Eagle Bancorp Montana Earns $521,000, or $0.14 Per Diluted Share, in 3Q15; Declares Regular Quarterly Cash Dividend to $0.0775 per Share

HELENA, Mont., Oct. 27, 2015 (GLOBE NEWSWIRE) — Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported net income was $521,000, or $0.14 per diluted share, in the third quarter of 2015, compared to $792,000, or $0.21 per diluted share, in the preceding quarter, and $718,000, or $0.18 per diluted share, in the same period a year ago. In the first nine months of 2015, Eagle’s earnings were $1.7 million, or $0.44 per diluted share, compared to $1.7 million, or $0.43 per diluted share, in the first nine months of 2014.

“Eagle generated another solid quarter of loan growth, with both commercial and residential projects contributing to loan portfolio expansion,” said Peter J. Johnson, President and CEO. “We will continue to capitalize on Montana’s economic strengths by focusing our efforts on gathering strong core deposits, growing the loan portfolio and expanding our customer base.”

Eagle’s board of directors declared a regular quarterly cash dividend of $0.0775 per share. The dividend will be payable December 4, 2015 to shareholders of record November 13, 2015.

Third Quarter 2015 Highlights (at or for the three month period ended September 30, 2015, except where noted)

  • Net income was $521,000, or $0.14 per diluted share in the third quarter, compared to $718,000, or $0.18 per diluted share in the same period a year ago.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 7.3% to $7.3 million compared to $6.8 million in the same period a year ago.
  • Net interest margin was 3.28% in the third quarter, compared to 3.34% in the same period a year earlier.
  • Total loans increased 30.1% to $391.5 million compared to $300.9 million a year earlier.
  • Commercial real estate loans increased 60.2% to $164.0 million at September 30, 2015, compared to $102.4 million a year earlier.
  • Total deposits increased 9.1% to $481.1 million at September 30, 2015, from $440.8 million a year earlier.
  • Capital ratios remain strong with a tangible shareholders equity ratio of 10.23% at September 30, 2015.
  • Declared a quarterly cash dividend of $0.0775 per share, providing a 2.7% current yield at recent market prices.

Balance Sheet Results

Total assets increased 10.4% to $611.4 million at September 30, 2015, compared to $553.9 million a year earlier, and increased 4.8% compared to $583.4 million three months earlier.

“Demand for loans remains strong, contributing to higher originations. Activity is improving across all loan categories, particularly in commercial real estate and mortgage lending, and we don’t see any sign of the pace slowing down in the near term,” said Johnson.  Total loans increased 9.2% to $391.5 million at September 30, 2015, compared to $358.4 million three months earlier and increased 30.1% compared to $300.9 million a year earlier. 

Eagle originated $77.8 million in new residential mortgages during the quarter, excluding construction loans, and sold $59.5 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.77%. This production compares to residential mortgage originations of $65.5 million in the preceding quarter with sales of $59.1 million.

Commercial real estate loans increased 60.2% to $164.0 million at September 30, 2015, compared to $102.4 million a year earlier, while residential mortgage loans increased 15.3% to $113.7 million compared to $98.5 million a year earlier. Home equity loans increased 22.0% to $48.1 million, commercial loans decreased 10.5% to $34.4 million, and construction loans increased 92.3% to $17.2 million, compared to a year ago.  

Total deposits increased 9.1% to $481.1 million at September 30, 2015, compared to $440.8 million a year earlier and were up 3.2% compared to $466.1 million at June 30, 2015. As of September 30, 2015, checking and money market accounts represent 54.2%, savings accounts represent 14.0%, and CDs comprise 31.8% of the total deposit portfolio.  

Eagle’s shareholders’ equity improved to $54.4 million at September 30, 2015, compared to $53.7 million three months earlier and $52.6 million one year earlier. Tangible book value was $12.40 per share at September 30, 2015, compared to $12.34 per share at June 30, 2015 and $11.62 per share a year earlier. The year-over-year increase continues to be a result of steady growth in earnings and increases in the fair value of the investment portfolio caused by lower interest rates.

Credit Quality

Eagle’s provision for loan losses for the third quarter was $310,000, compared to $328,000 in the preceding quarter and $215,000 in the third quarter a year ago. As of September 30, 2015, the allowance for loan losses represented 216.6% of nonperforming loans compared to 501.7% three months earlier and 429.1% a year earlier.

“During the quarter we had $888,000 that moved into the 90 days past due status. The increase was due primarily to a few residential mortgages that are in the process of collection,” said Johnson.  At September 30, 2015, nonperforming loans (NPLs) were $1.5 million, compared to $588,000 three months earlier, and $536,000 a year ago.   

Net charge-offs totaled $30,000 in the third quarter, compared to $3,000 in the preceding quarter and $40,000 in the third quarter a year ago. The allowance for loan losses was $3.2 million, or 0.83% of total loans at September 30, 2015, compared to $3.0 million, or 0.82% of total loans at June 30, 2015, and $2.3 million, or 0.76% of total loans a year ago.

OREO and other repossessed assets was $619,000 at September 30, 2015, which was down slightly compared to $623,000 at June 30, 2015. Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.1 million at September 30, 2015, compared to $1.2 million both three months earlier and a year earlier. 

Operating Results

Eagle’s third quarter revenues were $7.3 million compared to $7.8 million in the preceding quarter and increased 7.3% compared to $6.8 million in the third quarter a year ago.  Year-to-date revenues increased 16.1% to $22.2 million compared to $19.1 million in the first nine months of 2014. Net interest income before the provision for loan loss increased 5.9% to $4.4 million in the third quarter compared to $4.2 million in the third quarter a year ago. Net interest income was $4.5 million in the preceding quarter.  In the first nine months of the year, Eagle’s net interest income increased 9.5% to $13.1 million compared to $12.0 million in the same period a year earlier.

“Our net interest margin contracted this quarter, and we expect to see continued pressure on loan yields as loans reprice in this very low interest rate environment. In addition, the interest cost for the newly issued subordinated debt increased interest expense by $149,000 in the quarter,” Johnson noted.  Eagle’s net interest margin was 3.28% in the third quarter compared to 3.46% in the preceding quarter and 3.34% in the third quarter a year ago.  Funding costs for the quarter were up 14 basis points while asset yields increased 8 basis points compared to a year ago.  The investment securities portfolio decreased to $147.5 million at September 30, 2015, compared to $178.4 million a year ago, which increased average yields on earning asset balances moderately. In the first nine months of the year, Eagle’s net interest margin was 3.36% compared to 3.32% in the first nine months a year earlier.

Noninterest income increased 9.6% to $2.9 million in the third quarter compared to $2.7 million in the third quarter a year ago. In the preceding quarter Eagle’s noninterest income was $3.3 million. The preceding quarter’s noninterest income included both a $310,000 gain on sale of fixed assets resulting from the sale of a branch building as well as the net gain on the sale of loans of $1.9 million.  Year-to-date, noninterest income increased 27.2% to $9.1 million compared to $7.1 million in the nine month period a year earlier.

Eagle’s third quarter noninterest expenses were $6.5 million, the same as in the preceding quarter. This compares to $5.9 million in the third quarter one year ago.  In the first nine months of 2015, noninterest expense increased to $19.3 million compared to $17.3 million in the first nine months of 2014. The year-over-year increase for both the quarter and year-to-date periods is primarily due to higher salary and employee benefits, part of which is attributed to commission-based compensation related to the robust loan growth.

Stock Repurchase

During the quarter, the company repurchased 46,065 shares of EBMT stock at an average price of $11.47 per share.

Capital Management

Eagle Bancorp Montana continues to be well capitalized with the ratio of shareholders’ equity to tangible asset of 10.23% at September 30, 2015.  (Shareholders’ equity, plus trust preferred securities and subordinated debt, less goodwill and core deposit intangible to tangible assets).

During the preceding quarter, Eagle booked $10.0 million in subordinated debt.  The subordinated notes were issued on June 19, 2015, bear a fixed rate of interest of 6.75% per annum, payable quarterly, and mature on June 19, 2025.  The net cash proceeds from the sale of the subordinated notes were $9.9 million, and the subordinated notes are expected to qualify as Tier 2 capital for regulatory purposes. The net proceeds from the offering are expected to be used for general corporate purposes, to support organic growth and fund acquisitions should appropriate opportunities arise.

About the Company

Eagle Bancorp Montana, Inc. is a bank holding company headquartered in Helena, Montana and is the holding company of Opportunity Bank, a community bank established in 1922 that serves consumers and small businesses in Southern Montana through 13 banking offices. Additional information is available on the bank’s website at www.opportunitybank.com. The shares of Eagle Bancorp Montana, Inc. are traded on the NASDAQ Global Select Market under the symbol “EBMT.”

Forward Looking Statements

This release may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” and “potential.” These forward-looking statements include, but are not limited to statements of our goals, intentions and expectations; statements regarding our business plans, prospects, 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 our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. These factors include, but are not limited to, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; general economic conditions, either nationally or in our market areas, that are worse than expected; competition among depository and other financial institutions; loan demand or residential and commercial real estate values in Montana; inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; adverse changes in the securities markets; and other economic, governmental, competitive, regulatory and technological factors that may affect our operations. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. All information set forth in this press release is current as of the date of this release and the company undertakes no duty or obligation to update this information.

Balance Sheet      
(Dollars in thousands, except per share data) (Unaudited) (Unaudited) (Unaudited)
  September 30, 2015 June 30, 2015 September 30, 2014
       
Assets:      
Cash and due from banks  $ 6,529  $ 8,108  $ 3,295
Interest-bearing deposits with banks  717  619  615
Federal funds sold  —   —   —
Total cash and cash equivalents  7,246  8,727  3,910
Securities available-for-sale, at market value  147,460  148,766  178,428
FHLB stock, at cost   2,853  2,326  1,878
FRB stock  642  642  —
Investment in Eagle Bancorp Statutory Trust I  155  155  155
Loans held-for-sale  14,731  17,184  21,656
Loans:      
Residential mortgage (1-4 family)  113,658  106,852  98,543
Commercial loans  34,370  46,372  38,387
Commercial real estate  164,040  139,812  102,377
Construction loans  17,234  10,513  8,962
Consumer loans  14,860  14,480  13,692
Home equity  48,062  40,946  39,408
Unearned loan fees  (750)  (605)  (456)
Total loans  391,474  358,370  300,913
Allowance for loan losses  (3,230)  (2,950)  (2,300)
Net loans  388,244  355,420  298,613
Accrued interest and dividends receivable  2,332  2,337  2,340
Mortgage servicing rights, net  4,808  4,517  3,913
Premises and equipment, net  18,290  18,459  20,037
Cash surrender value of life insurance  12,429  11,898  11,653
Real estate and other assets acquired in settlement of loans, net  619  623  619
Goodwill  7,034  7,034  7,034
Core deposit intangible  550  588  703
Other assets  4,016  4,691  2,927
Total assets  $ 611,409  $ 583,367  $ 553,866
       
Liabilities:      
Deposit accounts:      
Noninterest bearing  82,842  70,043  66,943
Interest bearing  398,286  396,016  373,882
Total deposits  481,128  466,059  440,825
Accrued expense and other liabilities  5,372  4,985  4,069
FHLB advances and other borrowings  55,534  43,611  51,172
Subordinated debentures, net  14,951  15,005  5,155
Total liabilities  556,985  529,660  501,221
       
Shareholders’ Equity:      
Preferred stock (no par value; 1,000,000 shares authorized; none issued or outstanding)  —   —   —
Common stock (par value $0.01; 8,000,000 shares authorized; 4,083,127 shares issued; 3,776,916; 3,822,981; 3,866,233 outstanding at September 30, 2015, June 30, 2015 and September 30, 2014, respectively)  41  41  41
Additional paid-in capital  22,134  22,129  22,126
Unallocated common stock held by employee stock ownership plan (ESOP)  (1,016)  (1,057)  (1,182)
Treasury stock, at cost (306,211 shares at September 30, 2015, 260,146 shares at June 30, 2015 and 216,894 shares at September 30, 2014)  (3,338)  (2,810)  (2,333)
Retained earnings  36,714  36,490  35,252
Accumulated other comprehensive (loss)  (111)  (1,086)  (1,259)
Total shareholders’ equity   54,424  53,707  52,645
Total liabilities and shareholders’ equity  $ 611,409  $ 583,367  $ 553,866
       
Income Statement  (Unaudited) (Unaudited)  
(Dollars in thousands, except per share data) Three Months Ended Nine Months Ended
  September 30,
2015
June 30,
2015
September 30,
2014
September 30,
2015
September 30,
2014
Interest and dividend Income:          
Interest and fees on loans  $ 4,390  $ 4,255  $ 3,658  $ 12,607  $ 10,291
Securities available-for-sale  759  737  1,044  2,255  3,227
FRB and FHLB dividends  5  20  —   25  — 
Interest on deposits with banks  —  3  1  6  5
Total interest and dividend income  5,154  5,015  4,703  14,893  13,523
Interest Expense:          
Interest expense on deposits  400  356  338  1,093  999
Advances and other borrowings  130  128  156  401  455
Subordinated debentures  191  42  21  254  63
Total interest expense  721  526  515  1,748  1,517
Net interest income  4,433  4,489  4,188  13,145  12,006
Loan loss provision  310  328  215  960  511
Net interest income after loan loss provision  4,123  4,161  3,973  12,185  11,495
           
Noninterest income:          
Service charges on deposit accounts  317  243  284  783  763
Net gain on sale of loans  1,639  1,856  1,398  5,126  3,430
Mortgage loan servicing fees  523  422  380  1,360  1,099
Net gain on sale of available-for-sale securities  —   48  194  234  431
Wealth management income  174  111  112  470  383
Net loss on fair value hedge  —   —  (47)  (93)  (181)
Other income  259  595  336  1,189  1,206
Total noninterest income  2,912  3,275  2,657  9,069  7,131
           
Noninterest expense:          
Salaries and employee benefits   3,660  3,639  3,131  10,678  9,523
Occupancy and equipment expense  838  733  695  2,307  2,094
Data processing  560  536  540  1,605  1,479
Advertising  170  174  166  563  525
Amortization of mortgage servicing fees  218  205  166  640  462
Amortization of core deposit intangible and tax credits  116  101  105  317  315
Federal insurance premiums  83  73  73  251  176
Postage  63  43  44  152  127
Legal, accounting and examination fees  126  133  262  415  548
Consulting fees  72  211  176  523  558
Write-down on OREO  —   —   —  —   10
Other expense  586  624  507  1,874  1,490
Total noninterest expense  6,492  6,472  5,865  19,325  17,307
           
Income before income taxes   543  964  765  1,929  1,319
Income tax provision (benefit)  22  172  47  230  (369)
Net income  $ 521  $ 792  $ 718  $ 1,699  $ 1,688
           
Basic earnings per share  $ 0.14  $ 0.21  $ 0.18  $ 0.44  $ 0.43
Diluted earnings per share  $ 0.14  $ 0.21  $ 0.18  $ 0.44  $ 0.43
           
Weighted average shares outstanding (basic EPS)  3,804,532  3,822,981  3,889,603  3,823,896  3,907,259
           
Weighted average shares outstanding (diluted EPS)  3,841,787  3,860,236  3,944,406  3,861,151  3,962,062
         
Financial Ratios and Other Data        
(Dollars in thousands, except per share data)        
(Unaudited) September 30 June 30 March 31 September 30
  2015 2015 2015 2014
Asset Quality:        
Nonaccrual loans  $ 556  $ 541  $ 176  $ 486
Loans 90 days past due  888  —  —  —
Restructured loans, net  47  47  47  50
Total nonperforming loans  1,491  588  223  536
Other real estate owned and other repossessed assets  619  623  642  619
Total nonperforming assets  $ 2,110  $ 1,211  $ 865  $ 1,155
Nonperforming loans / portfolio loans 0.38% 0.16% 0.07% 0.18%
Nonperforming assets / assets 0.35% 0.21% 0.15% 0.21%
Allowance for loan losses / portfolio loans 0.83% 0.82% 0.78% 0.76%
Allowance / nonperforming loans 216.63% 501.70% 1177.13% 429.10%
Gross loan charge-offs for the quarter  $ 39  $ 4  $ 148  $ 80
Gross loan recoveries for the quarter  $ 9  $ 1  $ 1  $ 40
Net loan charge-offs for the quarter  $ 30  $ 3  $ 147  $ 40
         
Capital Data (At quarter end):        
Tangible book value per share  $ 12.40  $ 12.05  $ 12.34  $ 11.62
Shares outstanding 3,776,916 3,822,981 3,822,981 3,866,233
         
         
Profitability Ratios (For the quarter):        
Efficiency ratio* 86.79% 82.06% 88.12% 84.15%
Return on average assets 0.35% 0.56% 0.28% 0.52%
Return on average equity 3.87% 5.96% 2.82% 5.49%
Net interest margin 3.28% 3.46% 3.35% 3.34%
         
Profitability Ratios (Year-to-date):        
Efficiency ratio * 85.57% 84.96% 88.12% 88.79%
Return on average assets 0.40% 0.42% 0.28% 0.43%
Return on average equity 4.22% 4.39% 2.82% 4.45%
Net interest margin 3.36% 3.41% 3.35% 3.32%
         
Other Information        
Average total assets for the quarter  $ 593,947  $ 567,553  $ 550,980  $ 547,111
Average total assets year to date  $ 570,948  $ 559,524  $ 550,980  $ 529,260
Average earning assets for the quarter  $ 540,222  $ 518,291  $ 503,894  $ 500,485
Average earning assets year to date  $ 520,925  $ 511,356  $ 503,894  $ 482,289
Average loans for the quarter **  $ 384,275  $ 360,782  $ 339,007  $ 304,791
Average loans year to date **  $ 361,355  $ 349,895  $ 339,007  $ 282,976
Average equity for the quarter  $ 53,894  $ 53,193  $ 54,847  $ 52,299
Average equity year to date  $ 53,701  $ 53,642  $ 54,847  $ 50,621
Average deposits for the quarter  $ 478,635  $ 457,743  $ 445,655  $ 436,044
Average deposits year to date  $ 460,816  $ 451,931  $ 445,655  $ 374,864
         
* The efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of intangible asset amortization, by the sum of net interest income and non-interest income. 
** includes loans held for sale        
CONTACT: Peter J. Johnson, President and CEO
         (406) 457-4006
         Laura F. Clark, SVP and CFO
         (406) 457-4007