Add warm water heated to 100-110ºF (37 to 43ºC) and sugar to the bowl of a stand mixer, stir to combine. Sprinkle the yeast on top and let it sit for 10 minutes until foamy.
Add warm milk heated to 100-110ºF (37-43ºC), honey, salt, softened butter, and 1 cup of flour. Use the dough hook attachment and mix for 1 minute on the lowest speed setting. Use a spatula to scrape the sides and bottom after 30 seconds.
Add 1 cup of flour, then gradually increase to medium speed until the dough just starts to come together, about 30 seconds. Add the remaining flour and mix on medium speed until the dough begins to pull away from the bowl, 30 seconds.
Let the dough sit for 20 to 30 minutes to absorb the water and soften the bran.
Knead on low speed until the dough becomes smooth and elastic, about 6 to 7 minutes. If the dough still feels very sticky, add more flour, 1 tablespoon at a time, mixing for 30 to 60 seconds each addition. Do not exceed ¼ cup of extra flour, too much will make the dough tough and not rise properly.
Transfer the dough to a lightly floured surface. Knead until a smooth ball forms, about 1 minute.
Lightly grease a mixing bowl with oil. Add the dough inside and turn it to coat with the oil. Cover the bowl with plastic wrap or a damp kitchen towel. Let the dough rise in a warm draft-free area until doubled in size, about 1 to 2 hours.
Lightly grease a 9x5-inch loaf pan with oil or cooking spray.
Punch the dough down while still in the bowl, and then transfer it to a lightly floured surface.
Knead the dough 2 to 4 times to create a smooth ball and then roll into a 9-inch long cylinder. Press the side and bottom seams together to seal. Place it in the loaf pan with the seam-side down.
Cover with plastic wrap and allow to rise in a warm area until it reaches about 1-inch above the rim, about 1 hour. At about 30 minutes before the bread is done rising, set the oven rack to the middle position. Preheat to 350ºF (177°C).
In a small bowl whisk together egg and 1 tablespoon of milk. Gently brush the top of the bread with a thin layer of egg wash. Sprinkle oats evenly over the top, crushing some into finer pieces.
Bake for 20 minutes, then loosely tent the top with foil so that the crust doesn't darken too much.
Continue to bake the bread until the top is golden brown and the internal temperature reaches between 190 to 200ºF (87 to 93ºC) in the center, about 10 to 15 minutes.
Let the bread sit in the hot pan for 5 minutes, then transfer to a wire rack to cool. Slice the bread when it’s about room temperature or cool enough to handle.
Recipe Yield: 1 large loaf
Use the microwave to warm the milk and water (about 45-seconds).
Instant Yeast Substitution: Add the same amount of instant yeast for active dry. Add it directly to the dry ingredients. Warm water and milk to 120-130ºF (48-54ºC). The rise times may be reduced by nearly half since instant yeast is more active.
Store bread at room temperature in a resealable plastic bag for up to 3 days.
Slices can be frozen for up to 30 days. To reheat, toast for the best texture.