GlobeNewswire Inc | Jan 25, 2022 12:00PM EST

January 25, 2022

HELENA, Montana, Jan. 25, 2022 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the Company, Eagle), the holding company of Opportunity Bank of Montana (the Bank), today reported net income of $1.7 million, or $0.26 per diluted share, in the fourth quarter of 2021, compared to $5.2 million, or $0.76 per diluted share, in the fourth quarter a year ago, and $4.7 million, or $0.73 per diluted share, in the preceding quarter. For the year 2021, net income was $14.4 million, or $2.17 per diluted share, compared to $21.2 million, or $3.11 per diluted share, for 2020.

Eagles board of directors declared a quarterly cash dividend of $0.125 per share on January 20, 2022. The dividend will be payable March 4, 2022 to shareholders of record February 11, 2022. The current annualized dividend yield is 2.17% based on recent market prices.

Our operating results for 2021 reflect solid loan production year-over-year, and record deposit generation, said Peter J. Johnson, President and CEO. One of the highlights of 2021 was the announcement of our proposed merger with First Community Bancorp, Inc., and its subsidiary, First Community Bank (First Community). First Community is an experienced agriculture and commercial lender with a 130-year operating history in Montana and deep roots in the communities it serves. This transaction will expand our presence across the state of Montana and build on our reputation as an experienced and preferred agricultural lender. We foresee this merger, like other recent acquisitions, resulting in significant benefits to our expanding group of clients, communities, employees and shareholders. We anticipate welcoming First Community clients and employees to our Opportunity Bank family with a closing date anticipated during the first quarter of 2022.

On October 1, 2021 Eagle announced that it had reached an agreement to acquire First Community Bancorp, Inc. and its subsidiary, First Community Bank. Headquartered in Glasgow, Montana, First Community is the largest bank headquartered in Northeast Montana, and currently operates nine branches and two mortgage loan production offices, including commercial-focused branches in Helena and Three Forks (Gallatin County). Upon completion of the acquisition, Opportunity Bank of Montana will have 32 retail branches in key commercial and agricultural markets across Montana. This transaction is subject to the approvals of bank regulatory agencies, the shareholders of Eagle and First Community and other customary closing requirements.

Fourth Quarter 2021 Highlights (at or for the three-month period ended December 31, 2021, except where noted):

-- Net income of $1.7 million, or $0.26 per diluted share, in the fourth quarter of 2021, compared to $4.7 million, or $0.73 per diluted share, in the preceding quarter, and $5.2 million, or $0.76 per diluted share, in the fourth quarter a year ago. -- Net interest margin (NIM) was 3.75% in the fourth quarter of 2021, compared to 3.87% in the preceding quarter, and 4.03% in the fourth quarter a year ago. -- Revenues (net interest income before the loan loss provision, plus noninterest income) were $21.8million in the fourth quarter of 2021, compared to $25.4 million in the preceding quarter and $23.6million in the fourth quarter a year ago. -- Purchase discount on loans from the Western Bank of Wolf Point portfolio was $1.2 million at January1, 2020, of which $334,000 remained as of December 31, 2021. -- Remaining purchase discount on loans from acquisitions prior to 2020 totaled $658,000 as of December31, 2021. -- The accretion of the loan purchase discount into loan interest income from the Western Bank of Wolf Point, and previous acquisitions was $171,000 in the fourth quarter of 2021, compared to interest accretion on purchased loans from acquisitions of $94,000 in the preceding quarter. -- The allowance for loan losses represented 177.1% of nonperforming loans at December 31, 2021, compared to 136.9% a year earlier. -- Total loans increased 10.9% to $933.1 million, at December 31, 2021, compared to $841.1 million a year earlier and increased 5.5% compared to $884.9 million in the previous quarter. -- Total deposits increased 18.3% to $1.22 billion at December 31, 2021, from $1.03 billion a year ago, and increased 2.3% compared to $1.19 billion in the previous quarter. -- Eagle remained well capitalized with a tangible common shareholders equity ratio of 9.49% at December31,2021. -- Paid a quarterly cash dividend of $0.125 per share on December 3, 2021 to shareholders of record November12, 2021.

COVID-19 Preparations as of December 31, 2021:

-- Loan Accommodations: The Bank offered multiple accommodation options to its clients, including 90-day deferrals, interest only payments, and forbearances. As of December 31, 2021, there was only one remaining loan modification for a nonresidential borrower. All of the other loans originally modified, or 314 borrowers, are now performing according to current loan agreements. The Montana Board of Investments (MBOI) offered 12-months of interest payment assistance to qualified borrowers. The Bank qualified approximately 32 borrowers for the MBOI program representing $27.3 million in loans, of which all had aged out of the program as of the third quarter of 2021. There are 15 forbearances for residential mortgage loans, of which all are sold and serviced as of December 31, 2021. Utilization of credit lines were 78.6% at the end of the fourth quarter, compared to 76.4% at the end of the previous quarter. -- Small Business Administration (SBA) Paycheck Protection Program (PPP): During the second and third quarters of 2020, Eagle helped 764 borrowers receive $45.7 million in first round SBA PPP loans. During the first and second quarters of 2021, Eagle supported 646 borrowers in receiving $19.5 million in second round PPP loans. As of December 31, 2021, Eagle had received forgiveness from the SBA for 1,273 loans, representing over $60.8 million now paid in full. The remaining 137 PPP loans from both the first round and second round represent a combined $4.5 million.Approximately $407,000 of the income recognized during the fourth quarter of 2021 was related to recognizing origination fees for PPP loan payoffs or forgiveness, compared to $701,000 of income recognized during the third quarter of 2021.

Balance Sheet Results

Eagles total assets increased 14.2% to $1.44 billion at December 31, 2021, compared to $1.26 billion a year ago, and increased 2.1% from $1.41 billion three months earlier.

Strong commercial real estate and commercial construction activity more than offset PPP loan forgiveness, causing the loan portfolio to grow approximately 10.9% compared to a year ago and grow approximately 5.5% from the previous quarter end. PPP loan forgiveness in the fourth quarter of 2021 was $4.3 million.

Eagle originated $235.4 million in new residential mortgages during the quarter and sold $239.0 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 4.11%. This production compares to residential mortgage originations of $265.0 million in the preceding quarter with sales of $270.8 million and an average gross margin on sale of mortgage loans of approximately 4.25%.

Commercial real estate loans increased 29.7% to $410.6 million at December 31, 2021, compared to $316.7 million a year earlier. Commercial construction and development loans increased 41.5% to $92.4 million, compared to $65.3 million a year ago. Construction projects were slow to start in early 2021 due to COVID-19 concerns and supply chain issues. Agricultural and farmland loans decreased 4.1% to $113.3 million at December 31, 2021, compared to $118.2million a year earlier. Residential mortgage loans decreased 8.7% to $101.2 million, compared to $110.8 million a year earlier. Commercial loans decreased 7.0% to $101.5 million, compared to $109.2 million a year ago, reflecting SBA PPP loan forgiveness. Home equity loans decreased 8.5% to $51.7 million, residential construction loans decreased 1.4% to $45.6 million, and consumer loans decreased 8.5% to $18.5 million, compared to a year ago.

Total deposits increased 18.3% to $1.22 billion at December 31, 2021, compared to $1.03 billion at December 31, 2020, and increased 2.3% from $1.19 billion at September 30, 2021. Noninterest-bearing checking accounts represented 30.2%, interest-bearing checking accounts represented 16.6%, savings accounts represented 18.2%, money market accounts comprised 22.7% and time certificates of deposit made up 12.3% of the total deposit portfolio at December31, 2021.

Shareholders equity increased 2.5% to $156.7 million at December 31, 2021, compared to $152.9 million a year earlier and increased nominally compared to $156.5 million three months earlier. Tangible book value was $19.74 per share, at December 31, 2021, compared to $19.16 per share a year earlier and $19.74 per share three months earlier.

Operating Results

The low interest rate environment, coupled with lower yields on interest earning assets continued to put pressure on our NIM during the fourth quarter, said Johnson. Eagles NIM was 3.75% in the fourth quarter of 2021, compared to 3.87% in the preceding quarter, and 4.03% in the fourth quarter a year ago. The interest accretion on acquired loans totaled $171,000 and resulted in a five basis-point increase in the NIM during the fourth quarter, compared to $94,000 and a three basis-point increase in the NIM during the preceding quarter. The investment securities portfolio increased to $271.3 million at December 31, 2021, compared to $240.0 million at September 30, 2021, and $162.9 million at December 31, 2020. Average yields on earning assets for the fourth quarter decreased to 3.99% from 4.41% a year ago. For the year 2021, the NIM was 3.85%, compared to 3.94% for the year 2020.

Eagles fourth quarter revenues decreased to $21.8 million, compared to $25.4 million in the preceding quarter and $23.6 million in the fourth quarter a year ago. The decrease compared to the prior quarter and the fourth quarter a year ago was largely due to lower volumes in mortgage banking activity. For the year 2021, revenues increased 2.2% to $94.3 million, compared to $92.2 million in 2020.

Net interest income, before the loan loss provision, remained unchanged at $12.0 million in the fourth quarter, compared to the third quarter of 2021, and increased 4.8% compared to $11.5 million in the fourth quarter of 2020. For the year 2021, net interest income increased 7.8% to $46.5 million, compared to $43.2 million in 2020.

Total noninterest income decreased 27.2% to $9.7 million in the fourth quarter of 2021, compared to $13.4 million in the preceding quarter, and decreased 19.7% compared to $12.1 million in the fourth quarter a year ago. Net mortgage banking, the largest component of noninterest income, totaled $7.7 million in the fourth quarter of 2021, compared to $11.7 million in the preceding quarter and $10.5 million in the fourth quarter a year ago. These decreases were driven by a decline in net gain on sale of mortgage loans, as well as changes in the fair value of loans held-for sale and derivatives. These changes are largely volume driven and are impacted by the reduced volumes in mortgage activity. For the year 2021, noninterest income decreased 2.6% to $47.8 million, compared to $49.1 million in 2020. Net mortgage banking decreased 2.4% to $41.0 million in 2021, compared to $42.1 million in 2020.

Eagles fourth quarter noninterest expenses were $19.1 million, compared to $18.8 million in the preceding quarter and $16.3 million in the fourth quarter a year ago. For the year 2021, noninterest expense increased to $74.2 million, compared to $60.7 million in 2020. The increase is largely attributable to an increase in salary, commissions and employee benefits driven by growth in mortgage loan originations and higher overall staff levels. In addition, acquisition costs were incurred related to the proposed merger with First Community.

For the fourth quarter of 2021, the income tax provision totaled $632,000, for an effective tax rate of 26.8%, compared to $1.6 million in the preceding quarter, and $1.7 million in the fourth quarter of 2020. For the year, the income tax provision totaled $4.9 million, for an effective tax rate of 25.2%, compared to $7.2 million in 2020, for an effective tax rate of 25.4%.

Credit Quality

The loan loss provision was $285,000 in the fourth quarter of 2021, compared to $255,000 in the preceding quarter and $379,000 in the fourth quarter a year ago. The allowance for loan losses represented 177.1% of nonperforming loans at December 31, 2021, compared to 156.3% three months earlier and 136.9% a year earlier. Nonperforming loans were $7.1 million at December 31, 2021, compared to $7.8 million at September30,2021, and $8.5million a year earlier. Local economies continue to rebound and loan quality has remained strong despite the impact of the COVID-19 pandemic.

Eagle had $4,000 in other real estate owned (OREO) and other repossessed assets on its books at December31,2021. This compares to $117,000 in OREO at September 30, 2021, and $25,000 at December31,2020.

Net loan recoveries totaled $15,000 in the fourth quarter of 2021, compared to net loan recoveries of $45,000 in the preceding quarter and net loan charge-offs of $78,000 in the fourth quarter a year ago. The allowance for loan losses was $12.5 million, or 1.34% of total loans, at December 31, 2021, compared to $12.2 million, or 1.38% of total loans, at September 30, 2021, and $11.6 million, or 1.38% 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 (shareholders equity, less goodwill and core deposit intangible) to tangible assets (total assets, less goodwill and core deposit intangible) of 9.49% as of December 31, 2021.

Recent Events

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

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 Banks 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, including the proposed transaction with First Community, 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 the efficiency of the vaccine rollout, 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; 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.

In addition, future factors related to the proposed transaction between Eagle and First Community, include, among others: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between Eagle and First Community; the outcome of any legal proceedings that may be instituted against Eagle or First Community; the possibility that the proposed transaction will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the risk that any announcements relating to the proposed combination could have adverse effects on the market price of the common stock of Eagle; the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Eagle and First Community do business the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events diversion of managements attention from ongoing business operations and opportunities potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction Eagles and First Communitys success in executing their respective business plans and strategies and managing the risks involved in the foregoing; and other factors that may affect future results of Eagle and First Community; the business, economic and political conditions in the markets in which the parties operate; the risk that the proposed combination and its announcement could have an adverse effect on either or both parties ability to retain customers and retain or hire key personnel and maintain relationships with customers; the risk that the proposed combination may be more difficult or time-consuming than anticipated, including in areas such as sales force, cost containment, asset realization, systems integration and other key strategies; revenues following the proposed combination may be lower than expected, including for possible reasons such as unexpected costs, charges or expenses resulting from the transactions; the unforeseen risks relating to liabilities of Eagle or First Community that may exist; and uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on First Community, Eagle and the proposed combination.

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 Companys 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.

Important Additional Information and Where to Find It; Participants in the Solicitation

In connection with the proposed transaction with Eagle and First Community, Eagle has filed with the SEC a Registration Statement on Form S-4 that includes a joint proxy statement of Eagle and FCB and a prospectus of Eagle. The registration statement on Form S-4, as amended, was declared effective by the SEC on December 22, 2021, and Eagle and FCB mailed the definitive joint proxy statement/prospectus to their respective shareholders on or about December 23, 2021. The proposed transaction involving Eagle and FCB will be submitted to Eagles shareholders and FCBs shareholders for their consideration on January 26, 2022. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Before making any voting decisions,investors and security holders of Eagle and First Community are urged to read the joint proxy statement/prospectus and other documents filed with the SEC carefully and in their entirety because they contain important information.Investors and security holders can obtain free copies of the registration statement and the joint proxy statement/prospectus and other documents filed with the SEC by Eagle through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with or furnished to the SEC by Eagle are available free of charge on Eagles internet website atwww.opportunitybank.com, or by contacting Eagle. The contents of the Eagle website is not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.

Eagle, First Community, their respective directors and executive officers and other members of management and employees may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of Eagle is set forth in its proxy statement for its 2021 annual meeting of shareholders, which was filed with the SEC on March 10, 2021 and its Current Reports on Form 8-K. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC.

Balance Sheet (Dollars in thousands, except per share (Unaudited) data) December 31, September 30, December 31, 2021 2021 2020 Assets: Cash and due from banks $ 10,938 $ 16,320 $ 14,455 Interest bearing deposits in banks 43,669 71,609 47,733 Federal funds sold 6,827 7,011 7,614 Total cash and cash 61,434 94,940 69,802 equivalents Securities available-for-sale 271,262 240,033 162,946 Federal Home Loan Bank ("FHLB") 1,702 1,702 2,060 stock Federal Reserve Bank ("FRB") stock 2,974 2,974 2,974 Mortgage loans held-for-sale, at 25,819 42,059 54,615 fair value Loans: Real estate loans: Residential 1-4 101,180 99,447 110,802 family Residential 1-4 family 45,635 43,474 46,290 construction Commercial real 410,568 380,071 316,668 estate Commercial construction and 92,403 78,058 65,281 development Farmland 67,005 64,824 65,918 Other loans: Home equity 51,748 52,990 56,563 Consumer 18,455 18,940 20,168 Commercial 101,535 95,554 109,209 Agricultural 46,335 53,645 52,242 Unearned loan fees (1,725 ) (2,098 ) (2,038 ) Total 933,139 884,905 841,103 loans Allowance for loan losses (12,500 ) (12,200 ) (11,600 ) Net 920,639 872,705 829,503 loans Accrued interest and dividends 5,751 6,218 5,765 receivable Mortgage servicing rights, net 13,693 12,941 10,105 Premises and equipment, net 67,266 66,537 58,762 Cash surrender value of life 36,474 36,265 27,753 insurance, net Goodwill 20,798 20,798 20,798 Core deposit intangible, net 1,780 1,919 2,343 Other assets 6,334 7,832 10,208 Total $ 1,435,926 $ 1,406,923 $ 1,257,634 assets Liabilities: Deposit accounts: Noninterest bearing 368,846 367,127 318,389 Interest 853,703 827,422 714,694 bearing Total 1,222,549 1,194,549 1,033,083 deposits Accrued expenses and other 21,779 21,001 24,752 liabilities FHLB advances and other borrowings 5,000 5,000 17,070 Other long-term debt, net 29,869 29,850 29,791 Total 1,279,197 1,250,400 1,104,696 liabilities 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 shares issued; 6,794,811, 6,776,703 and 6,775,447 shares outstanding at December 31, 2021, September 30, 2021 and December 31, 2020, respectively 71 71 71 Additional paid-in capital 80,832 80,957 77,602 Unallocated common stock held by Employee (5,729 ) (5,883 ) (145 ) Stock Ownership Plan Treasury stock, at cost (316,022 and 335,386 shares at December 31, 2021 and December 31, 2020, respectively (7,321 ) (7,631 ) (4,423 ) Retained earnings 85,383 84,505 73,982 Accumulated other comprehensive income, 3,493 4,504 5,851 net of tax Total shareholders' 156,729 156,523 152,938 equity Total liabilities and shareholders' $ 1,435,926 $ 1,406,923 $ 1,257,634 equity

Income Statement (Unaudited) (Unaudited) (Dollars inthousands, except per Three Months Ended Years Ended share data) December 31, September December 31, December 31, 30, 2021 2021 2020 2021 2020 Interest and dividend income: Interest and fees $ 11,474 $ 11,619 $ 11,549 $ 45,134 $ 45,381 on loans Securities 1,249 1,094 889 4,238 3,742 available-for-sale FRB and FHLB 61 62 86 255 370 dividends Other interest 30 32 27 120 161 income Total interest and dividend 12,814 12,807 12,551 49,747 49,654 incomeInterest expense: Interest expense 356 350 551 1,474 3,614 on deposits FHLB advances and 23 37 117 175 1,183 other borrowings Other long-term 390 389 391 1,558 1,687 debt Total interest 769 776 1,059 3,207 6,484 expenseNet interest 12,045 12,031 11,492 46,540 43,170 incomeLoan loss 285 255 379 861 3,130 provision Net interest income after loan 11,760 11,776 11,113 45,679 40,040 loss provision Noninterest income: Service charges on 329 318 282 1,213 1,096 deposit accounts Mortgage banking, 7,675 11,665 10,455 41,035 42,051 net Interchange and 493 570 415 1,982 1,538 ATM fees Appreciation in cash surrender value of 209 181 165 721 645 life insurance Net gain (loss) on sale of 12 11 (335 ) 23 733 available-for-sale securities Other noninterest 997 608 1,112 2,795 3,004 income Total noninterest 9,715 13,353 12,094 47,769 49,067 income Noninterest expense: Salaries and 11,673 12,262 10,562 48,766 38,836 employee benefits Occupancy and 1,702 1,665 1,342 6,448 5,019 equipment expense Data processing 1,369 1,171 1,215 5,035 4,722 Advertising 426 326 287 1,276 911 Amortization 142 144 164 573 659 Loan costs 610 654 669 2,736 1,880 FDIC insurance 89 81 75 332 222 premiums Postage 84 93 103 386 363 Professional and 356 790 254 1,756 1,335 examination fees Acquisition costs 726 35 - 761 157 Other noninterest 1,939 1,579 1,670 6,097 6,563 expense Total noninterest 19,116 18,800 16,341 74,166 60,667 expense Income beforeprovision for income 2,359 6,329 6,866 19,282 28,440 taxesProvision for Income 632 1,583 1,702 4,863 7,234 taxesNet income $ 1,727 $ 4,746 $ 5,164 $ 14,419 $ 21,206 Basic earnings per $ 0.26 $ 0.73 $ 0.76 $ 2.17 $ 3.12 shareDiluted earnings per $ 0.26 $ 0.73 $ 0.76 $ 2.17 $ 3.11 share Basic weightedaverage shares 6,543,192 6,525,509 6,768,720 6,653,935 6,795,503 outstanding Diluted weightedaverage shares 6,563,512 6,544,044 6,815,072 6,655,735 6,820,306 outstanding

ADDITIONAL FINANCIAL (Unaudited) INFORMATION(Dollars in thousands, except Three Months Ended or Twelve Months Endedper share data) December 31, September 30, December 31, 2021 2021 2020 Mortgage Banking Activity (For the quarter): Net gain on sale of mortgage $ 9,825 $ 11,503 $ 11,959 loans Net change in fair value of loans held-for-sale and (2,439 ) (35 ) (1,352 ) derivatives Mortgage servicing income, 289 197 (152 ) net Mortgage banking, $ 7,675 $ 11,665 $ 10,455 net Mortgage Banking Activity (Year-to-date): Net gain on sale of mortgage $ 46,086 $ 36,391 loans Net change in fair value of loans held-for-sale and (5,443 ) 5,968 derivatives Mortgage servicing income, 392 (308 ) net Mortgage banking, $ 41,035 $ 42,051 net Performance Ratios (For the quarter): Return on average assets 0.48 % 1.37 % 1.63 % Return on average equity 4.37 % 12.09 % 13.68 % Net interest margin 3.75 % 3.87 % 4.03 % Core efficiency ratio* 83.86 % 73.36 % 68.59 % Performance Ratios (Year-to-date): Return on average assets 1.06 % 1.74 % Return on average equity 9.18 % 15.02 % Net interest margin 3.85 % 3.94 % Core efficiency ratio* 77.23 % 64.89 % Asset Quality Ratios and Data: As of or for the Three Months Ended December 31, September 30, December 31, 2021 2021 2020 Nonaccrual $ 4,835 $ 5,657 $ 6,257 loans Loans 90 days past due and - 34 392 still accruing Restructured loans, net 2,224 2,116 1,824 Total nonperforming 7,059 7,807 8,473 loans Other real estate owned and 4 117 25 other repossessed assets Total nonperforming $ 7,063 $ 7,924 $ 8,498 assets Nonperforming loans / 0.76 % 0.88 % 1.01 % portfolio loans Nonperforming assets / 0.49 % 0.56 % 0.68 % assets Allowance for loan losses / 1.34 % 1.38 % 1.38 % portfolio loans Allowance / nonperforming 177.08 % 156.27 % 136.91 % loans Gross loan charge-offs for $ 2 $ 4 $ 98 the quarter Gross loan recoveries for $ 17 $ 49 $ 20 the quarter Net loan (recoveries) $ (15 ) $ (45 ) $ 78 charge-offs for the quarter December 31, September 30, December 31, 2021 2021 2020 Capital Data (At quarter end): Tangible book value per $ 19.74 $ 19.74 $ 19.16 share** Shares outstanding 6,794,811 6,776,703 6,775,447 Tangible common equity to 9.49 % 9.67 % 10.51 % tangible assets*** Other Information: Average total assets for the $ 1,433,003 $ 1,382,186 $ 1,268,402 quarter Average total assets $ 1,357,249 $ 1,331,988 $ 1,219,890 year-to-date Average earning assets for $ 1,274,817 $ 1,233,500 $ 1,131,621 the quarter Average earning assets $ 1,209,715 $ 1,188,014 $ 1,092,551 year-to-date Average loans for the $ 942,783 $ 926,748 $ 888,331 quarter **** Average loans year-to-date $ 914,804 $ 905,478 $ 874,669 **** Average equity for the $ 158,208 $ 157,078 $ 151,002 quarter Average equity year-to-date $ 157,014 $ 156,616 $ 141,160 Average deposits for the $ 1,215,046 $ 1,163,979 $ 1,024,871 quarter Average deposits $ 1,138,608 $ 1,113,109 $ 954,500 year-to-date * The core efficiency ratio is a non-GAAP ratio that is calculated by dividingnon-interest expense, exclusive of acquisitioncosts and intangible asset amortization, by thesum 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 depositintangible, 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 (Unaudited) (Unaudited) Ratio(Dollars in Three Months Ended Years Ended thousands) December 31, September December 31, December 31, 30, 2021 2021 2020 2021 2020 Calculation ofCore Efficiency Ratio: Noninterest $ 19,116 $ 18,800 $ 16,341 $ 74,166 $ 60,667 expense Acquisition (726 ) (35 ) - (761 ) (157 ) costs Intangible asset (142 ) (144 ) (164 ) (573 ) (659 ) amortization Core efficiency 18,248 18,621 16,177 72,832 59,851 ratio numerator Net interest 12,045 12,031 11,492 46,540 43,170 income Noninterest 9,715 13,353 12,094 47,769 49,067 income Core efficiency 21,760 25,384 23,586 94,309 92,237 ratio denominator Core efficiency 83.86 % 73.36 % 68.59 % 77.23 % 64.89 % ratio (non-GAAP)

Tangible Book Value (Unaudited) and Tangible Assets(Dollars in thousands, December 31, September 30, December 31, except per share data) 2021 2021 2020 Tangible Book Value: Shareholders' $ 156,729 $ 156,523 $ 152,938 equity Goodwill and core deposit intangible, (22,578 ) (22,717 ) (23,141 ) net Tangible common shareholders' $ 134,151 $ 133,806 $ 129,797 equity (non-GAAP) Common shares outstanding at end of 6,794,811 6,776,703 6,775,447 period Common shareholders' equity (book value) $ 23.07 $ 23.10 $ 22.57 per share (GAAP) Tangible common shareholders' equity (tangible book value) per share $ 19.74 $ 19.74 $ 19.16 (non-GAAP) Tangible Assets: Total assets $ 1,435,926 $ 1,406,923 $ 1,257,634 Goodwill and core deposit intangible, (22,578 ) (22,717 ) (23,141 ) net Tangible assets $ 1,413,348 $ 1,384,206 $ 1,234,493 (non-GAAP) Tangible common shareholders' equity to tangible assets (non-GAAP) 9.49 % 9.67 % 10.51 %

Earnings Per DilutedShare, Excluding (Unaudited) (Unaudited) Acquisition Costs(Dollars inthousands, except Three Months Ended Years Ended per share data) December 31, September December 31, December 31, 30, 2021 2021 2020 2021 2020 Net interest incomeafter loan loss $ 11,760 $ 11,776 $ 11,113 $ 45,679 $ 40,040 provisionNoninterest 9,715 13,353 12,094 47,769 49,067 income Noninterest 19,116 18,800 16,341 74,166 60,667 expense Acquisition (726 ) (35 ) - (761 ) (157 ) costsNoninterest expense,excluding 18,390 18,765 16,341 73,405 60,510 acquisition costs(non-GAAP) Income before 3,085 6,364 6,866 20,043 28,597 income taxesProvision for incometaxes, excluding acquisition costs related taxes 827 1,592 1,702 5,055 7,274 (non-GAAP)Net Income,excluding $ 2,258 $ 4,772 $ 5,164 $ 14,988 $ 21,323 acquisition costs(non-GAAP) Diluted earnings $ 0.26 $ 0.73 $ 0.76 $ 2.17 $ 3.11 per share (GAAP)Diluted earnings pershare, excluding acquisition costs $ 0.34 $ 0.73 $ 0.76 $ 2.25 $ 3.13 (non-GAAP)

Return on Average Assets,Excluding Acquisition (Unaudited)Costs(Dollars in December 31, September 30, December 31,thousands) 2021 2021 2020 For the quarter: Net income, excluding acquisition costs $ 2,258 $ 4,772 $ 5,164 (non-GAAP)* Average total assets $ 1,433,003 $ 1,382,186 $ 1,268,402 quarter-to-date Return on average assets, excluding acquisition costs 0.63 % 1.38 % 1.63 % (non-GAAP) Year-to-date: Net income, excluding acquisition costs $ 14,988 $ 12,718 $ 21,323 (non-GAAP)* Average total assets $ 1,357,249 $ 1,331,988 $ 1,219,890 year-to-date Return on average assets, excluding acquisition costs 1.10 % 1.27 % 1.75 % (non-GAAP) * See Earnings Per Diluted Share, Excluding Acquisition Costs table for GAAP tonon-GAAP reconciliation.

Contacts: Peter J. Johnson, President and CEO(406) 457-4006 Laura F. Clark, EVP and CFO(406) 457-4007