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

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| Source: Eagle Bancorp Montana, Inc.

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 31December 31March 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   

Peter J. Johnson, President and CEO
(406) 457-4006 
Laura F. Clark, SVP and CFO
(406) 457-4007