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 $3.6 million, or $0.47 per diluted share, in the fourth quarter of 2022, compared to $3.1 million, or $0.40 per diluted share, in the preceding quarter, and $1.7 million, or $0.26 per diluted share, in the fourth quarter a year ago. For the year 2022, net income was $10.7 million, or $1.45 per diluted share, compared to $14.4 million, or $2.17 per diluted share, in 2021. Results for 2022 included $2.3 million in acquisition costs associated with the merger of First Community Bancorp, Inc., and its subsidiary, First Community Bank (“First Community”), compared to $761,000 in acquisition related expenses in 2021.

Eagle’s board of directors declared a quarterly cash dividend of $0.1375 per share on January 19, 2023. The dividend will be payable March 3, 2023 to shareholders of record February 10, 2023. The current dividend represents an annualized yield of 3.24% based on recent market prices.

“Eagle’s fourth quarter operating results reflect another quarter of growth in the loan portfolio and the resulting net interest margin expansion,” said Laura F. Clark, President and CEO. “Fourth quarter loan growth totaled $41.5 million and was well diversified across our loan categories. Additionally, our fourth quarter net interest margin improved year-over-year as we took advantage of interest rate increases enacted by the Federal Reserve. One of the highlights of 2022 was the acquisition of First Community, which was completed during the second quarter of 2022 and has already contributed nicely to operating results. I am excited about the opportunities this new market provides for continued long-term growth.”

Eagle closed its acquisition of First Community on April 30, 2022, in a transaction valued at approximately $38.6 million. The acquisition added approximately $370 million in assets, $321 million in deposits and $191 million in loans.

Fourth Quarter 2022 Highlights (at or for the three-month period ended December 31, 2022, except where noted):

• Net income was $3.6 million, or $0.47 per diluted share, in the fourth quarter of 2022, compared to $3.1 million, or $0.40 per diluted share, in the preceding quarter, and $1.7 million, or $0.26 per diluted share, in the fourth quarter a year ago.
• Net interest margin (“NIM”) was 4.10% in the fourth quarter of 2022, compared to 4.18% in the preceding quarter, and 3.75% in the fourth quarter a year ago.
• Revenues (net interest income before the loan loss provision, plus noninterest income) decreased modestly to $25.1 million in the fourth quarter of 2022, compared to $25.3 million in the preceding quarter and increased 15.2% compared to $21.8 million in the fourth quarter a year ago.  
• The Company recorded a discount on loans acquired from First Community of $5.4 million at April 30, 2022 of which $4.1 million remained as of December 31, 2022.
• Remaining discount on loans from acquisitions prior to 2022 totaled $728,000 as of December 31, 2022.
• The accretion of the loan purchase discount into loan interest income from the First Community, and previous acquisitions, was $267,000 in the fourth quarter of 2022, compared to accretion on purchased loans from acquisitions of $392,000 in the preceding quarter.
• The allowance for loan losses represented 180.0% of nonperforming loans at December 31, 2022, compared to 177.1% a year earlier.
• Total loans increased 45.1% to $1.35 billion, at December 31, 2022, compared to $933.1 million a year earlier, and increased 3.2% compared to $1.31 billion at September 30, 2022.
• Total deposits increased 33.8% to $1.64 billion at December 31, 2022, from $1.22 billion a year ago, and decreased 2.3% compared to $1.67 billion at September 30, 2022.
• The Company paid a quarterly cash dividend in the fourth quarter of $0.1375 per share on December 2, 2022 to shareholders of record November 10, 2022.

Balance Sheet Results

Eagle’s total assets increased 35.7% to $1.95 billion at December 31, 2022, compared to $1.44 billion a year ago, and increased 1.3% from $1.92 billion three months earlier. The year over year increase was primarily due to the First Community acquisition that closed during the second quarter of 2022.

The investment securities portfolio totaled $349.5 million at December 31, 2022, compared to $271.3 million a year ago, and $351.9 million at September 30, 2022.

Eagle originated $95.3 million in new residential mortgages during the quarter and sold $107.1 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.77%. This production compares to residential mortgage originations of $142.0 million in the preceding quarter with sales of $121.3 million and an average gross margin on sale of mortgage loans of approximately 3.46%.

Total loans increased $420.5 million or 45.1% compared to a year ago, and $41.5 million or 3.2% from three months earlier. Commercial real estate loans increased 31.3% to $539.1 million at December 31, 2022, compared to $410.6 million a year earlier. Agricultural and farmland loans increased 112.1% to $240.4 million at December 31, 2022, compared to $113.3 million a year earlier. Commercial construction and development loans increased 63.6% to $151.1 million, compared to $92.4 million a year ago. Residential mortgage loans increased 34.4% to $135.9 million, compared to $101.2 million a year earlier. Commercial loans increased 25.3% to $127.3 million, compared to $101.5 million a year ago. Home equity loans increased 43.5% to $74.3 million, residential construction loans increased 30.9% to $59.8 million, and consumer loans increased 49.6% to $27.6 million, compared to a year ago.

Total deposits increased 33.8% to $1.64 billion at December 31, 2022, compared to $1.22 billion at December 31, 2021, and decreased 2.3% from $1.67 billion at September 30, 2022. Noninterest-bearing checking accounts represented 28.7%, interest-bearing checking accounts represented 15.5%, savings accounts represented 16.7%, money market accounts comprised 23.7% and time certificates of deposit made up 15.4% of the total deposit portfolio at December 31, 2022. The average cost of funds was 0.85% in the fourth quarter of 2022, compared to 0.47% in the preceding quarter and 0.35% in the fourth quarter of 2021.

Shareholders’ equity was $158.4 million at December 31, 2022, compared to $156.7 million a year earlier and $151.3 million three months earlier. Book value per share was $19.79 at December 31, 2022, compared to $23.07 a year earlier and $18.94 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 $14.52 at December 31, 2022, compared to $19.74 a year earlier and $13.60 three months earlier.  

Operating Results

“Higher yields on interest earning assets contributed to NIM expanding 35 basis points during the fourth quarter of 2022, compared to the fourth quarter a year ago. Compared to the preceding quarter, NIM contracted eight basis points, largely due to an uptick in funding costs,” said Clark.

Eagle’s NIM was 4.10% in the fourth quarter of 2022, compared to 4.18% in the preceding quarter, and 3.75% in the fourth quarter a year ago. The interest accretion on acquired loans totaled $267,000 and resulted in a six basis-point increase in the NIM during the fourth quarter of 2022, compared to $392,000 and a nine basis-point increase in the NIM during the preceding quarter. Average yields on interest earning assets for the fourth quarter increased to 4.72% from 3.99% a year ago. For the year, the NIM expanded 18 basis points to 4.03%, compared to the same period one year earlier.

Eagle’s fourth quarter revenues decreased modestly to $25.1 million, compared to $25.3 million in the preceding quarter and increased 15.2% compared to $21.8 million in the fourth quarter a year ago. For the year, revenues were $93.8 million, compared to $94.3 million in 2021.

Net interest income, before the loan loss provision, decreased 1.5% to $17.6 million in the fourth quarter, compared to $17.9 million in the third quarter of 2022, and increased 46.2% compared to $12.0 million in the fourth quarter of 2021. For the year, net interest income, before the loan loss provision, increased 36.0% to $63.3 million, compared to $46.5 million in 2021.

Eagle’s total noninterest income was $7.4 million in the fourth quarter of 2022, which was unchanged compared to the preceding quarter, and a 23.3% decrease compared to $9.7 million in the fourth quarter a year ago. Net mortgage banking, the largest component of noninterest income, totaled $3.3 million in the fourth quarter of 2022, compared to $4.4 million in the preceding quarter and $7.7 million in the fourth quarter a year ago. Noninterest income includes $2.1 million for the fourth quarter of 2022, compared to $624,000 for the fourth quarter of 2021 related to commodity sales income from Eagle’s subsidiary Western Financial Services (“WFS”). WFS facilitates deferred payment contracts for customers that produce agricultural products. The corresponding commodity sales expense is included in noninterest expense. For the year 2022, noninterest income decreased 36.2% to $30.5 million, compared to $47.8 million in 2021. Net mortgage banking decreased 52.5% to $19.5 million in 2022, compared to $41.0 million in 2021. Decreases in net mortgage banking were largely driven by reduced mortgage volumes. Noninterest income includes $4.3 million for 2022, compared to $1.6 million for 2021 related to commodity sales income for WFS.

Fourth quarter noninterest expense decreased 1.7% to $20.3 million, compared to $20.7 million in the preceding quarter and increased 6.2% compared to $19.1 million in the fourth quarter a year ago. Noninterest expense includes commodity sales expense for WFS of $2.1 million for the fourth quarter of 2022, compared to $624,000 for the fourth quarter of 2021. For the year, noninterest expense increased to $78.0 million, compared to $74.2 million in 2021. Salaries and employee benefits expense were down overall due to lower commissions for residential mortgage originations. However, acquisition costs were $2.3 million in 2022 compared to $761,000 in 2021. In addition, noninterest expense includes commodity sales expense for WFS of $4.3 million for 2022, compared to $1.6 million for 2021.

For the fourth quarter of 2022, the income tax provision totaled $787,000, for an effective tax rate of 17.8%, compared to $1.0 million in the preceding quarter, and $632,000 in the fourth quarter of 2021.

Credit Quality

The loan loss provision was $347,000 in the fourth quarter of 2022, compared to $517,000 in the preceding quarter and $285,000 in the fourth quarter a year ago. The allowance for loan losses represented 180.0% of nonperforming loans at December 31, 2022, compared to 306.4% three months earlier and 177.1% a year earlier. Nonperforming loans were $7.8 million at December 31, 2022, compared to $4.5 million at September 30, 2022, and $7.1 million a year earlier.  

Eagle had no other real estate owned and other repossessed assets on its books at December 31, 2022, or at September 30, 2022. This compared to $4,000 at December 31, 2021.

Net loan charge-offs totaled $197,000 in the fourth quarter of 2022, compared to net loan recoveries of $8,000 in the preceding quarter and net loan recoveries of $15,000 in the fourth quarter a year ago. The allowance for loan losses was $14.0 million, or 1.03% of total loans, at December 31, 2022, compared to $13.9 million, or 1.06% of total loans, at September 30, 2022, and $12.5 million, or 1.34% of total loans, a year ago.  

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) decreased to 6.10% at December 31, 2022 from 9.49% a year ago and increased from 5.77% three months earlier. Shareholders’ equity has been impacted by an accumulated other comprehensive loss related to securities available-for-sale. These unrealized losses are primarily a result of rapid increases in interest rates. As of December 31, 2022, 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 9.82% as of December 31, 2022.

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 32 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 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 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; 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; 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 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 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 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,
							2022			2022			2021
Assets:
	Cash and due from banks					$	19,321		$	22,154		$	10,938
	Interest bearing deposits in banks						2,490			3,043			43,669
	Federal funds sold						-			-			6,827
	Total cash and cash equivalents						21,811			25,197			61,434
	Securities available-for-sale						349,495			351,949			271,262
	Federal Home Loan Bank ("FHLB") stock						5,089			2,939			1,702
	Federal Reserve Bank ("FRB") stock						4,131			4,206			2,974
	Mortgage loans held-for-sale, at fair value						8,250			24,408			25,819
	Loans:
	Real estate loans:
	Residential 1-4 family						135,947			137,798			101,180
	Residential 1-4 family construction						59,756			57,467			45,635
	Commercial real estate						539,070			506,716			410,568
	Commercial construction and development						151,145			145,300			92,403
	Farmland						136,334			129,827			67,005
	Other loans:
	Home equity						74,271			67,409			51,748
	Consumer						27,609			27,703			18,455
	Commercial						127,255			130,975			101,535
	Agricultural						104,036			110,633			46,335
	Unearned loan fees						(1,745	)		(1,674	)		(1,725	)
	Total loans						1,353,678			1,312,154			933,139
	Allowance for loan losses						(14,000	)		(13,850	)		(12,500	)
	Net loans						1,339,678			1,298,304			920,639
	Accrued interest and dividends receivable						11,284			10,778			5,751
	Mortgage servicing rights, net						15,412			15,141			13,693
	Assets held-for-sale, at fair value						1,305			2,041			-
	Premises and equipment, net						84,323			79,374			67,266
	Cash surrender value of life insurance, net						47,724			45,845			36,474
	Goodwill						34,740			34,740			20,798
	Core deposit intangible, net						7,459			7,895			1,780
	Other assets						17,683			21,103			6,334
	Total assets					$	1,948,384		$	1,923,920		$	1,435,926
Liabilities:
	Deposit accounts:
	Noninterest bearing						468,955			507,034			368,846
	Interest bearing						1,166,317			1,167,216			853,703
	Total deposits						1,635,272			1,674,250			1,222,549
	Accrued expenses and other liabilities						26,458			23,748			21,779
	FHLB advances and other borrowings						69,394			15,600			5,000
	Other long-term debt, net						58,844			59,048			29,869
	Total liabilities						1,789,968			1,772,646			1,279,197
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, 8,507,429 and 7,110,833 shares issued; 8,006,033,
	7,986,890 and 6,794,811 shares outstanding at December 31, 2022,
	September 30, 2022 and December, 2021, respectively						85			85			71
	Additional paid-in capital						109,164			109,488			80,832
	Unallocated common stock held by Employee Stock Ownership Plan						(5,156	)		(5,300	)		(5,729	)
	Treasury stock, at cost (501,396, 520,539, and 316,022 shares at
	December 31, 2022, September 30, 2022 and December 31, 2021, respectively)						(11,343	)		(11,627	)		(7,321	)
	Retained earnings						92,023			89,502			85,383
	Accumulated other comprehensive (loss) income, net of tax						(26,357	)		(30,874	)		3,493
	Total shareholders' equity						158,416			151,274			156,729
	Total liabilities and shareholders' equity					$	1,948,384		$	1,923,920		$	1,435,926

Income Statement									(Unaudited)					(Unaudited)
(Dollars in thousands, except per share data)							Three Months Ended							Years Ended
							December 31,		September 30,		December 31,			December 31,
								2022		2022		2021			2022		2021
Interest and dividend income:
	Interest and fees on loans						$	17,420	$	16,665	$	11,474		$	60,353	$	45,134
	Securities available-for-sale							2,716		2,555		1,249			8,579		4,238
	FRB and FHLB dividends							142		63		61			302		255
	Other interest income							22		59		30			228		120
		Total interest and dividend income						20,300		19,342		12,814			69,462		49,747
Interest expense:
	Interest expense on deposits							1,673		717		356			3,124		1,474
	FHLB advances and other borrowings							357		136		23			514		175
	Other long-term debt							657		602		390			2,512		1,558
		Total interest expense						2,687		1,455		769			6,150		3,207
Net interest income								17,613		17,887		12,045			63,312		46,540
Loan loss provision								347		517		285			2,001		861
		Net interest income after loan loss provision						17,266		17,370		11,760			61,311		45,679
Noninterest income:
	Service charges on deposit accounts							445		498		329			1,668		1,213
	Mortgage banking, net							3,306		4,447		7,675			19,489		41,035
	Interchange and ATM fees							707		594		493			2,375		1,982
	Appreciation in cash surrender value of life insurance							287		291		209			1,035		721
	Commodity sales income							2,147		1,171		624			4,279		1,586
	Other noninterest income							555		416		385			1,653		1,232
		Total noninterest income						7,447		7,417		9,715			30,499		47,769
Noninterest expense:
	Salaries and employee benefits							11,010		11,699		11,673			44,521		48,766
	Occupancy and equipment expense							2,160		1,946		1,702			7,601		6,448
	Data processing							1,367		1,964		1,369			5,995		5,035
	Advertising							367		464		426			1,419		1,276
	Amortization							439		333		142			1,334		573
	Loan costs							412		491		610			2,036		2,736
	FDIC insurance premiums							229		93		89			559		332
	Professional and examination fees							371		420		356			1,469		1,756
	Acquisition costs							-		103		726			2,296		761
	Commodity sales expense							2,147		1,171		624			4,279		1,586
	Other noninterest expense							1,802		1,980		1,399			6,453		4,897
		Total noninterest expense						20,304		20,664		19,116			77,962		74,166
Income before provision for income taxes								4,409		4,123		2,359			13,848		19,282
Provision for income taxes								787		1,031		632			3,147		4,863
Net income							$	3,622	$	3,092	$	1,727		$	10,701	$	14,419
Basic earnings per share							$	0.47	$	0.40	$	0.26		$	1.45	$	2.17
Diluted earnings per share							$	0.47	$	0.40	$	0.26		$	1.45	$	2.17
Basic weighted average shares outstanding								7,776,145		7,793,485		6,543,192			7,376,275		6,653,935
Diluted weighted average shares outstanding								7,777,552		7,808,050		6,563,512			7,386,253		6,655,735

ADDITIONAL FINANCIAL INFORMATION						(Unaudited)
(Dollars in thousands, except per share data)			Three Months Ended or Years Ended
			December 31,			September 30,			December 31,
				2022			2022			2021
Mortgage Banking Activity (For the quarter):
	Net gain on sale of mortgage loans		$	2,965		$	4,192		$	9,825
	Net change in fair value of loans held-for-sale and derivatives			(509	)		(378	)		(2,439	)
	Mortgage servicing income, net			850			633			289
	Mortgage banking, net		$	3,306		$	4,447		$	7,675
Mortgage Banking Activity (Year-to-date):
	Net gain on sale of mortgage loans		$	18,610					$	46,086
	Net change in fair value of loans held-for-sale and derivatives			(1,842	)					(5,443	)
	Mortgage servicing income, net			2,721						392
	Mortgage banking, net		$	19,489					$	41,035
Performance Ratios (For the quarter):
	Return on average assets			0.75	%		0.65	%		0.48	%
	Return on average equity			9.38	%		7.51	%		4.37	%
	Yield on average interest earning assets			4.72	%		4.52	%		3.99	%
	Cost of funds			0.85	%		0.47	%		0.35	%
	Net interest margin			4.10	%		4.18	%		3.75	%
	Core efficiency ratio*			79.27	%		79.94	%		83.86	%
Performance Ratios (Year-to-date):
	Return on average assets			0.60	%					1.06	%
	Return on average equity			6.87	%					9.18	%
	Yield on average interest earning assets			4.42	%					4.11	%
	Cost of funds			0.54	%					0.39	%
	Net interest margin			4.03	%					3.85	%
	Core efficiency ratio*			79.24	%					77.23	%
* 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,
				2022			2022			2021
	Nonaccrual loans		$	2,200		$	2,534		$	4,835
	Loans 90 days past due and still accruing			1,076			874			-
	Restructured loans, net			4,502			1,112			2,224
	Total nonperforming loans			7,778			4,520			7,059
	Other real estate owned and other repossessed assets			-			-			4
	Total nonperforming assets		$	7,778		$	4,520		$	7,063
	Nonperforming loans / portfolio loans			0.57	%		0.34	%		0.76	%
	Nonperforming assets / assets			0.40	%		0.23	%		0.49	%
	Allowance for loan losses / portfolio loans			1.03	%		1.06	%		1.34	%
	Allowance / nonperforming loans			179.99	%		306.42	%		177.08	%
	Gross loan charge-offs for the quarter		$	216		$	6		$	2
	Gross loan recoveries for the quarter		$	19		$	14		$	17
	Net loan charge-offs (recoveries) for the quarter		$	197		$	(8	)	$	(15	)
			December 31,			September 30,			December 31,
				2022			2022			2021
Capital Data (At quarter end):
	Book value per share		$	19.79		$	18.94		$	23.07
	Tangible book value per share**		$	14.52		$	13.60		$	19.74
	Shares outstanding			8,006,033			7,986,890			6,794,811
	Tangible common equity to tangible assets***			6.10	%		5.77	%		9.49	%
Other Information:
	Average investment securities for the quarter		$	348,267		$	378,680		$	262,736
	Average investment securities year-to-date		$	336,779		$	332,950		$	215,978
	Average loans for the quarter ****		$	1,345,776		$	1,301,358		$	942,783
	Average loans year-to-date ****		$	1,194,788		$	1,144,459		$	914,804
	Average earning assets for the quarter		$	1,705,349		$	1,699,027		$	1,274,817
	Average earning assets year-to-date		$	1,572,106		$	1,527,692		$	1,209,715
	Average total assets for the quarter		$	1,934,002		$	1,913,710		$	1,433,003
	Average total assets year-to-date		$	1,768,919		$	1,713,892		$	1,357,249
	Average deposits for the quarter		$	1,655,298		$	1,656,228		$	1,215,046
	Average deposits year-to-date		$	1,514,158		$	1,467,111		$	1,138,608
	Average equity for the quarter		$	154,409		$	164,592		$	158,208
	Average equity year-to-date		$	155,655		$	156,071		$	157,014
** 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,
						2022			2022			2021				2022			2021
Calculation of Core Efficiency Ratio:
	Noninterest expense				$	20,304		$	20,664		$	19,116			$	77,962		$	74,166
	Acquisition costs					-			(103	)		(726	)			(2,296	)		(761	)
	Intangible asset amortization					(439	)		(333	)		(142	)			(1,334	)		(573	)
		Core efficiency ratio numerator				19,865			20,228			18,248				74,332			72,832
	Net interest income					17,613			17,887			12,045				63,312			46,540
	Noninterest income					7,447			7,417			9,715				30,499			47,769
		Core efficiency ratio denominator				25,060			25,304			21,760				93,811			94,309
	Core efficiency ratio (non-GAAP)					79.27	%		79.94	%		83.86	%			79.24	%		77.23	%

Tangible Book Value and Tangible Assets						(Unaudited)
(Dollars in thousands, except per share data)						December 31,			September 30,			December 31,
							2022			2022			2021
Tangible Book Value:
	Shareholders' equity					$	158,416		$	151,274		$	156,729
	Goodwill and core deposit intangible, net						(42,199	)		(42,635	)		(22,578	)
		Tangible common shareholders' equity (non-GAAP)				$	116,217		$	108,639		$	134,151
	Common shares outstanding at end of period						8,006,033			7,986,890			6,794,811
	Common shareholders' equity (book value) per share (GAAP)					$	19.79		$	18.94		$	23.07
	Tangible common shareholders' equity (tangible book value)
		per share (non-GAAP)				$	14.52		$	13.60		$	19.74
Tangible Assets:
	Total assets					$	1,948,384		$	1,923,920		$	1,435,926
	Goodwill and core deposit intangible, net						(42,199	)		(42,635	)		(22,578	)
		Tangible assets (non-GAAP)				$	1,906,185		$	1,881,285		$	1,413,348
	Tangible common shareholders' equity to tangible assets
		(non-GAAP)					6.10	%		5.77	%		9.49	%

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,
						2022		2022			2021				2022			2021
Net interest income after loan loss provision					$	17,266	$	17,370		$	11,760			$	61,311		$	45,679
Noninterest income						7,447		7,417			9,715				30,499			47,769
Noninterest expense						20,304		20,664			19,116				77,962			74,166
Acquisition costs						-		(103	)		(726	)			(2,296	)		(761	)
Noninterest expense, excluding acquisition costs (non-GAAP)						20,304		20,561			18,390				75,666			73,405
Income before income taxes, excluding acquisition costs						4,409		4,226			3,085				16,144			20,043
Provision for income taxes, excluding acquisition costs
related taxes (non-GAAP)						787		1,057			827				3,669			5,055
Net Income, excluding acquisition costs and related taxes (non-GAAP)					$	3,622	$	3,169		$	2,258			$	12,475		$	14,988
Diluted earnings per share (GAAP)					$	0.47	$	0.40		$	0.26			$	1.45		$	2.17
Diluted earnings per share, excluding acquisition costs and related
taxes (non-GAAP)					$	0.47	$	0.41		$	0.34			$	1.69		$	2.25

Return on Average Assets, Excluding Acquisition Costs and Related Taxes					(Unaudited)
(Dollars in thousands)					December 31,			September 30,			December 31,
						2022			2022			2021
For the quarter:
	Net income, excluding acquisition costs and related taxes (non-GAAP)*				$	3,622		$	3,169		$	2,258
	Average total assets quarter-to-date				$	1,934,002		$	1,913,710		$	1,433,003
	Return on average assets, excluding acquisition costs and related taxes (non-GAAP)					0.75	%		0.66	%		0.63	%
Year-to-date:
	Net income, excluding acquisition costs and related taxes (non-GAAP)*				$	12,475		$	8,801		$	14,988
	Average total assets year-to-date				$	1,768,919		$	1,713,892		$	1,357,249
	Return on average assets, excluding acquisition costs and related taxes (non-GAAP)					0.71	%		0.68	%		1.10	%
* 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