Eagle Bancorp Montana Earns $763,000, or $0.20 per Diluted Share, in First Quarter; Declares Regular Quarterly Cash Dividend of $0.08 per Share

HELENA, Mont., April 21, 2017 (GLOBE NEWSWIRE) — Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported first quarter net income increased 17.9% to $763,000, or $0.20 per diluted share, compared to $647,000, or $0.17 per diluted share, in the first quarter a year ago.  In the preceding quarter, Eagle earned $1.4 million, or $0.37 per diluted share. 

Eagle’s board of directors declared a regular quarterly cash dividend of $0.08 per share.  The dividend will be payable June 2, 2017 to shareholders of record May 12, 2017.  The current annualized yield is 1.77% at recent market prices.

“We started the year with another quarter of consistent profitability, supported by a stable net interest margin, strong loan and deposit growth, while maintaining asset quality,” said Peter J. Johnson, President and CEO. “Western Montana continues to benefit from a strong economy, and we are well positioned to grow the profitability of the bank and claim additional market share in our markets.”

First Quarter 2017 Highlights (at or for the three-month period ended March 31, 2017, except where noted)

  • Net income grew 17.9% to $763,000, or $0.20 per diluted share in the first quarter, compared to $647,000, or $0.17 per diluted share in the first quarter a year ago.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 11.9% to $8.7 million compared to $7.8 million in the same period a year ago. 
  • Net interest margin was 3.61%, which was unchanged compared to the preceding quarter and a 26 basis point improvement compared to the first quarter a year ago.
  • Total loans increased 15.6% to $488.9 million at March 31, 2017, compared to $422.9 million a year earlier. 
  • Commercial real estate loans increased 20.6% to $234.5 million, or 48.0% of total loans at March 31, 2017, compared to $194.5 million, or 46.0% of total loans a year earlier.
  • Total deposits increased 6.5% to $526.3 million at March 31, 2017, from $494.4 million a year earlier.
  • Capital ratios remain strong with a tangible shareholders’ equity ratio of 11.42% at March 31, 2017.
  • Declared quarterly cash dividend of $0.08 per share, providing a 1.77% current yield at recent market prices.

Balance Sheet Results

“Loan demand remains robust, particularly in the commercial real estate and C&I loan segments.  Our local economies are strong, and we expect the loan pipeline to continue to expand at this pace in the near future,” said Johnson.  Total loans increased 4.9% to $488.9 million at March 31, 2017, compared to $466.2 million three months earlier and increased 15.6% compared to $422.9 million a year earlier. 

Eagle originated $51.7 million in new residential mortgages during the quarter, excluding construction loans, and sold $56.6 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.26%.  This production compares to residential mortgage originations of $96.5 million in the preceding quarter with sales of $90.6 million.

Commercial real estate loans increased 20.6% to $234.5 million at March 31, 2017, compared to $194.5 million a year earlier, while residential mortgage loans decreased modestly to $112.9 million compared to $113.4 million a year earlier.  Commercial loans increased 34.5% to $54.6 million, home equity loans increased 8.0% to $49.0 million and construction loans increased 53.9% to $24.1 million, compared to a year ago.  

Total deposits increased 6.5% to $526.3 million at March 31, 2017, compared to $494.4 million a year earlier and increased 2.6% compared to $512.8 million at December 31, 2016.  As of quarter-end, checking and money market accounts represent 53.8%, savings accounts represent 16.1%, and CDs comprise 30.1% of the total deposit portfolio.  

Eagle’s total assets increased 6.3% to $683.7 million at March 31, 2017, compared to $643.0 million a year earlier and increased 1.4% compared to $673.9 million three months earlier.  Shareholders’ equity increased modestly to $60.0 million at March 31, 2017, compared to $59.5 million three months earlier and increased 6.2% compared to $56.5 million one year earlier.  Tangible book value was $13.81 per share at March 31, 2017, compared to $13.65 per share at December 31, 2016, and $12.97 per share a year earlier. 

Operating Results

“The net interest margin remained unchanged from the preceding quarter, but increased significantly compared to the year ago quarter, largely due to the growth in interest earning assets over the past few months,” Johnson said.  Eagle’s net interest margin was 3.61% in the first quarter, which was unchanged compared to the preceding quarter, and increased 26 basis points compared to 3.35% in the first quarter a year ago.  Funding costs for the first quarter were up six basis points while asset yields were up 32 basis points compared to a year ago.  The investment securities portfolio decreased to $127.2 million at March 31, 2017, compared to $145.1 million a year ago, which had a positive impact on the average yields on earning assets. 

Eagle’s first quarter revenues increased 11.9% to $8.7 million compared to $7.8 million in the first quarter a year ago, but decreased compared to $10.2 million in the preceding quarter.  Net interest income before the provision for loan loss increased 12.6% to $5.5 million in the first quarter compared to $4.9 million in the first quarter one year ago, and decreased modestly compared to $5.6 million in the preceding quarter.

Noninterest income increased 10.8% to $3.2 million in the first quarter, compared to $2.9 million in the first quarter a year ago, but decreased compared to $4.6 million in the preceding quarter.  The net gain on sale of mortgage loans totaled $1.8 million in the first quarter, compared to $3.0 million in the preceding quarter and $1.7 million in the first quarter a year ago. 

First quarter noninterest expenses were $7.4 million, compared to $7.6 million in the preceding quarter and $6.5 million in the year ago quarter.  Higher compensation expenses contributed to the year-over-year increase. 

Credit Quality

Eagle’s first quarter provision for loan losses was $301,000, compared to $452,000 in the preceding quarter and $450,000 in the first quarter a year ago.  The allowance for loan losses represented 300.1% of nonperforming loans at March 31, 2017, compared to 414.1% three months earlier and 168.7% a year earlier.  Nonperforming loans (NPLs) were $1.7 million at the end of the first quarter, which was up compared to $1.2 million three months earlier, and down 27.6% compared to $2.3 million a year earlier.   

Net loan recoveries were $4,000 in the first quarter, compared to net charge offs of $332,000 in the preceding quarter and net charge-offs of $60,000 in the first quarter a year ago.  The allowance for loan losses was $5.1 million, or 1.04% of total loans at March 31, 2017, compared to $4.8 million, or 1.02% of total loans at December 31, 2016, and $3.9 million, or 0.93% of total loans a year ago.

Eagle’s total OREO and other repossessed assets was $668,000 at March 31, 2017, compared to $825,000 at December 31, 2016.  Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.4 million at March 31, 2017 or 0.35% of total assets, compared to $2.0 million, or 0.29% of total assets three months earlier and $2.9 million, or 0.46% of total assets a year earlier. 

Capital Management

Eagle Bancorp Montana continues to be well capitalized with the ratio of shareholders’ equity to tangible asset of 11.42% at March 31, 2017.  (Shareholders’ equity, plus trust preferred securities, subordinated debt and senior debt, less goodwill and core deposit intangible to tangible assets).

On February 13, 2017, the Company completed the issuance of $10 million of senior unsecured debt.  The net proceeds of $9.8 million was used as capital contribution to its bank subsidiary to support both organic growth and opportunistic 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 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) (Audited) (Unaudited)
            March 31, December 31, March 31,
              2017     2016     2016  
                (As Restated)
Assets:              
  Cash and due from banks       $   5,353   $   6,531   $   5,620  
  Interest-bearing deposits with banks         813       787       993  
    Total cash and cash equivalents       6,166       7,318       6,613  
  Securities available-for-sale, at market value         127,212       128,436       145,070  
  FHLB stock, at cost              3,344       4,012       3,564  
  FRB stock             871       871       871  
  Investment in Eagle Bancorp Statutory Trust I         155       155       155  
  Loans held-for-sale             8,432       18,230       18,284  
  Loans:              
    Residential mortgage (1-4 family)       112,872       113,262       113,364  
    Commercial loans         54,614       54,706       40,614  
    Commercial real estate         234,467       214,927       194,479  
    Construction loans         24,118       20,540       15,673  
    Consumer loans         14,786       14,800       14,229  
    Home equity           49,037       49,018       45,404  
    Unearned loan fees         (1,036 )     (1,092 )     (882 )
      Total loans         488,858       466,161       422,881  
  Allowance for loan losses           (5,075 )     (4,770 )     (3,940 )
    Net loans           483,783       461,391       418,941  
  Accrued interest and dividends receivable         2,101       2,123       2,213  
  Mortgage servicing rights, net           5,892       5,853       4,988  
  Premises and equipment, net           19,750       19,393       18,145  
  Cash surrender value of life insurance         14,191       14,095       12,598  
  Real estate and other assets acquired in settlement of loans, net     668       825       606  
  Goodwill             7,034       7,034       7,034  
  Core deposit intangible           356       384       481  
  Deferred tax asset, net           2,036       1,965       1,198  
  Other assets             1,686       1,840       2,243  
    Total assets       $   683,677   $   673,925   $   643,004  
                 
Liabilities:              
  Deposit accounts:              
  Noninterest bearing             95,737       82,877       90,517  
  Interest bearing             430,548       429,918       403,877  
    Total deposits         526,285       512,795       494,394  
  Accrued expense and other liabilities         4,309       4,291       5,933  
  FHLB advances and other borrowings         68,266       82,413       71,204  
  Long-term debt, net             24,782       14,970       14,954  
    Total liabilities         623,642       614,469       586,485  
                 
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; 3,811,409, 3,811,409 and 3,779,464 shares outstanding    
    at March 31, 2017, December 31, 2016 and March 31, 2016, respectively)     41       41       41  
  Additional paid-in capital           22,407       22,366       22,157  
  Unallocated common stock held by employee stock ownership plan (ESOP)     (767 )     (809 )     (933 )
  Treasury stock, at cost (271,718, 271,718 and 303,663 shares at       
    March 31, 2017, December 31, 2016 and March 31, 2016, respectively)     (2,971 )     (2,971 )     (3,321 )
  Retained earnings             41,699       41,240       37,655  
  Accumulated other comprehensive (loss) income       (374 )     (411 )     920  
    Total shareholders’ equity        60,035       59,456       56,519  
    Total liabilities and shareholders’ equity   $   683,677   $   673,925   $   643,004  

 

Income Statement       (Unaudited)  
(Dollars in thousands, except per share data)     Three Months Ended
              March 31, December 31, March 31,
                2017     2016   2016
                  (As Restated)
Interest and dividend Income:          
  Interest and fees on loans     $   5,570   $   5,589 $   4,837
  Securities available-for-sale         729       721     747
  FRB and FHLB dividends         40       39     31
  Other interest income         1       2     3
    Total interest and dividend income         6,340       6,351     5,618
Interest Expense:            
  Interest expense on deposits         380       399     355
  FHLB advances and other borrowings         205       193     201
  Long-term debt         272       198     194
    Total interest expense         857       790     750
Net interest income           5,483       5,561     4,868
Loan loss provision       301       452     450
  Net interest income after loan loss provision       5,182       5,109     4,418
       
Noninterest income:        
  Service charges on deposit accounts       232       226     199
  Net gain on sale of loans       1,825       3,026     1,718
  Mortgage loan servicing fees       547       568     363
  Wealth management income         141       140     136
  Interchange and ATM fees         206       221     202
  Appreciation in cash surrender value of life insurance       124       126     112
  Net gain on sale of available-for-sale securities       –       55     – 
  Net loss on sale of real estate owned and other repossessed property     (1 )     –     – 
  Other noninterest income       134       237     166
  Total noninterest income       3,208       4,599     2,896
       
Noninterest expense:        
  Salaries and employee benefits        4,433       4,503     3,690
  Occupancy and equipment expense       717       657     789
  Data processing       567       513     548
  Advertising       189       166     188
  Amortization of mortgage servicing fees       262       410     228
  Amortization of core deposit intangible and tax credits       107       110     112
  Federal insurance premiums       84       99     83
  Postage       48       46     54
  Legal, accounting and examination fees       85       115     98
  Consulting fees       49       41     83
  Write-down on real estate owned and other repossessed property     36       –      – 
  Other noninterest expense       862       966     675
  Total noninterest expense       7,439       7,626     6,548
       
Income before income taxes          951       2,082     766
Income tax provision         188       633     119
Net income         $   763   $   1,449 $   647
       
Basic earnings per share     $   0.20   $   0.39 $   0.17
Diluted earnings per share     $   0.20   $   0.37 $   0.17
Weighted average shares        
  outstanding (basic EPS)       3,811,409       3,800,645     3,779,464
Weighted average shares        
  outstanding (diluted EPS)       3,875,677       3,874,833     3,873,171

 

Financial Ratios and Other Data      
(Dollars in thousands, except per share data)      
(Unaudited)   March 31 December 31 March 31
        2017     2016     2016  
Asset Quality:       (as restated)
  Nonaccrual loans   $   651   $   614   $   1,580  
  Loans 90 days past due     998       495       710  
  Restructured loans, net     42       43       45  
    Total nonperforming loans     1,691       1,152       2,335  
  Other real estate owned and other repossessed assets     668       825       606  
    Total nonperforming assets $   2,359   $   1,977   $   2,941  
  Nonperforming loans / portfolio loans   0.35 %   0.25 %   0.55 %
  Nonperforming assets / assets   0.35 %   0.29 %   0.46 %
  Allowance for loan losses / portfolio loans   1.04 %   1.02 %   0.93 %
  Allowance / nonperforming loans   300.12 %   414.06 %   168.74 %
  Gross loan charge-offs for the quarter $   9   $   338   $   63  
  Gross loan recoveries for the quarter $   13   $   6   $   3  
  Net loan charge-offs for the quarter $   (4 ) $   332   $   60  
           
Capital Data (At quarter end):      
  Tangible book value per share $   13.81   $   13.65   $   12.97  
  Shares outstanding   3,811,409     3,811,409     3,779,464  
           
           
Profitability Ratios (For the quarter):      
  Efficiency ratio*     84.36 %   73.98 %   82.90 %
  Return on average assets   0.46 %   0.86 %   0.41 %
  Return on average equity   5.19 %   9.57 %   4.48 %
  Net interest margin     3.61 %   3.61 %   3.35 %
           
Other Information        
  Average total assets for the quarter $   662,541   $   670,469   $   631,998  
  Average total assets year to date $   662,541   $   654,811   $   631,998  
  Average earning assets for the quarter $   607,048   $   615,539   $   581,594  
  Average earning assets year to date $   607,048   $   601,824   $   581,594  
  Average loans for the quarter ** $   474,439   $   479,229   $   428,408  
  Average loans year to date ** $   474,439   $   456,808   $   428,408  
  Average equity for the quarter $   58,752   $   60,544   $   56,767  
  Average equity year to date $   58,752   $   58,754   $   56,767  
  Average deposits for the quarter $   515,851   $   515,771   $   480,255  
  Average deposits year to date $   515,851   $   498,224   $   480,255  
           
* 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