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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 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

Source:Eagle Bancorp Montana, Inc.