$9.00
$40.00
bear $9.00
base $22.00
bull $40.00
margin of safety $13.00
market price* $20.97
Eagle Bancorp Montana is the holding company for Opportunity Bank of Montana, a community bank that gathers deposits and makes commercial, real estate and consumer loans in Montana. It also runs a large mortgage business that originates home loans and sells most of them to investors, keeping the servicing. That mortgage arm makes earnings unusually uneven: gains on loan sales were about $46 million in 2021 and about $7.7 million in 2025, and the bank has also spent heavily on premises (capital spending of $12-21 million a year in 2020-2024, against roughly $5 million of annual depreciation). How we measure earnings. We start from cash from operations, remove the swings from loans being held for sale and from other working-capital lines (accrued interest, other assets, accrued expenses and other liabilities), subtract stock-based pay (restricted stock and ESOP expense), and subtract the part of capital spending needed to maintain the business. Per diluted share this gives $2.02 (2020), $1.75 (2021), $0.79 (2022), $0.84 (2023), $0.47 (2024) and $2.47 (2025). Two things stand out. First, 2024 was depressed by roughly $14 million of capital spending and by a $14 million increase in accrued expenses and other liabilities that we removed as working capital; we could not fully explain that liability increase from the filing text. Second, 2025 capital spending fell to $4.8 million, which lifted the figure; we do not assume that lower level lasts. We use the median of 2020-2025, $1.30 per share, because that span covers a full mortgage cycle (the 2020-21 refinancing boom, the 2022-23 downturn and the recovery). Net income was $14.8 million ($1.90 per share) in 2025 and $7.7 million in the first half of 2026 versus $6.5 million a year earlier, which supports that the business is not deteriorating, but we do not raise the starting level on this evidence alone. Growth. Owner earnings per share rose sharply in 2025 from the 2024 low, but that was a rebound from a distorted year, not a growth rate. Our base case starts at the $1.30 cycle median and credits no growth. The bank's earnings per share have not compounded steadily over the period: acquisitions in 2020 and 2022 added shares and earnings together, and no step is a repeatable, small-increment process we could point to. Market growth in Montana, share gains and mortgage recovery are left out because they are not locked in. Bear case: about $9 per share. Mortgage gains stay near their 2025 level or fall further, spending on premises keeps running well above depreciation as it did in 2022-2024, and owner earnings settle around $0.55 per share (2024 was $0.47 and 2022-2023 were $0.79-0.84), with no growth. The bank funds part of its balance sheet with Federal Home Loan Bank borrowings and paid down $105 million of long-term borrowings in 2025 alone, so a weak year can squeeze results; we charge this leverage here rather than in the discount rate. Base case: about $22 per share. Owner earnings stay at $1.30 per share for as long as the bank's deposit franchise operates, discounted at 6%. Credit quality supports this: nonperforming assets were 0.27% of total assets and nonaccrual loans 0.14% of loans at the end of 2025. Bull case: about $40 per share. The bank sustains roughly its 2025 result, $2.40 per share, because capital spending stays near the $4.8 million of 2025 and mortgage volume holds at 2025 levels (loans sold were $237 million in 2025 versus $218 million in 2024), again with no growth. What we did not do. We do not subtract debt or add cash separately: cash flow from operations is already after interest paid, so it already reflects the bank's funding costs. The value in each case is therefore the value of the earnings stream alone; we did not add balance-sheet cash on top. The intangible amortization (core deposits, servicing rights) is added back as non-cash, and the bank's 2025 amortization of $1.2 million of core deposit intangibles is small enough that we did not adjust the growth path for it. What could make this wrong. If the capital spending of 2020-2024 was largely a one-time build-out, as the drop to $4.8 million in 2025 hints, true owner earnings are closer to our bull case; if mortgage gains fall back to the levels of 2023, they are closer to our bear case. The company's own shorter-term guidance was not used; all figures come from its annual and quarterly filings. Prior analysis: none existed. The margin-of-safety price reflects a wide cushion because earnings are cyclical and the small size of the company increases the chance of a permanent setback.