10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission file number 1-34682

Eagle Bancorp Montana, Inc.

(Exact name of small business issuer as specified in its charter)

Delaware	27-1449820
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1400 Prospect Avenue, Helena, MT 59601

(Address of principal executive offices)

(406) 442-3080)

(Issuer's telephone number)

Website address: www.opportunitybank.com

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer     [   ]	Accelerated filer       [   ]
Non-accelerated filer       [   ]	Smaller reporting company    [X]
	Emerging growth company    [   ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

Indicate by check mark whether the registrant is a shell company (defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Common stock, par value $0.01 per share 5,477,652 shares outstanding

As of November 14, 2018

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I.	Financial Information	PAGE
Item1.	Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition as of September 30, 2018 and December 31, 2017	1
	Consolidated Statements of Income for the three and nine months ended September 30, 2018 and 2017	3
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2018 and 2017	5
	Consolidated Statements of Changes in Shareholders' Equity for the nine months ended September 30, 2018 and 2017	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017	7
	Notes to the Unaudited Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	52
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	54
Signatures		55

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

Note Regarding Forward-Looking Statements

This report includes “forward-looking statements” within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “project,” “could,” “intend,” “target” and other similar words and expressions of the future. These forward-looking statements include, but are not limited to:

● statements of our goals, intentions and expectations;

● statements regarding our business plans, prospects, 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 management of Eagle Bancorp Montana, Inc. (“Eagle” or the “Company”) and Opportunity Bank of Montana (the “Bank”), Eagle’s wholly-owned subsidiary, 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.

The following factors, among others, could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

● changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

● general economic conditions, either nationally or in our market areas that are worse than expected;

● competition among depository and other financial institutions;

● changes in the prices, values and sales volume of residential and commercial real estate in Montana;

● inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

● changes or volatility in the securities markets;

● our ability to enter new markets successfully and capitalize on growth opportunities;

● our ability to successfully perform due diligence and integrate acquired businesses including our proposed acquisition of Big Muddy Bancorp, Inc.;

● changes in consumer spending, borrowing and savings habits;

● our ability to continue to increase and manage our commercial and residential real estate, multi-family and commercial business loans;

● possible impairments of securities held by us, including those issued by government entities and government sponsored enterprises;

● the level of future deposit insurance premium assessments;

● the costs or effects of mergers, acquisitions or dispositions we may make, including the pending merger of The State Bank of Townsend with and into Opportunity Bank of Montana, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits, including any anticipated cost savings or synergies, associated with any such mergers, acquisitions or dispositions;

● our ability to develop and maintain secure and reliable information technology systems, effectively defend ourselves against cyberattacks, or recover from breaches to our cybersecurity infrastructure;

● the failure of assumptions underlying the establishment of allowance for possible loan losses and other estimates;

● the possibility of goodwill impairment charges in the future;

● changes in the financial performance, and/or condition of our borrowers and their ability to repay their loans when due; and

● the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2017, any subsequent Reports on Form 10-Q and Form 8-K, and other filings with the SEC. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware.

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	September 30,		December 31,
	2018		2017
ASSETS:
Cash and due from banks	$	7,889	$	5,517
Interest bearing deposits in banks		1,079		1,920
Total cash and cash equivalents		8,968		7,437
Securities available-for-sale		148,935		132,044
Federal Home Loan Bank stock		4,617		4,086
Federal Reserve Bank stock		2,033		1,465
Investment in Eagle Bancorp Statutory Trust I		155		155
Mortgage loans held-for-sale		8,747		8,949
Loans receivable, net of deferred loan fees of $1,081 at September 30, 2018 and $1,093 at December 31, 2017 and allowance for loan losses of $6,350 at September 30, 2018 and $5,750 at December 31, 2017		590,290		507,404
Accrued interest and dividends receivable		3,890		2,555
Mortgage servicing rights, net		6,947		6,578
Premises and equipment, net		28,600		21,958
Cash surrender value of life insurance		20,405		14,481
Real estate and other repossessed assets acquired in settlement of loans, net		457		525
Goodwill		12,124		7,034
Core deposit intangible, net		1,599		273
Deferred tax asset, net		2,100		1,360
Other assets		100		478
Total assets	$	839,967	$	716,782

The accompanying notes are an integral part of these unaudited consolidated financial statements.

-1-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	September 30,			December 31,
	2018			2017
LIABILITIES:
Deposit accounts:
Noninterest bearing	$	142,351		$	99,799
Interest bearing		478,951			420,765
Total deposits		621,302			520,564
Accrued expenses and other liabilities		6,082			4,822
Federal Home Loan Bank advances and other borrowings		95,731			82,969
Other long-term debt:
Principal amount		25,155			25,155
Unamortized debt issuance costs		(295	)		(344	)
Total other long-term debt less unamortized debt issuance costs		24,860			24,811
Total liabilities		747,975			633,166
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 per share; 8,000,000 shares authorized; 5,718,942 and 5,272,168 shares issued; 5,460,452 and 5,013,678 shares outstanding at September 30, 2018 and December 31, 2017, respectively)		57			53
Additional paid-in capital		51,927			42,780
Unallocated common stock held by Employee Stock Ownership Plan		(518	)		(643	)
Treasury stock, at cost		(2,826	)		(2,826	)
Retained earnings		45,989			43,939
Net accumulated other comprehensive (loss) income		(2,637	)		313
Total shareholders' equity		91,992			83,616
Total liabilities and shareholders' equity	$	839,967		$	716,782

The accompanying notes are an integral part of these unaudited consolidated financial statements.

-2-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans	$	7,701		$	6,478	$	22,435		$	18,222
Securities available-for-sale		1,036			693		3,046			2,136
Federal Home Loan Bank and Federal Reserve Bank dividends		80			48		233			124
Interest on deposits in banks		5			2		40			3
Other interest income		3			3		4			4
Total interest and dividend income		8,825			7,224		25,758			20,489
INTEREST EXPENSE:
Deposits		534			386		1,454			1,142
Federal Home Loan Bank advances and other borrowings		453			329		1,105			856
Other long-term debt		361			350		1,065			969
Total interest expense		1,348			1,065		3,624			2,967
NET INTEREST INCOME		7,477			6,159		22,134			17,522
Loan loss provision		194			331		720			934
NET INTEREST INCOME AFTER LOAN LOSS PROVISION		7,283			5,828		21,414			16,588
NONINTEREST INCOME:
Service charges on deposit accounts		241			250		681			721
Net gain on sale of loans (includes $402 and $657 for the three months ended September 30, 2018 and 2017, respectively, and $989 and $1,556 for the nine months ended September 30, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassification)		2,290			2,574		5,449			6,662
Mortgage loan servicing fees		575			525		1,698			1,581
Wealth management income		130			142		409			463
Interchange and ATM fees		270			214		766			648
Appreciation in cash surrender value of life insurance		166			125		436			375
Net loss on sale of available-for-sale securities (includes ($23) and $0 for the three months ended September 30, 2018 and 2017, respectively, and ($113) and ($14) for the nine months ended September 30, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassification)		(23	)		-		(113	)		(14	)
Net loss on sale of real estate owned and other repossessed property		-			-		(57	)		(25	)
Other noninterest income		112			158		255			355
Total noninterest income		3,761			3,988		9,524			10,766

The accompanying notes are an integral part of these unaudited consolidated financial statements.

-3-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Continued)

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
NONINTEREST EXPENSE:
Salaries and employee benefits	$	5,123	$	4,331	$	15,493	$	13,350
Occupancy and equipment expense		880		680		2,543		2,069
Data processing		866		563		2,176		1,696
Advertising		295		255		871		713
Amortization of mortgage servicing rights		296		288		906		812
Amortization of core deposit intangible and tax credits		182		107		519		321
Loan costs		154		166		469		465
Federal insurance premiums		65		78		203		198
Postage		58		48		192		147
Legal, accounting and examination fees		121		107		447		392
Consulting fees		23		14		65		122
Acquisition costs		222		276		587		276
Write-down on real estate owned and other repossessed property		-		-		-		45
Other noninterest expense		767		644		2,149		2,010
Total noninterest expense		9,052		7,557		26,620		22,616
INCOME BEFORE INCOME TAXES		1,992		2,259		4,318		4,738
Income tax expense (includes ($364) and ($157) for the three months ended September 30, 2018 and 2017, respectively, and ($1,064) and $726 for the nine months ended September 30, 2018 and 2017, respectively related to income tax (benefit) expense from reclassification items)		360		538		780		1,188
NET INCOME	$	1,632	$	1,721	$	3,538	$	3,550
BASIC EARNINGS PER SHARE	$	0.30	$	0.45	$	0.65	$	0.93
DILUTED EARNINGS PER SHARE	$	0.30	$	0.45	$	0.65	$	0.92
WEIGHTED AVERAGE SHARES OUTSTANDING (BASIC EPS)		5,460,452		3,811,409		5,411,356		3,811,409
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED EPS)		5,524,912		3,863,656		5,475,816		3,869,695

The accompanying notes are an integral part of these unaudited consolidated financial statements.

-4-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
NET INCOME	$	1,632		$	1,721		$	3,538		$	3,550
OTHER ITEMS OF COMPREHENSIVE (LOSS) INCOME:
Change in fair value of investment securities available-for-sale, before income taxes		(1,237	)		(91	)		(4,036	)		1,963
Reclassification for net realized losses on investment securities included in income, before income tax		23			-			113			14
Change in fair value of derivatives designated as cash flow hedges, before income taxes		234			364			898			1,362
Reclassification for net realized gains on derivatives designated as cash flow hedges, before income taxes		(402	)		(657	)		(989	)		(1,556	)
Total other items of comprehensive (loss) income		(1,382	)		(384	)		(4,014	)		1,783
Income tax benefit (expense) related to:
Investment securities		320			38			1,040			(805	)
Derivatives designated as cash flow hedges		44			119			24			79
Total income tax benefit (expense)		364			157			1,064			(726	)
COMPREHENSIVE INCOME	$	614		$	1,494		$	588		$	4,607

The accompanying notes are an integral part of these unaudited consolidated financial statements.

-5-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Nine Months Ended September 30, 2018 and 2017

(Dollars in Thousands, Except for Per Share Data)

(Unaudited)

																ACCUMULATED
							UNALLOCATED									OTHER
	PREFERRED		COMMON		PAID-IN		ESOP			TREASURY			RETAINED			COMPREHENSIVE
	STOCK		STOCK		CAPITAL		SHARES			STOCK			EARNINGS			INCOME (LOSS)			TOTAL
Balance at January 1, 2018	$	-	$	53	$	42,780	$	(643	)	$	(2,826	)	$	43,939		$	313		$	83,616
Net income														3,538						3,538
Other comprehensive loss																	(2,950	)		(2,950	)
Dividends paid														(1,488	)					(1,488	)
Stock issued in connection with TwinCo acquisition				4		9,026														9,030
Employee Stock Ownership Plan shares allocated or committed to be released for allocation (12,462 shares)						121		125												246
Balance at September 30, 2018	$	-	$	57	$	51,927	$	(518	)	$	(2,826	)	$	45,989		$	(2,637	)	$	91,992
Balance at January 1, 2017	$	-	$	41	$	22,366	$	(809	)	$	(2,971	)	$	41,240		$	(411	)	$	59,456
Net income														3,550						3,550
Other comprehensive income																	1,057			1,057
Dividends paid														(953	)					(953	)
Employee Stock Ownership Plan shares allocated or committed to be released for allocation (12,462 shares)						111		125												236
Balance at September 30, 2017	$	-	$	41	$	22,477	$	(684	)	$	(2,971	)	$	43,837		$	646		$	63,346

The accompanying notes are an integral part of these unaudited consolidated financial statements.

-6-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,538		$	3,550
Adjustments to reconcile net income to net cash provided by operating activities:
Loan loss provision		720			934
Write-down on real estate owned and other repossessed assets		-			45
Depreciation		923			712
Net amortization of investment securities premium and discounts		950			1,208
Amortization of mortgage servicing rights		906			812
Amortization of core deposit intangible and tax credits		519			321
Deferred income tax provision (benefit)		516			(110	)
Net gain on sale of loans		(5,449	)		(6,662	)
Net loss on sale of available-for-sale securities		113			14
Net loss on sale of real estate owned and other repossessed assets		57			25
Net loss on sale/disposal of premises and equipment		(9	)		-
Net appreciation in cash surrender value of life insurance		(346	)		(290	)
Net change in:
Accrued interest and dividends receivable		(630	)		(146	)
Loans held-for-sale		5,560			15,092
Other assets		258			558
Accrued expenses and other liabilities		1,487			1,371
Net cash provided by operating activities		9,113			17,434
CASH FLOWS FROM INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales		46,058			2,749
Maturities, principal payments and calls		8,763			6,982
Purchases		(45,970	)		(1,307	)
Federal Home Loan Bank stock purchased		(420	)		(109	)
Federal Reserve Bank stock purchased		(568	)		-
Cash paid for TwinCo Acquisition, net of cash received		(4,243	)		-
Loan origination and principal collection, net		(29,828	)		(45,618	)
Proceeds from Bank owned life insurance		205			-
Purchase of Bank owned life insurance		(5,600	)		-
Proceeds from sale of real estate and other repossessed assets acquired in settlement of loans		150			262
Proceeds from sale of premises and equipment		9			-
Additions to premises and equipment		(5,960	)		(2,179	)
Net cash used in investing activities		(37,404	)		(39,220	)

The accompanying notes are an integral part of these unaudited consolidated financial statements. 

-7-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in Thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2018			2017
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	$	18,548		$	12,372
Net short-term advances (payments) on Federal Home Loan Bank and other borrowings		39,417			(35,522	)
Long-term advances from Federal Home Loan Bank and other borrowings		-			46,300
Payments on long-term Federal Home Loan Bank and other borrowings		(26,655	)		(9,355	)
Proceeds from issuance of long-term debt		-			10,000
Payments for debt issuance costs		-			(219	)
Dividends paid		(1,488	)		(953	)
Net cash provided by financing activities		29,822			22,623
NET INCREASE IN CASH AND CASH EQUIVALENTS		1,531			837
CASH AND CASH EQUIVALENTS, beginning of period		7,437			7,318
CASH AND CASH EQUIVALENTS, end of period	$	8,968		$	8,155
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest	$	3,523		$	2,939
Cash paid during the period for income taxes	$	355		$	1,180
NON-CASH INVESTING AND FINANCING ACTIVITIES:
(Decrease) increase in market value of securities available-for-sale	$	(3,923	)	$	1,977
Mortgage servicing rights recognized	$	1,275		$	1,357
Loans transferred to real estate and other assets acquired in foreclosure	$	4		$	34
Stock issued in connection with TwinCo acquisition	$	9,030		$	-
Employee Stock Ownership Plan shares released	$	246		$	236
See Note 12. Mergers and Acquisitions for additional information related to assets acquired and liabilities assumed in the TwinCo acquisition.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

-8-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income and cash flows for the unaudited interim periods.

The results of operations for the nine-month period ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or any other period. The unaudited consolidated financial statements and notes presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in Eagle Bancorp Montana, Inc.’s (“the Company” or “Eagle”) Form 10-K for the year ended December 31, 2017.

Certain prior period amounts were reclassified to conform to the presentation for 2018. These reclassifications had no impact on net income or total shareholders’ equity. Certain loan amounts were reclassified for prior periods to be consistent with loan category classification for September 30, 2018. During the quarter ended March 31, 2018, Eagle completed the acquisition of TwinCo, Inc. (“TwinCo”). See Note 12. Mergers and Acquisitions for more information. The acquisition included the addition of over $55,000,000 in gross loans and added a considerable amount to Eagle’s agricultural loans. There was no impact to Eagle’s loan policies due to the acquisition. Loan costs were previously included in other noninterest expense on the Consolidated Statements of Income. These amounts were presented on their own lines for the three and nine months ended September 30, 2018 and prior year amounts were reclassed to be consistent with the current year presentation.

The Company evaluated subsequent events for potential recognition and/or disclosure through November 14, 2018, the date the unaudited consolidated financial statements were issued.

NOTE 2. INVESTMENT SECURITIES

Investment securities are summarized as follows:

	September 30, 2018									December 31, 2017
			Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	10,452	$	-	$	(223	)	$	10,229	$	4,881	$	13	$	(37	)	$	4,857
Municipal obligations		74,853		100		(2,279	)		72,674		67,508		807		(429	)		67,886
Corporate obligations		11,419		24		(236	)		11,207		14,725		18		(99	)		14,644
Mortgage-backed securities		20,946		120		(446	)		20,620		24,770		364		(265	)		24,869
Collateralized mortgage obligations		24,668		-		(827	)		23,841		20,051		7		(270	)		19,788
Asset-backed securities		10,411		1		(48	)		10,364		-		-		-			-
Total	$	152,749	$	245	$	(4,059	)	$	148,935	$	131,935	$	1,209	$	(1,100	)	$	132,044

-9-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. INVESTMENT SECURITIES - continued

Proceeds from sales of available-for-sale securities and the associated gross realized gains and losses were as follows:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	978		$	-	$	46,058		$	2,749
Gross realized gain on sale of available-for-sale securities	$	-		$	-	$	191		$	14
Gross realized loss on sale of available-for-sale securities		(23	)		-		(304	)		(28	)
Net realized loss on sale of available-for-sale securities	$	(23	)		-	$	(113	)	$	(14	)

The amortized cost and fair value of securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2018
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	1,255	$	1,254
Due from one to five years		18,245		17,920
Due from five to ten years		14,561		14,236
Due after ten years		73,074		71,064
		107,135		104,474
Mortgage-backed securities		20,946		20,620
Collateralized mortgage obligations		24,668		23,841
Total	$	152,749	$	148,935

Maturities of securities do not reflect repricing opportunities present in adjustable rate securities.

-10-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. INVESTMENT SECURITIES - continued

The Company’s investment securities that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve or more months were as follows:

	September 30, 2018
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency	$	7,756	$	(130	)	$	2,473	$	(93	)
Municipal obligations		50,828		(1,274	)		17,332		(1,005	)
Corporate obligations		7,193		(227	)		991		(9	)
Mortgage-backed securities and collateralized mortgage obligations		17,702		(472	)		16,912		(801	)
Asset-backed securities		8,371		(48	)		-		-
Total	$	91,850	$	(2,151	)	$	37,708	$	(1,908	)

	December 31, 2017
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency	$	2,943	$	(14	)	$	1,363	$	(23	)
Municipal obligations		15,404		(87	)		16,675		(342	)
Corporate obligations		7,643		(71	)		3,981		(28	)
Mortgage-backed securities and collateralized mortgage obligations		9,107		(81	)		21,653		(454	)
Asset-backed securities		-		-			-		-
Total	$	35,097	$	(253	)	$	43,672	$	(847	)

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As of September 30, 2018 and December 31, 2017, there were, respectively, 139 and 87 securities in an unrealized loss position that were considered to be temporarily impaired and therefore an impairment charge has not been recorded.

As of September 30, 2018, 104 U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately 3.09% from the Company’s amortized cost basis of these securities. At December 31, 2017, 52 U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately 1.28% from the Company’s amortized cost basis of these securities. As of September 30, 2018, 9 corporate obligations had unrealized losses of approximately 2.80% from the Company’s amortized cost basis of these securities. At December 31, 2017, 15 corporate obligations had unrealized losses with aggregate depreciation of approximately 0.84% from the Company’s amortized cost basis of these securities. As management has the ability to hold debt securities until maturity, or for the foreseeable future, no declines are deemed to be other than temporary.

-11-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. INVESTMENT SECURITIES - continued

As of September 30, 2018, 22 mortgage-backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) had unrealized losses with aggregate depreciation of approximately 3.55% from the Company’s amortized cost basis of these securities. At December 31, 2017, 20 MBSs and CMOs had unrealized losses with aggregate depreciation of approximately 1.71% from the Company’s amortized cost basis. Management’s analysis as of September 30, 2018 revealed no expected credit losses on the securities and therefore, declines are not deemed to be other than temporary.

As of September 30, 2018, 4 asset-backed securities (“ABSs”) had unrealized losses with aggregate depreciation of approximately 0.57% from the Company’s amortized cost basis of these securities. The ABSs were purchased during the quarter ended March 31, 2018. Management’s analysis as of September 30, 2018 revealed no expected credit losses on the securities and therefore, declines are not deemed to be other than temporary.

NOTE 3. LOANS RECEIVABLE

Loans receivable consisted of the following:

	September 30,			December 31,
	2018			2017
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	144,972		$	135,217
Commercial real estate		303,660			244,783
Other loans:
Home equity		53,342			52,672
Consumer		16,491			15,712
Commercial		79,256			65,863
Total		597,721			514,247
Deferred loan fees, net		(1,081	)		(1,093	)
Allowance for loan losses		(6,350	)		(5,750	)
Total loans, net	$	590,290		$	507,404

Within the commercial real estate loan category, $12,637,000 and $13,114,000 was guaranteed by the United States Department of Agriculture Rural Development, at September 30, 2018 and December 31, 2017, respectively. The commercial real estate category and the commercial category also include $3,004,000 and $1,480,000 of loans guaranteed by the United States Department of Agriculture Farm Service Agency at September 30, 2018, respectively. The United States Department of Agriculture Farm Service Agency guaranteed loans were acquired through the TwinCo acquisition. In addition, within the commercial loan category, $229,000 and $486,000 were in loans originated through a syndication program where the business resides outside of Montana, at September 30, 2018, and December 31, 2017, respectively.

-12-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

The following table includes information regarding nonperforming assets.

	September 30,			December 31,
	2018			2017
	(Dollars in Thousands)
Non-accrual loans	$	1,556		$	977
Accruing loans delinquent 90 days or more		156			-
Restructured loans, net		-			-
Total nonperforming loans		1,712			977
Real estate owned and other repossessed assets, net		457			525
Total nonperforming assets	$	2,169		$	1,502
Total nonperforming assets as a percentage of total assets		0.26	%		0.21	%
Allowance for loan losses	$	6,350		$	5,750
Percent of allowance for loan losses to nonperforming loans		370.91	%		588.54	%
Percent of allowance for loan losses to nonperforming assets		292.76	%		382.82	%

-13-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE - continued

Allowance for loan losses activity was as follows:

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, July 1, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Charge-offs		-		-		-			(14	)		-			(14	)
Recoveries		-		7		-			12			1			20
Provision		-		164		-			-			30			194
Ending balance, September 30, 2018	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Allowance for loan losses:
Beginning balance, January 1, 2018	$	1,301	$	2,778	$	506		$	225		$	940		$	5,750
Charge-offs		-		-		(80	)		(64	)		(24	)		(168	)
Recoveries		-		14		1			22			11			48
Provision		-		609		-			-			111			720
Ending balance, September 30, 2018	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Ending balance, September 30, 2018 allocated to loans individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-		$	-
Ending balance, September 30, 2018 allocated to loans collectively evaluated for impairment	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Loans receivable:
Ending balance, September 30, 2018	$	144,972	$	303,660	$	53,342		$	16,491		$	79,256		$	597,721
Ending balance, September 30, 2018 of loans individually evaluated for impairment	$	564	$	514	$	228		$	137		$	113		$	1,556
Ending balance, September 30, 2018 of loans collectively evaluated for impairment	$	144,408	$	303,146	$	53,114		$	16,354		$	79,143		$	596,165

-14-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE - continued

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity		Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, July 1, 2017	$	1,251	$	2,378	$	505	$	225		$	866		$	5,225
Charge-offs		-		-		-		(41	)		(19	)		(60	)
Recoveries		-		-		-		3			1			4
Provision		50		200		-		31			50			331
Ending balance, September 30, 2017	$	1,301	$	2,578	$	505	$	218		$	898		$	5,500
Allowance for loan losses:
Beginning balance, January 1, 2017	$	1,241	$	2,079	$	460	$	193		$	797		$	4,770
Charge-offs		-		-		-		(140	)		(118	)		(258	)
Recoveries		-		-		39		14			1			54
Provision		60		499		6		151			218			934
Ending balance, September 30, 2017	$	1,301	$	2,578	$	505	$	218		$	898		$	5,500
Ending balance, September 30, 2017 allocated to loans individually evaluated for impairment	$	-	$	-	$	-	$	32		$	-		$	32
Ending balance, September 30, 2017 allocated to loans collectively evaluated for impairment	$	1,301	$	2,578	$	505	$	186		$	898		$	5,468
Loans receivable:
Ending balance, September 30, 2017	$	139,010	$	247,501	$	51,450	$	14,696		$	58,554		$	511,211
Ending balance, September 30, 2017 of loans individually evaluated for impairment	$	484	$	451	$	242	$	131		$	88		$	1,396
Ending balance, September 30, 2017 of loans collectively evaluated for impairment	$	138,526	$	247,050	$	51,208	$	14,565		$	58,466		$	509,815

The Company utilizes an 8-point internal loan rating system, largely based on regulatory classifications, as follows:

Loans Rated Pass – these are loans in categories 1 – 5 that are considered to be protected by the current net worth and paying capacity of the obligor, or by the value of the asset or the underlying collateral.

Loans Rated Special Mention – these loans in category 6 have potential weaknesses and are watched closely by management. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset at some future date.

Loans Rated Substandard – these loans in category 7 are inadequately protected by the current net worth and paying capacity of the obligor of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Loans Rated Doubtful – these loans in category 8 have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loans Rated Loss – these loans are considered uncollectible and are not part of the 8-point rating system. They are of such small value that their continuance as assets without establishment of a specific reserve is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but, rather, that it is not practical or desirable to defer writing off a basically worthless asset even though practical recovery may be affected in the future.

-15-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE - continued

On an annual basis, or more often if needed, the Company formally reviews the ratings of all commercial real estate, construction, and commercial business loans that have a principal balance of $750,000 or more. Quarterly, the Company reviews the rating of any consumer loan, broadly defined, that is delinquent 90 days or more. Likewise, quarterly, the Company reviews the rating of any commercial loan, broadly defined, that is delinquent 60 days or more. Annually, the Company engages an independent third-party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process.

Internal classification of the loan portfolio was as follows:

	September 30, 2018
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	114,320	$	-	$	897	$	-	$	-	$	115,217
Residential 1-4 family construction		29,418		-		337		-		-		29,755
Commercial real estate		232,721		1,758		2,421		-		-		236,900
Commercial construction and development		36,339		-		-		-		-		36,339
Farmland		30,421		-		-		-		-		30,421
Other loans:
Home equity		53,114		-		228		-		-		53,342
Consumer		16,307		-		184		-		-		16,491
Commercial		59,403		870		134		-		-		60,407
Agricultural		18,451		-		398		-		-		18,849
Total	$	590,494	$	2,628	$	4,599	$	-	$	-	$	597,721

	December 31, 2017
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	109,167	$	-	$	744	$	-	$	-	$	109,911
Residential 1-4 family construction		24,850		-		456		-		-		25,306
Commercial real estate		194,502		-		303		-		-		194,805
Commercial construction and development		38,351		-		-		-		-		38,351
Farmland		11,627		-		-		-		-		11,627
Other loans:
Home equity		52,430		-		242		-		-		52,672
Consumer		15,549		-		136		-		27		15,712
Commercial		63,165		-		113		-		22		63,300
Agricultural		2,563		-		-		-		-		2,563
Total	$	512,204	$	-	$	1,994	$	-	$	49	$	514,247

-16-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

Credit risk profile based on payment activity of the loan portfolio was as follows:

	September 30, 2018
			Restructured
	Performing		Loans		Nonperforming		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	114,860	$	-	$	357	$	115,217
Residential 1-4 family construction		29,418		-		337		29,755
Commercial real estate		236,386		-		514		236,900
Commercial construction and development		36,313		-		26		36,339
Farmland		30,421		-		-		30,421
Other loans:
Home equity		53,114		-		228		53,342
Consumer		16,354		-		137		16,491
Commercial		60,294		-		113		60,407
Agricultural		18,849		-		-		18,849
Total	$	596,009	$	-	$	1,712	$	597,721

	December 31, 2017
			Restructured
	Performing		Loans		Nonperforming		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	109,436	$	-	$	475	$	109,911
Residential 1-4 family construction		25,306		-		-		25,306
Commercial real estate		194,805		-		-		194,805
Commercial construction and development		38,351		-		-		38,351
Farmland		11,627		-		-		11,627
Other loans:
Home equity		52,430		-		242		52,672
Consumer		15,559		-		153		15,712
Commercial		63,193		-		107		63,300
Agricultural		2,563		-		-		2,563
Total	$	513,270	$	-	$	977	$	514,247

-17-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

The following tables include information regarding delinquencies within the loan portfolio.

	September 30, 2018
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	473	$	130	$	603	$	227	$	114,387	$	115,217
Residential 1-4 family construction		118		-		118		337		29,300		29,755
Commercial real estate		1,618		-		1,618		514		234,768		236,900
Commercial construction and development		10		26		36		-		36,303		36,339
Farmland				-		-		-		30,421		30,421
Other loans:
Home equity		109		-		109		228		53,005		53,342
Consumer		80		-		80		137		16,274		16,491
Commercial		1,956				1,956		113		58,338		60,407
Agricultural		79		-		79		-		18,770		18,849
Total	$	4,443	$	156	$	4,599	$	1,556	$	591,566	$	597,721

	December 31, 2017
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	898	$	-	$	898	$	475	$	108,538	$	109,911
Residential 1-4 family construction		409		-		409		-		24,897		25,306
Commercial real estate		291		-		291		-		194,514		194,805
Commercial construction and development		-		-		-		-		38,351		38,351
Farmland		-		-		-		-		11,627		11,627
Other loans:
Home equity		212		-		212		242		52,218		52,672
Consumer		111		-		111		153		15,448		15,712
Commercial		116		-		116		107		63,077		63,300
Agricultural		-		-		-		-		2,563		2,563
Total	$	2,037	$	-	$	2,037	$	977	$	511,233	$	514,247

-18-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE - continued

The following tables include information regarding impaired loans.

	September 30, 2018
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
With no related allowance:
Real estate loans:
Residential 1-4 family	$	227	$	248	$	-
Residential 1-4 family construction		337		387		-
Commercial real estate		514		527		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		228		268		-
Consumer		137		190		-
Commercial		113		119		-
Agricultural		-		-		-
With a related allowance:
Real estate loans:
Residential 1-4 family		-		-		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		-		-		-
Consumer		-		-		-
Commercial		-		-		-
Agricultural		-		-		-
Total:
Real estate loans:
Residential 1-4 family		227		248		-
Residential 1-4 family construction		337		387		-
Commercial real estate		514		527		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		228		268		-
Consumer		137		190		-
Commercial		113		119		-
Agricultural		-		-		-
Total	$	1,556	$	1,739	$	-

-19-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE - continued

	December 31, 2017
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
With no related allowance:
First mortgage loans:
Residential 1-4 family	$	475	$	487	$	-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		242		263		-
Consumer		126		176		-
Commercial		85		87		-
Agricultural		-		-		-
With a related allowance:
First mortgage loans:
Residential 1-4 family		-		-		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		-		-		-
Consumer		27		27		27
Commercial		22		22		22
Agricultural		-		-		-
Total:
First mortgage loans:
Residential 1-4 family		475		487		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		242		263		-
Consumer		153		203		27
Commercial		107		109		22
Agricultural		-		-		-
Total	$	977	$	1,062	$	49

-20-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. LOANS RECEIVABLE – continued

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	Average Recorded Investment
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	232	$	492	$	351	$	352
Residential 1-4 family construction		337		-		169		-
Commercial real estate		521		451		257		226
Commercial construction and development		-		-		-		-
Farmland		-		-		-		-
Other loans:
Home equity		217		274		235		291
Consumer		119		137		145		114
Commercial		102		150		110		44
Agricultural		-		-		-		-
Total	$	1,528	$	1,504	$	1,267	$	1,027

Interest income recognized on impaired loans for the three and nine months ended September 30, 2018 and 2017 are considered insignificant.

NOTE 4. TROUBLED DEBT RESTRUCTURINGS

A troubled debt restructured (“TDR”) loan is a loan in which the Bank grants a concession to the borrower that it would not otherwise consider, for reasons related to a borrower's financial difficulties. The loan terms which have been modified or restructured due to a borrower's financial difficulty, include but are not limited to a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market rates; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-aging, extensions, deferrals, renewals and rewrites or a combination of these modification methods. A TDR loan would generally be considered impaired in the year of modification and will be assessed periodically for continued impairment.

The Company offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories:

Rate Modification – A modification in which the interest rate is changed.

Term Modification – A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Interest Only Modification – A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification – A modification in which the dollar amount of the payment is changed, other than an interest only modification described above.

Combination Modification – Any other type of modification, including the use of multiple categories above.

-21-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. TROUBLED DEBT RESTRUCTURINGS – continued

The Company previously had one TDR loan with a recorded investment of $43,000 and a $34,000 charge-off at time of restructure. The loan was a home equity loan and was on accrual status. The remaining recorded investment of $42,000 was paid-off during the quarter ended June 30, 2017 and the $34,000 charge-off was recovered.

The Bank’s policy is that loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appears relatively certain. The Bank’s policy generally refers to nine months of payment performance as sufficient to warrant a return to accrual status.

During the nine months ended September 30, 2018, there were no new restructured loans.

There were no loans modified as a troubled debt restructured loan within the previous nine months for which there was a payment default during the nine months ended September 30, 2018. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral.

As of September 30, 2018 and December 31, 2017, the Company had no commitments to lend additional funds to loan customers whose terms had been modified in trouble debt restructures.

NOTE 5. DEPOSITS

Deposits are summarized as follows:

	September 30,		December 31,
	2018		2017
	(In Thousands)
Noninterest checking	$	142,351	$	99,799
Interest bearing checking		103,372		99,255
Savings		108,878		88,603
Money market		104,794		89,558
Time certificates of deposit		161,907		143,349
Total	$	621,302	$	520,564

NOTE 6. OTHER LONG-TERM DEBT

Other long-term debt consisted of the following:

	September 30, 2018					December 31, 2017
			Unamortized					Unamortized
			Debt					Debt
	Principal		Issuance			Principal		Issuance
	Amount		Costs			Amount		Costs
	(In Thousands)
Senior notes fixed at 5.75%, due 2022	$	10,000	$	(147	)		10,000		(180	)
Subordinated debentures fixed at 6.75%, due 2025		10,000		(148	)		10,000		(164	)
Subordinated debentures variable at 3-Month Libor plus 1.42%, due 2035		5,155		-			5,155		-
Total other long-term debt	$	25,155	$	(295	)	$	25,155	$	(344	)

-22-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6. OTHER LONG-TERM DEBT - continued

In February 2017, the Company completed the issuance, through a private placement, of $10,000,000 aggregate principal amount of 5.75% fixed senior unsecured notes due in 2022. The interest will be paid semi-annually through maturity date. The notes are not subject to redemption at the option of the Company.

In June 2015, the Company completed the issuance of $10,000,000 in aggregate principal amount of subordinated notes due in 2025 in a private placement transaction to an institutional accredited investor. The notes will bear interest at an annual fixed rate of 6.75% and interest will be paid quarterly through maturity date or earlier redemption.

In September 2005, the Company completed the private placement of $5,155,000 in subordinated debentures to Eagle Bancorp Statutory Trust I (“the Trust”). The Trust funded the purchase of the subordinated debentures through the sale of trust preferred securities to First Tennessee Bank, N.A. with a liquidation value of $5,155,000. Using interest payments made by the Company on the debentures, the Trust began paying quarterly dividends to preferred security holders in December 2005. The annual percentage rate of the interest payable on the subordinated debentures and distributions payable on the preferred securities was fixed at 6.02% until December 2010 then became variable at 3-Month LIBOR plus 1.42%, making the rate 3.818% and 3.114% as of September 30, 2018 and December 31, 2017, respectively. Dividends on the preferred securities are cumulative and the Trust may defer the payments for up to five years. The preferred securities mature in December 2035 unless the Company elects and obtains regulatory approval to accelerate the maturity date.

For the three months ended September 30, 2018 and 2017, interest expense on other long-term debt was $361,000 and $350,000, respectively. For the nine months ended September 30, 2018 and 2017, interest expense on other long-term debt was $1,065,000 and $969,000, respectively.

-23-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7. EARNINGS PER SHARE

Basic earnings per share for the three months ended September 30, 2018 was computed using 5,460,452 weighted average shares outstanding. Basic earnings per share for the three months ended September 30, 2017 was computed using 3,811,409 weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method by adjusting the number of shares outstanding by the shares purchased. The weighted average shares outstanding for the diluted earnings per share calculations was 5,524,912 for the three months ended September 30, 2018 and 3,863,656 for the three months ended September 30, 2017.

Basic earnings per share for the nine months ended September 30, 2018 was computed using 5,411,356 weighted average shares outstanding. Basic earnings per share for the nine months ended September 30, 2017 was computed using 3,811,409 weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method by adjusting the number of shares outstanding by the shares purchased. The weighted average shares outstanding for the diluted earnings per share calculations was 5,475,816 for the nine months ended September 30, 2018 and 3,869,695 for the nine months ended September 30, 2017.

NOTE 8. DIVIDENDS AND STOCK REPURCHASE PROGRAM

For the year ended December 31, 2017, Eagle paid dividends of $0.08 per share for the quarters ended March 31 and June 30, 2017. Eagle paid dividends of $0.09 per share for the quarters ended September 30 and December 31, 2017. A dividend of $0.09 per share was declared on January 25, 2018 and paid March 1, 2018 to shareholders of record on February 9, 2018. A dividend of $0.09 per share was declared on April 19, 2018 and paid June 1, 2018 to shareholders of record on May 11, 2018. A dividend of $0.0925 per share was declared on July 19, 2018 and paid on September 7, 2018 to shareholders of record on August 17, 2018. A dividend of $0.0925 per share was declared on October 18, 2018, payable on December 7, 2018 to shareholders of record on November 16, 2018.

On July 19, 2018, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares may be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations. No shares were purchased under this plan during the three months ended September 30, 2018. The plan expires on July 19, 2019.

On July 20, 2017, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. No shares were purchased under this plan. The plan expired on July 20, 2018.

On July 21, 2016, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. No shares were purchased under this plan. The plan expired on July 21, 2017.

-24-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table includes information regarding the activity in accumulated other comprehensive income (loss).

	Unrealized			Unrealized
	Gains (Losses)			Gains (Losses)
	on Derivatives			on Investment
	Designated as			Securities
	Cash Flow Hedges			Available for Sale			Total
				(In Thousands)
Balance, January 1, 2018	$	234		$	79		$	313
Other comprehensive income (loss), before reclassifications and income taxes		664			(2,799	)		(2,135	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(587	)		90			(497	)
Income tax (expense) benefit		(20	)		720			700
Total other comprehensive income (loss)		57			(1,989	)		(1,932	)
Balance, June 30, 2018		291			(1,910	)		(1,619	)
Other comprehensive income (loss), before reclassifications and income taxes		234			(1,237	)		(1,003	)
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(402	)		23			(379	)
Income tax benefit		44			320			364
Total other comprehensive loss		(124	)		(894	)		(1,018	)
Balance, September 30, 2018	$	167		$	(2,804	)	$	(2,637	)
Balance, January 1, 2017	$	330		$	(741	)	$	(411	)
Other comprehensive income, before reclassifications and income taxes		998			2,054			3,052
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(899	)		14			(885	)
Income tax expense		(40	)		(843	)		(883	)
Total other comprehensive income		59			1,225			1,284
Balance, June 30, 2017		389			484			873
Other comprehensive income (loss), before reclassifications and income taxes		364			(91	)		273
Amounts reclassified from accumulated other comprehensive income, before income taxes		(657	)		-			(657	)
Income tax benefit		119			38			157
Total other comprehensive loss		(174	)		(53	)		(227	)
Balance, September 30, 2017	$	215		$	431		$	646

-25-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10. DERIVATIVES AND HEDGING ACTIVITIES

Mortgage Loan Commitments

Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held-for-sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A mortgage loan commitment binds the Company to lend funds to a potential borrower at a specified interest rate and within a specified period of time, generally up to 60 days after inception of the rate lock.

Interest Rate Lock Commitments

Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. The notional amount of interest rate lock commitments was $31,583,000 and $15,338,000 at September 30, 2018 and December 31, 2017, respectively. The fair value of such commitments was insignificant.

The Company has no other off-balance-sheet arrangements or transactions with unconsolidated, special purpose entities that would expose the Company to liability that is not reflected on the face of the financial statements.

NOTE 11. FAIR VALUE DISCLOSURES

FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and, (iv) willing to transact.

FASB ASC 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied.

Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, FASB ASC 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date, or convert to cash in the short term.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

-26-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11. FAIR VALUE DISCLOSURES – continued

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Available-for-Sale Securities – Securities classified as available-for-sale are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the bond’s terms and conditions, among other things.

Impaired Loans – Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on internally customized discounting criteria.

Loans Held-for-Sale – These loans are reported at the lower of cost or fair value. Fair value is determined based on expected proceeds based on sales contracts and commitments and are considered Level 2 inputs.

Repossessed Assets – Fair values are valued at the time the loan is foreclosed upon and the asset is transferred from loans. The value is based upon primary third party appraisals, less costs to sell. The appraisals are generally discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and result in Level 3 classification of the inputs for determining fair value. Repossessed assets are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on same or similar factors above.

-27-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11. FAIR VALUE DISCLOSURES – continued

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	September 30, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency obligations	$	-	$	10,229	$	-	$	10,229
Municipal obligations		-		72,674		-		72,674
Corporate obligations		-		11,207		-		11,207
Mortgage-backed securities		-		20,620		-		20,620
Collateralized mortgage obligations		-		23,841		-		23,841
Asset-backed securities		-		10,364		-		10,364
Loans held-for-sale		-		8,747		-		8,747

	December 31, 2017
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency	$	-	$	4,857	$	-	$	4,857
Municipal obligations		-		67,886		-		67,886
Corporate obligations		-		14,644		-		14,644
Mortgage-backed securities		-		24,869		-		24,869
Collateralized mortgage obligations		-		19,788		-		19,788
Asset-backed securities		-		-		-		-
Loans held-for-sale		-		8,949		-		8,949

-28-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11. FAIR VALUE DISCLOSURES - continued

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

The following table summarizes financial assets and financial liabilities measured at fair value on a nonrecurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Impaired loans	$	-	$	-	$	1,556	$	1,556
Repossessed assets		-		-		457		457

	December 31, 2017
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Impaired loans	$	-	$	-	$	928	$	928
Repossessed assets		-		-		525		525

As of September 30, 2018, certain impaired loans were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for possible loan losses based upon the fair value of the underlying collateral. Impaired loans with a carrying value of $1,556,000 were not reduced by specific valuation allowance allocations, resulting in a total reported fair value of $1,556,000 based on collateral valuations utilizing Level 3 valuation inputs.

As of December 31, 2017, certain impaired loans were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for possible loan losses based upon the fair value of the underlying collateral. Impaired loans with a carrying value of $977,000 were reduced by specific valuation allowance allocations totaling $49,000 to a total reported fair value of $928,000 based on collateral valuations utilizing Level 3 valuation inputs.

The following table represents the Bank’s Level 3 financial assets and liabilities, the valuation techniques used to measure the fair value of those financial assets and liabilities, and the significant unobservable inputs and the ranges of values for those inputs.

	Fair Value at				Principal	Significant	Range of
	September 30,		December 31,		Valuation	Unobservable	Signficant Input
Instrument	2018		2017		Technique	Inputs	Values
(Dollars In Thousands)
Impaired loans	$	1,556	$	928	Appraisal of collateral(1)	Appraisal adjustments	10	-	30%
Repossessed assets	$	457	$	525	Appraisal of collateral(1)(3)	Liquidation expenses(2)	10	-	30%

⁽¹⁾ Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable, less associated allowance.

⁽²⁾ Appraisals may be adjusted for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

⁽³⁾ Includes qualitative adjustments by management and estimated liquidation expenses.

-29-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11. FAIR VALUE DISCLOSURES - continued

FASB ASC Topic 825 requires disclosure of the fair value of financial instruments, both assets and liabilities recognized and not recognized in the statement of financial position, for which it is practicable to estimate fair value. Below is a table that summarizes the fair market values of all financial instruments of the Company at September 30, 2018 and December 31, 2017, followed by methods and assumptions that were used by the Company in estimating the fair value of the classes of financial instruments.

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

	September 30, 2018
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	8,968	$	-	$	-	$	8,968	$	8,968
Federal Home Loan Bank stock		4,617		-		-		4,617		4,617
Federal Reserve Bank stock		2,033		-		-		2,033		2,033
Loans receivable, net		-		-		581,434		581,434		588,734
Accrued interest and dividends receivable		3,890		-		-		3,890		3,890
Mortgage servicing rights		-		-		8,411		8,411		6,947
Cash surrender value of life insurance		20,405		-		-		20,405		20,405
Financial liabilities:
Non-maturing interest bearing deposits		-		317,044		-		317,044		317,044
Noninterest bearing deposits		142,351		-		-		142,351		142,351
Time certificates of deposit		-		-		159,867		159,867		161,907
Accrued expenses and other liabilities		6,082		-		-		6,082		6,082
Federal Home Loan Bank advances and other borrowings		-		-		95,137		95,137		95,731
Other long-term debt		-		-		23,641		23,641		25,155
Off-balance-sheet instruments		-
Forward delivery commitments		-		-		-		-		-
Commitments to extend credit		-		-		-		-		-
Rate lock commitments		-		-		-		-		-

-30-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11. FAIR VALUE DISCLOSURES – continued

	December 31, 2017
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	7,437	$	-	$	-	$	7,437	$	7,437
Federal Home Loan Bank stock		4,086		-		-		4,086		4,086
Federal Reserve Bank stock		1,465		-		-		1,465		1,465
Loans receivable, net		-		-		505,615		505,615		506,476
Accrued interest and dividends receivable		2,555		-		-		2,555		2,555
Mortgage servicing rights		-		-		7,312		7,312		6,578
Cash surrender value of life insurance		14,481		-		-		14,481		14,481
Financial liabilities:
Non-maturing interest bearing deposits		-		277,416		-		277,416		277,416
Noninterest bearing deposits		99,799		-		-		99,799		99,799
Time certificates of deposit		-		-		142,202		142,202		143,349
Accrued expenses and other liabilities		4,822		-		-		4,822		4,822
Federal Home Loan Bank advances and other borrowings		-		-		82,579		82,579		82,969
Other long-term debt		-		-		24,209		24,209		25,155
Off-balance-sheet instruments
Forward delivery commitments		-		-		-		-		-
Commitments to extend credit		-		-		-		-		-
Rate lock commitments		-		-		-		-		-

The following methods and assumptions were used by the Company in estimating the fair value of the following classes of financial instruments. However, the Form 10-K for the year ended December 31, 2017 provides additional description of valuation methodologies used in estimating fair value of these financial instruments.

Cash, Interest Bearing Accounts, Accrued Interest and Dividend Receivable and Accrued Expenses and Other Liabilities – The carrying amounts approximate fair value due to the relatively short period of time between the origination of these instruments and their expected realization.

Stock in the Federal Home Loan Bank of Des Moines (“FHLB”) and Federal Reserve Bank (“FRB”) – The fair value of stock approximates redemption value.

Loans Receivable – Fair values are estimated by stratifying the loan portfolio into groups of loans with similar financial characteristics. Loans are segregated by type such as real estate, commercial, and consumer, with each category further segmented into fixed and adjustable rate interest terms. For mortgage loans, the Company uses the secondary market rates in effect for loans that have similar characteristics. The fair value of other fixed rate loans is calculated by discounting scheduled cash flows through the anticipated maturities adjusted for prepayment estimates. Adjustable interest rate loans are assumed to approximate fair value because they generally reprice within the short term.

Fair values are adjusted for credit risk based on assessment of risk identified with specific loans, and risk adjustments on the remaining portfolio based on credit loss experience.

Assumptions regarding credit risk are judgmentally determined using specific borrower information, internal credit quality analysis, and historical information on segmented loan categories for non-specific borrowers.

Mortgage Servicing Rights – the fair value of servicing rights was determined at loan level using a discount rate of 12.50% for all investor types and prepayment speeds ranging from approximately 80.00% to 230.00% PSA, depending on stratification of the specific loan. The weighted average prepayment speed was 114.00% PSA. The fair value was also adjusted for the effect of potential past dues and foreclosures. Individual mortgage servicing rights values were capped at a maximum of 1.25% for all investor types.

-31-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11. FAIR VALUE DISCLOSURES - continued

Cash Surrender Value of Life Insurance – The carrying amount for cash surrender value of life insurance approximates fair value as policies are recorded at redemption value.

Deposits and Time Certificates of Deposit – The fair value of deposits with no stated maturity, such as checking, passbook, and money market, is equal to the amount payable on demand. The fair value of time certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar maturities.

Advances from the FHLB/Other Borrowings and Other Long-Term Debt – The fair value of the Company’s advances and debentures are estimated using discounted cash flow analysis based on the interest rate that would be effective September 30, 2018 and December 31, 2017, respectively if the borrowings repriced according to their stated terms.

Off-Balance-Sheet Instruments – Fair values for off-balance-sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair values of these financial instruments are considered insignificant. Additionally, those financial instruments have no carrying value.

NOTE 12. MERGERS AND ACQUISITIONS

On September 5, 2017, the Company entered into an Agreement and Plan of Merger with TwinCo, a Montana corporation, and TwinCo’s wholly-owned subsidiary, Ruby Valley Bank, a Montana chartered commercial bank to acquire 100% of TwinCo’s equity voting interests. The merger agreement provided that Ruby Valley Bank would merge with and into Opportunity Bank of Montana and that TwinCo would merge with and into the Company. Ruby Valley Bank operated 2 branches in Madison County, Montana. The transaction provided an opportunity to expand market presence and lending activities, particularly in agricultural lending. The acquisition closed January 31, 2018, after receipt of approvals from regulatory authorities, approval of TwinCo shareholders and the satisfaction of other closing conditions. The total consideration paid was $18,930,000 and included cash consideration of $9,900,000 and common stock issued of $9,030,000.

The transaction was accounted for under the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations. In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, a more reliable measure.

Under FASB ASC 805, all of the assets acquired and liabilities assumed in a business combination are recognized at acquisition at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Goodwill recorded in the acquisition was accounted for in accordance with the authoritative business combination guidance. Accordingly, goodwill will not be amortized, but will be tested for impairment annually. The goodwill recorded is not deductible for federal income tax purposes.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12. MERGERS AND ACQUISITIONS – continued

Assets acquired and liabilities assumed were recorded on the consolidated statement of financial condition at estimated fair value on acquisition date. The following table summarizes fair values of assets acquired and liabilities assumed, consideration paid and resulting goodwill.

	January 31,
	2018
	(In Thousands, Except Share Data)
Assets acquired:
Cash and cash equivalents	$	5,657
Investment securities		30,728
Loans		55,057
Premises and equipment		1,605
Other real estate owned		135
Core deposit intangible		1,609
Other assets		1,258
Total assets acquired	$	96,049
Liabilities assumed:
Deposits	$	82,190
Accrued expenses and other liabilities		19
Total liabilities assumed	$	82,209
Net assets acquired	$	13,840
Consideration paid:
Cash	$	9,900
Common stock issued (446,774 shares)		9,030
Total consideration paid	$	18,930
Goodwill resulting from acquisition	$	5,090

The fair value analysis of the loan portfolio resulted in a valuation adjustment for each loan based on an amortization schedule of expected cash flow. Individual amortization schedules were used for each loan over a certain amount and those with specifically identified loss exposure. The remainder of the loans were grouped by type and risk rating into loan pools (based on loans type, fixed or variable interest rate, revolving or term payments and risk rating). Yield inputs for the amortization schedules included contractual interest rates, estimated prepayment speeds, liquidity adjustments and market yields. Credit inputs for the amortization schedules included probability of payment default, loss given default rates and individually identified loss exposure.

Information regarding loans acquired as of acquisition date is as follows:

	January 31,
	2018
	(In Thousands)
Contractually required principal and interest at acquisition	$	56,891
Contractual cash flows not expected to be collected (nonaccretable discount)		(1,346	)
Expected cash flows at acquisition		55,545
Interest component of expected cash flows (accretable discount)		(488	)
Fair value of acquired loans	$	55,057

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12. MERGERS AND ACQUISITIONS – continued

Core deposit intangible assets of $1,609,000 are being amortized using an accelerated method over the estimated useful lives of the related deposits of 10 years.

The core deposit intangible value is a function of the difference between the cost of the acquired core deposits and the alternative cost of funds. This cash flow stream was discounted to present value. The fair value of other deposit accounts acquired were valued by estimating future cash flows to be received or paid from individual or homogenous groups of assets and liabilities and then discounting those cash flows to a present value using rates of return that were available in financial markets for similar financial instruments on or near January 31, 2018.

Direct costs related to the acquisition were expensed as incurred. The Company recorded acquisition costs related to the TwinCo acquisition of $131,000 during the quarter ended June 30, 2018, $234,000 during the quarter ended March 31, 2018 and $676,000 during the year ended December 31, 2017. Acquisition costs included legal and professional fees and data processing incurred related to the acquisition.

Operations of TwinCo have been included in the consolidated financial statements since February 1, 2018. The Company does not consider TwinCo a separate reporting segment and does not track the amount of revenues and net income attributable to TwinCo since acquisition. As such, it is impracticable to determine such amounts for the period from February 1, 2018 through September 30, 2018.

The accompanying consolidated statements of income include the results of operations of the acquired entity since the January 31, 2018 acquisition date. The following table presents unaudited pro forma results of operations for the three and nine months ended September 30, 2018 and 2017 as if the acquisition had occurred on January 1, 2017. This pro forma information gives effect to certain adjustments, including purchase accounting fair value adjustments and amortization of the core deposit intangible asset. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company purchased and assumed the assets and liabilities of TwinCo on January 1, 2017.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(Dollars in Thousands, Except Per Share Data)
Pro forma net income(1)
Net interest income after loan loss provision	$	7,283	$	6,756	$	21,697	$	19,371
Noninterest income		3,761		4,069		9,559		11,009
Noninterest expense		9,052		8,230		26,771		24,634
Income before income taxes		1,992		2,595		4,485		5,746
Income tax expense		360		727		826		1,609
Net income	$	1,632	$	1,868	$	3,659	$	4,137
Pro forma earnings per share(1)
Basic earnings per share	$	0.30	$	0.49	$	0.68	$	1.09
Diluted earnings per share	$	0.30	$	0.48	$	0.67	$	1.07
Weighted average shares outstanding, basic		5,460,452		3,811,409		5,411,356		3,811,409
Weighted average shares outstanding, diluted		5,524,912		3,863,656		5,475,816		3,869,695

⁽¹⁾ Significant assumptions utilized include the acquisition cost noted above, accretion of interest rate fair value adjustments, amortization of the core deposit intangible asset and a 28.00% effective tax rate for 2017.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12. MERGERS AND ACQUISITIONS – continued

On August 21, 2018, the Company entered into an Agreement and Plan of Merger with Big Muddy Bancorp, Inc. (“Big Muddy Bancorp”), a Montana corporation, and Big Muddy Bancorp’s wholly-owned subsidiary, The State Bank of Townsend, a Montana chartered commercial bank. The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement, Big Muddy Bancorp will merge with and into Eagle, with Eagle continuing as the surviving corporation. The State Bank of Townsend operates four branches in Townsend, Dutton, Denton and Choteau, Montana. The transaction provides an opportunity to expand market presence. The acquisition is expected to close during the first quarter of 2019, after receipt of approvals from regulatory authorities, approval of Big Muddy Bancorp shareholders and the satisfaction of other closing conditions.

NOTE 13. RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance is a comprehensive new revenue recognition standard that supersede substantially all existing revenue recognition guidance. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under existing guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In July 2015, the FASB agreed to delay the effective date of the standard by one year. Therefore, the new standard was effective in the first quarter of 2018 and was adopted by the Company. Our revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and non-interest income. The largest percentage of our non-interest income is derived from the gain on sale of mortgage loans. The gains are recognized at the time of the sale of the loan, when proceeds are sent to us by the investor purchasing the loan. No change in the recognition of revenue on that portion of our noninterest income was recognized. We also evaluated the impact of this standard on our revenue from our wealth management division and it did not have a significant impact on our consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The amendment has a number of provisions including the requirements that public business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, a separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans receivables), and eliminating the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendment is effective for annual and interim reporting periods beginning after December 15, 2017 and was adopted by the Company in the first quarter of 2018. Note 11. Fair Value Disclosures for September 30, 2018, reflects the provisions of this pronouncement.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) intended to improve financial reporting regarding leasing transactions. The new standard affects all companies and organizations that lease assets. The standard will require organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases if the lease terms are more than 12 months. The guidance also will require qualitative and quantitative disclosures providing additional information about the amounts recorded in the financial statements. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is evaluating the potential impact of the amendment on the Company’s consolidated financial statements. We currently lease six locations that serve as full-service branches, with the longest running lease expiring in 2027. We continue to explore options for using a third party vendor to assist with the implementation of this standard.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13. RECENT ACCOUNTING PRONOUNCEMENTS - continued

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The standard requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The standard also requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the standard amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. An entity will apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company believes the amendments in this update will have an impact on the Company’s consolidated financial statements and is working to evaluate the significance of that impact. In that regard, we have established a working group under the direction of our Chief Financial Officer and Chief Credit Officer. The group is composed of individuals from the finance and credit administration areas of the Company. We are currently developing an implementation plan, including assessment of processes, segmentation of the loan portfolio and identifying and adding data fields necessary for analysis. The adoption of this standard is likely to result in an increase in the allowance for loan and lease losses as a result of changing from an “incurred loss” model to an “expected loss” model. While we currently cannot reasonably estimate the impact of adopting this standard, we expect the impact will be influenced by the composition, characteristics and quality of our loan and securities portfolios, as well as the general economic conditions and forecasts as of the adoption date.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) to amend and simplify current goodwill impairment testing to eliminate Step 2 from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. The guidance will be effective for the Company on January 1, 2020 and is not expected to have a significant impact on the Company’s consolidated financial statements. We have improved our internal reporting systems as it relates to profitability by divisions and markets within the Company. We expect these systems to help in our evaluation of potential impairment.

In March 2017, the FASB issued ASU No. 2017-08, Receivables–Nonrefundable Fees and Other Costs (Subtopic 310-20) to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. Currently, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The guidance does not change the accounting for callable debt securities held at a discount. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including in an interim period. We have currently been following this guidance based on our internal investment policy guidelines. There is little impact on our consolidated financial statements, as we typically do not invest in these types of securities.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company’s primary business activity is the ownership of its wholly owned subsidiary, Opportunity Bank of Montana (the “Bank”). The Bank is a Montana chartered commercial bank that focuses on both consumer and commercial lending. It engages in typical banking activities: acquiring deposits from local markets and originating loans and investing in securities. Its deposits are insured by the Federal Deposit Insurance Corporation. The Bank’s primary component of earnings is its net interest margin (also called spread or margin), the difference between interest income and interest expense. The net interest margin is managed by management (through the pricing of its products and by the types of products offered and kept in portfolio), and is affected by changes in market interest rates. The Bank also generates noninterest income in the form of fee income and gain on sale of loans.

The Bank has a strong mortgage lending focus, with a large portion of its loan originations represented by single-family residential mortgages, which has enabled it to successfully market home equity loans, as well as a wide range of shorter term consumer loans for various personal needs (automobiles, recreational vehicles, etc.). In recent years, the Bank has focused on adding commercial loans to its portfolio, both real estate and non-real estate. We have made significant progress in this initiative. The purpose of this diversification is to mitigate the Bank’s dependence on the residential mortgage market, as well as to improve its ability to manage its spread. The Bank’s management recognizes that fee income will also enable it to be less dependent on specialized lending and it now maintains a significant loan serviced portfolio which provides a steady source of fee income. Fee income is also supplemented with fees generated from the Bank’s deposit accounts. The Bank has a high percentage of non-maturity deposits, such as checking accounts and savings accounts, which allows management flexibility in managing its spread. Non-maturity deposits and certificates of deposits do not automatically reprice as interest rates rise. Gain on sale of loans also provides significant noninterest income in periods of high mortgage loan origination volumes. Such income will be adversely affected in periods of lower mortgage activity.

Management continues to focus on improving the Bank’s core earnings. Core earnings can be described as income before taxes, with the exclusion of gain on sale of loans and adjustments to the market value of the Bank’s loan servicing portfolio. Management believes that the Bank will need to continue to concentrate on increasing net interest margin, other areas of fee income and control of operating expenses to achieve earnings growth going forward. Management’s strategy of growing the bank’s loan portfolio and deposit base is expected to help achieve these goals as follows: loans typically earn higher rates of return than investments; a larger deposit base should yield higher fee income; increasing the asset base will reduce the relative impact of fixed operating costs. The biggest challenge to the strategy is funding the growth of the Bank’s balance sheet in an efficient manner. Though deposit growth has been steady, it may become more difficult to maintain due to significant competition and possible reduced customer demand for deposits as customers may shift into other asset classes.

The level and movement of interest rates impacts the Bank’s earnings as well. The Federal Open Market Committee changed the federal funds target rate from 0.75% to 1.50% during the year ended December 31, 2017. The rate increased from 1.50% to 2.25% during the nine months ended September 30, 2018.

On October 13, 2017, the Company successfully completed a public offering of its common stock, and issued 1,189,041 shares and received approximately $20.16 million in net cash proceeds.

Acquisitions

On August 21, 2018, the Company entered into an Agreement and Plan of Merger with Big Muddy Bancorp, Inc. (“Big Muddy Bancorp”), a Montana corporation, and Big Muddy Bancorp’s wholly-owned subsidiary, The State Bank of Townsend, a Montana chartered commercial bank. The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement, Big Muddy Bancorp will merge with and into Eagle, with Eagle continuing as the surviving corporation. The State Bank of Townsend operates four branches in Townsend, Dutton, Denton and Choteau, Montana. The transaction provides an opportunity to expand market presence. The acquisition is expected to close during the first quarter of 2019, after receipt of approvals from regulatory authorities, approval of Big Muddy Bancorp shareholders and the satisfaction of other closing conditions.

Subject to the terms and conditions of the merger agreement upon completion of the merger, each outstanding share of Big Muddy Bancorp common stock will be converted into the right to receive 20.49 shares of Eagle common stock.  Based on the number of shares of Big Muddy Bancorp common stock outstanding as of August 21, 2018, we expect to issue approximately 996,142 shares of our common stock to Big Muddy Bancorp shareholders in the aggregate upon completion of the merger.

On January 31, 2018, we acquired all of the outstanding common stock of TwinCo Inc. (“TwinCo”), the parent company of Ruby Valley Bank, a Montana chartered commercial bank with 2 branches in Madison County, Montana. The transaction provided an opportunity to expand market presence and lending activities, particularly in agricultural lending. The total consideration paid was $18.93 million and included cash consideration of $9.90 million and common stock issued of $9.03 million.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition

Comparisons of financial condition in this section are between September 30, 2018 and December 31, 2017.

Total assets were $839.97 million at September 30, 2018, an increase of $123.19 million, or 17.2%, from $716.78 million at December 31, 2017. The increase was largely due to the change in securities and loans receivable, net partly due to the acquisition of TwinCo. Securities available-for-sale increased $16.90 million, or 12.8%, to $148.94 million at September 30, 2018 from $132.04 million at December 31, 2017. Loans receivable, net increased by $82.89 million, or 16.3%, to $590.29 million at September 30, 2018, from $507.40 million at December 31, 2017. Total liabilities were $747.98 million at September 30, 2018, an increase of $114.81 million, or 18.1%, from $633.17 million at December 31, 2017. The increase was largely due to an increase in deposits due in part to the TwinCo acquisition, as well as an increase in Federal Home Loan Bank (“FHLB”) advances and other borrowings. Total deposits increased by $100.74 million to $621.30 million at September 30, 2018 from $520.56 million at December 31, 2017. FHLB advances and other borrowings increased $12.76 million to $95.73 million at September 30, 2018 from $82.97 million at December 31, 2017.

Balance Sheet Details

Investment Activities

The following table summarizes investment activities:

	September 30,					December 31,
	2018					2017
	Fair Value		Percentage of Total			Fair Value		Percentage of Total
	(Dollars in Thousands)
Securities available-for-sale:
U.S. government and agency	$	10,229		6.53	%	$	4,857		3.48	%
Municipal obligations		72,674		46.38	%		67,886		48.66	%
Corporate obligations		11,207		7.15	%		14,644		10.50	%
Mortgage-backed securities		20,620		13.16	%		24,869		17.82	%
Collateralized mortgage obligations		23,841		15.22	%		19,788		14.18	%
Asset-backed securities		10,364		6.62	%		-		0.00	%
Total securities available-for-sale		148,935		95.06	%		132,044		94.64	%
Interest bearing deposits		1,079		0.69	%		1,920		1.38	%
FHLB capital stock, at cost		4,617		2.95	%		4,086		2.93	%
FRB capital stock, at cost		2,033		1.30	%		1,465		1.05	%
Total	$	156,664		100.00	%	$	139,515		100.00	%

Securities available-for-sale were $148.94 million at September 30, 2018, an increase of $16.90 million, or 12.8%, from $132.04 million at December 31, 2017. The net increase was due in part to the acquisition of TwinCo. All categories of securities available-for sale increased during the period with the exception of corporate obligations and mortgage-backed securities. Corporate obligations decreased primarily due to maturities, and mortgage-backed securities decreased due to principal payments partially offset by net purchases.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition – continued

Lending Activities

The following table includes the composition of the Bank’s loan portfolio by loan category:

	September 30,						December 31,
	2018						2017
	Amount			Percent of Total			Amount			Percent of Total
	(Dollars in thousands)
Real estate loans:
Residential 1-4 family (1)	$	115,217			19.28	%	$	109,911			21.37	%
Residential 1-4 family construction		29,755			4.98	%		25,306			4.92	%
Commercial real estate		236,900			39.63	%		194,805			37.88	%
Commercial construction and development		36,339			6.08	%		38,351			7.46	%
Farmland		30,421			5.09	%		11,627			2.26	%
Total first mortgage loans		448,632			75.06	%		380,000			73.89	%
Other loans:
Home equity		53,342			8.92	%		52,672			10.24	%
Consumer		16,491			2.76	%		15,712			3.06	%
Commercial		60,407			10.11	%		63,300			12.31	%
Agricultural		18,849			3.15	%		2,563			0.50	%
Total other loans		149,089			24.94	%		134,247			26.11	%
Total loans		597,721			100.00	%		514,247			100.00	%
Deferred loan fees		(1,081	)					(1,093	)
Allowance for loan losses		(6,350	)					(5,750	)
Total loans, net	$	590,290					$	507,404

⁽¹⁾  Excludes loans held-for-sale.

Loans receivable, net increased $82.89 million to $590.29 million at September 30, 2018 due in part to the TwinCo acquisition. The TwinCo acquisition included $55.07 million of acquired loans. Excluding acquired loans, loans receivable, net increased by $27.82 million. Including acquired loans, commercial real estate loans increased $42.10 million, farmland loans increased $18.79 million, agricultural loans increased $16.29 million, residential 1-4 family construction loans increased $4.45 million, residential 1-4 family loans increased $5.31 million, consumer loans increased $779,000 and home equity loans increased $670,000. These increases were slightly offset by a decrease in commercial construction and development loans of $2.01 million and commercial loans of $2.89 million. Total loan originations were $364.67 million for the nine months ended September 30, 2018, with residential mortgage accounting for $227.71 million of the total. Commercial real estate loan originations were $43.47 million and commercial construction and development loan originations were $12.69 million. Residential 1-4 family construction loan originations were $20.25 million. Consumer loan originations were $7.10 million and home equity originations were $11.35 million. Farmland loan originations were $8.99 million and agricultural loan originations were $11.40 million. Commercial loans originations were $21.71 million. Loans held-for-sale decreased slightly to $8.75 million at September 30, 2018 from $8.95 million at December 31, 2017.

Nonperforming Assets. Generally, our collection procedures provide that when a loan is 15 or more days delinquent, the borrower is sent a past due notice. If the loan becomes 30 days delinquent, the borrower is sent a written delinquency notice requiring payment. If the delinquency continues, subsequent efforts are made to contact the delinquent borrower, including face to face meetings and counseling to resolve the delinquency. All collection actions are undertaken with the objective of compliance with the Fair Debt Collection Act.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition – continued

Lending Activities– continued

For mortgage loans and home equity loans, if the borrower is unable to cure the delinquency or reach a payment agreement, we will institute foreclosure actions. If a foreclosure action is taken and the loan is not reinstated, paid in full or refinanced, the property is sold at judicial sale at which we may be the buyer if there are no adequate offers to satisfy the debt. Any property acquired as the result of foreclosure, or by deed in lieu of foreclosure, is classified as real estate owned until such time as it is sold or otherwise disposed of. When real estate owned is acquired, it is recorded at its fair market value less estimated selling costs. The initial recording of any loss is charged to the allowance for loan losses. Subsequent write-downs are recorded as a charge to operations. As of September 30, 2018, the Bank had $457,000 of real estate owned.

The following table sets forth information regarding nonperforming assets:

	September 30,			December 31,
	2018			2017
	(Dollars in Thousands)
Non-accrual loans
Real estate loans:
Residential 1-4 family	$	227		$	475
Residential 1-4 family construction		337			-
Commercial real estate		514			-
Other loans:
Home equity		228			242
Consumer		137			153
Commercial		113			107
Accruing loans delinquent 90 days or more
Real estate loans:
Residential 1-4 family		130			-
Other loans:
Commercial construction and development		26			-
Restructured loans		-			-
Total nonperforming loans		1,712			977
Real estate owned and other repossed property, net		457			525
Total nonperforming assets	$	2,169		$	1,502
Total nonperforming loans to total loans		0.29	%		0.19	%
Total nonperforming loans to total assets		0.20	%		0.14	%
Total allowance for loan loss to nonperforming loans		370.91	%		588.54	%
Total nonperforming assets to total assets		0.26	%		0.21	%

The commercial real estate non-accrual loans at September 30, 2018 relate to the TwinCo acquisition.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Condition – continued

Deposits and Other Sources of Funds

The following table includes deposit accounts by category:

	September 30,					December 31,
	2018					2017
			Percent					Percent
	Amount		of Total			Amount		of Total
	(Dollars in Thousands)
Noninterest checking	$	142,351		22.91	%	$	99,799		19.17	%
Interest bearing checking		103,372		16.64	%		99,255		19.07	%
Savings		108,878		17.52	%		88,603		17.02	%
Money market accounts		104,794		16.87	%		89,558		17.20	%
Total		459,395		73.94	%		377,215		72.46	%
Certificates of deposit accounts:
IRA certificates		30,134		4.85	%		28,189		5.42	%
Brokered certificates		1,266		0.20	%		4,601		0.88	%
Other certificates		130,507		21.01	%		110,559		21.24	%
Total certificates of deposit		161,907		26.06	%		143,349		27.54	%
Total deposits	$	621,302		100.00	%	$	520,564		100.00	%

Deposits increased by $100.74 million, or 19.4%, to $621.30 million at September 30, 2018 from $520.56 million at December 31, 2017. The increase was due in part to the TwinCo acquisition. Noninterest checking increased by $42.55 million. Savings and interest bearing checking increased by $20.27 million and $4.12 million, respectively. Money market accounts increased by $15.24 million. Certificates of deposit increased by $18.56 million.

The following table summarizes borrowing activity:

	September 30,					December 31,
	2018					2017
	Net		Percent			Net		Percent
	Amount		of Total			Amount		of Total
	(Dollars in Thousands)
FHLB advances and other borrowings	$	95,731		79.39	%	$	82,969		76.98	%
Other long-term debt:
Senior notes fixed at 5.75%, due 2022		9,853		8.17	%		9,820		9.11	%
Subordinated debentures fixed at 6.75%, due 2025		9,852		8.17	%		9,836		9.13	%
Subordinated debentures variable, due 2035		5,155		4.27	%		5,155		4.78	%
Total other long-term debt		24,860		20.61	%		24,811		23.02	%
Total borrowings		120,591		100.00	%		107,780		100.00	%

FHLB advances and other borrowings increased by $12.76 million, or 15.4%, to $95.73 million at September 30, 2018 from $82.97 million at December 31, 2017. The borrowings were used to help fund the continued loan growth.

Shareholders’ Equity

Total shareholders’ equity increased $8.37 million, or 10.0%, to $91.99 million at September 30, 2018 from $83.62 million at December 31, 2017. This was primarily the result of stock issued in connection with the TwinCo acquisition of $9.03 million and net income of $3.54 million. These increases were partially offset by other comprehensive loss of $2.95 million and dividends paid of $1.49 million.

-41-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Analysis of Net Interest Income

The Bank’s earnings have historically depended primarily upon net interest income, which is the difference between interest income earned on loans and investments and interest paid on deposits and any borrowed funds. It is the single largest component of Eagle’s operating income. Net interest income is affected by (i) the difference between rates of interest earned on loans and investments and rates paid on interest bearing deposits and borrowings (the “interest rate spread”) and (ii) the relative amounts of loans and investments and interest bearing deposits and borrowings.

The following tables include average balances for balance sheet items, as well as, interest and dividends and average yields related to the average balances. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields include the effect of deferred fees and discounts and premiums that are amortized or accreted to interest income or expense.

	For the Three Months Ended September 30,
	2018							2017
	Average		Interest					Average		Interest
	Daily		and		Yield/			Daily		and		Yield/
	Balance		Dividends		Cost(4)			Balance		Dividends		Cost(4)(5)
	(Dollars in Thousands)
Assets:
Interest earning assets:
Investment securities	$	151,750	$	1,036		2.71	%	$	121,971	$	693		2.25	%
FHLB and FRB stock		6,473		80		4.90	%		5,308		48		3.57	%
Loans receivable(1)		591,441		7,701		5.17	%		520,603		6,478		4.94	%
Other earning assets		1,020		8		3.11	%		503		5		3.94	%
Total interest earning assets		750,684		8,825		4.66	%		648,385		7,224		4.42	%
Noninterest earning assets		80,191							55,951
Total assets	$	830,875						$	704,336
Liabilities and equity:
Interest bearing liabilities:
Deposit accounts:
Checking	$	105,060	$	8		0.03	%	$	96,788	$	8		0.03	%
Savings		104,884		14		0.05	%		85,596		11		0.05	%
Money market		104,421		51		0.19	%		87,699		36		0.16	%
Certificates of deposit		162,877		461		1.12	%		150,322		331		0.87	%
Advances from FHLB and other borrowings including long-term debt		114,438		814		2.82	%		118,240		679		2.28	%
Total interest bearing liabilities		591,680		1,348		0.90	%		538,645		1,065		0.78	%
Noninterest checking		138,302							97,255
Other noninterest bearing liabilities		8,215							5,121
Total liabilities		738,197							641,021
Total equity		92,678							63,315
Total liabilities and equity	$	830,875						$	704,336
Net interest income/interest rate spread(2)			$	7,477		3.76	%			$	6,159		3.64	%
Net interest margin(3)						3.95	%						3.77	%
Total interest earning assets to interest bearing liabilities						126.87	%						120.37	%

⁽¹⁾ Includes loans held-for-sale.

⁽²⁾ Interest rate spread represents the difference between the average yield on interest-earning assets and the average rate on interest-bearing liabilities.

⁽³⁾ Net interest margin represents income before the provision for loan losses divided by average interest-earning assets.

⁽⁴⁾ For purposes of this table, tax exempt income is not calculated on a tax equivalent basis.

⁽⁵⁾ Calculated based on actual days. Previously calculated on a 360-day basis.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Analysis of Net Interest Income – continued

	For the Nine Months Ended September 30,
			2018							2017
	Average		Interest					Average		Interest
	Daily		and		Yield/			Daily		and		Yield/
	Balance		Dividends		Cost(4)			Balance		Dividends		Cost(4)(5)
	(Dollars in Thousands)
Assets:
Interest earning assets:
Investment securities	$	152,580	$	3,046		2.67	%	$	125,642	$	2,136		2.27	%
FHLB and FRB stock		6,166		233		5.05	%		4,942		124		3.35	%
Loans receivable, net(1)		583,274		22,435		5.14	%		502,563		18,222		4.85	%
Other earning assets		3,450		44		1.70	%		1,218		7		0.77	%
Total interest earning assets		745,470		25,758		4.62	%		634,365		20,489		4.32	%
Noninterest earning assets		78,356							55,747
Total assets	$	823,826						$	690,112
Liabilities and equity:
Interest bearing liabilities:
Deposit accounts:
Money market	$	107,280	$	156		0.19	%	$	91,056	$	94		0.14	%
Savings		103,325		40		0.05	%		84,687		31		0.05	%
Checking		107,412		27		0.03	%		95,246		23		0.03	%
Certificates of deposit		164,010		1,231		1.00	%		154,752		994		0.86	%
Advances from FHLB and other borrowings including long-term debt		108,484		2,170		2.67	%		108,290		1,825		2.25	%
Total interest bearing liabilities		590,511		3,624		0.82	%		534,031		2,967		0.74	%
Noninterest checking		132,773							90,453
Other noninterest bearing liabilities		9,603							4,532
Total liabilities		732,887							629,016
Total equity		90,939							61,096
Total liabilities and equity	$	823,826						$	690,112
Net interest income/interest rate spread(2)			$	22,134		3.80	%			$	17,522		3.58	%
Net interest margin(3)						3.97	%						3.69	%
Total interest earning assets to interest bearing liabilities						126.24	%						118.79	%

⁽¹⁾ Includes loans held-for-sale.

⁽²⁾ Interest rate spread represents the difference between the average yield on interest-earning assets and the average rate on interest-bearing liabilities.

⁽³⁾ Net interest margin represents income before the provision for loan losses divided by average interest-earning assets.

⁽⁴⁾ For purposes of this table, tax exempt income is not calculated on a tax equivalent basis.

⁽⁵⁾ Calculated based on actual days. Previously calculated on a 360-day basis.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Rate/Volume Analysis

The following tables present the dollar amount of changes in interest income and interest expense for major components of interest earning assets and interest bearing liabilities. For each category of interest earning assets and interest bearing liabilities, information is provided on changes attributable to: (1) changes in volume multiplied by the old rate; (2) changes in rate, which are changes in rate multiplied by the old volume; and (3) changes not solely attributable to rate or volume, which have been allocated proportionately to the change due to volume and the change due to rate.

	For the Three Months Ended September 30,
				2018								2017
				Due to								Due to
	Volume			Rate			Net		Volume			Rate		Net
	(In Thousands)
Interest earning assets:
Investment securities	$	169		$	174		$	343	$	(66	)	$	50	$	(16	)
FHLB and FRB stock		10			22			32		4			7		11
Loans receivable(1)		881			342			1,223		570			447		1,017
Other earning assets		5			(2	)		3		1			3		4
Total interest earning assets		1,065			536			1,601		509			507		1,016
Interest bearing liabilities:
Savings, money market and checking accounts		11			7			18		2			12		14
Certificates of deposit		28			102			130		(21	)		10		(11	)
Advances from FHLB and other borrowings including long-term debt		(22	)		157			135		77			198		275
Total interest bearing liabilities		17			266			283		58			220		278
Change in net interest income	$	1,048		$	270		$	1,318	$	451		$	287	$	738

⁽¹⁾     Includes loans held for sale.

-44-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Rate/Volume Analysis – continued

	For the Nine Months Ended September 30,
			2018							2017
			Due to							Due to
	Volume		Rate		Net		Volume			Rate			Net
	(In Thousands)
Interest earning assets:
Investment securities	$	458	$	452	$	910	$	(240	)	$	180		$	(60	)
FHLB and FRB stock		31		78		109		5			16			21
Loans receivable(1)		2,926		1,287		4,213		1,806			1,163			2,969
Other earning assets		13		24		37		(1	)		3			2
Total interest earning assets		3,428		1,841		5,269		1,570			1,362			2,932
Interest bearing liabilities:
Savings, money market and checking accounts		27		48		75		5			22			27
Certificates of deposit		59		178		237		(2	)		(2	)		(4	)
Advances from FHLB and other borrowings including long-term debt		3		342		345		181			438			619
Total interest bearing liabilities		89		568		657		184			458			642
Change in net interest income	$	3,339	$	1,273	$	4,612	$	1,386		$	904		$	2,290

⁽¹⁾     Includes loans held for sale.

Results of Operations for the Three Months Ended September 30, 2018 and 2017

Net Income. Eagle’s net income for the three months ended September 30, 2018 was $1.63 million compared to $1.72 million for the three months ended September 30, 2017. The slight decrease of $89,000, or 5.2%, was due to an increase in noninterest expense of $1.49 million, a decrease in noninterest income of $227,000, largely offset by an increase in net interest income after loan loss provision of $1.45 million and a decrease in income tax expense of $178,000. Basic and diluted earnings per share were both $0.30 for the current period. Basic and diluted earnings per share were both $0.45 for the prior year comparable period.

Net Interest Income. Net interest income increased to $7.48 million for the three months ended September 30, 2018, from $6.16 million for the same quarter in the prior year. This increase of $1.32 million, or 21.4%, was the result of an increase in interest and dividend income of $1.61 million, partially offset by an increase in interest expense of $283,000.

Interest and Dividend Income. Interest and dividend income was $8.83 million for the three months ended September 30, 2018, compared to $7.22 million for the three months ended September 30, 2017, an increase of $1.61 million, or 22.3%. Interest and fees on loans increased to $7.70 million for the three months ended September 30, 2018 from $6.48 million for the three months ended September 30, 2017. This increase of $1.22 million, or 18.8%, was due to an increase in the average balance of loans, as well as, an increase in the average yield of loans for the quarter ended September 30, 2018. Average balances for loans receivable, including loans held-for-sale, for the three months ended September 30, 2018 were $591.44 million, compared to $520.60 million for the prior year period. This represents an increase of $70.84 million, or 13.6% and was due in part to the TwinCo acquisition. The average interest rate earned on loans receivable increased by 23 basis points, from 4.94% to 5.17%. Interest and dividends on investment securities available-for-sale increased by $343,000, or 49.5% period over period. Average interest rates earned on investments increased to 2.71% for the three months ended September 30, 2018 from 2.25% for the three months ended September 30, 2017. Average balances for investments increased to $151.75 million for the three months ended September 30, 2018, from $121.97 million for the three months ended September 30, 2017. This increase was largely due to the TwinCo acquisition.

-45-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended September 30, 2018 and 2017 – continued

Interest Expense. Total interest expense was $1.35 million for the three months ended September 30, 2018 compared to $1.07 million for the three months ended September 30, 2017. The increase of $283,000 or 26.6% was due to an increase in interest expense on deposits, as well as interest expense on borrowings. The average balance for total deposits was $615.54 million for the three months ended September 30, 2018 compared to $517.66 million for the three months ended September 30, 2017. This increase was due in part to the TwinCo acquisition. The overall average rate on total deposits was 0.34% for the three months ended September 30, 2018 compared to 0.30% for the three months ended September 30, 2017. The average borrowing balance decreased from $118.24 million for the three months ended September 30, 2017 to $114.44 million for the three months ended September 30, 2018. However, the average rate paid on total borrowings increased from 2.28% for the three months ended September 30, 2017, to 2.82% for the three months ended September 30, 2018.

Loan Loss Provision. Loan loss provisions are charged to earnings to maintain total allowance for loan losses at a level considered adequate by management of the Bank, to provide for probable loan losses based on prior loss experience, volume and type of lending conducted by the Bank and past due loans in the portfolio. The Bank’s policies require review of assets on a quarterly basis. The Bank classifies loans as well as other assets if warranted. While management believes it uses the best information available to make a determination with respect to the allowance for loan losses, it recognizes that future adjustments may be necessary. The Bank recorded $194,000 in provision for loan losses for the three months ended September 30, 2018 and $331,000 for the three months ended September 30, 2017.

Noninterest Income. Total noninterest income was $3.76 million for the three months ended September 30, 2018, compared to $3.99 million for the three months ended September 30, 2017, a decrease of $227,000 or 5.7%. The decrease is primarily due to a decrease in net gain on sale of loans which decreased to $2.29 million for the three months ended September 30, 2018 from $2.57 million for the three months ended September 30, 2017. The decrease is primarily due to a decrease in gross margin on sale of mortgage loans for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. The decrease in gross margin on sale of mortgage loans is due to interest rate movements in the mortgage market and strategic defensive posture due to competitive pressure.

Noninterest Expense. Noninterest expense was $9.05 million for the three months ended September 30, 2018 compared to $7.56 million for the three months ended September 30, 2017. The increase of $1.49 million or 19.7% is largely due to increases in salaries and employee benefits expense of $792,000. The increase is due in part to higher commission-based compensation related to the continued loan growth in both commercial and mortgage lending activities as well as the TwinCo acquisition. Data processing increased $303,000, primarily due to one-time costs to improve network infrastructure and to support growth. Occupancy and equipment expense increased $200,000 as a result of facility improvements and bringing in acquired branches.

Income Tax Expense. Income tax expense was $360,000 for the three months ended September 30, 2018, compared to $538,000 for the three months ended September 30, 2017. The effective tax rate for the three months ended September 30, 2018 was 18.1%.

Results of Operations for the Nine Months Ended September 30, 2018 and 2017

Net Income. Eagle’s net income for the nine months ended September 30, 2018 was $3.54 million compared to $3.55 million of net income for the nine months ended September 30, 2017. The slight decrease of $12,000, or 0.3%, was primarily due to an increase in noninterest expense of $4.00 million and a decrease in noninterest income of $1.25 million, largely offset by an increase in net interest income after loan loss provision of $4.82 million and a decrease in income tax expense of $408,000. Basic and diluted earnings per share were both $0.65 for the current period. Basic and diluted earnings per share were $0.93 and $0.92, respectively, for the prior year comparable period.

Net Interest Income. Net interest income increased to $22.13 million for the nine months ended September 30, 2018, from $17.52 million for the previous year’s nine-month period. This increase of $4.61 million, or 26.3%, was the result of an increase in interest and dividend income of $5.27 million, partially offset by an increase in interest expense of $657,000.

Interest and Dividend Income. Interest and dividend income was $25.76 million for the nine months ended September 30, 2018, compared to $20.49 million for the nine months ended September 30, 2017, an increase of $5.27 million, or 25.7%. Interest and fees on loans increased to $22.44 million for the nine months ended September 30, 2018 from $18.22 million for the same period ended September 30, 2017. This increase of $4.22 million, or 23.2%, was due to an increase in the average balance of loans, as well as, an increase in the average yield on loans. Average balances for loans receivable, including loans held-for-sale, for the nine months ended September 30, 2018 were $583.27 million, compared to $502.56 million for the prior year period. This represents an increase of $80.71 million, or 16.1% and was due in part to the TwinCo acquisition. The average interest rate earned on loans receivable increased by 29 basis points, from 4.85% to 5.14%. Interest and dividends on investment securities available-for-sale loans increased to $3.05 million for the nine months ended September 30, 2018 from $2.14 million for the same period ended September 30, 2017. Average balances for investments increased to $152.58 million for the nine months ended September 30, 2018, from $125.64 million for the nine months ended September 30, 2017. This increase was largely due to the TwinCo acquisition. Average interest rates earned on investments increased to 2.67% for the nine months ended September 30, 2018 from 2.27% for the nine months ended September 30, 2017.

-46-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the Nine Months Ended September 30, 2018 and 2017 – continued

Interest Expense. Total interest expense for the nine months ended September 30, 2018 was $3.62 million compared to $2.97 million for the nine months ended September 30, 2017. The increase of $657,000, or 22.1%, was due to an increase in interest expense on borrowings, as well as an increase in interest expense on deposits. Interest expense on FHLB advances and other borrowings and other long term debt increased $345,000 for the nine months ended September 30, 2018 compared to the same period in the prior year. The average borrowing balance increased slightly from $108.29 million for the nine months ended September 30, 2017 to $108.48 million for the nine months ended September 30, 2018. However, the average rate paid on borrowings increased from 2.25% for the nine months ended September 30, 2017, to 2.67% for the nine months ended September 30, 2018. Interest expense on deposits increased $312,000 for the nine months ended September 30, 2018 compared to the same period in the prior year. The increase is due to higher overall average balances for total deposits which increased from $516.19 million for the nine months ended September 30, 2017 to $614.80 million for the nine months ended September 30, 2018. This increase was due in part to the TwinCo acquisition. The overall average rate on total deposits increased from 0.30% for the nine months ended September 30, 2017 to 0.32% for the nine months ended September 30, 2018.

Loan Loss Provision. Loan loss provisions are charged to earnings to maintain the total allowance for loan losses at a level considered adequate by management of the Bank, to provide for probable loan losses based on prior loss experience, volume and type of lending conducted by the Bank and past due loans in the portfolio. The Bank’s policies require a review of assets on a quarterly basis. The Bank classifies loans as well as other assets if warranted. While management believes it uses the best information available to make a determination with respect to the allowance for loan losses, it recognizes that future adjustments may be necessary. The Bank recorded $720,000 in loan loss provisions for the nine months ended September 30, 2018 and $934,000 in the nine months ended September 30, 2017. Management believes the level of total allowances is adequate. As of September 30, 2018, the Bank had $457,000 in foreclosed real estate property and other repossessed property.

Noninterest Income. Total noninterest income decreased to $9.52 million for the nine months ended September 30, 2018, from $10.77 million for the nine months ended September 30, 2017, a decrease of $1.25 million or 11.6%. The decrease is largely due to a decrease in net gain on sale of loans which decreased to $5.45 million for the nine months ended September 30, 2018 from $6.66 million for the nine months ended September 30, 2017. During the nine months ended September 30, 2018, $205.06 million mortgage loans were sold compared to $215.20 million in the same period in the prior year. In addition, gross margin on sale of mortgage loans for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2018 declined. The decrease in gross margin on sale of mortgage loans is due to interest rate movements in the mortgage market and strategic defensive posture due to competitive pressure.

Noninterest Expense. Noninterest expense was $26.62 million for the nine months ended September 30, 2018 compared to $22.62 million for the nine months ended September 30, 2017. The increase of $4.00 million, or 17.7%, is largely due to increased salaries and employee benefits expense of $2.14 million. The increase in salaries expense is due in part to higher commission-based compensation related to the continued loan growth in both commercial and mortgage lending activities as well as the TwinCo acquisition. Data processing increased $480,000, primarily due to one-time costs to improve network infrastructure and to support growth. Occupancy and equipment expense increased $474,000 as a result of facility improvements and bringing in acquired branches. In addition, the Company incurred acquisition costs totaling $587,000 for the nine months ended September 30, 2018 compared to $276,000 for the nine months ended September 30, 2017.

Income Tax Expense. Income tax expense was $780,000 for the nine months ended September 30, 2018, compared to $1.19 million for the nine months ended September 30, 2017. The effective tax rate for the nine months ended September 30, 2018 was 18.1%. The tax was lower due to lower income before income taxes for the nine months ended September 30, 2018 compared to the same period in the prior year, as well as the impact of the Tax Cuts and Job Act enacted in December 2017.

-47-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Liquidity

The Bank is required to maintain minimum levels of liquid assets as defined in the regulations of the Montana Division of Banking and Financial Institutions and Federal Reserve Bank (“FRB”) regulations. The liquidity requirement is retained for safety and soundness purposes, and appropriate levels of liquidity will depend upon the types of activities in which the company engages. For internal reporting purposes, the Bank uses policy minimums of 1.0%, and 8.0% for “basic surplus” and “basic surplus with FHLB” as internally defined. In general, the “basic surplus” is a calculation of the ratio of unencumbered short-term assets reduced by estimated percentages of CD maturities and other deposits that may leave the Bank in the next 90 days divided by total assets. “Basic surplus with FHLB” adds to “basic surplus” the additional borrowing capacity the Bank has with FHLB. The Bank exceeded those minimum ratios as of both September 30, 2018 and December 31, 2017.

The Bank’s primary sources of funds are deposits, repayment of loans and mortgage-backed and collateralized mortgage obligation securities, maturities of investments, funds provided from operations and advances from FHLB and other borrowings. Scheduled repayments of loans and mortgage-backed and collateralized mortgage obligation securities and maturities of investment securities are generally predictable. However, other sources of funds, such as deposit flows and loan prepayments, can be greatly influenced by the general level of interest rates, economic conditions and competition. The Bank uses liquidity resources principally to fund existing and future loan commitments. It also uses them to fund maturing certificates of deposit, demand deposit withdrawals and to invest in other loans and investments, maintain liquidity and meet operating expenses.

Liquidity may be adversely affected by unexpected deposit outflows, higher interest rates paid by competitors and similar matters. Management monitors projected liquidity needs and determines the level desirable, based in part on commitments to make loans and management’s assessment of the Bank’s ability to generate funds.

Capital Resources

As of September 30, 2018, the Bank’s internally determined measurement of sensitivity to interest rate movements as measured by a 200 basis point rise in interest rates scenario, increased the economic value of equity (“EVE”) by 2.0% compared to an increase of 2.7% at December 31, 2017. The Bank is within the guidelines set forth by the Board of Directors for interest rate risk sensitivity in rising interest rate scenarios.

Beginning January 1, 2015, community banking organizations became subject to a new regulatory rule recently adopted by federal banking agencies (commonly referred to as Basel III). The new rule establishes a new regulatory capital framework that incorporates revisions to the Basel capital framework, strengthens the definition of regulatory capital, increases risk-based capital requirements, and amends the methodologies for determining risk-weighted assets. These changes are expected to increase the amount of capital required by community banking organizations. Basel III includes a multiyear transition period from January 1, 2015 through December 31, 2019.

The Banks’s Tier I leverage ratio, as measured under State of Montana and FRB rules, increased from 10.39% as of December 31, 2017 to 11.434% as of September 30, 2018. The Bank’s capital position helps to mitigate its interest rate risk exposure.

As of September 30, 2018, the Bank’s regulatory capital was in excess of all applicable regulatory requirements. As of September 30, 2018, the Bank’s total capital, Tier 1 capital, common equity Tier 1 capital and Tier 1 leverage ratios were 15.779%, 14.759%, 14.759% and 11.434%, respectively, compared to regulatory requirements of 9.875%, 7.875%, 6.375% and 4.00%, respectively. All of these ratios with the exception of the Tier 1 leverage ratio include the capital conservation buffer of 1.875% phased in beginning January 1, 2018.

-48-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources – continued

	September 30, 2018
	(Unaudited)
	Dollar		% of
	Amount		Assets
	(Dollars in Thousands)
Total risk-based capital to risk weighted assets:
Actual capital level	$	98,203		15.779	%
Minimum required for capital adequacy Basel III phase-in schedule		61,457		9.875
Excess capital	$	36,746		5.904	%
Tier I capital to risk weighted assets:
Actual capital level	$	91,853		14.759	%
Minimum required for capital adequacy Basel III phase-in schedule		49,010		7.875
Excess capital	$	42,843		6.884	%
Common equity tier I capital to risk weighted assets:
Actual capital level	$	91,853		14.759	%
Minimum required for capital adequacy Basel III phase-in schedule		39,675		6.375
Excess capital	$	52,178		8.384	%
Tier I capital to adjusted total average assets:
Actual capital level	$	91,853		11.434	%
Minimum required for capital adequacy Basel III phase-in schedule		32,133		4.000
Excess capital	$	59,720		7.434	%

Interest Rate Risk

Interest rate risk is the potential for loss of future earnings resulting from adverse changes in the level of interest rates. Interest rate risk results from several factors and could have a significant impact on the Company’s net interest income, which is the Company primary source of income. Net interest income is affected by changes in interest rates, the relationship between rates on interest bearing assets and liabilities, the impact of interest fluctuations on asset prepayments and the mix of interest bearing assets and liabilities.

Although interest rate risk is inherent in the banking industry, banks are expected to have sound risk management practices in place to measure, monitor and control interest rate exposures. The objective of interest rate risk management is to contain the risks associated with interest rate fluctuations. The process involves identification and management of the sensitivity of net interest income to changing interest rates.

The ongoing monitoring and management of this risk is an important component of the Company’s asset/liability committee, which is governed by policies established by the Company’s Board that are reviewed and approved annually. The Board delegates responsibility for carrying out the asset/liability management policies to the Bank’s asset/liability committee. In this capacity, the asset/liability committee develops guidelines and strategies impacting the Company’s asset/liability management related activities based upon estimated market risk sensitivity, policy limits and overall market interest rate levels and trends. The Company’s goal of its asset and liability management practices is to maintain or increase the level of net interest income within an acceptable level of interest rate risk. Our asset and liability policy and strategies are expected to continue as described so long as competitive and regulatory conditions in the financial institution industry and market interest rates continue as they have in recent years.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest Rate Risk – continued

The Bank has established acceptable levels of interest rate risk as follows: Projected net interest income over the next twelve months will not be reduced by more than 15.0% given a change in interest rates of up to 200 basis points (+ or -).

The following table includes the Bank’s net interest income sensitivity analysis.

Changes in Market	Rate Sensitivity
Interest Rates	As of September 30, 2018		Policy
(Basis Points)	Year 1	Year 2	Limits
+200	0.61%	1.62%	-15.00%
-200	-2.47%	-9.07%	-15.00%

Impact of Inflation and Changing Prices

Our financial statements and the accompanying notes have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation. The impact of inflation is reflected in the increased cost of our operations. Interest rates have a greater impact on our performance than do the general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 3. Quantitative and Qualitative Disclosures About Market Risk

This item has been omitted based on Eagle’s status as a smaller reporting company.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

CONTROLS AND PROCEDURES

Item 4. Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation under the supervision and with the participation of our management including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure. Based on that evaluation, our CEO and CFO concluded that as of September 30, 2018, our disclosure controls and procedures were effective. During the last quarter, there were no changes in the Company’s internal control over financial reporting that have materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

Part II - OTHER INFORMATION

Item 1. Legal Proceedings.

Neither the Company nor the Bank is involved in any pending legal proceeding other than non-material legal proceedings occurring in the ordinary course of business.

Item 1A. Risk Factors.

There have not been any material changes in the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On July 19, 2018, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares may be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations. No shares were purchased under this plan during the three months ended September 30, 2018. The plan expires on July 19, 2019.

On July 20, 2017, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. No shares were purchased under this plan. The plan expired on July 20, 2018.

On July 21, 2016, the Board authorized the repurchase of up to 100,000 shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions. No shares were purchased under this plan. The plan expired on July 21, 2017.

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EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

Part II - OTHER INFORMATION (CONTINUED)

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of August 21, 2018, by and among Eagle Bancorp Montana, Inc., Opportunity Bank of Montana, Big Muddy Bancorp, Inc. and The State Bank of Townsend (incorporated herein by reference to Exhibit 2.1 of our Current Report on Form 8-K filed on August 21, 2018).
3.1	Amended and Restated Certificate of Incorporation of Eagle Bancorp Montana, Inc. (incorporated herein by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on February 23, 2010).
3.2	Bylaws of Eagle Bancorp Montana, Inc., amended as of August 20, 2015 (incorporated herein by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on August 25, 2015).
10.1	Salary Continuation Agreement between Opportunity Bank of Montana and Patrick D. Rensmon (incorporated herein by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on October 11, 2018).
10.2	Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Peter J. Johnson (incorporated herein by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on October 11, 2018).
10.3	Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Laura F. Clark (incorporated herein by reference to Exhibit 10.3 of our Current Report on Form 8-K filed on October 11, 2018).
10.4	Salary Continuation Agreement between Opportunity Bank of Montana and Mark O’Neill (filed herewith).
10.5	Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Dale Field (filed herewith).
10.6	Amendment to Salary Continuation Agreement between Opportunity Bank of Montana and Chantelle Nash (filed herewith).
31.1	Certification by Peter J. Johnson, Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Laura F. Clark, Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Peter J. Johnson, Chief Executive Officer, and Laura F. Clark, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

-54-

EAGLE BANCORP MONTANA, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EAGLE BANCORP MONTANA, INC.
Date:   November 14, 2018	By:	/s/ Peter J. Johnson
		Peter J. Johnson
		President/CEO
Date:   November 14, 2018	By:	/s/ Laura F. Clark
		Laura F. Clark
		Executive Vice President/CFO

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EX-10.4

Exhibit 10.4

Opportunity Bank of Montana

Salary Continuation Agreement

This Salary Continuation Agreement (this “Agreement”) is entered into as of this 11th day of October, 2018, by and between Opportunity Bank of Montana (the “Bank”), a Montana-chartered bank, and Mark O’Neill, an officer of the Bank (the “Executive”).

Whereas, the Executive has contributed substantially to the success of the Bank and the Bank desires that the Executive continue in its employ,

Whereas, to encourage the Executive to remain an employee, the Bank is willing to provide to the Executive salary continuation benefits payable from the Bank’s general assets,

Whereas, none of the conditions or events included in the definition of the term “golden parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] currently exists or, to the best knowledge of the Bank, is contemplated insofar as the Bank is concerned, and

Whereas, the parties hereto intend this Agreement to be an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive (who is a key employee and member of a select group of management), and to be considered a top hat plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Executive is fully advised of the Bank’s financial status.

Now Therefore, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.

Article 1

Definitions

1.1     “Accrual Balance” means the liability that should be accrued by the Bank under generally accepted accounting principles (“GAAP”) for the Bank’s obligation to the Executive under this Agreement, applying Financial Accounting Standards Board ASC 710-10-30 (formerly known as Accounting Principles Board Opinion No. 12, as amended by Statement of Financial Accounting Standards No. 106), and the calculation method and discount rate specified hereinafter. The Accrual Balance shall be calculated such that when it is credited with interest each month the Accrual Balance at Normal Retirement Age equals the present value of the normal retirement benefits. The discount rate means the rate used by the Plan Administrator for determining the Accrual Balance. In its sole discretion the Plan Administrator may adjust the discount rate to maintain the rate within reasonable standards according to GAAP.

1.2     “Beneficiary” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive, determined according to Article 4.

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1.3     “Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

1.4     “Change in Control” means a change in control as defined in Internal Revenue Code section 409A and rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury, including –

(a)       Change in ownership: a change in ownership of Eagle Bancorp Montana (the “Bancorp’’), a Delaware corporation of which the Bank is a wholly owned subsidiary, occurs on the date any one person or group accumulates ownership of Bancorp stock constituting more than 50% of the total fair market value or total voting power of Bancorp stock, or

(b)      Change in effective control: (x) any one person or more than one person acting as a group acquires within a 12-month period ownership of Bancorp stock possessing 30% or more of the total voting power of the Bancorp, or (y) a majority of the Bancorp’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance by a majority of the Bancorp’s board of directors, or

(c)      Change in ownership of a substantial portion of assets: a change in ownership of a substantial portion of the Bancorp’s assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from the Bancorp assets having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the Bancorp’s assets immediately before the acquisition or acquisitions. For this purpose, gross fair market value means the value of the Bancorp’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

1.5     “Code” means the Internal Revenue Code of 1986, as amended, and rules, regulations, and guidance of general application issued by the Department of the Treasury under the Internal Revenue Code of 1986, as amended.

1.6     “Disability” means, because of a medically determinable physical or mental impairment that can be expected to result in death or that can be expected to last for a continuous period of at least 12 months, (x) the Executive is unable to engage in any substantial gainful activity, or (y) the Executive is receiving income replacement benefits for a period of at least three months under an accident and health plan of the employer. Medical determination of disability may be made either by the Social Security Administration or by the provider of an accident or health plan covering employees of the Bank. Upon request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security Administration’s or provider’s determination.

1.7     “Early Termination” means Separation from Service before Normal Retirement Age for reasons other than death, Disability, or Termination with Cause. Early Termination excludes a Separation from Service governed by section 2.4.

1.8     “Effective Date” means October 1, 2018.

1.9     “Intentional” for purposes of this Agreement, no act or failure to act on the Executive’s part will be considered intentional if it was due primarily to an error in judgment or negligence. An act or failure to act on the Executive’s part is intentional if it is not in good faith and if it is without a reasonable belief that the action or failure to act is in the Bank’s best interests. Any act or failure to act based upon authority granted by resolutions duly adopted by the board of directors or based upon the advice of counsel for the Bank is conclusively presumed to be in good faith and in the Bank’s best interests.

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1.10     “Involuntary Termination without Cause” means the Bank has terminated the Executive’s employment without Cause, and such termination of employment is a Separation from Service.

1.11     “Normal Retirement Age” means age 65.

1.12     “Plan Administrator” or “Administrator” means the plan administrator described in Article 8.

1.13     “Plan Year” means a twelve-month period commencing on January 1 and ending on December 31 of each year, provided that the initial Plan Year will commence on the Effective Date of the Agreement and end on December 31 of the year in which the Effective Date occurs.

1.14     “Separation from Service” means separation from service as defined in Internal Revenue Code section 409A and rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury, including termination for any reason of the Executive’s service as an executive and independent contractor to the Bank and any member of a controlled group, as defined in Code section 414, other than because of a leave of absence approved by the Bank or the Executive’s death.

1.15     “Termination with Cause” and “Cause” shall have the same meaning specified in any effective severance or employment agreement existing on the date hereof or hereafter entered into between the Executive and the Bank. If the Executive is not a party to a severance or employment agreement containing a definition of termination with cause, Termination with Cause means the Bank terminates the Executive’s employment because of –

(a)        the Executive’s gross negligence or gross neglect of duties or intentional and material failure to perform stated duties after written notice thereof. For purposes of this Agreement, no act or failure to act on the part of the Executive shall be deemed to have been intentional if it was due primarily to an error in judgment or negligence. An act or failure to act on the Executive’s part shall be considered intentional if it is not in good faith and if it is without a reasonable belief that the action or failure to act is in the best interests of the Bank, or

(b)       fraud, disloyalty, dishonesty, or willfull violation of any applicable law or significant policy of the Bank committed in connection with the Executive’s employment and resulting in an adverse effect on the Bank. For purposes of this Agreement, applicable laws include any statute, rule, regulatory order, statement of policy, or final cease-and-desist order of any governmental agency or body having regulatory authority over the Bank, or

(c)        the occurrence of any event that results in the Executive being excluded from coverage, or having coverage limited for the Executive as compared to other executives of the Bank, under the Bank’s blanket bond or other fidelity or insurance policy covering its directors, officers, or employees, or

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(d)        the Executive is removed from office or permanently prohibited from participating in the Bank’s affairs by an order issued under section 8(e)(4) or section 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), or

(e)        conviction of the Executive for or plea of no contest to a felony or conviction of or plea of no contest to a misdemeanor involving moral turpitude.

1.16     “Voluntary Termination with Good Reason” means a voluntary Separation from Service by the Executive within 24 months after a Change in Control if the following conditions (x) and (y) are satisfied: (x) a voluntary Separation from Service by the Executive will be considered a Voluntary Termination with Good Reason if any of the following occur without the Executive’s advance written consent –

1)     a material diminution of the Executive’s base salary,

2)     a material diminution of the Executive’s authority, duties, or responsibilities of the supervisor to whom the Executive is required to report,

3)     a material diminution in the budget over which the Executive retains authority,

4)     a material change in the geographic location at which the Executive must perform services for the Bank, or

5)     any other action or inaction that constitutes a material breach by the Bank of the agreement under which the Executive provides services to the Bank.

(y)         the Executive must give notice to the Bank of the existence of one or more of the conditions described in clause (x) within 90 days after the initial existence of the condition, and the Bank has 30 days thereafter to remedy the condition. In addition, the Executive’s voluntary termination because of the existence of one or more of the conditions described in clause (x) must occur within 24 months after the earlier of the initial existence of the condition or the Change in Control.

Article 2

Lifetime Benefits

2.1          Normal Retirement. Unless Separation from Service or a Change in Control occurs before Normal Retirement Age, when the Executive attains Normal Retirement Age the Bank shall pay to the Executive the benefit described in this section 2.1 instead of any other benefit under this Agreement. If the Executive’s Separation from Service after Normal Retirement Age is a Termination with Cause or if this Agreement terminates under Article 5, no further benefits shall be paid.

2.1.1 Amount of benefit. The annual benefit under this section 2.1 is $38,500.

2.1.2 Payment of benefit. Beginning with the month immediately after the month in which the Executive attains Normal Retirement Age, the Bank shall pay the annual benefit to the Executive in equal monthly installments on the first day of each month. The annual benefit is payable for 180 months or for the Executive’s lifetime, whichever is longer.

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2.2     Early Termination. If Early Termination occurs on or after the date the Executive attains age 60 but before Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this section 2.2 instead of any other benefit under this Agreement. If Early Termination occurs before the Executive attains age 60, no benefit shall be payable under this section 2.2, unless a Change in Control shall have first occurred. However, if a Change in Control occurs before Separation from Service, the benefit described in this section 2.2 shall no longer be dependent on the Executive’s age when Early Termination occurs and the Executive shall be considered 100% vested in the Accrual Balance after the Change in Control. Neither the Bank nor the Executive shall be entitled to elect in the 24-month period after a Change in Control between the benefit under section 2.4 versus the benefit under this section 2.2. If the Executive’s Separation from Service within 24 months after a Change in Control is an involuntary termination without Cause or a Voluntary Termination with Good Reason, no benefit shall be payable under this section 2.2 and the Executive shall instead be entitled to the benefit under section 2.4 or, if the Executive first attained Normal Retirement Age, section 2.1. No benefits shall be payable under this Agreement if the Executive’s Separation from Service is a Termination with Cause or if this Agreement terminates under Article 5.

2.2.1   Amount of benefit. The benefit under this section 2.2 is the fixed annual amount that fully amortizes the Accrual Balance existing at the end of the month immediately before the month in which Separation from Service occurs, amortizing that Accrual Balance (i) over the number of years determined by subtracting sixty-five (65) from the Executive’s life expectancy as of Separation from Service and (ii) taking into account interest at the discount rate or rates established by the Plan Administrator.

2.2.2   Payment of benefit. Beginning with the later of (x) the seventh month after the month in which the Executive’s Separation from Service occurs, or (y) the month immediately after the month in which the Executive attains Normal Retirement Age, the Bank will pay the benefit to the Executive in equal monthly installments on the first day of each month. The benefit is payable for 180 months or for the Executive’s lifetime, whichever is longer.

2.3     Disability. For Separation from Service because of Disability before Normal Retirement Age, the Bank will pay to the Executive the benefit described in this section 2.3 instead of any other benefit under this Agreement.

2.3.1   Amount of benefit.   The benefit under this section 2.3 is the fixed annual amount that fully amortizes the Accrual Balance existing at the end of the month immediately before the month in which Separation from Service occurs, amortizing that Accrual Balance (i) over the number of years determined by subtracting sixty-five (65) from the Executive’s life expectancy as of Separation from Service and (ii) taking into account interest at the discount rate or rates established by the Plan Administrator.

2.3.2   Payment of benefit. Beginning with the later of (x) the seventh month after the month in which the Executive’s Separation from Service occurs, or (y) the month immediately after the month in which the Executive attains Normal Retirement Age, the Bank will pay the benefit to the Executive in equal monthly installments on the first day of each month. The benefit is payable for 180 months or for the Executive’s lifetime, whichever is longer.

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2.4     Change in Control. If the Executive’s Separation from Service is an Involuntary Termination without Cause or a Voluntary Termination with Good Reason, in either case within 24 months after a Change in Control, the Bank will pay to the Executive the benefit described in this section 2.4 instead of any other benefit under this Agreement. No benefit is payable under this Agreement if the Executive’s employment terminates with Cause or if this Agreement terminates under Article 5. Neither the Bank nor the Executive may elect in the 24-month period after a Change in Control between the benefit under this section 2.4 versus the Early Termination benefit under section 2.2. If the Executive’s Separation from Service within 24 months after a Change in Control is an Involuntary Termination without Cause or a Voluntary Termination with Good Reason, no benefit is payable under section 2.2 or section 2.3 and the Executive is instead entitled to the benefit under this section 2.4. But if the Executive has attained Normal Retirement Age prior to Separation from Service within 24 months after a Change in Control occurs, whether Separation from Service is voluntary or involuntary for any reason other than Termination with Cause, the Executive is entitled solely to the benefit provided by section 2.1, not this section 2.4.

2.4.1     Amount of benefit. The benefit under this section 2.4 is the Accrual Balance required to be maintained by the Bank on the date on which the Executive’s Separation from Service occurs.

2.4.2     Payment of benefit. The Bank will pay the benefit under section 2.4 of this Agreement to the Executive in a single lump sum on the date of the Executive’s Separation from Service (or, if the Executive is a specified employee (as defined in the regulations under Code section 409A) at the time of the Separation from Service, on the date that is six months after the date of the Executive’s Separation from Service).

2.5        Lump-sum Payment of Normal Retirement Benefit, Early Termination Benefit, or Disability Benefit Being Paid to the Executive when a Change in Control Occurs. If when a Change in Control occurs the Executive is receiving the benefit under section 2.1, the Bank will pay remaining benefits to the Executive in a single lump sum on the day of the Change in Control. If when a Change in Control occurs the Executive is receiving or is entitled at Normal Retirement Age to receive the benefit under sections 2.2 or 2.3, the Bank will pay remaining benefits to the Executive in a single lump sum on the later of (x) the day of the Change in Control or (y) the first day of the seventh month after the month in which the Executive’s Separation from Service occurs. The lump-sum payment due to the Executive as a result of a Change in Control is the Accrual Balance amount corresponding to the particular benefit when the Change in Control occurs.

2.6       Annual Benefit Statement. Within 120 days after the end of each Plan Year, the Plan Administrator shall provide or cause to be provided to the Executive an annual benefit statement showing benefits payable or potentially payable to the Executive under this Agreement. Each annual benefit statement shall supersede the previous year’s annual benefit statement. If there is a contradiction between this Agreement and the annual benefit statement concerning the amount of a particular benefit payable or potentially payable to the Executive under sections 2.2, 2.3 or 2.4 hereof, the amount of the benefit determined under this Agreement shall control.

2.7       Savings Clause Relating to Compliance with Code Section 409A. The Agreement is intended to comply with Code section 409A and official guidance issued thereunder. Notwithstanding anything to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with this intention. If any provision of this Agreement would subject the Executive to additional tax or interest under section 409A, the Bank will reform the provision. However, the Bank will maintain to the maximum extent practicable the original intent of the applicable provision without subjecting the Executive to additional tax or interest, and the Bank is not required to incur any additional compensation expense as a result of the reformed provision. In the event the terms of this Agreement, any payments made hereunder, or any action or inaction by the Bank with respect thereto, shall be deemed not to comply with section 409A, the Bank shall not be liable to the Executive for any income or excise taxes or any other amounts imposed on or payable by the Executive with respect to any payments made hereunder or for any actions, decisions or determinations made by the Bank in good faith.

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2.8       One Benefit Only. Despite anything to the contrary in this Agreement, the Executive and Beneficiary are entitled to one benefit only under this Agreement, which shall be determined by the first event to occur that is dealt with by this Agreement. Except as provided in section 2.5 or Article 3, subsequent occurrence of events dealt with by this Agreement shall not entitle the Executive or Beneficiary to other or additional benefits under this Agreement.

Article 3

Death Benefits

3.1       Death During Active Service. Except as provided in section 5.2, if the Executive dies in active service to the Bank, at the Executive’s death the Executive’s Beneficiary is entitled to the Normal Retirement benefit specified in section 2.1. Beginning with the month immediately after the month in which the Executive’s death occurs, the Bank will pay the annual benefit to the Beneficiary in equal monthly installments on the first day of each month. The annual benefit is payable for 180 months.

3.2       Death During Benefit Period. (a) If the Executive dies after benefit payments commence under Article 2 but before receiving payments for 180 months (treating as payment for six months the single lump-sum payment made seven months after Separation from Service, in the case of payments that are delayed for six months because of Code section 409A), the Executive’s Beneficiary is entitled to remaining benefits at the same time and in the same amount they would have been paid to the Executive had the Executive survived. The benefit is payable to the Executive’s Beneficiary under this section 3.2 until the Executive and the Executive’s Beneficiary have together received a total of 180 monthly payments (treating as six monthly payments the single lump-sum payment made seven months after Separation from Service, in the case of payments that are delayed for six months because of Code section 409A).

(b)       If the Executive dies after receiving payments for 180 months (treating as payment for six months the single lump-sum payment made seven months after Separation from Service, in the case of payments that are delayed for six months because of Code section 409A), the Executive’s Beneficiary is entitled to no benefits under this Agreement.

Article 4

Beneficiaries

4.1       Beneficiary Designations. The Executive shall have the right to designate at any time a Beneficiary to receive any benefits payable under this Agreement after the Executive’s death. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designation under any other benefit plan of the Bank in which the Executive participates.

4.2       Beneficiary Designation: Change. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. The Executive’s Beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time. Upon acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator before the Executive’s death.

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4.3       Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted, and acknowledged in writing by the Plan Administrator or its designated agent.

4.4       No Beneficiary Designation. If the Executive dies without a valid beneficiary designation or if all designated Beneficiaries predecease the Executive, the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, the benefits shall be made to the personal representative of the Executive’s estate.

4.5       Facility of Payment. If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Bank may pay the benefit to the guardian, legal representative, or person having the care or custody of the minor, incapacitated person, or incapable person. The Bank may require proof of incapacity, minority, or guardianship as it may deem appropriate before distribution of the benefit. Distribution shall completely discharge the Bank from all liability for the benefit.

Article 5

General Limitations

5.1       Termination with Cause. Despite any contrary provision of this Agreement, the Bank will not pay any benefit under this Agreement and this Agreement will terminate if Separation from Service is a Termination with Cause.

5.2       Misstatement. The Bank will not pay any benefit under this Agreement if the Executive makes any material misstatement of fact on any application or resume provided to the Bank or on any application for benefits provided by the Bank.

5.3       Removal. If the Executive is removed from office or permanently prohibited from participating in the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement terminate as of the effective date of the order.

5.4       Default. Despite any provision of this Agreement to the contrary, if the Bank is in “default” or “in danger of default,” as those terms are defined in section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement terminate.

5.5       FDIC Open-Bank Assistance. All obligations under this Agreement terminate, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, when the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Federal Deposit Insurance Act section 13(c). 12 U.S.C. 1823(c). Rights of the parties that have already vested are not affected, however.

8

Article 6

Claims and Review Procedures

6.1     Claims Procedure. The Bank will notify any person or entity that makes a claim for benefits under this Agreement (the “Claimant”) in writing, within 90 days after receiving Claimant’s written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement. If the Plan Administrator determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (w) the specific reasons for such denial, (x) a specific reference to the provisions of the Agreement on which the denial is based, (y) a description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of why it is needed, and (z) an explanation of the Agreement’s claims review procedure and other appropriate information as to the steps to be taken if the Claimant wishes to have the claim reviewed. If the Plan Administrator determines that there are special circumstances requiring additional time to make a decision, the Bank will notify the Claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90 days.

6.2     Review Procedure. If the Claimant is determined by the Plan Administrator not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant will have the opportunity to have such claim reviewed by the Bank by filing a petition for review with the Bank within 60 days after receipt of the notice issued by the Bank. Said petition will state the specific reasons which the Claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Bank of the petition, the Plan Administrator will afford the Claimant (and counsel, if any) an opportunity to present his or her position verbally or in writing, and the Claimant (or counsel) will have the right to review the pertinent documents. The Plan Administrator will notify the Claimant of the Plan Administrator’s decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner to be understood by the Claimant and the specific provisions of the Agreement on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60 days at the election of the Plan Administrator, but notice of this deferral will be given to the Claimant.

Article 7

Miscellaneous

7.1     Amendments and Termination. This Agreement may be amended solely by a written agreement signed by the Bank and by the Executive. This Agreement may be terminated by the Bank without the Executive’s consent. Unless Article 5 provides that the Executive is not entitled to payment, the Bank will pay the vested Accrual Balance in a single lump sum to the Executive if the Bank terminates this Agreement without the Executive’s consent, but only if the termination and payment are carried out consistent with the terms of the section 409A plan-termination exception to the prohibition against accelerated payment [Rule 1.409A-3(j)(4)(ix)]. The Accrual Balance is determined as of the section 409A plan-termination date for purposes of Rule 1.409A-3(j)(4)(ix).

7.2     Binding Effect. This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, successors, administrators, and transferees.

7.3     No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Bank nor does it interfere with the Bank’s right to discharge the Executive. It also does not require the Executive to remain an employee or interfere with the Executive’s right to terminate employment at any time.

9

7.4       Non-Transferability. Benefits under this Agreement may not be sold, transferred, assigned, pledged, attached, or encumbered.

7.5       Successors; Binding Agreement. By an assumption agreement in form and substance satisfactory to the Executive, the Bank shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the Bank’s business or assets to expressly assume and agree to perform this Agreement in the same manner and to the same extent the Bank would be required to perform this Agreement had no succession occurred.

7.6       Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

7.7       Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the State of Montana, except to the extent preempted by the laws of the United States of America.

7.8       Unfunded Arrangement. The Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay benefits. The rights to benefits are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset of the Bank to which the Executive and beneficiary have no preferred or secured claim.

7.9       Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive concerning the subject matter. No rights are granted to the Executive under this Agreement other than those specifically set forth.

7.10     Severability. If any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held invalid, and to the full extent consistent with law each such other provision shall continue in full force and effect. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision not held invalid, and to the full extent consistent with law the remainder of such provision, together with all other provisions of this Agreement, shall continue in full force and effect.

7.11     Headings. Headings are included herein solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.

7.12     Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid, to the following addresses or to such other address as either party may designate by like notice. If to the Bank, notice shall be given to the board of directors, Opportunity Bank of Montana, 1400 Prospect Avenue, Helena, Montana 59601, or to such other or additional person or persons as the Bank shall have designated to the Executive in writing. If to the Executive, notice shall be given to the Executive at the Executive’s address appearing on the Bank’s records, or to such other or additional person or persons as the Executive shall have designated to the Bank in writing.

10

Article 8

Administration of Agreement

8.1     Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator consisting of the Board or such committee or person as the Board shall appoint. The Executive may not be a member of the Plan Administrator. The Plan Administrator shall have the discretion and authority to (x) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Agreement and (y) decide or resolve any and all questions that may arise, including interpretations of this Agreement.

8.2      Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the Bank.

8.3     Binding Effect of Decisions. The decision or action of the Plan Administrator about any question arising out of the administration, interpretation, and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement. No Executive or Beneficiary shall be deemed to have any right, vested or nonvested, regarding the continued use of any previously adopted assumptions, including but not limited to the discount rate and calculation method employed in the determination of the Accrual Balance.

8.4     Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.

8.5     Bank Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the retirement, Disability, death, or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

In Witness Whereof, the Executive and a duly authorized Bank officer have executed this Salary Continuation Agreement as of the date first written above.

Executive:	Bank:
	Opportunity Bank of Montana
/s/ Mark O’Neill	/s/ Peter J. Johnson
Mark O’Neill	By:   Peter J. Johnson
	Title:   President and Chief Executive Officer

11

Beneficiary Designation

Opportunity Bank of Montana

Salary Continuation Agreement

I, Mark O’Neill, designate the following as beneficiary of any death benefits under this Salary Continuation Agreement:

Primary:

Contingent:

Note:      To name a trust as beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new written designation with the Bank. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved.

Signature:	________________________________________
	Mark O’Neill
Date:	_________       , 2018

Accepted by the Bank this              day of                                          , 2018         

By:	________________________________________
Title:

12

EX-10.5

Exhibit 10.5

First Amendment

to the

Opportunity Bank of Montana

Salary Continuation Agreement

For

Dale Field

This First Amendment is adopted this 11th day of October, 2018 by Opportunity Bank of Montana located in Helena, Montana (the “Bank”).

The Bank and Dale Field (the “Executive”) executed the Salary Continuation Agreement effective as of November 1, 2014 (the “Agreement”).

The undersigned hereby amends the Agreement for the purpose of increasing the benefits provided therein. Therefore, the following changes shall be made:

Section 2.1 of the Agreement shall be deleted in its entirety and replaced by the following:

2.1. Normal Retirement Benefit. Upon Separation from Service after Normal Retirement Age, the Employer shall pay the Executive an annual benefit in the amount of Sixty-One Thousand Five Hundred Dollars ($61,500) in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following Separation from Service and continuing until the Executive’s death.

IN WITNESS OF THE ABOVE, the Bank hereby consents to this First Amendment.

Opportunity Bank of Montana

By:        /s/ Peter J. Johnson

Title:     President and Chief Executive Officer

Acknowledged:

/s/ Dale Field

Dale Field

EX-10.6

Exhibit 10.6

First Amendment

to the

Opportunity Bank of Montana

Salary Continuation Agreement

For

Chantelle Nash

This First Amendment is adopted this 11th day of October, 2018 by Opportunity Bank of Montana located in Helena, Montana (the “Bank”).

The Bank and Chantelle Nash (the “Executive”) executed the Salary Continuation Agreement effective as of November 1, 2014 (the “Agreement”).

The undersigned hereby amends the Agreement for the purpose of increasing the benefits provided therein. Therefore, the following changes shall be made:

Section 2.1 of the Agreement shall be deleted in its entirety and replaced by the following:

2.1. Normal Retirement Benefit. Upon Separation from Service after Normal Retirement Age, the Employer shall pay the Executive an annual benefit in the amount of Fifty-Three Thousand Five Hundred Dollars ($53,500) in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following Separation from Service and continuing until the Executive’s death.

IN WITNESS OF THE ABOVE, the Bank hereby consents to this First Amendment.

Opportunity Bank of Montana

By:       /s/ Peter J. Johnson

Title:    President and Chief Executive Officer

Acknowledged:

/s/ Chantelle Nash

Chantelle Nash

EX-31.1

EAGLE BANCORP Montana, Inc. AND SUBSIDIARIES

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302(a) OF THE

SARBANES-OXLEY ACT OF 2002

I, Peter J. Johnson certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eagle Bancorp Montana, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2018

/s/ Peter J. Johnson                                               

Peter J. Johnson

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EAGLE BANCORP Montana, Inc. AND SUBSIDIARIES

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302(a) OF THE

SARBANES-OXLEY ACT OF 2002

I, Laura F. Clark certify that:

1. I have reviewed this quarterly report on Form 10-Q of Eagle Bancorp Montana, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2018

/s/ Laura F. Clark                                                         

Laura F. Clark

Executive VP and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EAGLE BANCORP Montana, Inc. AND SUBSIDIARIES

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Eagle Bancorp Montana, Inc. (the ‘Company’) on Form 10-Q for the period ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the ‘Report’), we, Peter J. Johnson, Chief Executive Officer of the Company, and Laura F. Clark, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the undersigned’s best knowledge and belief:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Peter J. Johnson	/s/ Laura F. Clark
Peter J. Johnson	Laura F. Clark
Chief Executive Officer (Principal Executive Officer) November 14, 2018	Chief Financial Officer and Principal Accounting Officer (Principal Financial Officer) November 14, 2018

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission and shall not be considered filed as part of the Report.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 13, 2018
Document Information [Line Items]
Entity Registrant Name	Eagle Bancorp Montana, Inc.
Entity Central Index Key	0001478454
Trading Symbol	ebmt
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		5,477,652
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Statements of Financial Condition (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
ASSETS:
Cash and due from banks	$ 7,889	$ 5,517
Interest bearing deposits in banks	1,079	1,920
Total cash and cash equivalents	8,968	7,437
Securities available-for-sale	148,935	132,044
Federal Home Loan Bank stock	4,617	4,086
Federal Reserve Bank stock	2,033	1,465
Investment in Eagle Bancorp Statutory Trust I	155	155
Mortgage loans held-for-sale	8,747	8,949
Loans receivable, net of deferred loan fees of $1,081 at September 30, 2018 and $1,093 at December 31, 2017 and allowance for loan losses of $6,350 at September 30, 2018 and $5,750 at December 31, 2017	590,290	507,404
Accrued interest and dividends receivable	3,890	2,555
Mortgage servicing rights, net	6,947	6,578
Premises and equipment, net	28,600	21,958
Cash surrender value of life insurance	20,405	14,481
Real estate and other repossessed assets acquired in settlement of loans, net	457	525
Goodwill	12,124	7,034
Core deposit intangible, net	1,599	273
Deferred tax asset, net	2,100	1,360
Other assets	100	478
Total assets	839,967	716,782
LIABILITIES:
Noninterest bearing	142,351	99,799
Interest bearing	478,951	420,765
Total deposits	621,302	520,564
Accrued expenses and other liabilities	6,082	4,822
Federal Home Loan Bank advances and other borrowings	95,731	82,969
Other long-term debt:
Principal amount	25,155	25,155
Unamortized debt issuance costs	(295)	(344)
Total other long-term debt less unamortized debt issuance costs	24,860	24,811
Total liabilities	747,975	633,166
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 per share; 8,000,000 shares authorized; 5,718,942 and 5,272,168 shares issued; 5,460,452 and 5,013,678 shares outstanding at September 30, 2018 and December 31, 2017, respectively)	57	53
Additional paid-in capital	51,927	42,780
Unallocated common stock held by Employee Stock Ownership Plan	(518)	(643)
Treasury stock, at cost	(2,826)	(2,826)
Retained earnings	45,989	43,939
Net accumulated other comprehensive (loss) income	(2,637)	313
Total shareholders' equity	91,992	83,616
Total liabilities and shareholders' equity	$ 839,967	$ 716,782

XML

Consolidated Statements of Financial Condition (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Deferred loan fees	$ 1,081	$ 1,093
Allowance for loan losses	$ 6,350	$ 5,750
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	8,000,000	8,000,000
Common stock, shares issued (in shares)	5,718,942	5,272,168
Common stock, shares outstanding (in shares)	5,460,452	5,013,678

XML

Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans	$ 7,701,000	$ 6,478,000	$ 22,435,000	$ 18,222,000
Securities available-for-sale	1,036,000	693,000	3,046,000	2,136,000
Federal Home Loan Bank and Federal Reserve Bank dividends	80,000	48,000	233,000	124,000
Interest on deposits in banks	5,000	2,000	40,000	3,000
Other interest income	3,000	3,000	4,000	4,000
Total interest and dividend income	8,825,000	7,224,000	25,758,000	20,489,000
INTEREST EXPENSE:
Deposits	534,000	386,000	1,454,000	1,142,000
Federal Home Loan Bank advances and other borrowings	453,000	329,000	1,105,000	856,000
Other long-term debt	361,000	350,000	1,065,000	969,000
Total interest expense	1,348,000	1,065,000	3,624,000	2,967,000
NET INTEREST INCOME	7,477,000	6,159,000	22,134,000	17,522,000
Loan loss provision	194,000	331,000	720,000	934,000
NET INTEREST INCOME AFTER LOAN LOSS PROVISION	7,283,000	5,828,000	21,414,000	16,588,000
NONINTEREST INCOME:
Net gain on sale of loans (includes $402 and $657 for the three months ended September 30, 2018 and 2017, respectively, and $989 and $1,556 for the nine months ended September 30, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassification)	2,290,000	2,574,000	5,449,000	6,662,000
Appreciation in cash surrender value of life insurance	166,000	125,000	436,000	375,000
Net loss on sale of available-for-sale securities (includes ($23) and $0 for the three months ended September 30, 2018 and 2017, respectively, and ($113) and ($14) for the nine months ended September 30, 2018 and 2017, respectively, related to accumulated other comprehensive earnings reclassification)	(23,000)		(113,000)	(14,000)
Net loss on sale of real estate owned and other repossessed property			(57,000)	(25,000)
Other noninterest income	112,000	158,000	255,000	355,000
Total noninterest income	3,761,000	3,988,000	9,524,000	10,766,000
NONINTEREST EXPENSE:
Salaries and employee benefits	5,123,000	4,331,000	15,493,000	13,350,000
Occupancy and equipment expense	880,000	680,000	2,543,000	2,069,000
Data processing	866,000	563,000	2,176,000	1,696,000
Advertising	295,000	255,000	871,000	713,000
Amortization of mortgage servicing rights	296,000	288,000	906,000	812,000
Amortization of core deposit intangible and tax credits	182,000	107,000	519,000	321,000
Loan costs	154,000	166,000	469,000	465,000
Federal insurance premiums	65,000	78,000	203,000	198,000
Postage	58,000	48,000	192,000	147,000
Legal, accounting and examination fees	121,000	107,000	447,000	392,000
Consulting fees	23,000	14,000	65,000	122,000
Acquisition costs	222,000	276,000	587,000	276,000
Write-down on real estate owned and other repossessed property				45,000
Other noninterest expense	767,000	644,000	2,149,000	2,010,000
Total noninterest expense	9,052,000	7,557,000	26,620,000	22,616,000
INCOME BEFORE INCOME TAXES	1,992,000	2,259,000	4,318,000	4,738,000
Income tax expense (includes ($364) and ($157) for the three months ended September 30, 2018 and 2017, respectively, and ($1,064) and $726 for the nine months ended September 30, 2018 and 2017, respectively related to income tax (benefit) expense from reclassification items)	360,000	538,000	780,000	1,188,000
NET INCOME	$ 1,632,000	$ 1,721,000	$ 3,538,000	$ 3,550,000
BASIC EARNINGS PER SHARE (in dollars per share)	$ 0.30	$ 0.45	$ 0.65	$ 0.93
DILUTED EARNINGS PER SHARE (in dollars per share)	$ 0.30	$ 0.45	$ 0.65	$ 0.92
WEIGHTED AVERAGE SHARES OUTSTANDING (BASIC EPS) (in shares)	5,460,452	3,811,409	5,411,356	3,811,409
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED EPS) (in shares)	5,524,912	3,863,656	5,475,816	3,869,695
Deposit Account [Member]
NONINTEREST INCOME:
Noninterest income revenue	$ 241,000	$ 250,000	$ 681,000	$ 721,000
Bank Servicing [Member]
NONINTEREST INCOME:
Noninterest income revenue	575,000	525,000	1,698,000	1,581,000
Investment Advisory, Management and Administrative Service [Member]
NONINTEREST INCOME:
Noninterest income revenue	130,000	142,000	409,000	463,000
Debit Card [Member]
NONINTEREST INCOME:
Noninterest income revenue	$ 270,000	$ 214,000	$ 766,000	$ 648,000

XML

Consolidated Statements of Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Gain on sale of loans, accumulated other comprehensive earnings reclassification	$ 402	$ 657	$ 989	$ 1,556
Net loss on sale of available-for-sale securities, accumulated other comprehensive earnings reclassification	(23)	0	(113)	(14)
Income tax expense, reclassification items	$ (364)	$ (157)	$ (1,064)	$ 726

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net income	$ 1,632	$ 1,721	$ 3,538	$ 3,550
OTHER ITEMS OF COMPREHENSIVE (LOSS) INCOME:
Change in fair value of investment securities available-for-sale, before income taxes	(1,237)	(91)	(4,036)	1,963
Reclassification for net realized losses on investment securities included in income, before income tax	23	0	113	14
Change in fair value of derivatives designated as cash flow hedges, before income taxes	234	364	898	1,362
Reclassification for net realized gains on derivatives designated as cash flow hedges, before income taxes	(402)	(657)	(989)	(1,556)
Total other items of comprehensive (loss) income	(1,382)	(384)	(4,014)	1,783
Income tax benefit (expense) related to:
Investment securities	320	38	1,040	(805)
Derivatives designated as cash flow hedges	44	119	24	79
Total income tax benefit (expense)	364	157	1,064	(726)
COMPREHENSIVE INCOME	$ 614	$ 1,494	$ 588	$ 4,607

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Unallocated ESOP Shares [Member]	Treasury Stock [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance at Dec. 31, 2016		$ 41	$ 22,366	$ (809)	$ (2,971)	$ 41,240	$ (411)	$ 59,456
Net income						3,550		3,550
Other comprehensive income (loss)							1,057	1,057
Dividends paid						(953)		(953)
Employee Stock Ownership Plan shares allocated or committed to be released for allocation			111	125				236
Balance at Sep. 30, 2017		41	22,477	(684)	(2,971)	43,837	646	63,346
Balance at Jun. 30, 2017							873
Net income								1,721
Balance at Sep. 30, 2017		41	22,477	(684)	(2,971)	43,837	646	63,346
Balance at Dec. 31, 2017		53	42,780	(643)	(2,826)	43,939	313	83,616
Net income						3,538		3,538
Other comprehensive income (loss)							(2,950)	(2,950)
Dividends paid						(1,488)		(1,488)
Stock issued in connection with TwinCo acquisition		4	9,026					9,030
Employee Stock Ownership Plan shares allocated or committed to be released for allocation			121	125				246
Balance at Sep. 30, 2018		57	51,927	(518)	(2,826)	45,989	(2,637)	91,992
Balance at Jun. 30, 2018							(1,619)
Net income								1,632
Balance at Sep. 30, 2018		$ 57	$ 51,927	$ (518)	$ (2,826)	$ 45,989	$ (2,637)	$ 91,992

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Unallocated ESOP Shares [Member]
ESOP shares allocated or committed to be released for allocation, shares (in shares)	12,462	12,462

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 3,538	$ 3,550
Adjustments to reconcile net income to net cash provided by operating activities:
Loan loss provision	720	934
Write-down on real estate owned and other repossessed assets		45
Depreciation	923	712
Net amortization of investment securities premium and discounts	950	1,208
Amortization of mortgage servicing rights	906	812
Amortization of core deposit intangible and tax credits	519	321
Deferred income tax provision (benefit)	516	(110)
Net gain on sale of loans	(5,449)	(6,662)
Net loss on sale of available-for-sale securities	113	14
Net loss on sale of real estate owned and other repossessed assets	57	25
Net loss on sale/disposal of premises and equipment	(9)
Net appreciation in cash surrender value of life insurance	(346)	(290)
Net change in:
Accrued interest and dividends receivable	(630)	(146)
Loans held-for-sale	5,560	15,092
Other assets	258	558
Accrued expenses and other liabilities	1,487	1,371
Net cash provided by operating activities	9,113	17,434
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales	46,058	2,749
Maturities, principal payments and calls	8,763	6,982
Purchases	(45,970)	(1,307)
Federal Home Loan Bank stock purchased	(420)	(109)
Federal Reserve Bank stock purchased	(568)
Cash paid for TwinCo Acquisition, net of cash received	(4,243)
Loan origination and principal collection, net	(29,828)	(45,618)
Proceeds from Bank owned life insurance	205
Purchase of Bank owned life insurance	(5,600)
Proceeds from sale of real estate and other repossessed assets acquired in settlement of loans	150	262
Proceeds from sale of premises and equipment	9
Additions to premises and equipment	(5,960)	(2,179)
Net cash used in investing activities	(37,404)	(39,220)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	18,548	12,372
Net short-term advances (payments) on Federal Home Loan Bank and other borrowings	39,417	(35,522)
Long-term advances from Federal Home Loan Bank and other borrowings		46,300
Payments on long-term Federal Home Loan Bank and other borrowings	(26,655)	(9,355)
Proceeds from issuance of long-term debt		10,000
Payments for debt issuance costs		(219)
Dividends paid	(1,488)	(953)
Net cash provided by financing activities	29,822	22,623
NET INCREASE IN CASH AND CASH EQUIVALENTS	1,531	837
CASH AND CASH EQUIVALENTS, beginning of period	7,437	7,318
CASH AND CASH EQUIVALENTS, end of period	8,968	8,155
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest	3,523	2,939
Cash paid during the period for income taxes	355	1,180
NON-CASH INVESTING AND FINANCING ACTIVITIES:
(Decrease) increase in market value of securities available-for-sale	(3,923)	1,977
Mortgage servicing rights recognized	1,275	1,357
Loans transferred to real estate and other assets acquired in foreclosure	4	34
Stock issued in connection with TwinCo acquisition	9,030
Employee Stock Ownership Plan shares released	$ 246	$ 236

XML

Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE

1.

 BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do

not

include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income and cash flows for the unaudited interim periods.

The results of operations for the

nine

-month period ended

September 30, 2018

are

not

necessarily indicative of the results to be expected for the year ending

December 31, 2018

or any other period. The unaudited consolidated financial statements and notes presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in Eagle Bancorp Montana, Inc.’s (“the Company” or “Eagle”) Form

10

-K for the year ended

December 31, 2017.

Certain prior period amounts were reclassified to conform to the presentation for

2018.

These reclassifications had

no

impact on net income or total shareholders’ equity. Certain loan amounts were reclassified for prior periods to be consistent with loan category classification for

September 30, 2018.

During the quarter ended

March 31, 2018,

Eagle completed the acquisition of TwinCo, Inc. (“TwinCo”). See Note

12.

Mergers and Acquisitions for more information. The acquisition included the addition of over

$55,000,000

in gross loans and added a considerable amount to Eagle’s agricultural loans. There was

no

impact to Eagle’s loan policies due to the acquisition. Loan costs were previously included in other noninterest expense on the Consolidated Statements of Income. These amounts were presented on their own lines for the

three

and

nine

months ended

September 30, 2018

and prior year amounts were reclassed to be consistent with the current year presentation.

The Company evaluated subsequent events for potential recognition and/or disclosure through

November 13, 2018,

the date the unaudited consolidated financial statements were issued.

XML

Note 2 - Investment Securities

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE

2

.

INVESTMENT SECURITIES

Investment securities are summarized as follows:

	September 30, 2018									December 31, 2017
			Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	10,452	$	-	$	(223	)	$	10,229	$	4,881	$	13	$	(37	)	$	4,857
Municipal obligations		74,853		100		(2,279	)		72,674		67,508		807		(429	)		67,886
Corporate obligations		11,419		24		(236	)		11,207		14,725		18		(99	)		14,644
Mortgage-backed securities		20,946		120		(446	)		20,620		24,770		364		(265	)		24,869
Collateralized mortgage obligations		24,668		-		(827	)		23,841		20,051		7		(270	)		19,788
Asset-backed securities		10,411		1		(48	)		10,364		-		-		-			-
Total	$	152,749	$	245	$	(4,059	)	$	148,935	$	131,935	$	1,209	$	(1,100	)	$	132,044

Proceeds from sales of available-for-sale securities and the associated gross realized gains and losses were as follows:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	978		$	-	$	46,058		$	2,749
Gross realized gain on sale of available-for-sale securities	$	-		$	-	$	191		$	14
Gross realized loss on sale of available-for-sale securities		(23	)		-		(304	)		(28	)
Net realized loss on sale of available-for-sale securities	$	(23	)		-	$	(113	)	$	(14	)

The amortized cost and fair value of securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2018
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	1,255	$	1,254
Due from one to five years		18,245		17,920
Due from five to ten years		14,561		14,236
Due after ten years		73,074		71,064
		107,135		104,474
Mortgage-backed securities		20,946		20,620
Collateralized mortgage obligations		24,668		23,841
Total	$	152,749	$	148,935

Maturities of securities do

not

reflect repricing opportunities present in adjustable rate securities.

The Company’s investment securities that have been in a continuous unrealized loss position for less than

twelve

months and those that have been in a continuous unrealized loss position for

twelve

or more months were as follows:

	September 30, 2018
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency	$	7,756	$	(130	)	$	2,473	$	(93	)
Municipal obligations		50,828		(1,274	)		17,332		(1,005	)
Corporate obligations		7,193		(227	)		991		(9	)
Mortgage-backed securities and collateralized mortgage obligations		17,702		(472	)		16,912		(801	)
Asset-backed securities		8,371		(48	)		-		-
Total	$	91,850	$	(2,151	)	$	37,708	$	(1,908	)

	December 31, 2017
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency	$	2,943	$	(14	)	$	1,363	$	(23	)
Municipal obligations		15,404		(87	)		16,675		(342	)
Corporate obligations		7,643		(71	)		3,981		(28	)
Mortgage-backed securities and collateralized mortgage obligations		9,107		(81	)		21,653		(454	)
Asset-backed securities		-		-			-		-
Total	$	35,097	$	(253	)	$	43,672	$	(847	)

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (

1

) the length of time and the extent to which the fair value has been less than cost, (

2

) the financial condition and near-term prospects of the issuer and (

3

) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As of

September 30, 2018

and

December 31, 2017,

there were, respectively,

139

and

87

securities in an unrealized loss position that were considered to be temporarily impaired and therefore an impairment charge has

not

been recorded.

As of

September 30, 2018,

104

U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately

3.09%

from the Company’s amortized cost basis of these securities. At

December 31, 2017,

52

U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately

1.28%

from the Company’s amortized cost basis of these securities. As of

September 30, 2018,

9

corporate obligations had unrealized losses of approximately

2.80%

from the Company’s amortized cost basis of these securities. At

December 31, 2017,

15

corporate obligations had unrealized losses with aggregate depreciation of approximately

0.84%

from the Company’s amortized cost basis of these securities. As management has the ability to hold debt securities until maturity, or for the foreseeable future,

no

declines are deemed to be other than temporary.

As of

September 30, 2018,

22

mortgage-backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) had unrealized losses with aggregate depreciation of approximately

3.55%

from the Company’s amortized cost basis of these securities. At

December 31, 2017,

20

MBSs and CMOs had unrealized losses with aggregate depreciation of approximately

1.71%

from the Company’s amortized cost basis. Management’s analysis as of

September 30, 2018

revealed

no

expected credit losses on the securities and therefore, declines are

not

deemed to be other than temporary.

As of

September 30, 2018,

4

asset-backed securities (“ABSs”) had unrealized losses with aggregate depreciation of approximately

0.57%

from the Company’s amortized cost basis of these securities. The ABSs were purchased during the quarter ended

March 31, 2018.

Management’s analysis as of

September 30, 2018

revealed

no

expected credit losses on the securities and therefore, declines are

not

deemed to be other than temporary.

XML

Note 3 - Loans Receivable

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE

3

.

LOANS RECEIVABLE

Loans receivable consisted of the following:

	September 30,			December 31,
	2018			2017
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	144,972		$	135,217
Commercial real estate		303,660			244,783
Other loans:
Home equity		53,342			52,672
Consumer		16,491			15,712
Commercial		79,256			65,863
Total		597,721			514,247
Deferred loan fees, net		(1,081	)		(1,093	)
Allowance for loan losses		(6,350	)		(5,750	)
Total loans, net	$	590,290		$	507,404

Within the commercial real estate loan category,

$12,637,000

and

$13,114,000

was guaranteed by the United States Department of Agriculture Rural Development, at

September 30, 2018

and

December 31, 2017,

respectively. The commercial real estate category and the commercial category also include

$3,004,000

and

$1,480,000

of loans guaranteed by the United States Department of Agriculture Farm Service Agency at

September 30, 2018,

respectively. The United States Department of Agriculture Farm Service Agency guaranteed loans were acquired through the TwinCo acquisition. In addition, within the commercial loan category,

$229,000

and

$486,000

were in loans originated through a syndication program where the business resides outside of Montana, at

September 30, 2018,

and

December 31, 2017,

respectively.

The following table includes information regarding nonperforming assets.

	September 30,			December 31,
	2018			2017
	(Dollars in Thousands)
Non-accrual loans	$	1,556		$	977
Accruing loans delinquent 90 days or more		156			-
Restructured loans, net		-			-
Total nonperforming loans		1,712			977
Real estate owned and other repossessed assets, net		457			525
Total nonperforming assets	$	2,169		$	1,502
Total nonperforming assets as a percentage of total assets		0.26	%		0.21	%
Allowance for loan losses	$	6,350		$	5,750
Percent of allowance for loan losses to nonperforming loans		370.91	%		588.54	%
Percent of allowance for loan losses to nonperforming assets		292.76	%		382.82	%

Allowance for loan losses activity was as follows:

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, July 1, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Charge-offs		-		-		-			(14	)		-			(14	)
Recoveries		-		7		-			12			1			20
Provision		-		164		-			-			30			194
Ending balance, September 30, 2018	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Allowance for loan losses:
Beginning balance, January 1, 2018	$	1,301	$	2,778	$	506		$	225		$	940		$	5,750
Charge-offs		-		-		(80	)		(64	)		(24	)		(168	)
Recoveries		-		14		1			22			11			48
Provision		-		609		-			-			111			720
Ending balance, September 30, 2018	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Ending balance, September 30, 2018 allocated to loans individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-		$	-
Ending balance, September 30, 2018 allocated to loans collectively evaluated for impairment	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Loans receivable:
Ending balance, September 30, 2018	$	144,972	$	303,660	$	53,342		$	16,491		$	79,256		$	597,721
Ending balance, September 30, 2018 of loans individually evaluated for impairment	$	564	$	514	$	228		$	137		$	113		$	1,556
Ending balance, September 30, 2018 of loans collectively evaluated for impairment	$	144,408	$	303,146	$	53,114		$	16,354		$	79,143		$	596,165

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity		Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, July 1, 2017	$	1,251	$	2,378	$	505	$	225		$	866		$	5,225
Charge-offs		-		-		-		(41	)		(19	)		(60	)
Recoveries		-		-		-		3			1			4
Provision		50		200		-		31			50			331
Ending balance, September 30, 2017	$	1,301	$	2,578	$	505	$	218		$	898		$	5,500
Allowance for loan losses:
Beginning balance, January 1, 2017	$	1,241	$	2,079	$	460	$	193		$	797		$	4,770
Charge-offs		-		-		-		(140	)		(118	)		(258	)
Recoveries		-		-		39		14			1			54
Provision		60		499		6		151			218			934
Ending balance, September 30, 2017	$	1,301	$	2,578	$	505	$	218		$	898		$	5,500
Ending balance, September 30, 2017 allocated to loans individually evaluated for impairment	$	-	$	-	$	-	$	32		$	-		$	32
Ending balance, September 30, 2017 allocated to loans collectively evaluated for impairment	$	1,301	$	2,578	$	505	$	186		$	898		$	5,468
Loans receivable:
Ending balance, September 30, 2017	$	139,010	$	247,501	$	51,450	$	14,696		$	58,554		$	511,211
Ending balance, September 30, 2017 of loans individually evaluated for impairment	$	484	$	451	$	242	$	131		$	88		$	1,396
Ending balance, September 30, 2017 of loans collectively evaluated for impairment	$	138,526	$	247,050	$	51,208	$	14,565		$	58,466		$	509,815

The Company utilizes an

8

-point internal loan rating system, largely based on regulatory classifications, as follows:

Loans

R

ated Pass

– these are loans in categories

1

–

5

that are considered to be protected by the current net worth and paying capacity of the obligor, or by the value of the asset or the underlying collateral.

Loans

R

ated Special Mention

– these loans in category

6

have potential weaknesses and are watched closely by management. If left uncorrected, these potential weaknesses

may

result in deterioration of the repayment prospects for the asset at some future date.

Loans

R

ated Substandard

– these loans in category

7

are inadequately protected by the current net worth and paying capacity of the obligor of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are

not

corrected.

Loans

R

ated Doubtful

– these loans in category

8

have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loans

R

ated Loss

– these loans are considered uncollectible and are

not

part of the

8

-point rating system. They are of such small value that their continuance as assets without establishment of a specific reserve is

not

warranted. This classification does

not

mean that an asset has absolutely

no

recovery or salvage value, but, rather, that it is

not

practical or desirable to defer writing off a basically worthless asset even though practical recovery

may

be affected in the future.

On an annual basis, or more often if needed, the Company formally reviews the ratings of all commercial real estate, construction, and commercial business loans that have a principal balance of

$750,000

or more. Quarterly, the Company reviews the rating of any consumer loan, broadly defined, that is delinquent

90

days or more. Likewise, quarterly, the Company reviews the rating of any commercial loan, broadly defined, that is delinquent

60

days or more. Annually, the Company engages an independent

third

-party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process.

Internal classification of the loan portfolio was as follows:

	September 30, 2018
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	114,320	$	-	$	897	$	-	$	-	$	115,217
Residential 1-4 family construction		29,418		-		337		-		-		29,755
Commercial real estate		232,721		1,758		2,421		-		-		236,900
Commercial construction and development		36,339		-		-		-		-		36,339
Farmland		30,421		-		-		-		-		30,421
Other loans:
Home equity		53,114		-		228		-		-		53,342
Consumer		16,307		-		184		-		-		16,491
Commercial		59,403		870		134		-		-		60,407
Agricultural		18,451		-		398		-		-		18,849
Total	$	590,494	$	2,628	$	4,599	$	-	$	-	$	597,721

	December 31, 2017
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	109,167	$	-	$	744	$	-	$	-	$	109,911
Residential 1-4 family construction		24,850		-		456		-		-		25,306
Commercial real estate		194,502		-		303		-		-		194,805
Commercial construction and development		38,351		-		-		-		-		38,351
Farmland		11,627		-		-		-		-		11,627
Other loans:
Home equity		52,430		-		242		-		-		52,672
Consumer		15,549		-		136		-		27		15,712
Commercial		63,165		-		113		-		22		63,300
Agricultural		2,563		-		-		-		-		2,563
Total	$	512,204	$	-	$	1,994	$	-	$	49	$	514,247

Credit risk profile based on payment activity of the loan portfolio was as follows:

	September 30, 2018
			Restructured
	Performing		Loans		Nonperforming		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	114,860	$	-	$	357	$	115,217
Residential 1-4 family construction		29,418		-		337		29,755
Commercial real estate		236,386		-		514		236,900
Commercial construction and development		36,313		-		26		36,339
Farmland		30,421		-		-		30,421
Other loans:
Home equity		53,114		-		228		53,342
Consumer		16,354		-		137		16,491
Commercial		60,294		-		113		60,407
Agricultural		18,849		-		-		18,849
Total	$	596,009	$	-	$	1,712	$	597,721

	December 31, 2017
			Restructured
	Performing		Loans		Nonperforming		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	109,436	$	-	$	475	$	109,911
Residential 1-4 family construction		25,306		-		-		25,306
Commercial real estate		194,805		-		-		194,805
Commercial construction and development		38,351		-		-		38,351
Farmland		11,627		-		-		11,627
Other loans:
Home equity		52,430		-		242		52,672
Consumer		15,559		-		153		15,712
Commercial		63,193		-		107		63,300
Agricultural		2,563		-		-		2,563
Total	$	513,270	$	-	$	977	$	514,247

The following tables include information regarding delinquencies within the loan portfolio.

	September 30, 2018
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	473	$	130	$	603	$	227	$	114,387	$	115,217
Residential 1-4 family construction		118		-		118		337		29,300		29,755
Commercial real estate		1,618		-		1,618		514		234,768		236,900
Commercial construction and development		10		26		36		-		36,303		36,339
Farmland				-		-		-		30,421		30,421
Other loans:
Home equity		109		-		109		228		53,005		53,342
Consumer		80		-		80		137		16,274		16,491
Commercial		1,956				1,956		113		58,338		60,407
Agricultural		79		-		79		-		18,770		18,849
Total	$	4,443	$	156	$	4,599	$	1,556	$	591,566	$	597,721

	December 31, 2017
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	898	$	-	$	898	$	475	$	108,538	$	109,911
Residential 1-4 family construction		409		-		409		-		24,897		25,306
Commercial real estate		291		-		291		-		194,514		194,805
Commercial construction and development		-		-		-		-		38,351		38,351
Farmland		-		-		-		-		11,627		11,627
Other loans:
Home equity		212		-		212		242		52,218		52,672
Consumer		111		-		111		153		15,448		15,712
Commercial		116		-		116		107		63,077		63,300
Agricultural		-		-		-		-		2,563		2,563
Total	$	2,037	$	-	$	2,037	$	977	$	511,233	$	514,247

The following tables include information regarding impaired loans.

	September 30, 2018
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
With no related allowance:
Real estate loans:
Residential 1-4 family	$	227	$	248	$	-
Residential 1-4 family construction		337		387		-
Commercial real estate		514		527		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		228		268		-
Consumer		137		190		-
Commercial		113		119		-
Agricultural		-		-		-
With a related allowance:
Real estate loans:
Residential 1-4 family		-		-		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		-		-		-
Consumer		-		-		-
Commercial		-		-		-
Agricultural		-		-		-
Total:
Real estate loans:
Residential 1-4 family		227		248		-
Residential 1-4 family construction		337		387		-
Commercial real estate		514		527		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		228		268		-
Consumer		137		190		-
Commercial		113		119		-
Agricultural		-		-		-
Total	$	1,556	$	1,739	$	-

	December 31, 2017
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
With no related allowance:
First mortgage loans:
Residential 1-4 family	$	475	$	487	$	-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		242		263		-
Consumer		126		176		-
Commercial		85		87		-
Agricultural		-		-		-
With a related allowance:
First mortgage loans:
Residential 1-4 family		-		-		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		-		-		-
Consumer		27		27		27
Commercial		22		22		22
Agricultural		-		-		-
Total:
First mortgage loans:
Residential 1-4 family		475		487		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		242		263		-
Consumer		153		203		27
Commercial		107		109		22
Agricultural		-		-		-
Total	$	977	$	1,062	$	49

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	Average Recorded Investment
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	232	$	492	$	351	$	352
Residential 1-4 family construction		337		-		169		-
Commercial real estate		521		451		257		226
Commercial construction and development		-		-		-		-
Farmland		-		-		-		-
Other loans:
Home equity		217		274		235		291
Consumer		119		137		145		114
Commercial		102		150		110		44
Agricultural		-		-		-		-
Total	$	1,528	$	1,504	$	1,267	$	1,027

Interest income recognized on impaired loans for the

three

and

nine

months ended

September 30, 2018

and

2017

are considered insignificant.

XML

Note 4 - Troubled Debt Restructurings

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Troubled Debt Restructurings [Text Block]

NOTE

4

.

TROUBLE

D

DEBT RESTRUCTURINGS

A troubled debt restructured (“TDR”) loan is a loan in which the Bank grants a concession to the borrower that it would

not

otherwise consider, for reasons related to a borrower's financial difficulties. The loan terms which have been modified or restructured due to a borrower's financial difficulty, include but are

not

limited to a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market rates; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-aging, extensions, deferrals, renewals and rewrites or a combination of these modification methods. A TDR loan would generally be considered impaired in the year of modification and will be assessed periodically for continued impairment.

The Company offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories:

Rate Modification

– A modification in which the interest rate is changed.

Term Modification

– A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Interest Only Modification

– A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification

– A modification in which the dollar amount of the payment is changed, other than an interest only modification described above.

Combination Modification

– Any other type of modification, including the use of multiple categories above.

The Company previously had

one

TDR loan with a recorded investment of

$43,000

and a

$34,000

charge-off at time of restructure. The loan was a home equity loan and was on accrual status. The remaining recorded investment of

$42,000

was paid-off during the quarter ended

June 30, 2017

and the

$34,000

charge-off was recovered.

The Bank’s policy is that loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appears relatively certain. The Bank’s policy generally refers to

nine

months of payment performance as sufficient to warrant a return to accrual status.

During the

nine

months ended

September 30, 2018,

there were

no

new restructured loans.

There were

no

loans modified as a troubled debt restructured loan within the previous

nine

months for which there was a payment default during the

nine

months ended

September 30, 2018.

A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is

90

days past due or results in the foreclosure and repossession of the applicable collateral.

As of

September 30, 2018

and

December 31, 2017,

the Company had

no

commitments to lend additional funds to loan customers whose terms had been modified in trouble debt restructures.

XML

Note 5 - Deposits

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Deposit Liabilities Disclosures [Text Block]

NOTE

5

.

DEPOSITS

Deposits are summarized as follows:

	September 30,		December 31,
	2018		2017
	(In Thousands)
Noninterest checking	$	142,351	$	99,799
Interest bearing checking		103,372		99,255
Savings		108,878		88,603
Money market		104,794		89,558
Time certificates of deposit		161,907		143,349
Total	$	621,302	$	520,564

XML

Note 6 - Other Long-term Debt

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Long-term Debt [Text Block]

NOTE

6

.

OTHER L

ONG-TERM

DEBT

Other long-term debt consisted of the following:

	September 30, 2018					December 31, 2017
			Unamortized					Unamortized
			Debt					Debt
	Principal		Issuance			Principal		Issuance
	Amount		Costs			Amount		Costs
	(In Thousands)
Senior notes fixed at 5.75%, due 2022	$	10,000	$	(147	)		10,000		(180	)
Subordinated debentures fixed at 6.75%, due 2025		10,000		(148	)		10,000		(164	)
Subordinated debentures variable at 3-Month Libor plus 1.42%, due 2035		5,155		-			5,155		-
Total other long-term debt	$	25,155	$	(295	)	$	25,155	$	(344	)

In

February 2017,

the Company completed the issuance, through a private placement, of

$10,000,000

aggregate principal amount of

5.75%

fixed senior unsecured notes due in

2022.

The interest will be paid semi-annually through maturity date. The notes are

not

subject to redemption at the option of the Company.

In

June 2015,

the Company completed the issuance of

$10,000,000

in aggregate principal amount of subordinated notes due in

2025

in a private placement transaction to an institutional accredited investor. The notes will bear interest at an annual fixed rate of

6.75%

and interest will be paid quarterly through maturity date or earlier redemption.

In

September 2005,

the Company completed the private placement of

$5,155,000

in subordinated debentures to Eagle Bancorp Statutory Trust I (“the Trust”). The Trust funded the purchase of the subordinated debentures through the sale of trust preferred securities to First Tennessee Bank, N.A. with a liquidation value of

$5,155,000.

Using interest payments made by the Company on the debentures, the Trust began paying quarterly dividends to preferred security holders in

December 2005.

The annual percentage rate of the interest payable on the subordinated debentures and distributions payable on the preferred securities was fixed at

6.02%

until

December 2010

then became variable at

3

-Month LIBOR plus

1.42%,

making the rate

3.818%

and

3.114%

as of

September 30, 2018

and

December 31, 2017,

respectively. Dividends on the preferred securities are cumulative and the Trust

may

defer the payments for up to

five

years. The preferred securities mature in

December 2035

unless the Company elects and obtains regulatory approval to accelerate the maturity date.

For the

three

months ended

September 30, 2018

and

2017,

interest expense on other long-term debt was

$361,000

and

$350,000,

respectively. For the

nine

months ended

September 30, 2018

and

2017,

interest expense on other long-term debt was

$1,065,000

and

$969,000,

respectively.

XML

Note 7 - Earnings Per Share

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

7

.

EARNINGS PER SHARE

Basic earnings per share for the

three

months ended

September 30, 2018

was computed using

5,460,452

weighted average shares outstanding. Basic earnings per share for the

three

months ended

September 30, 2017

was computed using

3,811,409

weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method by adjusting the number of shares outstanding by the shares purchased. The weighted average shares outstanding for the diluted earnings per share calculations was

5,524,912

for the

three

months ended

September 30, 2018

and

3,863,656

for the

three

months ended

September 30, 2017.

Basic earnings per share for the

nine

months ended

September 30, 2018

was computed using

5,411,356

weighted average shares outstanding. Basic earnings per share for the

nine

months ended

September 30, 2017

was computed using

3,811,409

weighted average shares outstanding. Diluted earnings per share was computed using the treasury stock method by adjusting the number of shares outstanding by the shares purchased. The weighted average shares outstanding for the diluted earnings per share calculations was

5,475,816

for the

nine

months ended

September 30, 2018

and

3,869,695

for the

nine

months ended

September 30, 2017.

XML

Note 8 - Dividends and Stock Repurchase Program

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

8

.

DIVIDENDS AND STOCK REPURCHASE PROGRAM

For the year ended

December 31, 2017,

Eagle paid dividends of

$0.08

per share for the quarters ended

March 31

and

June 30, 2017.

Eagle paid dividends of

$0.09

per share for the quarters ended

September 30

and

December 31, 2017.

A dividend of

$0.09

per share was declared on

January 25, 2018

and paid

March 1, 2018

to shareholders of record on

February 9, 2018.

A dividend of

$0.09

per share was declared on

April 19, 2018

and paid

June 1, 2018

to shareholders of record on

May 11, 2018.

A dividend of

$0.0925

per share was declared on

July 19, 2018

and paid on

September 7, 2018

to shareholders of record on

August 17, 2018.

A dividend of

$0.0925

per share was declared on

October 18, 2018,

payable on

December 7, 2018

to shareholders of record on

November 16, 2018.

On

July 19, 2018,

the Board authorized the repurchase of up to

100,000

shares of its common stock. Under the plan, shares

may

be purchased by the Company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations.

No

shares were purchased under this plan during the

three

months ended

September 30, 2018.

The plan expires on

July 19, 2019.

On

July 20, 2017,

the Board authorized the repurchase of up to

100,000

shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions.

No

shares were purchased under this plan. The plan expired on

July 20, 2018.

On

July 21, 2016,

the Board authorized the repurchase of up to

100,000

shares of its common stock. Under the plan, shares could be purchased by the Company on the open market or in privately negotiated transactions.

No

shares were purchased under this plan. The plan expired on

July 21, 2017.

XML

Note 9 - Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

NOTE

9

. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table includes information regarding the activity in accumulated other comprehensive income (loss).

	Unrealized			Unrealized
	Gains (Losses)			Gains (Losses)
	on Derivatives			on Investment
	Designated as			Securities
	Cash Flow Hedges			Available for Sale			Total
				(In Thousands)
Balance, January 1, 2018	$	234		$	79		$	313
Other comprehensive income (loss), before reclassifications and income taxes		664			(2,799	)		(2,135	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(587	)		90			(497	)
Income tax (expense) benefit		(20	)		720			700
Total other comprehensive income (loss)		57			(1,989	)		(1,932	)
Balance, June 30, 2018		291			(1,910	)		(1,619	)
Other comprehensive income (loss), before reclassifications and income taxes		234			(1,237	)		(1,003	)
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(402	)		23			(379	)
Income tax benefit		44			320			364
Total other comprehensive loss		(124	)		(894	)		(1,018	)
Balance, September 30, 2018	$	167		$	(2,804	)	$	(2,637	)
Balance, January 1, 2017	$	330		$	(741	)	$	(411	)
Other comprehensive income, before reclassifications and income taxes		998			2,054			3,052
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(899	)		14			(885	)
Income tax expense		(40	)		(843	)		(883	)
Total other comprehensive income		59			1,225			1,284
Balance, June 30, 2017		389			484			873
Other comprehensive income (loss), before reclassifications and income taxes		364			(91	)		273
Amounts reclassified from accumulated other comprehensive income, before income taxes		(657	)		-			(657	)
Income tax benefit		119			38			157
Total other comprehensive loss		(174	)		(53	)		(227	)
Balance, September 30, 2017	$	215		$	431		$	646

XML

Note 10 - Derivatives and Hedging Activities

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE

1

0

.

D

ERIVATIVES AND HEDGING ACTIVITIES

Mortgage Loan Commitments

Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held-for-sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A mortgage loan commitment binds the Company to lend funds to a potential borrower at a specified interest rate and within a specified period of time, generally up to

60

days after inception of the rate lock.

Interest Rate Lock Commitments

Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. The notional amount of interest rate lock commitments was

$31,583,000

and

$15,338,000

at

September 30, 2018

and

December 31, 2017,

respectively. The fair value of such commitments was insignificant.

The Company has

no

other off-balance-sheet arrangements or transactions with unconsolidated, special purpose entities that would expose the Company to liability that is

not

reflected on the face of the financial statements.

XML

Note 11 - Fair Value Disclosures

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

NOTE

1

1

.

FAIR VALUE DISCLOSURES

FASB ASC

820

defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall

not

be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is

not

a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and, (iv) willing to transact.

FASB ASC

820

requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied.

Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs

may

be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, FASB ASC

820

establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The fair value hierarchy is as follows:

Level

1

Inputs

– Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date, or convert to cash in the short term.

Level

2

Inputs

– Inputs other than quoted prices included in Level

1

that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are

not

active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level

3

Inputs

– Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are

not

available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments

may

be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Available-for-

Sale Securities

– Securities classified as available-for-sale are reported at fair value utilizing Level

1

and Level

2

inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that

may

include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the bond’s terms and conditions, among other things.

Impaired Loans

– Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level

3

inputs based on internally customized discounting criteria.

Loans Held-for-

Sale

– These loans are reported at the lower of cost or fair value. Fair value is determined based on expected proceeds based on sales contracts and commitments and are considered Level

2

inputs.

Repossessed Assets

– Fair values are valued at the time the loan is foreclosed upon and the asset is transferred from loans. The value is based upon primary

third

party appraisals, less costs to sell. The appraisals are generally discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and result in Level

3

classification of the inputs for determining fair value. Repossessed assets are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on same or similar factors above.

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	September 30, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency obligations	$	-	$	10,229	$	-	$	10,229
Municipal obligations		-		72,674		-		72,674
Corporate obligations		-		11,207		-		11,207
Mortgage-backed securities		-		20,620		-		20,620
Collateralized mortgage obligations		-		23,841		-		23,841
Asset-backed securities		-		10,364		-		10,364
Loans held-for-sale		-		8,747		-		8,747

	December 31, 2017
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency	$	-	$	4,857	$	-	$	4,857
Municipal obligations		-		67,886		-		67,886
Corporate obligations		-		14,644		-		14,644
Mortgage-backed securities		-		24,869		-		24,869
Collateralized mortgage obligations		-		19,788		-		19,788
Asset-backed securities		-		-		-		-
Loans held-for-sale		-		8,949		-		8,949

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are

not

measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

The following table summarizes financial assets and financial liabilities measured at fair value on a nonrecurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Impaired loans	$	-	$	-	$	1,556	$	1,556
Repossessed assets		-		-		457		457

	December 31, 2017
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Impaired loans	$	-	$	-	$	928	$	928
Repossessed assets		-		-		525		525

As of

September 30, 2018,

certain impaired loans were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for possible loan losses based upon the fair value of the underlying collateral. Impaired loans with a carrying value of

$1,556,000

were

not

reduced by specific valuation allowance allocations, resulting in a total reported fair value of

$1,556,000

based on collateral valuations utilizing Level

3

valuation inputs.

As of

December 31, 2017,

certain impaired loans were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for possible loan losses based upon the fair value of the underlying collateral. Impaired loans with a carrying value of

$977,000

were reduced by specific valuation allowance allocations totaling

$49,000

to a total reported fair value of

$928,000

based on collateral valuations utilizing Level

3

valuation inputs.

The following table represents the Bank’s Level

3

financial assets and liabilities, the valuation techniques used to measure the fair value of those financial assets and liabilities, and the significant unobservable inputs and the ranges of values for those inputs.

	Fair Value at				Principal	Significant	Range of
	September 30,		December 31,		Valuation	Unobservable	Signficant Input
Instrument	2018		2017		Technique	Inputs	Values
(Dollars In Thousands)
Impaired loans	$	1,556	$	928	Appraisal of collateral (1)	Appraisal adjustments	10	-	30%
Repossessed assets	$	457	$	525	Appraisal of collateral (1)(3)	Liquidation expenses (2)	10	-	30%

( 1 ) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable, less associated allowance.

( 2 ) Appraisals may be adjusted for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

( 3 ) Includes qualitative adjustments by management and estimated liquidation expenses.

FASB ASC Topic

825

requires disclosure of the fair value of financial instruments, both assets and liabilities recognized and

not

recognized in the statement of financial position, for which it is practicable to estimate fair value. Below is a table that summarizes the fair market values of all financial instruments of the Company at

September 30, 2018

and

December 31, 2017,

followed by methods and assumptions that were used by the Company in estimating the fair value of the classes of financial instruments.

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are

not

necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies

may

have a material effect on the estimated fair value amounts.

	September 30, 2018
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	8,968	$	-	$	-	$	8,968	$	8,968
Federal Home Loan Bank stock		4,617		-		-		4,617		4,617
Federal Reserve Bank stock		2,033		-		-		2,033		2,033
Loans receivable, net		-		-		581,434		581,434		588,734
Accrued interest and dividends receivable		3,890		-		-		3,890		3,890
Mortgage servicing rights		-		-		8,411		8,411		6,947
Cash surrender value of life insurance		20,405		-		-		20,405		20,405
Financial liabilities:
Non-maturing interest bearing deposits		-		317,044		-		317,044		317,044
Noninterest bearing deposits		142,351		-		-		142,351		142,351
Time certificates of deposit		-		-		159,867		159,867		161,907
Accrued expenses and other liabilities		6,082		-		-		6,082		6,082
Federal Home Loan Bank advances and other borrowings		-		-		95,137		95,137		95,731
Other long-term debt		-		-		23,641		23,641		25,155
Off-balance-sheet instruments		-
Forward delivery commitments		-		-		-		-		-
Commitments to extend credit		-		-		-		-		-
Rate lock commitments		-		-		-		-		-

	December 31, 2017
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	7,437	$	-	$	-	$	7,437	$	7,437
Federal Home Loan Bank stock		4,086		-		-		4,086		4,086
Federal Reserve Bank stock		1,465		-		-		1,465		1,465
Loans receivable, net		-		-		505,615		505,615		506,476
Accrued interest and dividends receivable		2,555		-		-		2,555		2,555
Mortgage servicing rights		-		-		7,312		7,312		6,578
Cash surrender value of life insurance		14,481		-		-		14,481		14,481
Financial liabilities:
Non-maturing interest bearing deposits		-		277,416		-		277,416		277,416
Noninterest bearing deposits		99,799		-		-		99,799		99,799
Time certificates of deposit		-		-		142,202		142,202		143,349
Accrued expenses and other liabilities		4,822		-		-		4,822		4,822
Federal Home Loan Bank advances and other borrowings		-		-		82,579		82,579		82,969
Other long-term debt		-		-		24,209		24,209		25,155
Off-balance-sheet instruments
Forward delivery commitments		-		-		-		-		-
Commitments to extend credit		-		-		-		-		-
Rate lock commitments		-		-		-		-		-

The following methods and assumptions were used by the Company in estimating the fair value of the following classes of financial instruments. However, the Form

10

-K for the year ended

December 31, 2017

provides additional description of valuation methodologies used in estimating fair value of these financial instruments.

Cash, Interest B

earing

A

ccounts,

Accrued I

nterest and

D

ividend

R

eceivable and

A

ccrued

E

xpenses an

d Other L

iabilities

– The carrying amounts approximate fair value due to the relatively short period of time between the origination of these instruments and their expected realization.

Stock in the F

ederal Home

L

oan

B

ank of Des Moines (“FHLB”)

and F

ederal

R

eserve

B

ank (“FRB”)

– The fair value of stock approximates redemption value.

Loans

R

eceivable

– Fair values are estimated by stratifying the loan portfolio into groups of loans with similar financial characteristics. Loans are segregated by type such as real estate, commercial, and consumer, with each category further segmented into fixed and adjustable rate interest terms. For mortgage loans, the Company uses the secondary market rates in effect for loans that have similar characteristics. The fair value of other fixed rate loans is calculated by discounting scheduled cash flows through the anticipated maturities adjusted for prepayment estimates. Adjustable interest rate loans are assumed to approximate fair value because they generally reprice within the short term.

Fair values are adjusted for credit risk based on assessment of risk identified with specific loans, and risk adjustments on the remaining portfolio based on credit loss experience.

Assumptions regarding credit risk are judgmentally determined using specific borrower information, internal credit quality analysis, and historical information on segmented loan categories for non-specific borrowers.

Mortgage Servicing Rights

– the fair value of servicing rights was determined at loan level using a discount rate of

12.50%

for all investor types and prepayment speeds ranging from approximately

80.00%

to

230.00%

PSA, depending on stratification of the specific loan. The weighted average prepayment speed was

114.00%

PSA. The fair value was also adjusted for the effect of potential past dues and foreclosures. Individual mortgage servicing rights values were capped at a maximum of

1.25%

for all investor types.

Cash Surrender Value of Life I

nsurance

– The carrying amount for cash surrender value of life insurance approximates fair value as policies are recorded at redemption value.

Deposits and T

ime C

ertificates of

D

eposit

– The fair value of deposits with

no

stated maturity, such as checking, passbook, and money market, is equal to the amount payable on demand. The fair value of time certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar maturities.

Advances from the FHLB

/Other Borrowings

and

Other Long-Term Debt

– The fair value of the Company’s advances and debentures are estimated using discounted cash flow analysis based on the interest rate that would be effective

September 30, 2018

and

December 31, 2017,

respectively if the borrowings repriced according to their stated terms.

Off-Balance-Sheet I

nstruments

– Fair values for off-balance-sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair values of these financial instruments are considered insignificant. Additionally, those financial instruments have

no

carrying value.

XML

Note 12 - Mergers and Acquisitions

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE

12.

 MERGER

S

AND ACQUISITIONS

On

September 5, 2017,

the Company entered into an Agreement and Plan of Merger with TwinCo, a Montana corporation, and TwinCo’s wholly-owned subsidiary, Ruby Valley Bank, a Montana chartered commercial bank to acquire

100%

of TwinCo’s equity voting interests. The merger agreement provided that Ruby Valley Bank would merge with and into Opportunity Bank of Montana and that TwinCo would merge with and into the Company. Ruby Valley Bank operated

2

branches in Madison County, Montana. The transaction provided an opportunity to expand market presence and lending activities, particularly in agricultural lending. The acquisition closed

January 31, 2018,

after receipt of approvals from regulatory authorities, approval of TwinCo shareholders and the satisfaction of other closing conditions. The total consideration paid was

$18,930,000

and included cash consideration of

$9,900,000

and common stock issued of

$9,030,000.

The transaction was accounted for under the acquisition method of accounting in accordance with FASB ASC

805,

Business Combinations. In business combination transactions in which the consideration given is

not

in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the asset (or net assets) acquired, whichever is more clearly evident and, thus, a more reliable measure.

Under FASB ASC

805,

all of the assets acquired and liabilities assumed in a business combination are recognized at acquisition at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Goodwill recorded in the acquisition was accounted for in accordance with the authoritative business combination guidance. Accordingly, goodwill will

not

be amortized, but will be tested for impairment annually. The goodwill recorded is

not

deductible for federal income tax purposes.

Assets acquired and liabilities assumed were recorded on the consolidated statement of financial condition at estimated fair value on acquisition date. The following table summarizes fair values of assets acquired and liabilities assumed, consideration paid and resulting goodwill.

	January 31,
	2018
	(In Thousands, Except Share Data)
Assets acquired:
Cash and cash equivalents	$	5,657
Investment securities		30,728
Loans		55,057
Premises and equipment		1,605
Other real estate owned		135
Core deposit intangible		1,609
Other assets		1,258
Total assets acquired	$	96,049
Liabilities assumed:
Deposits	$	82,190
Accrued expenses and other liabilities		19
Total liabilities assumed	$	82,209
Net assets acquired	$	13,840
Consideration paid:
Cash	$	9,900
Common stock issued (446,774 shares)		9,030
Total consideration paid	$	18,930
Goodwill resulting from acquisition	$	5,090

The fair value analysis of the loan portfolio resulted in a valuation adjustment for each loan based on an amortization schedule of expected cash flow. Individual amortization schedules were used for each loan over a certain amount and those with specifically identified loss exposure. The remainder of the loans were grouped by type and risk rating into loan pools (based on loans type, fixed or variable interest rate, revolving or term payments and risk rating). Yield inputs for the amortization schedules included contractual interest rates, estimated prepayment speeds, liquidity adjustments and market yields. Credit inputs for the amortization schedules included probability of payment default, loss given default rates and individually identified loss exposure.

Information regarding loans acquired as of acquisition date is as follows:

	January 31,
	2018
	(In Thousands)
Contractually required principal and interest at acquisition	$	56,891
Contractual cash flows not expected to be collected (nonaccretable discount)		(1,346	)
Expected cash flows at acquisition		55,545
Interest component of expected cash flows (accretable discount)		(488	)
Fair value of acquired loans	$	55,057

Core deposit intangible assets of

$1,609,000

are being amortized using an accelerated method over the estimated useful lives of the related deposits of

10

years.

The core deposit intangible value is a function of the difference between the cost of the acquired core deposits and the alternative cost of funds. This cash flow stream was discounted to present value. The fair value of other deposit accounts acquired were valued by estimating future cash flows to be received or paid from individual or homogenous groups of assets and liabilities and then discounting those cash flows to a present value using rates of return that were available in financial markets for similar financial instruments on or near

January 31, 2018.

Direct costs related to the acquisition were expensed as incurred. The Company recorded acquisition costs related to the TwinCo acquisition of

$131,000

during the quarter ended

June 30, 2018,

$234,000

during the quarter ended

March 31, 2018

and

$676,000

during the year ended

December 31, 2017.

Acquisition costs included legal and professional fees and data processing incurred related to the acquisition.

Operations of TwinCo have been included in the consolidated financial statements since

February 1, 2018.

The Company does

not

consider TwinCo a separate reporting segment and does

not

track the amount of revenues and net income attributable to TwinCo since acquisition. As such, it is impracticable to determine such amounts for the period from

February 1, 2018

through

September 30, 2018.

The accompanying consolidated statements of income include the results of operations of the acquired entity since the

January 31, 2018

acquisition date. The following table presents unaudited pro forma results of operations for the

three

and

nine

months ended

September 30, 2018

and

2017

as if the acquisition had occurred on

January 1, 2017.

This pro forma information gives effect to certain adjustments, including purchase accounting fair value adjustments and amortization of the core deposit intangible asset. The pro forma information does

not

necessarily reflect the results of operations that would have occurred had the Company purchased and assumed the assets and liabilities of TwinCo on

January 1, 2017.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(Dollars in Thousands, Except Per Share Data)
Pro forma net income (1)
Net interest income after loan loss provision	$	7,283	$	6,756	$	21,697	$	19,371
Noninterest income		3,761		4,069		9,559		11,009
Noninterest expense		9,052		8,230		26,771		24,634
Income before income taxes		1,992		2,595		4,485		5,746
Income tax expense		360		727		826		1,609
Net income	$	1,632	$	1,868	$	3,659	$	4,137
Pro forma earnings per share (1)
Basic earnings per share	$	0.30	$	0.49	$	0.68	$	1.09
Diluted earnings per share	$	0.30	$	0.48	$	0.67	$	1.07
Weighted average shares outstanding, basic		5,460,452		3,811,409		5,411,356		3,811,409
Weighted average shares outstanding, diluted		5,524,912		3,863,656		5,475,816		3,869,695

( 1 ) Significant assumptions utilized include the acquisition cost noted above, accretion of interest rate fair value adjustments, amortization of the core deposit intangible asset and a 28.00% effective tax rate for 2017.

On

August 21, 2018,

the Company entered into an Agreement and Plan of Merger with Big Muddy Bancorp, Inc. (“Big Muddy Bancorp”), a Montana corporation, and Big Muddy Bancorp’s wholly-owned subsidiary, The State Bank of Townsend, a Montana chartered commercial bank. The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement, Big Muddy Bancorp will merge with and into Eagle, with Eagle continuing as the surviving corporation. The State Bank of Townsend operates

four

branches in Townsend, Dutton, Denton and Choteau, Montana. The transaction provides an opportunity to expand market presence. The acquisition is expected to close during the

first

quarter of

2019,

after receipt of approvals from regulatory authorities, approval of Big Muddy Bancorp shareholders and the satisfaction of other closing conditions.

XML

Note 13 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE

1

3

. RECENT ACCOUNTING PRONOUNCEMENTS

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

). This guidance is a comprehensive new revenue recognition standard that supersede substantially all existing revenue recognition guidance. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under existing guidance. These

may

include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In

July 2015,

the FASB agreed to delay the effective date of the standard by

one

year. Therefore, the new standard was effective in the

first

quarter of

2018

and was adopted by the Company. Our revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU

2014

-

09,

and non-interest income. The largest percentage of our non-interest income is derived from the gain on sale of mortgage loans. The gains are recognized at the time of the sale of the loan, when proceeds are sent to us by the investor purchasing the loan.

No

change in the recognition of revenue on that portion of our noninterest income was recognized. We also evaluated the impact of this standard on our revenue from our wealth management division and it did

not

have a significant impact on our consolidated financial statements.

In

January 2016,

the FASB issued ASU

No.

2016

-

01,

Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic

825

-

10

). The amendment has a number of provisions including the requirements that public business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, a separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans receivables), and eliminating the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendment is effective for annual and interim reporting periods beginning after

December 15, 2017

and was adopted by the Company in the

first

quarter of

2018.

Note

11.

Fair Value Disclosures for

September 30, 2018,

reflects the provisions of this pronouncement.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

Leases (Topic

842

) intended to improve financial reporting regarding leasing transactions. The new standard affects all companies and organizations that lease assets. The standard will require organizations to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases if the lease terms are more than

12

months. The guidance also will require qualitative and quantitative disclosures providing additional information about the amounts recorded in the financial statements. The amendments in this update are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The Company is evaluating the potential impact of the amendment on the Company’s consolidated financial statements. We currently lease

six

locations that serve as full-service branches, with the longest running lease expiring in

2027.

We continue to explore options for using a

third

party vendor to assist with the implementation of this standard.

In

September 2016,

the FASB issued ASU

No.

2016

-

13,

Financial Instruments – Credit Losses (Topic

326

) intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The standard requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The standard also requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the standard amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this update are effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. All entities

may

adopt the amendments in this update earlier as of the fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. An entity will apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the

first

reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company believes the amendments in this update will have an impact on the Company’s consolidated financial statements and is working to evaluate the significance of that impact. In that regard, we have established a working group under the direction of our Chief Financial Officer and Chief Credit Officer. The group is composed of individuals from the finance and credit administration areas of the Company. We are currently developing an implementation plan, including assessment of processes, segmentation of the loan portfolio and identifying and adding data fields necessary for analysis. The adoption of this standard is likely to result in an increase in the allowance for loan and lease losses as a result of changing from an “incurred loss” model to an “expected loss” model. While we currently cannot reasonably estimate the impact of adopting this standard, we expect the impact will be influenced by the composition, characteristics and quality of our loan and securities portfolios, as well as the general economic conditions and forecasts as of the adoption date.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

Intangibles – Goodwill and Other (Topic

350

) to amend and simplify current goodwill impairment testing to eliminate Step

2

from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. The guidance will be effective for the Company on

January 1, 2020

and is

not

expected to have a significant impact on the Company’s consolidated financial statements. We have improved our internal reporting systems as it relates to profitability by divisions and markets within the Company. We expect these systems to help in our evaluation of potential impairment.

In

March 2017,

the FASB issued ASU

No.

2017

-

08,

Receivables–Nonrefundable Fees and Other Costs (Subtopic

310

-

20

) to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. Currently, entities generally amortize the premium as a yield adjustment over the contractual life of the security. The guidance does

not

change the accounting for callable debt securities held at a discount. For public business entities, the guidance is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. Early adoption is permitted, including in an interim period. We have currently been following this guidance based on our internal investment policy guidelines. There is little impact on our consolidated financial statements, as we typically do

not

invest in these types of securities.

XML

Note 2 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Marketable Securities [Table Text Block]

	September 30, 2018									December 31, 2017
			Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	10,452	$	-	$	(223	)	$	10,229	$	4,881	$	13	$	(37	)	$	4,857
Municipal obligations		74,853		100		(2,279	)		72,674		67,508		807		(429	)		67,886
Corporate obligations		11,419		24		(236	)		11,207		14,725		18		(99	)		14,644
Mortgage-backed securities		20,946		120		(446	)		20,620		24,770		364		(265	)		24,869
Collateralized mortgage obligations		24,668		-		(827	)		23,841		20,051		7		(270	)		19,788
Asset-backed securities		10,411		1		(48	)		10,364		-		-		-			-
Total	$	152,749	$	245	$	(4,059	)	$	148,935	$	131,935	$	1,209	$	(1,100	)	$	132,044

Schedule of Realized Gain (Loss) [Table Text Block]

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	978		$	-	$	46,058		$	2,749
Gross realized gain on sale of available-for-sale securities	$	-		$	-	$	191		$	14
Gross realized loss on sale of available-for-sale securities		(23	)		-		(304	)		(28	)
Net realized loss on sale of available-for-sale securities	$	(23	)		-	$	(113	)	$	(14	)

Investments Classified by Contractual Maturity Date [Table Text Block]

	September 30, 2018
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	1,255	$	1,254
Due from one to five years		18,245		17,920
Due from five to ten years		14,561		14,236
Due after ten years		73,074		71,064
		107,135		104,474
Mortgage-backed securities		20,946		20,620
Collateralized mortgage obligations		24,668		23,841
Total	$	152,749	$	148,935

Schedule of Unrealized Loss on Investments [Table Text Block]

	September 30, 2018
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency	$	7,756	$	(130	)	$	2,473	$	(93	)
Municipal obligations		50,828		(1,274	)		17,332		(1,005	)
Corporate obligations		7,193		(227	)		991		(9	)
Mortgage-backed securities and collateralized mortgage obligations		17,702		(472	)		16,912		(801	)
Asset-backed securities		8,371		(48	)		-		-
Total	$	91,850	$	(2,151	)	$	37,708	$	(1,908	)

	December 31, 2017
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency	$	2,943	$	(14	)	$	1,363	$	(23	)
Municipal obligations		15,404		(87	)		16,675		(342	)
Corporate obligations		7,643		(71	)		3,981		(28	)
Mortgage-backed securities and collateralized mortgage obligations		9,107		(81	)		21,653		(454	)
Asset-backed securities		-		-			-		-
Total	$	35,097	$	(253	)	$	43,672	$	(847	)

XML

Note 3 - Loans Receivable (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	September 30,			December 31,
	2018			2017
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	144,972		$	135,217
Commercial real estate		303,660			244,783
Other loans:
Home equity		53,342			52,672
Consumer		16,491			15,712
Commercial		79,256			65,863
Total		597,721			514,247
Deferred loan fees, net		(1,081	)		(1,093	)
Allowance for loan losses		(6,350	)		(5,750	)
Total loans, net	$	590,290		$	507,404

Schedule of Information Regarding Non-performing Assets [Table Text Block]

	September 30,			December 31,
	2018			2017
	(Dollars in Thousands)
Non-accrual loans	$	1,556		$	977
Accruing loans delinquent 90 days or more		156			-
Restructured loans, net		-			-
Total nonperforming loans		1,712			977
Real estate owned and other repossessed assets, net		457			525
Total nonperforming assets	$	2,169		$	1,502
Total nonperforming assets as a percentage of total assets		0.26	%		0.21	%
Allowance for loan losses	$	6,350		$	5,750
Percent of allowance for loan losses to nonperforming loans		370.91	%		588.54	%
Percent of allowance for loan losses to nonperforming assets		292.76	%		382.82	%

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity			Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, July 1, 2018	$	1,301	$	3,230	$	427		$	185		$	1,007		$	6,150
Charge-offs		-		-		-			(14	)		-			(14	)
Recoveries		-		7		-			12			1			20
Provision		-		164		-			-			30			194
Ending balance, September 30, 2018	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Allowance for loan losses:
Beginning balance, January 1, 2018	$	1,301	$	2,778	$	506		$	225		$	940		$	5,750
Charge-offs		-		-		(80	)		(64	)		(24	)		(168	)
Recoveries		-		14		1			22			11			48
Provision		-		609		-			-			111			720
Ending balance, September 30, 2018	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Ending balance, September 30, 2018 allocated to loans individually evaluated for impairment	$	-	$	-	$	-		$	-		$	-		$	-
Ending balance, September 30, 2018 allocated to loans collectively evaluated for impairment	$	1,301	$	3,401	$	427		$	183		$	1,038		$	6,350
Loans receivable:
Ending balance, September 30, 2018	$	144,972	$	303,660	$	53,342		$	16,491		$	79,256		$	597,721
Ending balance, September 30, 2018 of loans individually evaluated for impairment	$	564	$	514	$	228		$	137		$	113		$	1,556
Ending balance, September 30, 2018 of loans collectively evaluated for impairment	$	144,408	$	303,146	$	53,114		$	16,354		$	79,143		$	596,165

	Residential		Commercial		Home
	1-4 Family		Real Estate		Equity		Consumer			Commercial			Total
	(In Thousands)
Allowance for loan losses:
Beginning balance, July 1, 2017	$	1,251	$	2,378	$	505	$	225		$	866		$	5,225
Charge-offs		-		-		-		(41	)		(19	)		(60	)
Recoveries		-		-		-		3			1			4
Provision		50		200		-		31			50			331
Ending balance, September 30, 2017	$	1,301	$	2,578	$	505	$	218		$	898		$	5,500
Allowance for loan losses:
Beginning balance, January 1, 2017	$	1,241	$	2,079	$	460	$	193		$	797		$	4,770
Charge-offs		-		-		-		(140	)		(118	)		(258	)
Recoveries		-		-		39		14			1			54
Provision		60		499		6		151			218			934
Ending balance, September 30, 2017	$	1,301	$	2,578	$	505	$	218		$	898		$	5,500
Ending balance, September 30, 2017 allocated to loans individually evaluated for impairment	$	-	$	-	$	-	$	32		$	-		$	32
Ending balance, September 30, 2017 allocated to loans collectively evaluated for impairment	$	1,301	$	2,578	$	505	$	186		$	898		$	5,468
Loans receivable:
Ending balance, September 30, 2017	$	139,010	$	247,501	$	51,450	$	14,696		$	58,554		$	511,211
Ending balance, September 30, 2017 of loans individually evaluated for impairment	$	484	$	451	$	242	$	131		$	88		$	1,396
Ending balance, September 30, 2017 of loans collectively evaluated for impairment	$	138,526	$	247,050	$	51,208	$	14,565		$	58,466		$	509,815

Financing Receivable Credit Quality Indicators [Table Text Block]

	September 30, 2018
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	114,320	$	-	$	897	$	-	$	-	$	115,217
Residential 1-4 family construction		29,418		-		337		-		-		29,755
Commercial real estate		232,721		1,758		2,421		-		-		236,900
Commercial construction and development		36,339		-		-		-		-		36,339
Farmland		30,421		-		-		-		-		30,421
Other loans:
Home equity		53,114		-		228		-		-		53,342
Consumer		16,307		-		184		-		-		16,491
Commercial		59,403		870		134		-		-		60,407
Agricultural		18,451		-		398		-		-		18,849
Total	$	590,494	$	2,628	$	4,599	$	-	$	-	$	597,721

	December 31, 2017
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	109,167	$	-	$	744	$	-	$	-	$	109,911
Residential 1-4 family construction		24,850		-		456		-		-		25,306
Commercial real estate		194,502		-		303		-		-		194,805
Commercial construction and development		38,351		-		-		-		-		38,351
Farmland		11,627		-		-		-		-		11,627
Other loans:
Home equity		52,430		-		242		-		-		52,672
Consumer		15,549		-		136		-		27		15,712
Commercial		63,165		-		113		-		22		63,300
Agricultural		2,563		-		-		-		-		2,563
Total	$	512,204	$	-	$	1,994	$	-	$	49	$	514,247

	September 30, 2018
			Restructured
	Performing		Loans		Nonperforming		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	114,860	$	-	$	357	$	115,217
Residential 1-4 family construction		29,418		-		337		29,755
Commercial real estate		236,386		-		514		236,900
Commercial construction and development		36,313		-		26		36,339
Farmland		30,421		-		-		30,421
Other loans:
Home equity		53,114		-		228		53,342
Consumer		16,354		-		137		16,491
Commercial		60,294		-		113		60,407
Agricultural		18,849		-		-		18,849
Total	$	596,009	$	-	$	1,712	$	597,721

	December 31, 2017
			Restructured
	Performing		Loans		Nonperforming		Total
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	109,436	$	-	$	475	$	109,911
Residential 1-4 family construction		25,306		-		-		25,306
Commercial real estate		194,805		-		-		194,805
Commercial construction and development		38,351		-		-		38,351
Farmland		11,627		-		-		11,627
Other loans:
Home equity		52,430		-		242		52,672
Consumer		15,559		-		153		15,712
Commercial		63,193		-		107		63,300
Agricultural		2,563		-		-		2,563
Total	$	513,270	$	-	$	977	$	514,247

Past Due Financing Receivables [Table Text Block]

	September 30, 2018
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	473	$	130	$	603	$	227	$	114,387	$	115,217
Residential 1-4 family construction		118		-		118		337		29,300		29,755
Commercial real estate		1,618		-		1,618		514		234,768		236,900
Commercial construction and development		10		26		36		-		36,303		36,339
Farmland				-		-		-		30,421		30,421
Other loans:
Home equity		109		-		109		228		53,005		53,342
Consumer		80		-		80		137		16,274		16,491
Commercial		1,956				1,956		113		58,338		60,407
Agricultural		79		-		79		-		18,770		18,849
Total	$	4,443	$	156	$	4,599	$	1,556	$	591,566	$	597,721

	December 31, 2017
	Loans Past Due and Still Accruing
			90 Days
	30-89 Days		and				Non-Accrual		Current		Total
	Past Due		Greater		Total		Loans		Loans		Loans
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	898	$	-	$	898	$	475	$	108,538	$	109,911
Residential 1-4 family construction		409		-		409		-		24,897		25,306
Commercial real estate		291		-		291		-		194,514		194,805
Commercial construction and development		-		-		-		-		38,351		38,351
Farmland		-		-		-		-		11,627		11,627
Other loans:
Home equity		212		-		212		242		52,218		52,672
Consumer		111		-		111		153		15,448		15,712
Commercial		116		-		116		107		63,077		63,300
Agricultural		-		-		-		-		2,563		2,563
Total	$	2,037	$	-	$	2,037	$	977	$	511,233	$	514,247

Impaired Financing Receivables [Table Text Block]

	September 30, 2018
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
With no related allowance:
Real estate loans:
Residential 1-4 family	$	227	$	248	$	-
Residential 1-4 family construction		337		387		-
Commercial real estate		514		527		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		228		268		-
Consumer		137		190		-
Commercial		113		119		-
Agricultural		-		-		-
With a related allowance:
Real estate loans:
Residential 1-4 family		-		-		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		-		-		-
Consumer		-		-		-
Commercial		-		-		-
Agricultural		-		-		-
Total:
Real estate loans:
Residential 1-4 family		227		248		-
Residential 1-4 family construction		337		387		-
Commercial real estate		514		527		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		228		268		-
Consumer		137		190		-
Commercial		113		119		-
Agricultural		-		-		-
Total	$	1,556	$	1,739	$	-

	December 31, 2017
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	(In Thousands)
With no related allowance:
First mortgage loans:
Residential 1-4 family	$	475	$	487	$	-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		242		263		-
Consumer		126		176		-
Commercial		85		87		-
Agricultural		-		-		-
With a related allowance:
First mortgage loans:
Residential 1-4 family		-		-		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		-		-		-
Consumer		27		27		27
Commercial		22		22		22
Agricultural		-		-		-
Total:
First mortgage loans:
Residential 1-4 family		475		487		-
Residential 1-4 family construction		-		-		-
Commercial real estate		-		-		-
Commercial construction and development		-		-		-
Farmland		-		-		-
Other loans:
Home equity		242		263		-
Consumer		153		203		27
Commercial		107		109		22
Agricultural		-		-		-
Total	$	977	$	1,062	$	49

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	Average Recorded Investment
	(In Thousands)
Real estate loans:
Residential 1-4 family	$	232	$	492	$	351	$	352
Residential 1-4 family construction		337		-		169		-
Commercial real estate		521		451		257		226
Commercial construction and development		-		-		-		-
Farmland		-		-		-		-
Other loans:
Home equity		217		274		235		291
Consumer		119		137		145		114
Commercial		102		150		110		44
Agricultural		-		-		-		-
Total	$	1,528	$	1,504	$	1,267	$	1,027

XML

Note 5 - Deposits (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Deposit Liabilities, Type [Table Text Block]

	September 30,		December 31,
	2018		2017
	(In Thousands)
Noninterest checking	$	142,351	$	99,799
Interest bearing checking		103,372		99,255
Savings		108,878		88,603
Money market		104,794		89,558
Time certificates of deposit		161,907		143,349
Total	$	621,302	$	520,564

XML

Note 6 - Other Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	September 30, 2018					December 31, 2017
			Unamortized					Unamortized
			Debt					Debt
	Principal		Issuance			Principal		Issuance
	Amount		Costs			Amount		Costs
	(In Thousands)
Senior notes fixed at 5.75%, due 2022	$	10,000	$	(147	)		10,000		(180	)
Subordinated debentures fixed at 6.75%, due 2025		10,000		(148	)		10,000		(164	)
Subordinated debentures variable at 3-Month Libor plus 1.42%, due 2035		5,155		-			5,155		-
Total other long-term debt	$	25,155	$	(295	)	$	25,155	$	(344	)

XML

Note 9 - Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Unrealized			Unrealized
	Gains (Losses)			Gains (Losses)
	on Derivatives			on Investment
	Designated as			Securities
	Cash Flow Hedges			Available for Sale			Total
				(In Thousands)
Balance, January 1, 2018	$	234		$	79		$	313
Other comprehensive income (loss), before reclassifications and income taxes		664			(2,799	)		(2,135	)
Amounts reclassified from accumulated other comprehensive income, before income taxes		(587	)		90			(497	)
Income tax (expense) benefit		(20	)		720			700
Total other comprehensive income (loss)		57			(1,989	)		(1,932	)
Balance, June 30, 2018		291			(1,910	)		(1,619	)
Other comprehensive income (loss), before reclassifications and income taxes		234			(1,237	)		(1,003	)
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(402	)		23			(379	)
Income tax benefit		44			320			364
Total other comprehensive loss		(124	)		(894	)		(1,018	)
Balance, September 30, 2018	$	167		$	(2,804	)	$	(2,637	)
Balance, January 1, 2017	$	330		$	(741	)	$	(411	)
Other comprehensive income, before reclassifications and income taxes		998			2,054			3,052
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes		(899	)		14			(885	)
Income tax expense		(40	)		(843	)		(883	)
Total other comprehensive income		59			1,225			1,284
Balance, June 30, 2017		389			484			873
Other comprehensive income (loss), before reclassifications and income taxes		364			(91	)		273
Amounts reclassified from accumulated other comprehensive income, before income taxes		(657	)		-			(657	)
Income tax benefit		119			38			157
Total other comprehensive loss		(174	)		(53	)		(227	)
Balance, September 30, 2017	$	215		$	431		$	646

XML

Note 11 - Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	September 30, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency obligations	$	-	$	10,229	$	-	$	10,229
Municipal obligations		-		72,674		-		72,674
Corporate obligations		-		11,207		-		11,207
Mortgage-backed securities		-		20,620		-		20,620
Collateralized mortgage obligations		-		23,841		-		23,841
Asset-backed securities		-		10,364		-		10,364
Loans held-for-sale		-		8,747		-		8,747

	December 31, 2017
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Financial assets:
Available-for-sale securities
U.S. government and agency	$	-	$	4,857	$	-	$	4,857
Municipal obligations		-		67,886		-		67,886
Corporate obligations		-		14,644		-		14,644
Mortgage-backed securities		-		24,869		-		24,869
Collateralized mortgage obligations		-		19,788		-		19,788
Asset-backed securities		-		-		-		-
Loans held-for-sale		-		8,949		-		8,949

Fair Value Measurements, Nonrecurring [Table Text Block]

	September 30, 2018
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Impaired loans	$	-	$	-	$	1,556	$	1,556
Repossessed assets		-		-		457		457

	December 31, 2017
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
	(In Thousands)
Impaired loans	$	-	$	-	$	928	$	928
Repossessed assets		-		-		525		525

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

	Fair Value at				Principal	Significant	Range of
	September 30,		December 31,		Valuation	Unobservable	Signficant Input
Instrument	2018		2017		Technique	Inputs	Values
(Dollars In Thousands)
Impaired loans	$	1,556	$	928	Appraisal of collateral (1)	Appraisal adjustments	10	-	30%
Repossessed assets	$	457	$	525	Appraisal of collateral (1)(3)	Liquidation expenses (2)	10	-	30%

Fair Value, by Balance Sheet Grouping [Table Text Block]

	September 30, 2018
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	8,968	$	-	$	-	$	8,968	$	8,968
Federal Home Loan Bank stock		4,617		-		-		4,617		4,617
Federal Reserve Bank stock		2,033		-		-		2,033		2,033
Loans receivable, net		-		-		581,434		581,434		588,734
Accrued interest and dividends receivable		3,890		-		-		3,890		3,890
Mortgage servicing rights		-		-		8,411		8,411		6,947
Cash surrender value of life insurance		20,405		-		-		20,405		20,405
Financial liabilities:
Non-maturing interest bearing deposits		-		317,044		-		317,044		317,044
Noninterest bearing deposits		142,351		-		-		142,351		142,351
Time certificates of deposit		-		-		159,867		159,867		161,907
Accrued expenses and other liabilities		6,082		-		-		6,082		6,082
Federal Home Loan Bank advances and other borrowings		-		-		95,137		95,137		95,731
Other long-term debt		-		-		23,641		23,641		25,155
Off-balance-sheet instruments		-
Forward delivery commitments		-		-		-		-		-
Commitments to extend credit		-		-		-		-		-
Rate lock commitments		-		-		-		-		-

	December 31, 2017
							Total
	Level 1		Level 2		Level 3		Estimated		Carrying
	Inputs		Inputs		Inputs		Fair Value		Amount
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	7,437	$	-	$	-	$	7,437	$	7,437
Federal Home Loan Bank stock		4,086		-		-		4,086		4,086
Federal Reserve Bank stock		1,465		-		-		1,465		1,465
Loans receivable, net		-		-		505,615		505,615		506,476
Accrued interest and dividends receivable		2,555		-		-		2,555		2,555
Mortgage servicing rights		-		-		7,312		7,312		6,578
Cash surrender value of life insurance		14,481		-		-		14,481		14,481
Financial liabilities:
Non-maturing interest bearing deposits		-		277,416		-		277,416		277,416
Noninterest bearing deposits		99,799		-		-		99,799		99,799
Time certificates of deposit		-		-		142,202		142,202		143,349
Accrued expenses and other liabilities		4,822		-		-		4,822		4,822
Federal Home Loan Bank advances and other borrowings		-		-		82,579		82,579		82,969
Other long-term debt		-		-		24,209		24,209		25,155
Off-balance-sheet instruments
Forward delivery commitments		-		-		-		-		-
Commitments to extend credit		-		-		-		-		-
Rate lock commitments		-		-		-		-		-

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Note 12 - Mergers and Acquisitions (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	January 31,
	2018
	(In Thousands, Except Share Data)
Assets acquired:
Cash and cash equivalents	$	5,657
Investment securities		30,728
Loans		55,057
Premises and equipment		1,605
Other real estate owned		135
Core deposit intangible		1,609
Other assets		1,258
Total assets acquired	$	96,049
Liabilities assumed:
Deposits	$	82,190
Accrued expenses and other liabilities		19
Total liabilities assumed	$	82,209
Net assets acquired	$	13,840
Consideration paid:
Cash	$	9,900
Common stock issued (446,774 shares)		9,030
Total consideration paid	$	18,930
Goodwill resulting from acquisition	$	5,090

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]

	January 31,
	2018
	(In Thousands)
Contractually required principal and interest at acquisition	$	56,891
Contractual cash flows not expected to be collected (nonaccretable discount)		(1,346	)
Expected cash flows at acquisition		55,545
Interest component of expected cash flows (accretable discount)		(488	)
Fair value of acquired loans	$	55,057

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(Dollars in Thousands, Except Per Share Data)
Pro forma net income (1)
Net interest income after loan loss provision	$	7,283	$	6,756	$	21,697	$	19,371
Noninterest income		3,761		4,069		9,559		11,009
Noninterest expense		9,052		8,230		26,771		24,634
Income before income taxes		1,992		2,595		4,485		5,746
Income tax expense		360		727		826		1,609
Net income	$	1,632	$	1,868	$	3,659	$	4,137
Pro forma earnings per share (1)
Basic earnings per share	$	0.30	$	0.49	$	0.68	$	1.09
Diluted earnings per share	$	0.30	$	0.48	$	0.67	$	1.07
Weighted average shares outstanding, basic		5,460,452		3,811,409		5,411,356		3,811,409
Weighted average shares outstanding, diluted		5,524,912		3,863,656		5,475,816		3,869,695

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Note 1 - Basis of Presentation (Details Textual) - USD ($)	Mar. 31, 2018	Jan. 31, 2018
TwinCo Acquisition [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Loans	$ 55,000,000	$ 55,057,000

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Note 2 - Investment Securities (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	139	87
US Government Agencies Debt Securities [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	104	52
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	3.09%	1.28%
Corporate Debt Securities [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	9	15
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	2.80%	0.84%
Mortgage-backed Securities and Collateralized Mortgage Obligations [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	22	20
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	3.55%	1.71%
Expected Credit Loss on Securities	$ 0
Asset-backed Securities [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	4
Debt Securities, Available for Sale, Continuous Unrealized Loss Position, Aggregate Depreciation from Amortized Cost Basis	0.57%
Expected Credit Loss on Securities	$ 0

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Note 2 - Investment Securities - Summary of Investment Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Securities available-for-sale, amortized cost	$ 152,749	$ 131,935
Securities available-for-sale, gross unrealized gains	245	1,209
Securities available-for-sale, gross unrealized losses	(4,059)	(1,100)
Securities available-for-sale	148,935	132,044
US Government Agencies Debt Securities [Member]
Securities available-for-sale, amortized cost	10,452	4,881
Securities available-for-sale, gross unrealized gains		13
Securities available-for-sale, gross unrealized losses	(223)	(37)
Securities available-for-sale	10,229	4,857
US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale, amortized cost	74,853	67,508
Securities available-for-sale, gross unrealized gains	100	807
Securities available-for-sale, gross unrealized losses	(2,279)	(429)
Securities available-for-sale	72,674	67,886
Corporate Debt Securities [Member]
Securities available-for-sale, amortized cost	11,419	14,725
Securities available-for-sale, gross unrealized gains	24	18
Securities available-for-sale, gross unrealized losses	(236)	(99)
Securities available-for-sale	11,207	14,644
Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale, amortized cost	20,946	24,770
Securities available-for-sale, gross unrealized gains	120	364
Securities available-for-sale, gross unrealized losses	(446)	(265)
Securities available-for-sale	20,620	24,869
Collateralized Mortgage Obligations [Member]
Securities available-for-sale, amortized cost	24,668	20,051
Securities available-for-sale, gross unrealized gains		7
Securities available-for-sale, gross unrealized losses	(827)	(270)
Securities available-for-sale	23,841	19,788
Asset-backed Securities [Member]
Securities available-for-sale, amortized cost	10,411
Securities available-for-sale, gross unrealized gains	1
Securities available-for-sale, gross unrealized losses	(48)
Securities available-for-sale	$ 10,364

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Note 2 - Investment Securities - Proceeds From Sale of Available-for-sale Securities and the Associated Gross Realized Gains and Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Proceeds from sale of available-for-sale securities	$ 978		$ 46,058	$ 2,749
Gross realized gain on sale of available-for-sale securities			191	14
Gross realized loss on sale of available-for-sale securities	(23)		(304)	(28)
Net realized loss on sale of available-for-sale securities	$ (23)		$ (113)	$ (14)

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Note 2 - Investment Securities - Amortized Cost and Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Available for sale securities, due in one year or less, amortized cost	$ 1,255
Available for sale securities, due in one year or less, fair value	1,254
Available for sale securities, due from one to five years, amortized cost	18,245
Available for sale securities, due from one to five years, fair value	17,920
Available for sale securities, due from five to ten years, amortized cost	14,561
Available for sale securities, due from five to ten years, fair value	14,236
Available for sale securities, due after ten years, amortized cost	73,074
Available for sale securities, due after ten years, fair value	71,064
Total available for sale securities debt maturities, amortized cost	107,135
Total available for sale securities, debt maturities, fair value	104,474
Securities available-for-sale, amortized cost	152,749	$ 131,935
Securities available-for-sale	148,935	132,044
Collateralized Mortgage Backed Securities [Member]
Available for sale securities, without single maturity, amortized cost	20,946
Available for sale securities, without single maturity, fair value	20,620
Securities available-for-sale, amortized cost	20,946	24,770
Securities available-for-sale	20,620	24,869
Collateralized Mortgage Obligations [Member]
Available for sale securities, without single maturity, amortized cost	24,668
Available for sale securities, without single maturity, fair value	23,841
Securities available-for-sale, amortized cost	24,668	20,051
Securities available-for-sale	$ 23,841	$ 19,788

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Note 2 - Investment Securities - Investment Securities in a Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	$ 91,850	$ 35,097
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(2,151)	(253)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	37,708	43,672
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(1,908)	(847)
US Government Corporations and Agencies Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	7,756	2,943
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(130)	(14)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	2,473	1,363
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(93)	(23)
US States and Political Subdivisions Debt Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	50,828	15,404
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(1,274)	(87)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	17,332	16,675
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(1,005)	(342)
Corporate Debt Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	7,193	7,643
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(227)	(71)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	991	3,981
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(9)	(28)
Mortgage-backed Securities and Collateralized Mortgage Obligations [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	17,702	9,107
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(472)	(81)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value	16,912	21,653
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses	(801)	(454)
Asset-backed Securities [Member]
Available for sale debt securities, continuous unrealized loss position less than 12 months, fair value	8,371
Available for sale debt securities, continuous unrealized loss position less than 12 months, gross unrealized losses	(48)
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, fair value
Available for sale debt securities, continuous unrealized loss position for 12 months or longer, gross unrealized losses

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Note 3 - Loans Receivable (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Loans and Leases Receivable, Gross, Total	$ 597,721,000	$ 514,247,000	$ 511,211,000
Minimum Principal Balance of Loans for Quarterly Rating Review	750,000
Commercial Real Estate Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	303,660,000	244,783,000	247,501,000
Commercial Real Estate Portfolio Segment [Member] | United States Department of Agriculture Rural Development [Member]
Loans and Leases Receivable, Gross, Total	12,637,000	13,114,000
Commercial Real Estate Portfolio Segment [Member] | United States Department of Agriculture Farm Service Agency [Member]
Loans and Leases Receivable, Gross, Total	3,004,000
Commercial Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	$ 79,256,000	65,863,000	58,554,000
Commercial Portfolio Segment [Member] | Minimum [Member]
Quarterly Review Criteria, Period of Delinquency on Loans	60 days
Commercial Portfolio Segment [Member] | Syndicated Loan Facility [Member]
Loans and Leases Receivable, Gross, Total	$ 229,000	486,000
Commercial Portfolio Segment [Member] | United States Department of Agriculture Farm Service Agency [Member]
Loans and Leases Receivable, Gross, Total	1,480,000
Consumer Portfolio Segment [Member]
Loans and Leases Receivable, Gross, Total	$ 16,491,000	$ 15,712,000	$ 14,696,000
Consumer Portfolio Segment [Member] | Minimum [Member]
Quarterly Review Criteria, Period of Delinquency on Loans	90 days

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Note 3 - Loans Receivable - Summary of Loans Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Loans receivable	$ 597,721		$ 514,247	$ 511,211
Deferred loan fees, net	(1,081)		(1,093)
Allowance for loan losses	(6,350)	$ (6,150)	(5,750)	(5,500)	$ (5,225)	$ (4,770)
Total loans, net	590,290		507,404
Residential Portfolio Segment [Member]
Loans receivable	144,972		135,217	139,010
Allowance for loan losses	(1,301)	(1,301)	(1,301)	(1,301)	(1,251)	(1,241)
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	303,660		244,783	247,501
Allowance for loan losses	(3,401)	(3,230)	(2,778)	(2,578)	(2,378)	(2,079)
Home Equity Portfolio Segment [Member]
Loans receivable	53,342		52,672	51,450
Allowance for loan losses	(427)	(427)	(506)	(505)	(505)	(460)
Consumer Portfolio Segment [Member]
Loans receivable	16,491		15,712	14,696
Allowance for loan losses	(183)	(185)	(225)	(218)	(225)	(193)
Commercial Portfolio Segment [Member]
Loans receivable	79,256		65,863	58,554
Allowance for loan losses	$ (1,038)	$ (1,007)	$ (940)	$ (898)	$ (866)	$ (797)

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Note 3 - Loans Receivable - Nonperforming Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Non-accrual loans	$ 1,556		$ 977
Accruing loans delinquent 90 days or more	156		0
Restructured loans, net			0
Total nonperforming loans	1,712		977
Real estate and other repossessed assets acquired in settlement of loans, net	457		525
Total nonperforming assets	$ 2,169		$ 1,502
Total nonperforming assets as a percentage of total assets	0.26%		0.21%
Allowance for loan losses	$ 6,350	$ 6,150	$ 5,750	$ 5,500	$ 5,225	$ 4,770
Percent of allowance for loan losses to nonperforming loans	370.91%		588.54%
Percent of allowance for loan losses to nonperforming assets	292.76%		382.82%

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Note 3 - Loans Receivable - Allowance for Loan Losses Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Allowance for loan losses, beginning balance	$ 6,150	$ 5,225	$ 5,750	$ 4,770
Charge-offs	(14)	(60)	(168)	(258)
Recoveries	20	4	48	54
Loan loss provision	194	331	720	934
Allowance for loan losses, ending balance	6,350	5,500	6,350	5,500
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment		32		32
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	6,350	5,468	6,350	5,468
Loans receivable	597,721	511,211	597,721	511,211	$ 514,247
Loans receivable, ending balance, loans individually evaluated for impairment	1,556	1,396	1,556	1,396
Loans receivable, ending balance, loans collectively evaluated for impairment	596,165	509,815	596,165	509,815
Residential Portfolio Segment [Member]
Allowance for loan losses, beginning balance	1,301	1,251	1,301	1,241
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Loan loss provision	0	50	0	60
Allowance for loan losses, ending balance	1,301	1,301	1,301	1,301
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	1,301	1,301	1,301	1,301
Loans receivable	144,972	139,010	144,972	139,010	135,217
Loans receivable, ending balance, loans individually evaluated for impairment	564	484	564	484
Loans receivable, ending balance, loans collectively evaluated for impairment	144,408	138,526	144,408	138,526
Commercial Real Estate Portfolio Segment [Member]
Allowance for loan losses, beginning balance	3,230	2,378	2,778	2,079
Charge-offs	0	0	0	0
Recoveries	7	0	14	0
Loan loss provision	164	200	609	499
Allowance for loan losses, ending balance	3,401	2,578	3,401	2,578
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	3,401	2,578	3,401	2,578
Loans receivable	303,660	247,501	303,660	247,501	244,783
Loans receivable, ending balance, loans individually evaluated for impairment	514	451	514	451
Loans receivable, ending balance, loans collectively evaluated for impairment	303,146	247,050	303,146	247,050
Home Equity Portfolio Segment [Member]
Allowance for loan losses, beginning balance	427	505	506	460
Charge-offs	0	0	(80)	0
Recoveries	0		1	39
Loan loss provision	0	0	0	6
Allowance for loan losses, ending balance	427	505	427	505
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	427	505	427	505
Loans receivable	53,342	51,450	53,342	51,450	52,672
Loans receivable, ending balance, loans individually evaluated for impairment	228	242	228	242
Loans receivable, ending balance, loans collectively evaluated for impairment	53,114	51,208	53,114	51,208
Consumer Portfolio Segment [Member]
Allowance for loan losses, beginning balance	185	225	225	193
Charge-offs	(14)	(41)	(64)	(140)
Recoveries	12	3	22	14
Loan loss provision	0	31	0	151
Allowance for loan losses, ending balance	183	218	183	218
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment		32		32
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	183	186	183	186
Loans receivable	16,491	14,696	16,491	14,696	15,712
Loans receivable, ending balance, loans individually evaluated for impairment	137	131	137	131
Loans receivable, ending balance, loans collectively evaluated for impairment	16,354	14,565	16,354	14,565
Commercial Portfolio Segment [Member]
Allowance for loan losses, beginning balance	1,007	866	940	797
Charge-offs		(19)	(24)	(118)
Recoveries	1	1	11	1
Loan loss provision	30	50	111	218
Allowance for loan losses, ending balance	1,038	898	1,038	898
Allowance for loan losses, ending balance, allocated to loans individually evaluated for impairment	0	0	0	0
Allowance for loan losses, ending balance, allocated to loans collectively evaluated for impairment	1,038	898	1,038	898
Loans receivable	79,256	58,554	79,256	58,554	$ 65,863
Loans receivable, ending balance, loans individually evaluated for impairment	113	88	113	88
Loans receivable, ending balance, loans collectively evaluated for impairment	$ 79,143	$ 58,466	$ 79,143	$ 58,466

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Note 3 - Loans Receivable - Internal Classification of the Loan Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Loans receivable	$ 597,721	$ 514,247	$ 511,211
Performing Financial Instruments [Member]
Loans receivable	596,009	513,270
Restructured Loans [Member]
Loans receivable
Nonperforming Financial Instruments [Member]
Loans receivable	1,712	977
Residential Portfolio Segment [Member]
Loans receivable	144,972	135,217	139,010
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	115,217	109,911
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member] | Performing Financial Instruments [Member]
Loans receivable	114,860	109,436
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member] | Restructured Loans [Member]
Loans receivable
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member] | Nonperforming Financial Instruments [Member]
Loans receivable	357	475
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	29,755	25,306
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member] | Performing Financial Instruments [Member]
Loans receivable	29,418	25,306
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member] | Restructured Loans [Member]
Loans receivable
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member] | Nonperforming Financial Instruments [Member]
Loans receivable	337
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	303,660	244,783	247,501
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	236,900	194,805
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member] | Performing Financial Instruments [Member]
Loans receivable	236,386	194,805
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member] | Restructured Loans [Member]
Loans receivable
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member] | Nonperforming Financial Instruments [Member]
Loans receivable	514
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	36,339	38,351
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Performing Financial Instruments [Member]
Loans receivable	36,313	38,351
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Restructured Loans [Member]
Loans receivable
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Nonperforming Financial Instruments [Member]
Loans receivable	26
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	30,421	11,627
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member] | Performing Financial Instruments [Member]
Loans receivable	30,421	11,627
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member] | Restructured Loans [Member]
Loans receivable
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member] | Nonperforming Financial Instruments [Member]
Loans receivable
Home Equity Portfolio Segment [Member]
Loans receivable	53,342	52,672	51,450
Home Equity Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans receivable	53,114	52,430
Home Equity Portfolio Segment [Member] | Restructured Loans [Member]
Loans receivable
Home Equity Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans receivable	228	242
Consumer Portfolio Segment [Member]
Loans receivable	16,491	15,712	14,696
Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans receivable	16,354	15,559
Consumer Portfolio Segment [Member] | Restructured Loans [Member]
Loans receivable
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans receivable	137	153
Commercial Portfolio Segment [Member]
Loans receivable	79,256	65,863	$ 58,554
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	60,407	63,300
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Performing Financial Instruments [Member]
Loans receivable	60,294	63,193
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Restructured Loans [Member]
Loans receivable
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Nonperforming Financial Instruments [Member]
Loans receivable	113	107
Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	18,849	2,563
Commercial Portfolio Segment [Member] | Agricultural Loan [Member] | Performing Financial Instruments [Member]
Loans receivable	18,849	2,563
Commercial Portfolio Segment [Member] | Agricultural Loan [Member] | Restructured Loans [Member]
Loans receivable
Commercial Portfolio Segment [Member] | Agricultural Loan [Member] | Nonperforming Financial Instruments [Member]
Loans receivable
Pass [Member]
Loans receivable	590,494	512,204
Pass [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	114,320	109,167
Pass [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	29,418	24,850
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	232,721	194,502
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	36,339	38,351
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	30,421	11,627
Pass [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	53,114	52,430
Pass [Member] | Consumer Portfolio Segment [Member]
Loans receivable	16,307	15,549
Pass [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	59,403	63,165
Pass [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	18,451	2,563
Special Mention [Member]
Loans receivable	2,628	0
Special Mention [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	0	0
Special Mention [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	0	0
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	1,758	0
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	0	0
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	0	0
Special Mention [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	0	0
Special Mention [Member] | Consumer Portfolio Segment [Member]
Loans receivable	0	0
Special Mention [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	870	0
Special Mention [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	0	0
Substandard [Member]
Loans receivable	4,599	1,994
Substandard [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	897	744
Substandard [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	337	456
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	2,421	303
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	0	0
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	0	0
Substandard [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	228	242
Substandard [Member] | Consumer Portfolio Segment [Member]
Loans receivable	184	136
Substandard [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	134	113
Substandard [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	398	0
Doubtful [Member]
Loans receivable	0	0
Doubtful [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	0	0
Doubtful [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	0	0
Doubtful [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	0	0
Doubtful [Member] | Consumer Portfolio Segment [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	0	0
Doubtful [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member]
Loans receivable	0	49
Unlikely to be Collected Financing Receivable [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Home Equity Portfolio Segment [Member]
Loans receivable	0	0
Unlikely to be Collected Financing Receivable [Member] | Consumer Portfolio Segment [Member]
Loans receivable	0	27
Unlikely to be Collected Financing Receivable [Member] | Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Loans receivable	0	22
Unlikely to be Collected Financing Receivable [Member] | Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Loans receivable	$ 0	$ 0

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Note 3 - Loans Receivable - Delinquencies Within the Loan Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Past due	$ 4,599	$ 2,037
Non-accrual Loans	1,556	977
Current Loans	591,566	511,233
Loans receivable	597,721	514,247	$ 511,211
Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	4,443	2,037
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due	156
Residential Portfolio Segment [Member]
Loans receivable	144,972	135,217	139,010
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Past due	603	898
Non-accrual Loans	227	475
Current Loans	114,387	108,538
Loans receivable	115,217	109,911
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	473	898
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due	130
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Past due	118	409
Non-accrual Loans	337
Current Loans	29,300	24,897
Loans receivable	29,755	25,306
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	118	409
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due
Commercial Real Estate Portfolio Segment [Member]
Loans receivable	303,660	244,783	247,501
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Past due	1,618	291
Non-accrual Loans	514
Current Loans	234,768	194,514
Loans receivable	236,900	194,805
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	1,618	291
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Past due	36
Non-accrual Loans
Current Loans	36,303	38,351
Loans receivable	36,339	38,351
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	10
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due	26
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Past due
Non-accrual Loans
Current Loans	30,421	11,627
Loans receivable	30,421	11,627
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due
Home Equity Portfolio Segment [Member]
Past due	109	212
Non-accrual Loans	228	242
Current Loans	53,005	52,218
Loans receivable	53,342	52,672	51,450
Home Equity Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	109	212
Home Equity Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due
Consumer Portfolio Segment [Member]
Past due	80	111
Non-accrual Loans	137	153
Current Loans	16,274	15,448
Loans receivable	16,491	15,712	14,696
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	80	111
Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due
Commercial Portfolio Segment [Member]
Loans receivable	79,256	65,863	$ 58,554
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Past due	1,956	116
Non-accrual Loans	113	107
Current Loans	58,338	63,077
Loans receivable	60,407	63,300
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	1,956	116
Commercial Portfolio Segment [Member] | Commercial Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due		0
Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Past due	79
Non-accrual Loans
Current Loans	18,770	2,563
Loans receivable	18,849	2,563
Commercial Portfolio Segment [Member] | Agricultural Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Past due	79
Commercial Portfolio Segment [Member] | Agricultural Loan [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Past due

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Note 3 - Loans Receivable - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Related allowance	$ 0		$ 0		$ 49
Recorded investment	1,556		1,556		977
Unpaid principal balance	1,739		1,739		1,062
Average recorded investment	1,528	$ 1,504	1,267	$ 1,027
Residential Portfolio Segment [Member] | One-to-Four Family Loans [Member]
Recorded investment, with no related allowance	227		227		475
Unpaid principal balance, with no related allowance	248		248		487
Recorded investment, with a related allowance	0		0		0
Unpaid principal balance, with a related allowance	0		0		0
Related allowance	0		0		0
Recorded investment	227		227		475
Unpaid principal balance	248		248		487
Average recorded investment	232	492	351	352
Residential Portfolio Segment [Member] | One-to-Four Family Construction [Member]
Recorded investment, with no related allowance	337		337		0
Unpaid principal balance, with no related allowance	387		387		0
Recorded investment, with a related allowance	0		0		0
Unpaid principal balance, with a related allowance	0		0		0
Related allowance	0		0		0
Recorded investment	337		337
Unpaid principal balance	387		387		0
Average recorded investment	337	0	169	0
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate Loan [Member]
Recorded investment, with no related allowance	514		514		0
Unpaid principal balance, with no related allowance	527		527		0
Recorded investment, with a related allowance	0		0		0
Unpaid principal balance, with a related allowance	0		0		0
Related allowance	0		0		0
Recorded investment	514		514
Unpaid principal balance	527		527		0
Average recorded investment	521	451	257	226
Commercial Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Recorded investment, with no related allowance	0		0		0
Unpaid principal balance, with no related allowance	0		0		0
Recorded investment, with a related allowance	0		0		0
Unpaid principal balance, with a related allowance	0		0		0
Related allowance	0		0		0
Recorded investment	0		0		0
Unpaid principal balance	0		0		0
Average recorded investment	0	0	0	0
Commercial Real Estate Portfolio Segment [Member] | Farmland Loan [Member]
Recorded investment, with no related allowance	0		0		0
Unpaid principal balance, with no related allowance	0		0		0
Recorded investment, with a related allowance	0		0		0
Unpaid principal balance, with a related allowance	0		0		0
Related allowance	0		0		0
Recorded investment	0		0		0
Unpaid principal balance	0		0		0
Average recorded investment	0	0	0	0
Home Equity Portfolio Segment [Member]
Recorded investment, with no related allowance	228		228		242
Unpaid principal balance, with no related allowance	268		268		263
Recorded investment, with a related allowance	0		0		0
Unpaid principal balance, with a related allowance	0		0		0
Related allowance	0		0		0
Recorded investment	228		228		242
Unpaid principal balance	268		268		263
Average recorded investment	217	274	235	291
Consumer Portfolio Segment [Member]
Recorded investment, with no related allowance	137		137		126
Unpaid principal balance, with no related allowance	190		190		176
Recorded investment, with a related allowance	0		0		27
Unpaid principal balance, with a related allowance	0		0		27
Related allowance	0		0		27
Recorded investment	137		137		153
Unpaid principal balance	190		190		203
Average recorded investment	119	137	145	114
Commercial Portfolio Segment [Member] | Commercial Loans [Member]
Recorded investment, with no related allowance	113		113		85
Unpaid principal balance, with no related allowance	119		119		87
Recorded investment, with a related allowance	0		0		22
Unpaid principal balance, with a related allowance	0		0		22
Related allowance	0		0		22
Recorded investment	113		113		107
Unpaid principal balance	119		119		109
Average recorded investment	102	150	110	44
Commercial Portfolio Segment [Member] | Agricultural Loan [Member]
Recorded investment, with no related allowance	0		0		0
Unpaid principal balance, with no related allowance	0		0		0
Recorded investment, with a related allowance	0		0		0
Unpaid principal balance, with a related allowance	0		0		0
Related allowance	0		0		0
Recorded investment	0		0		0
Unpaid principal balance	0		0		$ 0
Average recorded investment	$ 0	$ 0	$ 0	$ 0

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Note 4 - Troubled Debt Restructurings (Details Textual)	3 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($)
Financing Receivable, Modifications, Number of Contracts		0	1
Receivables, Change in Method of Calculating Impairment, Recorded Investment			$ 43,000
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			$ 34,000
Financing Receivables Impaired Troubled Debt Restructuring Collection of Payment	$ 42,000
Financing Receivable, Troubled Debt Restructuring, Recovery	$ 34,000
Financing Receivable, Modifications, Subsequent Default, Recorded Investment		$ 0
Loans and Leases Receivable, Impaired, Commitment to Lend		$ 0		$ 0

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Note 5 - Deposits - Summary of Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Noninterest checking	$ 142,351	$ 99,799
Interest bearing checking	103,372	99,255
Savings	108,878	88,603
Money market	104,794	89,558
Time certificates of deposit	161,907	143,349
Total deposits	$ 621,302	$ 520,564

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Note 6 - Other Long-term Debt (Details Textual) - USD ($)	1 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 28, 2017	Jun. 30, 2015	Dec. 31, 2010	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Sep. 30, 2005
Debt Instrument, Face Amount				$ 25,155,000		$ 25,155,000		$ 25,155,000
Interest Expense, Long-term Debt, Total				$ 361,000	$ 350,000	$ 1,065,000	$ 969,000
Eagle Bancorp Statutory Trust I [Member]
Subordinated Debt, Ending Balance									$ 5,155,000
Eagle Bancorp Statutory Trust I [Member] | Subordinated Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage									6.02%
Eagle Bancorp Statutory Trust I [Member] | Variable Interest Rate Subordinated Debentures Due in 2035 [Member]
Debt Instrument, Interest Rate, Effective Percentage				3.818%		3.818%		3.114%
Eagle Bancorp Statutory Trust I [Member] | Variable Interest Rate Subordinated Debentures Due in 2035 [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			1.42%
First Tennessee Bank, N.A. [Member]
Temporary Equity, Liquidation Preference									$ 5,155,000
Trust Preferred Securities, Maximum Dividend Deferring Period						5 years
5.75% Senior Unsecured Notes Due February 15, 2022 [Member]
Debt Instrument, Face Amount	$ 10,000,000			$ 10,000,000		$ 10,000,000		$ 10,000,000
Debt Instrument, Interest Rate, Stated Percentage	5.75%			5.75%		5.75%		5.75%
Debt Instrument, Maturity Year	2022					2022		2022
6.75% Subordinated Notes Due in 2025 [Member]
Debt Instrument, Face Amount		$ 10,000,000		$ 10,000,000		$ 10,000,000		$ 10,000,000
Debt Instrument, Interest Rate, Stated Percentage		6.75%		6.75%		6.75%		6.75%
Debt Instrument, Maturity Year		2025				2025		2025

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Note 6 - Other Long-term Debt - Summary of Other Long-term Debt (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Feb. 28, 2017	Jun. 30, 2015
Principal amount	$ 25,155,000	$ 25,155,000
Unamortized debt issuance costs	(295,000)	(344,000)
5.75% Senior Unsecured Notes Due February 15, 2022 [Member]
Principal amount	10,000,000	10,000,000	$ 10,000,000
Unamortized debt issuance costs	(147,000)	(180,000)
6.75% Subordinated Notes Due in 2025 [Member]
Principal amount	10,000,000	10,000,000		$ 10,000,000
Unamortized debt issuance costs	(148,000)	(164,000)
Variable Interest Rate Subordinated Debentures Due in 2035 [Member]
Principal amount	5,155,000	5,155,000
Unamortized debt issuance costs

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Note 6 - Other Long-term Debt - Summary of Other Long-term Debt (Details) (Parentheticals)	1 Months Ended		9 Months Ended	12 Months Ended
	Feb. 28, 2017	Jun. 30, 2015	Sep. 30, 2018	Dec. 31, 2017
5.75% Senior Unsecured Notes Due February 15, 2022 [Member]
Debt instrument, fixed interest rate	5.75%		5.75%	5.75%
Debt instrument, maturity year	2022		2022	2022
6.75% Subordinated Notes Due in 2025 [Member]
Debt instrument, fixed interest rate		6.75%	6.75%	6.75%
Debt instrument, maturity year		2025	2025	2025
Variable Interest Rate Subordinated Debentures Due in 2035 [Member]
Debt instrument, maturity year			2035	2035
Debt instrument, interest rate above LIBOR rate			1.42%	1.42%

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Note 7 - Earnings Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Weighted Average Number of Shares Outstanding, Basic, Total	5,460,452	3,811,409	5,411,356	3,811,409
Weighted Average Number of Shares Outstanding, Diluted, Total	5,524,912	3,863,656	5,475,816	3,869,695

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Note 8 - Dividends and Stock Repurchase Program (Details Textual) - $ / shares								3 Months Ended					12 Months Ended
	Oct. 18, 2018	Sep. 07, 2018	Jul. 19, 2018	Jun. 01, 2018	Apr. 19, 2018	Mar. 01, 2018	Jan. 25, 2018	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Jul. 20, 2018	Jul. 20, 2017	Jul. 21, 2016
Common Stock, Dividends, Per Share, Cash Paid		$ 0.0925		$ 0.09		$ 0.09			$ 0.09	$ 0.09	$ 0.08	$ 0.08
Common Stock, Dividends, Per Share, Declared			$ 0.0925		$ 0.09		$ 0.09
Stock Repurchase Program, Number of Shares Authorized to be Repurchased			100,000											100,000	100,000
Treasury Stock, Shares, Acquired								0					0	0
Subsequent Event [Member]
Common Stock, Dividends, Per Share, Declared	$ 0.0925

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Note 9 - Accumulated Other Comprehensive Income (Loss) - Activity in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Sep. 30, 2018	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017
Balance		$ 83,616		$ 59,456
Balance	$ 91,992		$ 63,346
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Balance	291	234	389	330
Other comprehensive income (loss), before reclassifications and income taxes	234	664	364	998
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes	(402)	(587)	(657)	(899)
Income tax benefit (expense)	44	(20)	119	(40)
Total other comprehensive (loss) income	(124)	57	(174)	59
Balance	167		215	389
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Balance	(1,910)	79	484	(741)
Other comprehensive income (loss), before reclassifications and income taxes	(1,237)	(2,799)	(91)	2,054
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes	23	90		14
Income tax benefit (expense)	320	720	38	(843)
Total other comprehensive (loss) income	(894)	(1,989)	(53)	1,225
Balance	(2,804)		431	484
AOCI Attributable to Parent [Member]
Balance	(1,619)	313	873	(411)
Other comprehensive income (loss), before reclassifications and income taxes	(1,003)	(2,135)	273	3,052
Amounts reclassified from accumulated other comprehensive income (loss), before income taxes	(379)	(497)	(657)	(885)
Income tax benefit (expense)	364	700	157	(883)
Total other comprehensive (loss) income	(1,018)	$ (1,932)	(227)	1,284
Balance	$ (2,637)		$ 646	$ 873

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Note 10 - Derivatives and Hedging Activities (Details Textual) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Notional Amount of Interest Rate Lock Commitments	$ 31,583,000	$ 15,338,000

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Note 11 - Fair Value Disclosures (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Loans and Leases Receivable, Gross, Total	$ 597,721,000		$ 514,247,000	$ 511,211,000
Loans and Leases Receivable, Allowance, Ending Balance	6,350,000	$ 6,150,000	5,750,000	$ 5,500,000	$ 5,225,000	$ 4,770,000
Impaired Loans [Member]
Loans and Leases Receivable, Gross, Total	1,556,000		977,000
Loans Receivable, Fair Value Disclosure	$ 1,556,000		928,000
Loans and Leases Receivable, Allowance, Ending Balance			$ 49,000
Mortgage Servicing Rights [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	12.50%
Mortgage Servicing Rights [Member] | Minimum [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	80.00%
Mortgage Servicing Rights [Member] | Maximum [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	230.00%
Mortgage Servicing Rights [Member] | Maximum [Member] | Agency Investors [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	1.25%
Mortgage Servicing Rights [Member] | Weighted Average [Member]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	114.00%

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Note 11 - Fair Value Disclosures - Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Securities available-for-sale	$ 148,935	$ 132,044
US Government Agencies Debt Securities [Member]
Securities available-for-sale	10,229	4,857
US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale	72,674	67,886
Corporate Debt Securities [Member]
Securities available-for-sale	11,207	14,644
Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale	20,620	24,869
Collateralized Mortgage Obligations [Member]
Securities available-for-sale	23,841	19,788
Asset-backed Securities [Member]
Securities available-for-sale	10,364
Fair Value, Measurements, Recurring [Member]
Loans held-for-sale	8,747	8,949
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member]
Securities available-for-sale	10,229	4,857
Fair Value, Measurements, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale	72,674	67,886
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Securities available-for-sale	11,207	14,644
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale	20,620	24,869
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member]
Securities available-for-sale	23,841	19,788
Fair Value, Measurements, Recurring [Member] | Asset-backed Securities [Member]
Securities available-for-sale	10,364
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Loans held-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US Government Agencies Debt Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Corporate Debt Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Collateralized Mortgage Obligations [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Asset-backed Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Loans held-for-sale	8,747	8,949
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Securities available-for-sale	10,229	4,857
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale	72,674	67,886
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member]
Securities available-for-sale	11,207	14,644
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale	20,620	24,869
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Collateralized Mortgage Obligations [Member]
Securities available-for-sale	23,841	19,788
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Asset-backed Securities [Member]
Securities available-for-sale	10,364
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Loans held-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US Government Agencies Debt Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Collateralized Mortgage Obligations [Member]
Securities available-for-sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Asset-backed Securities [Member]
Securities available-for-sale

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Note 11 - Fair Value Disclosures - Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Impaired loans, fair value	$ 1,556	$ 928
Repossessed assets, fair value	457	525
Fair Value, Inputs, Level 1 [Member]
Impaired loans, fair value
Repossessed assets, fair value
Fair Value, Inputs, Level 2 [Member]
Impaired loans, fair value
Repossessed assets, fair value
Fair Value, Inputs, Level 3 [Member]
Impaired loans, fair value	1,556	928
Repossessed assets, fair value	$ 457	$ 525

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Note 11 - Fair Value Disclosures - Financial Assets and Liabilities, Valuation Techniques and Significant Unobservable Inputs (Details) $ in Thousands		Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Impaired Loans [Member]
Fair value	[1]	$ 1,556	$ 928
Impaired Loans [Member] | Minimum [Member] | Measurement Input, Discount Rate [Member]
impaired loans, discount rate		0.1
Impaired Loans [Member] | Maximum [Member] | Measurement Input, Discount Rate [Member]
impaired loans, discount rate		0.3
Repossessed Assets [Member]
Fair value	[1],[2],[3]	$ 457	$ 525
Repossessed Assets [Member] | Minimum [Member] | Measurement Input, Discount Rate [Member]
Repossessed assets, discount rate		0.1
Repossessed Assets [Member] | Maximum [Member] | Measurement Input, Discount Rate [Member]
Repossessed assets, discount rate		0.3

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable, less associated allowance.

[2] Appraisals may be adjusted for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

[3] Includes qualitative adjustments by management and estimated liquidation expenses.

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Note 11 - Fair Value Disclosures - Estimated Fair Value and Carrying Amounts of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	$ 8,968	$ 7,437
Federal Home Loan Bank stock	4,617	4,086
Federal Reserve Bank stock	2,033	1,465
Loans Receivable, Fair Value Disclosure	581,434	505,615
Accrued interest and dividends receivable	3,890	2,555
Mortgage servicing rights	8,411	7,312
Cash surrender value of life insurance	20,405	14,481
Financial liabilities:
Non-maturing interest bearing deposits	317,044	277,416
Noninterest bearing deposits	142,351	99,799
Time certificates of deposit	159,867	142,202
Accrued expenses and other liabilities	6,082	4,822
Federal Home Loan Bank advances and other borrowings	95,137	82,579
Other long-term debt	23,641	24,209
Estimate of Fair Value Measurement [Member] | Forward Contracts [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Estimate of Fair Value Measurement [Member] | Commitments to Extend Credit [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Estimate of Fair Value Measurement [Member] | Interest Rate Lock Commitments [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Reported Value Measurement [Member]
Financial assets:
Cash and cash equivalents	8,968	7,437
Federal Home Loan Bank stock	4,617	4,086
Federal Reserve Bank stock	2,033	1,465
Loans Receivable, Fair Value Disclosure	588,734	506,476
Accrued interest and dividends receivable	3,890	2,555
Mortgage servicing rights	6,947	6,578
Cash surrender value of life insurance	20,405	14,481
Financial liabilities:
Non-maturing interest bearing deposits	317,044	277,416
Noninterest bearing deposits	142,351	99,799
Time certificates of deposit	161,907	143,349
Accrued expenses and other liabilities	6,082	4,822
Federal Home Loan Bank advances and other borrowings	95,731	82,969
Other long-term debt	25,155	25,155
Reported Value Measurement [Member] | Forward Contracts [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Reported Value Measurement [Member] | Commitments to Extend Credit [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Reported Value Measurement [Member] | Interest Rate Lock Commitments [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	8,968	7,437
Federal Home Loan Bank stock	4,617	4,086
Federal Reserve Bank stock	2,033	1,465
Loans Receivable, Fair Value Disclosure	0	0
Accrued interest and dividends receivable	3,890	2,555
Mortgage servicing rights	0	0
Cash surrender value of life insurance	20,405	14,481
Financial liabilities:
Non-maturing interest bearing deposits	0	0
Noninterest bearing deposits	142,351	99,799
Time certificates of deposit	0	0
Accrued expenses and other liabilities	6,082	4,822
Federal Home Loan Bank advances and other borrowings	0	0
Other long-term debt	0	0
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Forward Contracts [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Commitments to Extend Credit [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Interest Rate Lock Commitments [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Loans Receivable, Fair Value Disclosure	0	0
Accrued interest and dividends receivable	0	0
Mortgage servicing rights	0	0
Cash surrender value of life insurance	0	0
Financial liabilities:
Non-maturing interest bearing deposits	317,044	277,416
Noninterest bearing deposits	0	0
Time certificates of deposit	0	0
Accrued expenses and other liabilities	0	0
Federal Home Loan Bank advances and other borrowings	0	0
Other long-term debt	0	0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Forward Contracts [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Commitments to Extend Credit [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Interest Rate Lock Commitments [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	0	0
Federal Home Loan Bank stock	0	0
Federal Reserve Bank stock	0	0
Loans Receivable, Fair Value Disclosure	581,434	505,615
Accrued interest and dividends receivable	0	0
Mortgage servicing rights	8,411	7,312
Cash surrender value of life insurance	0	0
Financial liabilities:
Non-maturing interest bearing deposits	0	0
Noninterest bearing deposits	0	0
Time certificates of deposit	159,867	142,202
Accrued expenses and other liabilities	0	0
Federal Home Loan Bank advances and other borrowings	95,137	82,579
Other long-term debt	23,641	24,209
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member] | Forward Contracts [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member] | Commitments to Extend Credit [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	0	0
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member] | Interest Rate Lock Commitments [Member]
Off-balance-sheet instruments
Off-balance sheet instruments	$ 0	$ 0

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Note 12 - Mergers and Acquisitions (Details Textual)		3 Months Ended				9 Months Ended		12 Months Ended
	Jan. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)	Sep. 05, 2017
Finite-Lived Intangible Assets, Net, Ending Balance		$ 1,599,000				$ 1,599,000		$ 273,000
Business Combination, Acquisition Related Costs		222,000	$ 131,000	$ 234,000	$ 276,000	587,000	$ 276,000	$ 676,000
Effective Income Tax Rate Reconciliation, Percent, Total								28.00%
Core Deposits [Member]
Finite-Lived Intangible Assets, Net, Ending Balance		$ 1,609,000				$ 1,609,000
Finite-Lived Intangible Asset, Useful Life						10 years
Ruby Valley Bank [Member] | Madison County, Montana [Member]
Number of Bank Branches									2
TwinCo Acquisition [Member]
Business Acquisition, Percentage of Voting Interests Acquired									100.00%
Business Combination, Consideration Transferred, Total	$ 18,930,000
Payments to Acquire Businesses, Gross	9,900,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 9,030,000

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Note 12 - Mergers and Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($)	Jan. 31, 2018	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Goodwill		$ 12,124,000		$ 7,034,000
TwinCo Acquisition [Member]
Cash and cash equivalents	$ 5,657,000
Investment securities	30,728,000
Loans	55,057,000		$ 55,000,000
Premises and equipment	1,605,000
Other real estate owned	135,000
Core deposit intangible	1,609,000
Other assets	1,258,000
Total assets acquired	96,049,000
Deposits	82,190,000
Accrued expenses and other liabilities	19,000
Total liabilities assumed	82,209,000
Net assets acquired	13,840,000
Cash	9,900,000
Common stock issued (446,774 shares)	9,030,000
Total consideration paid	18,930,000
Goodwill	$ 5,090,000

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Note 12 - Mergers and Acquisitions - Assets Acquired and Liabilities Assumed (Details) (Parentheticals)	Jan. 31, 2018 shares
TwinCo Acquisition [Member]
Common stock issued, shares (in shares)	446,774

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Note 12 - Mergers and Acquisitions - Loans Acquired (Details) - TwinCo Acquisition [Member] $ in Thousands	Jan. 31, 2018 USD ($)
Contractually required principal and interest at acquisition	$ 56,891
Contractual cash flows not expected to be collected (nonaccretable discount)	(1,346)
Expected cash flows at acquisition	55,545
Interest component of expected cash flows (accretable discount)	(488)
Fair value of acquired loans	$ 55,057

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Note 12 - Mergers and Acquisitions - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net interest income after loan loss provision		$ 7,283	$ 5,828	$ 21,414	$ 16,588
Noninterest income		3,761	3,988	9,524	10,766
Noninterest expense		9,052	7,557	26,620	22,616
Income before income taxes		1,992	2,259	4,318	4,738
Income tax expense		360	538	780	1,188
Net income		$ 1,632	$ 1,721	$ 3,538	$ 3,550
Basic earnings per share (in dollars per share)		$ 0.30	$ 0.45	$ 0.65	$ 0.93
Diluted earnings per share (in dollars per share)		$ 0.30	$ 0.45	$ 0.65	$ 0.92
Weighted Average Number of Shares Outstanding, Basic, Total		5,460,452	3,811,409	5,411,356	3,811,409
Weighted Average Number of Shares Outstanding, Diluted, Total		5,524,912	3,863,656	5,475,816	3,869,695
TwinCo Acquisition [Member] | Pro Forma [Member]
Net interest income after loan loss provision	[1]	$ 7,283	$ 6,756	$ 21,697	$ 19,371
Noninterest income	[1]	3,761	4,069	9,559	11,009
Noninterest expense	[1]	9,052	8,230	26,771	24,634
Income before income taxes	[1]	1,992	2,595	4,485	5,746
Income tax expense	[1]	360	727	826	1,609
Net income	[1]	$ 1,632	$ 1,868	$ 3,659	$ 4,137
Basic earnings per share (in dollars per share)	[1]	$ 0.30	$ 0.49	$ 0.68	$ 1.09
Diluted earnings per share (in dollars per share)	[1]	$ 0.30	$ 0.48	$ 0.67	$ 1.07
Weighted Average Number of Shares Outstanding, Basic, Total	[1]	5,460,452	3,811,409	5,411,356	3,811,409
Weighted Average Number of Shares Outstanding, Diluted, Total	[1]	5,524,912	3,863,656	5,475,816	3,869,695

[1] Significant assumptions utilized include the acquisition cost noted above, accretion of interest rate fair value adjustments, amortization of the core deposit intangible asset and a 28.00% effective tax rate for 2017.