Eagle Bancorp Montana(US:EBMT)2025-05-08 16:43PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents Eagle Bancorp Montana, Inc.'s unaudited condensed consolidated financial statements for Q1 2025, covering financial condition, income, comprehensive income, equity changes, and cash flows, with detailed accounting notes Condensed Consolidated Statements of Financial Condition As of March 31, 2025, total assets were $2.09 billion, a slight decrease from $2.10 billion at year-end 2024, driven by reduced cash and mortgage loans, while total liabilities decreased to $1.91 billion due to lower FHLB advances, and total shareholders' equity increased to $177.6 million Condensed Consolidated Statements of Financial Condition (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,088,416 | $2,103,090 | | Loans receivable, net | $1,506,788 | $1,503,796 | | Securities available-for-sale, at fair value | $291,661 | $292,590 | | Total cash and cash equivalents | $22,805 | $31,559 | | Total Liabilities | $1,910,843 | $1,928,325 | | Total deposits | $1,689,966 | $1,681,228 | | FHLB advances and other borrowings | $124,952 | $140,930 | | Total Shareholders' Equity | $177,573 | $174,765 | Condensed Consolidated Statements of Income For Q1 2025, net income significantly increased to $3.24 million from $1.90 million in Q1 2024, primarily due to an 11.1% rise in net interest income to $16.90 million, with diluted earnings per share growing to $0.41 from $0.24 year-over-year Q1 2025 vs Q1 2024 Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $16,902 | $15,214 | | Provision (recapture) for credit losses | $42 | $(135) | | Total Noninterest Income | $4,016 | $3,952 | | Total Noninterest Expense | $17,006 | $17,033 | | Net Income | $3,239 | $1,898 | | Diluted Earnings Per Share | $0.41 | $0.24 | Notes to Condensed Consolidated Financial Statements (Unaudited) These notes provide detailed disclosures on the company's organization, accounting policies, and specific financial statement line items, covering loan and investment portfolios, credit losses, deposit structure, debt, and fair value measurements, with the company operating as a single community banking segment - The company operates as a single line of business (community banking) and is therefore considered one operating and reportable segment50 Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial real estate | $929,828 | $916,783 | | Commercial | $270,830 | $278,385 | | Residential 1-4 family | $195,207 | $199,422 | | Home equity | $100,665 | $97,543 | | Consumer | $26,978 | $28,513 | | Total Loans | $1,523,508 | $1,520,646 | Deposit Composition (in thousands) | Deposit Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Noninterest checking | $411,272 | $419,211 | | Money market | $396,399 | $367,094 | | Time certificates of deposit | $458,411 | $462,875 | | Savings | $212,462 | $210,572 | | Interest-bearing checking | $211,422 | $221,476 | | Total Deposits | $1,689,966 | $1,681,228 | - The allowance for credit losses on loans decreased slightly to $16.72 million at March 31, 2025, from $16.85 million at the beginning of the year, after a net recapture of $128,00065 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations for Q1 2025, analyzing key performance drivers such as net interest income, loan and deposit trends, asset quality, liquidity, capital resources, interest rate risk, and critical accounting policies, noting a material weakness in internal controls Financial Condition Total assets decreased by 0.7% to $2.09 billion at March 31, 2025, while net loans grew by 0.2% to $1.51 billion, driven by commercial real estate, total deposits increased by 0.5% to $1.69 billion, led by money market accounts, and nonperforming assets rose to $5.4 million (0.26% of total assets) - Total assets decreased by $14.67 million (0.7%) to $2.09 billion at March 31, 2025117 - Net loans receivable increased by $2.99 million (0.2%), driven by a $13.05 million increase in commercial real estate loans117121 - Total deposits increased by $8.74 million (0.5%), primarily due to a $29.31 million increase in money market deposits128 Nonperforming Assets (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total nonperforming loans | $5,339 | $3,850 | | Real estate owned and other repossessed property | $46 | $45 | | Total nonperforming assets | $5,385 | $3,895 | | Nonperforming assets to total assets | 0.26% | 0.19% | Results of Operations Net income for Q1 2025 rose to $3.24 million from $1.90 million in Q1 2024, primarily driven by a $1.69 million (11.1%) increase in net interest income due to higher loan yields and lower interest expense, expanding the net interest margin to 3.74% Net Interest Margin Analysis | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income (in thousands) | $16,902 | $15,214 | | Net Interest Spread | 3.22% | 2.80% | | Net Interest Margin | 3.74% | 3.33% | - The increase in net interest income was driven by a $1.13 million increase in interest income and a $561,000 decrease in interest expense compared to Q1 2024140 - The average yield on loans receivable increased by 32 basis points to 6.19% in Q1 2025 from 5.87% in Q1 2024141 - A provision for credit losses of $42,000 was recorded in Q1 2025, compared to a recapture of $135,000 in Q1 2024143 Liquidity and Capital Resources The company maintained a strong liquidity position with $437.4 million in available borrowing capacity as of March 31, 2025, and the Bank remains 'well capitalized' under all regulatory measures, exceeding minimums with a total risk-based capital ratio of 13.64% and a Tier 1 leverage ratio of 10.29% Available Borrowing Capacity (in thousands) | Source | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Federal Home Loan Bank advances | $310,857 | $276,664 | | Federal Reserve Bank discount window | $26,509 | $27,349 | | Correspondent bank lines of credit | $100,000 | $100,000 | | Total Remaining Capacity | $437,366 | $404,013 | Regulatory Capital Ratios | Ratio | March 31, 2025 | Minimum to be Well Capitalized | | :--- | :--- | :--- | | Total risk-based capital | 13.64% | 10.00% | | Tier 1 capital to risk weighted assets | 12.56% | 8.00% | | Common equity Tier 1 capital | 12.56% | 6.50% | | Tier 1 capital to average assets (Leverage) | 10.29% | 5.00% | Quantitative and Qualitative Disclosures About Market Risk This item has been omitted from the report, as permitted for a smaller reporting company - The company, as a smaller reporting company, has omitted the Quantitative and Qualitative Disclosures About Market Risk167 Controls and Procedures Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting concerning the design of controls for preparing the statement of cash flows, with remediation efforts underway - A material weakness was identified in internal controls related to the design of controls over the preparation of the statement of cash flows, specifically the classification of short-term vs. long-term borrowings169 - Due to this material weakness, the CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025168 - Remediation efforts are in process, including restructuring control activities, but the weakness will not be considered fully remediated until the new controls have operated effectively for a sufficient period170 PART II. OTHER INFORMATION Legal Proceedings The company and its subsidiary, Opportunity Bank of Montana, are not involved in any pending legal proceedings other than non-material proceedings that occur in the ordinary course of business - There are no material legal proceedings involving the Company or the Bank173 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors have occurred since the 2024 Form 10-K filing174 Unregistered Sales of Equity Securities and Use of Proceeds The company details its common stock repurchase activities, including 50,000 shares repurchased in Q1 2025 under the expired 2024 plan, and the authorization of a new plan for up to 400,000 shares effective May 1, 2025, through May 1, 2026 Share Repurchases for Q1 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2025 | 50,000 | $15.11 | | Feb 1 - Feb 28, 2025 | - | - | | Mar 1 - Mar 31, 2025 | - | - | | Total | 50,000 | $15.11 | - A new share repurchase plan was authorized on April 24, 2025, allowing the company to buy back up to 400,000 shares of its common stock, effective from May 1, 2025, to May 1, 2026175 Exhibits This section lists the exhibits filed with the Form 10-Q, including the company's articles of incorporation, bylaws, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act