Eagle Bancorp Montana, Inc. operates as the bank holding company for Opportunity Bank of Montana that provides various banking products and services.
The bank has various full-service branches and various automated teller machines located in the company’s market areas and the company participates in the Money Pass ATM network. The bank also operated certain branches under the brand names Dutton State Bank, Farmers State Bank of Denton and The State Bank of Townsend. Effective January 3, 2022, t...
Eagle Bancorp Montana, Inc. operates as the bank holding company for Opportunity Bank of Montana that provides various banking products and services.
The bank has various full-service branches and various automated teller machines located in the company’s market areas and the company participates in the Money Pass ATM network. The bank also operated certain branches under the brand names Dutton State Bank, Farmers State Bank of Denton and The State Bank of Townsend. Effective January 3, 2022, these branches were rebranded and are now only operating as Opportunity Bank of Montana.
The company provides loan and deposit services to customers who are predominantly small businesses and individuals throughout Montana. The company is a diversified lender with a focus on residential mortgage loans, commercial real estate mortgage loans, commercial business loans, agricultural loans and second mortgage/home equity loan products.
As a continuing part of its growth strategy, the company intends to enhance its market share in Montana through organic growth and opportunistic acquisitions.
Business Strategy
The company’s principal strategy is to continue its profitability through building a diversified loan portfolio and operating the bank as a full-service community bank that offers both retail and commercial loan and deposit products in all of its markets. The company offers mortgage loans, the majority of which are sold on the secondary market with loan servicing retained.
The following are the key elements of the company’s business strategy:
Continue to diversify the company’s portfolio by emphasizing the company’s growth in commercial real estate and commercial business loans, including agricultural loans, as a complement to the company’s single family residential real estate lending while maintaining disciplined credit underwriting standards.
Continue to emphasize the attraction and retention of core deposits.
Seek opportunities where presented to acquire other institutions or expand the company’s branch network through opening new branches and/or loan production offices.
Maintain the company’s strong asset quality.
Operate as a community-oriented financial institution that offers a broad array of financial products and services with focus on the customer experience.
Market Areas
The company conducts business through its headquarters in Helena, Montana, in addition to various other full-service branches located in Ashland, Big Timber, Billings, Bozeman, Butte, Choteau, Culbertson, Denton, Dutton, Froid, Glasgow, Great Falls, Hamilton, Helena, Hinsdale, Livingston, Missoula, Sheridan, Three Forks, Townsend, Twin Bridges, Winifred and Wolf Point, Montana.
Lending Activities
The bank originates residential 1-4 family loans held for investment and originated for sale in the secondary market. The bank also originates commercial real estate, home equity, consumer and commercial loans. Residential 1-4 family loans include residential mortgages and construction of residential properties. Commercial real estate loans include loans on multi-family dwellings, nonresidential property, commercial construction and development and farmland loans. Home equity loans include loans secured by the borrower’s primary residence. Typically, the property securing such loans is subject to a prior lien. Consumer loans consist of loans secured by collateral other than real estate, such as automobiles, recreational vehicles and boats. Personal loans and lines of credit are made on deposits held by the bank and on an unsecured basis. Commercial business loans consist of business loans and lines of credit on a secured and unsecured basis and include agriculture production loans.
Residential 1-4 Family Loans
The bank originates residential 1-4 family mortgage loans secured by property located in the bank’s market areas. The bank generally originates residential 1-4 family mortgage loans in amounts of up to 80.0% of the lesser of the appraised value or the selling price of the mortgaged property without requiring private mortgage insurance. A mortgage loan originated by the bank, whether fixed rate or adjustable rate, can have a term of up to 30 years. The bank holds substantially all of its adjustable rate and its 8, 10 and 12-year fixed rate loans in portfolio. The bank’s fixed rate 15-year and 20-year loans are held in portfolio or sold in the secondary market depending on market conditions.
The bank derives a significant portion of its noninterest income from servicing of loans that it has sold. The bank offers many of the fixed rate loans it originates for sale in the secondary market on a servicing retained basis. This means that the company processes the borrower’s payments and sends them to the purchaser of the loan. The bank does not ordinarily purchase home mortgage loans from other financial institutions.
The bank generally obtains title insurance policies on all first mortgage real estate loans originated. On occasion, refinancing of mortgage loans are approved using title reports instead of title insurance. Title reports are also allowed on home equity loans.
The bank also lends funds for the residential 1-4 family construction. Residential 1-4 family construction loans are made both to individual homeowners for the construction of their primary residence and, to a lesser extent, to local builders for the construction of pre-sold houses or houses that are being built for sale in the future. Residential 1-4 family construction loans accounted for 2.93% of the bank’s total loan portfolio at December 31, 2023.
Commercial Real Estate Loans
The bank originates commercial real estate loans including loans on multi-family dwellings. The bank’s commercial real estate loans are primarily permanent loans secured by improved property such as office buildings, retail stores, commercial warehouses and apartment buildings. Commercial real estate loans are typically made with fixed rates of interest and 5 to 15-year maturities. Generally, all commercial real estate loans that the company originates are secured by property located in the state of Montana and within the market areas of the bank. The bank's largest single commercial real estate loan at December 31, 2023 was originated by the bank.
The bank also lends funds for commercial construction and development. In addition, the bank originates loans secured by farm and ranch real estate.
Home Equity Loans
The bank also originates home equity loans. These loans are secured by the borrowers’ primary residence, but are typically subject to a prior lien, which may or may not be held by the bank. The bank offers fixed rate, fixed payment home equity loans, as well as variable and fixed rate home equity lines of credit. Fixed rate home equity loans typically have terms of no longer than 15 years.
Consumer Loans
As part of its strategy to invest in higher yielding shorter term loans, the bank emphasized growth of its consumer lending portfolio in recent years. This portfolio includes personal loans secured by collateral other than real estate, unsecured personal loans and lines of credit and loans secured by deposits held by the Bank. Consumer loans primarily consist of auto loans, RV loans, boat loans, personal loans and credit lines and deposit account loans. Consumer loans are originated in the bank’s market areas and generally have maturities of up to 7 years.
Commercial Loans
The bank’s commercial business loans are traditional business loans and are not secured by real estate. Such loans may be structured as unsecured lines of credit or may be secured by inventory, accounts receivable or other business assets. Agricultural operating loans are generally secured with equipment, cattle, crops or other non-real property and at times the underlying real property.
Investment Activities
The company’s investment securities generally include the U.S. government and agency obligations, the U.S. treasury obligations, Small Business Administration pools, municipal securities, corporate obligations, mortgage-backed securities (‘MBSs’), collateralized mortgage obligations (‘CMOs’) and asset-backed securities (‘ABSs’).
Deposits
The company offers a variety of deposit accounts.
The company’s deposit products include certificates of deposit accounts ranging in terms from 90 days to five years, as well as checking, savings and money market accounts. Individual retirement account (‘IRA’) certificates are included in certificates of deposit.
Deposits are obtained primarily from residents of Montana.
Subsidiary Activity
The company is permitted to invest in the capital stock of, or originate secured or unsecured loans to, subsidiary corporations. The following are subsidiaries of the company: Opportunity Bank of Montana, Eagle Bancorp Statutory Trust I, Opportunity Financial Services, Inc., formerly Western Financial Services and Opportunity Housing Fund, LLC, which is a subsidiary of the bank.
Regulation
As a state-chartered commercial bank, the bank is subject to extensive regulation, examination and supervision by the Federal Reserve Bank of Minneapolis (FRB) and Montana Division of Banking and Financial Institutions. The bank is a member of the FRB System and its deposit accounts are insured up to applicable limits by the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation (FDIC). There are periodic examinations to evaluate the bank’s safety and soundness and compliance with various regulatory requirements. Under certain circumstances, the FDIC may also examine the bank. This regulatory structure is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate allowance for loan losses for regulatory purposes. Eagle, as a bank holding company, is required to file certain reports with, and is subject to examination by, and must otherwise comply with the rules and regulations of the FRB. Eagle is also subject to the rules and regulations of the Securities and Exchange Commission (SEC) under the federal securities laws.
Deposits in the bank, a Montana state-chartered commercial bank, are insured by the FDIC. The bank has no branches in any other state. The bank is subject to regulation and supervision by the Montana Department of Administration’s Banking and Financial Institutions Division and the FRB. The federal laws that apply to the bank regulate, among other things, the scope of its business, its investments, its reserves against deposits, the timing of the availability of deposited funds, and the nature, amount of, and collateral for loans. Federal laws also regulate community reinvestment and insider credit transactions and impose safety and soundness standards.
The bank is a member of the FHLB of Des Moines. Deposit accounts at the bank are insured by the FDIC, generally up to a maximum of $250,000 per separately insured depositor and up to a maximum of $250,000 for self-directed retirement accounts. The bank’s deposits, therefore, are subject to FDIC deposit insurance assessments. Assessments paid to the FDIC by the bank and other banking institutions are used to fund the FDIC’s Federal Deposit Insurance Fund.
The bank’s authority to engage in transactions with affiliates is limited by regulations and by Sections 23A and 23B of the Federal Reserve Act as implemented by the FRB’s Regulation W. The term affiliates for these purposes generally means any company that controls or is under common control with an institution. Eagle and the bank are separate and distinct legal entities. Eagle is an affiliate of the bank.
The company’s authority to extend credit to executive officers, directors and 10.0% or greater shareholders (insiders), as well as entities controlled by these persons, is governed by Sections 22(g) and 22(h) of the Federal Reserve Act and its implementing regulation, FRB Regulation O. Among other things, loans to insiders must be made on terms substantially the same as those offered to unaffiliated individuals and not involve more than the normal risk of repayment. There is an exception for bank-wide lending programs that do not discriminate in favor of insiders.
Eagle is a bank holding company subject to regulatory oversight of the FRB. Eagle is required to register and file reports with the FRB and is subject to regulation and examination by the FRB. In addition, the FRB has enforcement authority over Eagle and its nonbank institution subsidiaries which also permits the FRB to restrict or prohibit activities that are determined to present a serious risk to the bank.
The company’s common stock is registered with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934, as amended (Exchange Act). The company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Exchange Act.
History
Eagle Bancorp Montana, Inc. was founded in 1922. The company was incorporated in 2009.
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