):

• Net income was $2.2 million, or $0.28 per diluted share, in the fourth quarter of 2023, compared to $2.6 million, or $0.34 per diluted share, in the preceding quarter, and $3.6 million, or $0.47 per diluted share, in the fourth quarter a year ago.
• Net interest margin (“NIM”) was 3.32% in the fourth quarter of 2023, compared to 3.41% in the preceding quarter, and a 78 basis point contraction compared to 4.10% in the fourth quarter a year ago.
• Revenues (net interest income before the provision for credit losses, plus noninterest income) were $21.0 million in the fourth quarter of 2023, compared to $21.6 million in the preceding quarter and $22.9 million in the fourth quarter a year ago.
• The accretion of the loan purchase discount into loan interest income from acquisitions was $168,000 in the fourth quarter of 2023, compared to accretion on purchased loans from acquisitions of $175,000 in the preceding quarter.
• Total loans increased 9.7% to $1.48 billion, at December 31, 2023, compared to $1.35 billion a year earlier, and changed minimally compared to September 30, 2023.
• The allowance for credit losses represented 1.11% of portfolio loans and 196.0% of nonperforming loans at December 31, 2023. The allowance for loan losses represented 1.03% of portfolio loans and 180.0% of nonperforming loans at December 31, 2022.
• The Company’s available borrowing capacity was approximately $398.5 million at December 31, 2023.

		December 31, 2023
	(Dollars in thousands)	Borrowings Outstanding		Remaining Borrowing Capacity
	Federal Home Loan Bank advances	$	175,737		$	266,017
	Federal Reserve Bank discount window		-			32,472
	Correspondent bank lines of credit		-			100,000
	Total	$	175,737		$	398,489

• The Company paid a quarterly cash dividend in the fourth quarter of $0.14 per share on December 1, 2023 to shareholders of record November 10, 2023.

Balance Sheet Results

Eagle’s total assets increased 6.5% to $2.08 billion at December 31, 2023, compared to $1.95 billion a year ago, and increased 0.6% from $2.06 billion three months earlier. The investment securities portfolio totaled $318.3 million at December 31, 2023, compared to $349.5 million a year ago, and $308.8 million at September 30, 2023.

Eagle originated $92.0 million in new residential mortgages during the quarter and sold $26.2 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.86%. This production compares to residential mortgage originations of $114.1 million in the preceding quarter with sales of $109.0 million and an average gross margin on sale of mortgage loans of approximately 3.29%.

Total loans increased $130.8 million, or 9.7%, compared to a year ago, and $8.7 million, or 0.6%, from three months earlier. Commercial real estate loans increased 12.9% to $608.7 million at December 31, 2023, compared to $539.1 million a year earlier. Agricultural and farmland loans increased 11.4% to $267.9 million at December 31, 2023, compared to $240.4 million a year earlier. We continue to build expertise in agricultural lending. Commercial construction and development loans increased 4.6% to $158.1 million, compared to $151.1 million a year ago. Residential mortgage loans increased 15.2% to $156.6 million, compared to $135.9 million a year earlier. Commercial loans increased 4.3% to $132.7 million, compared to $127.3 million a year ago. Home equity loans increased 17.0% to $86.9 million, residential construction loans decreased 27.3% to $43.4 million, and consumer loans increased 9.1% to $30.1 million, compared to a year ago.

Total deposits were $1.64 billion at December 31, 2023, which was unchanged compared to December 31, 2022, and a 1.2% increase compared to $1.62 billion at September 30, 2023. Noninterest-bearing checking accounts represented 25.6%, interest-bearing checking accounts represented 12.9%, savings accounts represented 14.1%, money market accounts comprised 20.2% and time certificates of deposit made up 27.2% of the total deposit portfolio at December 31, 2023. Time certificates of deposit include $72.4 million in brokered certificates at December 31, 2023, compared to none at December 31, 2022 and $40.0 million at September 30, 2023. The average cost of deposits was 1.49% in the fourth quarter of 2023, compared to 1.28% in the preceding quarter and 0.40% in the fourth quarter of 2022. The estimated amount of uninsured deposits at December 31, 2023 was $275.4 million, or 17% of total deposits, compared to $283.3 million, or 17% of total deposits, at September 30, 2023.

“Our deposit mix has leaned towards higher cost time deposits, while the increase in overall cost of deposits has slowed. We anticipate deposit rates will stabilize during the first half of 2024,” said Miranda Spaulding, CFO.

Shareholders’ equity was $169.3 million at December 31, 2023, compared to $158.4 million a year earlier and $157.3 million three months earlier. Book value per share was $21.11 at December 31, 2023, compared to $19.79 a year earlier and $19.69 three months earlier. Tangible book value per share, a non-GAAP financial measure calculated by dividing shareholders’ equity, less goodwill and core deposit intangible, by common shares outstanding, was $16.05 at December 31, 2023, compared to $14.52 a year earlier and $14.55 three months earlier.

Operating Results

“Our NIM contracted over the linked quarter as the increase in cost of funds continued to outpace the growth in yields on earning assets,” said Clark. “We anticipate funding costs to start to stabilize over the next several quarters.”

Eagle’s NIM was 3.32% in the fourth quarter of 2023, compared to 3.41% in the preceding quarter, and a 78 basis point contraction compared to 4.10% in the fourth quarter a year ago. The interest accretion on acquired loans totaled $168,000 and resulted in a four basis-point increase in the NIM during the fourth quarter of 2023, compared to $175,000 and a four basis-point increase in the NIM during the preceding quarter. Funding costs for the fourth quarter were 2.58%, compared to 2.37% in the third quarter of 2023. Funding costs were 0.85% in the fourth quarter of 2022. Average yields on interest earning assets for the fourth quarter of 2023 increased to 5.36%, compared to 5.27% in the third quarter of 2023 and 4.72% in the fourth quarter a year ago. For the year, the NIM was 3.51% compared to 4.03% for 2022.

Net interest income, before the provision for credit losses, decreased 2.5% to $15.2 million in the fourth quarter of 2023, compared to $15.6 million in the third quarter of 2023, and decreased 13.7% compared to $17.6 million in the fourth quarter of 2022. For the year 2023, net interest income decreased 1.3% to $62.5 million, compared to $63.3 million in 2022.

Fourth quarter revenues decreased 2.8% to $21.0 million, compared to $21.6 million in the preceding quarter and decreased 8.3% compared to $22.9 million in the fourth quarter a year ago. For the year, revenues were $85.2 million, compared to $89.5 million in 2022. The decrease compared to a year ago was largely due to lower volumes in mortgage banking activity.

Eagle’s total noninterest income decreased 3.7% to $5.8 million in the fourth quarter of 2023, compared to $6.0 million in the preceding quarter, and increased 9.7% compared to $5.3 million in the fourth quarter a year ago. Net mortgage banking, the largest component of noninterest income, totaled $3.7 million in the fourth quarter of 2023, compared to $4.3 million in the preceding quarter and $3.3 million in the fourth quarter a year ago. For the year, noninterest income decreased 13.3% to $22.7 million, compared to $26.2 million in 2022. Net mortgage banking revenue decreased 23.2% to $15.0 million in 2023, compared to $19.5 million in 2022. These decreases were largely driven by a decline in net gain on sale of mortgage loans. This was impacted by lower loan volumes and margin compression.

Fourth quarter noninterest expense increased 5.7% to $18.9 million, compared to $17.9 million in the preceding quarter and increased 4.0% compared to $18.2 million in the fourth quarter a year ago. For the year, noninterest expense decreased 2.2% to $72.1 million, compared to $73.7 million in 2022. The decrease year-over-year was largely due to acquisition costs in 2022.

For the fourth quarter of 2023, the Company recorded an income tax benefit of $315,000, compared to an income tax provision of $524,000 in the preceding quarter and $787,000 in the fourth quarter of 2022. The effective tax rate for the year was 13.7%, compared to 22.7% for the same period in 2022. The anticipated effective tax rate for 2023 was lower due to the increase in proportion of tax-exempt income compared to the pretax earnings. In addition, during 2023 the Company recorded tax credits and other tax benefits related to investments in low income housing tax credit projects.

Credit Quality

Beginning January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326), which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. The adoption resulted in a $700,000 increase to the allowance for credit losses, a $1.5 million increase to the allowance for unfunded loan commitments, and a net-of-tax cumulative effect adjustment of $1.6 million which decreased the beginning balance of retained earnings.

The provision for credit losses was $270,000 in the fourth quarter of 2023, compared to $588,000 in the preceding quarter and $347,000 in the fourth quarter a year ago. The allowance for credit losses represented 195.2% of nonperforming loans at December 31, 2023, compared to 209.3% three months earlier and 180.0% a year earlier. Nonperforming loans were $8.4 million at December 31, 2023, $7.8 million at September 30, 2023, and $7.8 million a year earlier.

Eagle had $5,000 of other real estate owned and other repossessed assets on its books at December 31, 2023. There was no other real estate owned and other repossessed assets at September 30, 2023 or December 31, 2022.

Net loan charge-offs totaled $10,000 in the fourth quarter of 2023, compared to net loan charge-offs of $108,000 in the preceding quarter and net loan charge-offs of $197,000 in the fourth quarter a year ago. The allowance for credit losses was $16.4 million, or 1.11% of total loans, at December 31, 2023, compared to $16.2 million, or 1.10% of total loans, at September 30, 2023, and $14.0 million, or 1.03% of total loans, a year ago. In addition, during

Capital Management

The ratio of tangible common shareholders’ equity (shareholders’ equity, less goodwill and core deposit intangible) to tangible assets (total assets, less goodwill and core deposit intangible) increased to 6.32% at December 31, 2023 from 6.10% a year ago and 5.75% three months earlier. Shareholders’ equity has been impacted by an accumulated other comprehensive loss related to securities available-for-sale, which resulted from unrealized losses primarily related to rapid increases in interest rates. The improvement for December 31, 2023 compared to the prior quarter was driven by the decline in interest rates on the intermediate to long end of the yield curve over the past quarter. As of December 31, 2023, the Bank’s regulatory capital was in excess of all applicable regulatory requirements and is deemed well capitalized. The Bank’s Tier 1 capital to adjusted total average assets was 9.78% as of December 31, 2023.

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 29 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, growth and operating strategies; statements regarding the asset quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of 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 emergence or continuation of widespread health emergencies or pandemics including the magnitude and duration of the COVID-19 pandemic, including but not limited to vaccine efficacy and immunization rates, new variants, 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 increase in cyberattacks in the current work-from-home environment, 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; the impact of adverse developments affecting the U.S. banking industry, including the associated impact of any continuing regulatory changes or other mitigation efforts taken by governmental agencies in bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory response thereto; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior, adverse developments with respect to U.S. economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures and labor shortages on economic conditions and our business; an inability to access capital markets or maintain deposits or borrowing costs; 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 that lead to impairment in the value of our investment securities and goodwill; other economic, governmental, competitive, regulatory and technological factors that may affect our operations; our ability to implement new technologies and maintain secure and reliable technology systems including those that involve the Bank’s third-party vendors and service providers; cyber incidents, or theft or loss of Company or customer data or money; our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; the effect of our recent or future acquisitions, including the failure to achieve expected revenue growth and/or expense savings, the failure to effectively integrate their operations, the outcome of any legal proceedings 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 financial measures 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 related taxes and 5) return on average assets, excluding acquisition costs and related taxes. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and performance trends, 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. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. 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)
			December 31,			September 30,			December 31,
				2023			2023			2022
Assets:
	Cash and due from banks		$	23,243		$	19,743		$	19,321
	Interest bearing deposits in banks			1,302			1,040			2,490
		Total cash and cash equivalents		24,545			20,783			21,811
	Securities available-for-sale, at fair value			318,279			308,786			349,495
	Federal Home Loan Bank ("FHLB") stock			9,191			10,438			5,089
	Federal Reserve Bank ("FRB") stock			4,131			4,131			4,131
	Mortgage loans held-for-sale, at fair value			11,432			17,880			8,250
	Loans:
	Real estate loans:
	Residential 1-4 family			156,578			146,938			135,947
	Residential 1-4 family construction			43,434			48,135			59,756
	Commercial real estate			608,691			611,963			539,070
	Commercial construction and development			158,132			151,614			151,145
	Farmland			142,590			143,789			136,334
	Other loans:
	Home equity			86,932			83,221			74,271
	Consumer			30,125			29,832			27,609
	Commercial			132,709			129,952			127,255
	Agricultural			125,298			130,329			104,036
	Unearned loan fees (1)			-			-			(1,745	)
		Total loans		1,484,489			1,475,773			1,353,678
	Allowance for credit losses (2)			(16,440	)		(16,230	)		(14,000	)
		Net loans		1,468,049			1,459,543			1,339,678
	Accrued interest and dividends receivable			12,485			13,657			11,284
	Mortgage servicing rights, net			15,853			15,738			15,412
	Assets held-for-sale, at fair value			-			-			1,305
	Premises and equipment, net			94,282			92,979			84,323
	Cash surrender value of life insurance, net			47,939			47,647			47,724
	Goodwill			34,740			34,740			34,740
	Core deposit intangible, net			5,880			6,264			7,459
	Other assets			28,860			30,478			17,683
		Total assets	$	2,075,666		$	2,063,064		$	1,948,384
Liabilities:
	Deposit accounts:
	Noninterest bearing			418,727			435,655			468,955
	Interest bearing			1,216,468			1,179,823			1,166,317
		Total deposits		1,635,195			1,615,478			1,635,272
	Accrued expenses and other liabilities			36,462			31,597			26,458
	FHLB advances and other borrowings			175,737			199,757			69,394
	Other long-term debt, net			58,999			58,962			58,844
		Total liabilities		1,906,393			1,905,794			1,789,968
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;
	8,507,429 shares issued; 8,016,784, 7,988,132 and 8,006,033
	shares outstanding at December 31, 2023, September 30, 2023, and
	December 31, 2022, respectively			85			85			85
	Additional paid-in capital			108,819			109,422			109,164
	Unallocated common stock held by Employee Stock Ownership Plan			(4,583	)		(4,727	)		(5,156	)
	Treasury stock, at cost (490,645, 519,297 and 501,396 shares at
	December 31, 2023, September 30, 2023 and December 31, 2022, respectively)			(11,124	)		(11,574	)		(11,343	)
	Retained earnings			96,021			94,979			92,023
	Accumulated other comprehensive loss, net of tax			(19,945	)		(30,915	)		(26,357	)
		Total shareholders' equity		169,273			157,270			158,416
		Total liabilities and shareholders' equity	$	2,075,666		$	2,063,064		$	1,948,384
(1) Unearned loan fees are included in individual loan categories for December 31, 2023 and September 30, 2023.
(2) Allowance for credit losses on loans at December 31, 2023 and September 30, 2023; allowance for loan losses for prior period.

Income Statement						(Unaudited)					(Unaudited)
(Dollars in thousands, except per share data)			Three Months Ended								Years Ended
			December 31,			September 30,		December 31,			December 31,
				2023			2023		2022			2023			2022
Interest and dividend income:
	Interest and fees on loans		$	21,481		$	21,068	$	17,420		$	79,423		$	60,353
	Securities available-for-sale			2,790			2,794		2,716			11,376			8,579
	FRB and FHLB dividends			247			212		142			727			302
	Other interest income			23			20		22			89			228
		Total interest and dividend income		24,541			24,094		20,300			91,615			69,462
Interest expense:
	Interest expense on deposits			6,090			5,152		1,673			17,857			3,124
	FHLB advances and other borrowings			2,569			2,672		357			8,562			514
	Other long-term debt			684			683		657			2,719			2,512
		Total interest expense		9,343			8,507		2,687			29,138			6,150
Net interest income				15,198			15,587		17,613			62,477			63,312
Provision for credit losses (1)				270			588		347			1,456			2,001
		Net interest income after provision for credit losses		14,928			14,999		17,266			61,021			61,311
Noninterest income:
	Service charges on deposit accounts			444			447		445			1,757			1,668
	Mortgage banking, net			3,718			4,338		3,306			14,970			19,489
	Interchange and ATM fees			663			643		707			2,524			2,375
	Appreciation in cash surrender value of life insurance			301			382		287			1,466			1,035
	Net loss on sale of available-for-sale securities			-			-		-			(222	)		(6	)
	Other noninterest income			686			225		555			2,227			1,659
		Total noninterest income		5,812			6,035		5,300			22,722			26,220
Noninterest expense:
	Salaries and employee benefits			11,359			10,837		11,010			42,973			44,521
	Occupancy and equipment expense			1,972			1,956		2,160			8,072			7,601
	Data processing			1,673			1,486		1,367			5,943			5,995
	Advertising			445			340		367			1,375			1,419
	Amortization			386			386		439			1,587			1,334
	Loan costs			461			517		412			1,887			2,036
	FDIC insurance premiums			288			301		229			1,150			559
	Professional and examination fees			438			408		371			1,922			1,469
	Acquisition costs			-			-		-			-			2,296
	Other noninterest expense			1,869			1,644		1,802			7,180			6,453
		Total noninterest expense		18,891			17,875		18,157			72,089			73,683
Income before (benefit) provision for income taxes				1,849			3,159		4,409			11,654			13,848
(Benefit) provision for income taxes				(315	)		524		787			1,598			3,147
Net income			$	2,164		$	2,635	$	3,622		$	10,056		$	10,701
Basic earnings per share			$	0.28		$	0.34	$	0.47		$	1.29		$	1.45
Diluted earnings per share			$	0.28		$	0.34	$	0.47		$	1.29		$	1.45
Basic weighted average shares outstanding				7,809,274			7,784,279		7,776,145			7,793,352			7,376,275
Diluted weighted average shares outstanding				7,815,022			7,791,966		7,777,552			7,798,244			7,386,253
(1) Provision for credit losses on loans for the quarter ended December 31, 2023 and September 30, 2023; provision for loan losses for prior periods.

ADDITIONAL FINANCIAL INFORMATION						(Unaudited)
(Dollars in thousands, except per share data)			Three Months Ended or Years Ended
			December 31,			September 30,			December 31,
				2023			2023			2022
Mortgage Banking Activity (For the quarter):
	Net gain on sale of mortgage loans		$	2,845		$	3,591		$	2,965
	Net change in fair value of loans held-for-sale and derivatives			(40	)		(71	)		(509	)
	Mortgage servicing income, net			913			818			850
		Mortgage banking, net	$	3,718		$	4,338		$	3,306
Mortgage Banking Activity (Year-to-date):
	Net gain on sale of mortgage loans		$	11,396					$	18,610
	Net change in fair value of loans held-for-sale and derivatives			194						(1,842	)
	Mortgage servicing income, net			3,380						2,721
		Mortgage banking, net	$	14,970					$	19,489
Performance Ratios (For the quarter):
	Return on average assets			0.42	%		0.51	%		0.75	%
	Return on average equity			5.68	%		6.63	%		9.38	%
	Yield on average interest earning assets			5.36	%		5.27	%		4.72	%
	Cost of funds			2.58	%		2.37	%		0.85	%
	Net interest margin			3.32	%		3.41	%		4.10	%
	Core efficiency ratio*			88.08	%		80.89	%		77.33	%
Performance Ratios (Year-to-date):
	Return on average assets			0.50	%					0.60	%
	Return on average equity			6.33	%					6.87	%
	Yield on average interest earning assets			5.14	%					4.42	%
	Cost of funds			2.11	%					0.54	%
	Net interest margin			3.51	%					4.03	%
	Core efficiency ratio*			82.75	%					78.24	%
* 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.
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands, except per share data)
Asset Quality Ratios and Data:			As of or for the Three Months Ended
			December 31,			September 30,			December 31,
				2023			2023			2022
	Nonaccrual loans		$	8,395		$	7,753		$	2,200
	Loans 90 days past due and still accruing			26			-			1,076
	Restructured loans, net			-			-			4,502
		Total nonperforming loans		8,421			7,753			7,778
	Other real estate owned and other repossessed assets			5			-			-
		Total nonperforming assets		8,426		$	7,753		$	7,778
	Nonperforming loans / portfolio loans			0.57	%		0.53	%		0.57	%
	Nonperforming assets / assets			0.41	%		0.38	%		0.40	%
	Allowance for credit losses / portfolio loans			1.11	%		1.10	%		1.03	%
	Allowance for credit losses/ nonperforming loans			195.23	%		209.34	%		179.99	%
	Gross loan charge-offs for the quarter		$	11		$	122		$	216
	Gross loan recoveries for the quarter		$	1		$	14		$	19
	Net loan charge-offs for the quarter		$	10		$	108		$	197
			December 31,			September 30,			December 31,
				2023			2023			2022
Capital Data (At quarter end):
	Common shareholders' equity (book value) per share		$	21.11		$	19.69		$	19.79
	Tangible book value per share**		$	16.05		$	14.55		$	14.52
	Shares outstanding			8,016,784			7,988,132			8,006,033
	Tangible common equity to tangible assets***			6.32	%		5.75	%		6.10	%
Other Information:
	Average investment securities for the quarter		$	306,678		$	319,308		$	348,267
	Average investment securities year-to-date		$	328,533		$	335,898		$	336,779
	Average loans for the quarter ****		$	1,494,181		$	1,476,584		$	1,345,776
	Average loans year-to-date ****		$	1,436,672		$	1,417,291		$	1,194,788
	Average earning assets for the quarter		$	1,817,419		$	1,812,610		$	1,705,349
	Average earning assets year-to-date		$	1,780,727		$	1,768,361		$	1,572,106
	Average total assets for the quarter		$	2,062,267		$	2,052,443		$	1,934,002
	Average total assets year-to-date		$	2,015,586		$	1,999,864		$	1,768,919
	Average deposits for the quarter		$	1,626,598		$	1,602,770		$	1,655,298
	Average deposits year-to-date		$	1,603,861		$	1,596,201		$	1,514,158
	Average equity for the quarter		$	152,516		$	158,933		$	154,409
	Average equity year-to-date		$	158,807		$	160,917		$	155,655
** 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.

Reconciliation of Non-GAAP Financial Measures
Core Efficiency Ratio							(Unaudited)							(Unaudited)
(Dollars in thousands)				Three Months Ended										Years Ended
				December 31,			September 30,			December 31,				December 31,
					2023			2023			2022				2023			2022
Calculation of Core Efficiency Ratio:
	Noninterest expense			$	18,891		$	17,875		$	18,157			$	72,089		$	73,683
	Acquisition costs				-			-			-				-			(2,296	)
	Intangible asset amortization				(386	)		(386	)		(439	)			(1,587	)		(1,334	)
		Core efficiency ratio numerator			18,505			17,489			17,718				70,502			70,053
	Net interest income				15,198			15,587			17,613				62,477			63,312
	Noninterest income				5,812			6,035			5,300				22,722			26,220
		Core efficiency ratio denominator			21,010			21,622			22,913				85,199			89,532
	Core efficiency ratio (non-GAAP)				88.08	%		80.89	%		77.33	%			82.75	%		78.24	%

Tangible Book Value and Tangible Assets				(Unaudited)
(Dollars in thousands, except per share data)				December 31,			September 30,			December 31,
					2023			2023			2022
Tangible Book Value:
	Shareholders' equity			$	169,273		$	157,270		$	158,416
	Goodwill and core deposit intangible, net				(40,620	)		(41,004	)		(42,199	)
		Tangible common shareholders' equity (non-GAAP)		$	128,653		$	116,266		$	116,217
	Common shares outstanding at end of period				8,016,784			7,988,132			8,006,033
	Common shareholders' equity (book value) per share (GAAP)			$	21.11		$	19.69		$	19.79
	Tangible common shareholders' equity (tangible book value)
		per share (non-GAAP)		$	16.05		$	14.55		$	14.52
Tangible Assets:
	Total assets			$	2,075,666		$	2,063,064		$	1,948,384
	Goodwill and core deposit intangible, net				(40,620	)		(41,004	)		(42,199	)
		Tangible assets (non-GAAP)		$	2,035,046		$	2,022,060		$	1,906,185
	Tangible common shareholders' equity to tangible assets
		(non-GAAP)			6.32	%		5.75	%		6.10	%

Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes		(Unaudited)								(Unaudited)
(Dollars in thousands, except per share data)		Three Months Ended								Years Ended
		December 31,			September 30,		December 31,			December 31,
			2023			2023		2022			2023		2022
Net interest income after provision for credit losses		$	14,928		$	14,999	$	17,266		$	61,021	$	61,311
Noninterest income			5,812			6,035		5,300			22,722		26,220
Noninterest expense			18,891			17,875		18,157			72,089		73,683
	Acquisition costs		-			-		-			-		(2,296	)
Noninterest expense, excluding acquisition costs (non-GAAP)			18,891			17,875		18,157			72,089		71,387
Income before (benefit) provision for income taxes, excluding acquisition costs			1,849			3,159		4,409			11,654		16,144
(Benefit) provision for income taxes, excluding acquisition costs
	related taxes (non-GAAP)		(315	)		524		787			1,598		3,669
Net Income, excluding acquisition costs and related taxes (non-GAAP)		$	2,164		$	2,635	$	3,622		$	10,056	$	12,475
Diluted earnings per share (GAAP)		$	0.28		$	0.34	$	0.47		$	1.29	$	1.45
Diluted earnings per share, excluding acquisition costs and related
	taxes (non-GAAP)	$	0.28		$	0.34	$	0.47		$	1.29	$	1.69

Return on Average Assets, Excluding Acquisition Costs and Related Taxes		(Unaudited)
(Dollars in thousands)		December 31,			September 30,			December 31,
			2023			2023			2022
For the quarter:
	Net income, excluding acquisition costs and related taxes (non-GAAP)*	$	2,164		$	2,635		$	3,622
	Average total assets quarter-to-date	$	2,062,267		$	2,052,443		$	1,934,002
	Return on average assets, excluding acquisition costs and related taxes (non-GAAP)		0.42	%		0.51	%		0.75	%
Year-to-date:
	Net income, excluding acquisition costs and related taxes (non-GAAP)*	$	10,056		$	7,892		$	12,475
	Average total assets year-to-date	$	2,015,586		$	1,999,864		$	1,768,919
	Return on average assets, excluding acquisition costs and related taxes (non-GAAP)		0.50	%		0.53	%		0.71	%
* See Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes table for GAAP to non-GAAP reconciliation.

Contacts:	Laura F. Clark, President and CEO
	(406) 457-4007
	Miranda J. Spaulding, SVP and CFO
	(406) 441-5010