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Eagle Bancorp Montana Earns $1.4 Million, or $0.37 per Diluted Share, in 4Q16 and Record Earnings of $5.1 Million, or $1.32 per Diluted Share, in 2016; Declares Regular Quarterly Cash Dividend of $0.08 per Share

HELENA, Mont., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported net income increased 98.9% to $5.1 million, or $1.32 per diluted share, in 2016, compared to $2.6 million, or $0.67 per diluted share, in 2015. For the fourth quarter of 2016, net income increased 64.5% to $1.4 million, or $0.37 per diluted share, compared to $881,000, or $0.22 per diluted share, in the fourth quarter a year ago. In the preceding quarter, Eagle earned a record $1.8 million, or $0.46 per diluted share.

Eagle’s board of directors declared a regular quarterly cash dividend of $0.08 per share. The dividend will be payable March 3, 2017 to shareholders of record February 10, 2017. The current annualized yield is 1.63% at recent market prices.

“We achieved record 2016 earnings, along with strong fourth quarter earnings of $1.4 million,” said Peter J. Johnson, President and CEO. “We continue to produce solid loan and core deposit growth, which highlights our ability to deepen and grow customer relationships, as well as gain new customers and market share. With steady balance sheet growth and significant and ongoing improvements in revenue generation, we are continuing to produce and retain earnings while paying appropriate dividends to increase value for our shareholders.”

Fourth Quarter 2016 Highlights (at or for the three month period ended December 31, 2016, except where noted)

  • Net income grew 64.5% to $1.4 million, or $0.37 per diluted share in the fourth quarter, compared to $881,000, or $0.22 per diluted share in the fourth quarter a year ago.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 34.4% to $10.2 million compared to $7.6 million in the same period a year ago.
  • Net interest margin improved 20 basis points to 3.61% compared to a year ago.
  • Total loans increased 14.5% to $466.2 million at December 31, 2016, compared to $407.3 million a year earlier.
  • Commercial real estate loans increased 28.0% to $214.9 million, or 46.1% of total loans at December 31, 2016, compared to $167.9 million, or 41.2% of total loans a year earlier.
  • Total deposits increased 6.1% to $512.8 million at December 31, 2016, from $483.2 million a year earlier.
  • Capital ratios remain strong with a tangible shareholders equity ratio of 10.03% at December 31, 2016.
  • Declared quarterly cash dividend to $0.08 per share, providing a 1.63% current yield at recent market prices.

Balance Sheet Results

“The loan portfolio continues to expand, which is a reflection of the strong local economy and demand in our markets. The commercial real estate and C&I loan segments of our loan portfolio, in particular, continue to build momentum,” said Johnson. Total loans increased 1.0% to $466.2 million at December 31, 2016, compared to $461.5 million three months earlier and increased 14.5% compared to $407.3 million a year earlier.

Eagle originated $96.5 million in new residential mortgages during the quarter, excluding construction loans, and sold $90.6 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.41%. This production compares to residential mortgage originations of $101.2 million in the preceding quarter with sales of $95.6 million.

Commercial real estate loans increased 28.0% to $214.9 million at December 31, 2016, compared to $167.9 million a year earlier, while residential mortgage loans decreased 4.1% to $113.3 million compared to $118.1 million a year earlier. Commercial loans increased 40.0% to $54.7 million, home equity loans increased 8.1% to $49.0 million and construction loans decreased 10.5% to $20.5 million, compared to a year ago.

Total deposits increased 6.1% to $512.8 million at December 31, 2016, compared to $483.2 million a year earlier but were down slightly compared to $515.3 million at September 30, 2016. As of year-end, checking and money market accounts represent 51.8%, savings accounts represent 16.0%, and CDs comprise 32.2% of the total deposit portfolio.

Eagle’s total assets increased 6.9% to $673.9 million at December 31, 2016, compared to $630.3 million a year earlier and decreased slightly compared to $674.5 million three months earlier. Shareholders’ equity was $59.5 million at December 31, 2016, compared to $60.0 million three months earlier and increased 7.2% compared to $55.5 million one year earlier. Tangible book value was $13.65 per share at December 31, 2016, compared to $13.91 per share at September 30, 2016, and $12.67 per share a year earlier.

Operating Results

“Our 2016 net interest margin improved eight basis points to 3.46% compared to 3.38% in 2015, primarily as a result of growing both in core deposits and loans,” Johnson said. Eagle’s net interest margin increased six basis point to 3.61% in the fourth quarter, compared to 3.55% in the preceding quarter and increased 20 basis point from 3.41% in the fourth quarter a year ago. For the full year, Eagle’s net interest margin was 3.46% compared to 3.38% in 2015. Funding costs for the fourth quarter were up two basis points while asset yields increased 22 basis points compared to a year ago. The investment securities portfolio decreased to $128.4 million at December 31, 2016, compared to $145.7 million a year ago, which had a slight positive impact on the average yields on earning assets.

Fourth quarter revenues increased 33.8% to $10.2 million compared to $7.6 million in the fourth quarter a year ago, and increased modestly compared to $10.1 million in the preceding quarter. For the year, revenues increased 23.5% to $36.8 million, compared to $29.8 million in 2015. Net interest income before the provision for loan loss increased 2.6% to $5.6 million in the fourth quarter compared to $5.4 million in the preceding quarter, and increased 14.3% compared to $4.9 million in the fourth quarter a year ago. For the year, net interest income increased 15.4% to $20.8 million, compared to $18.0 million in 2015.

Eagle’s noninterest income increased 70.8% to $4.6 million in the fourth quarter, compared to $2.7 million in the fourth quarter a year ago, but decreased modestly compared to $4.7 million in the preceding quarter. For the full year, noninterest income increased 36.0% to $16.0 million compared to $11.8 million in 2015. Mortgage servicing fees and net gain on sale of mortgage loans contributed to the growth. Fourth quarter noninterest expenses were $7.6 million, compared to $7.2 million in the preceding quarter and $6.4 million in the year ago quarter. Increased compensation due to additional loan production and year end benefit expenses contributed to the increase. In 2016, noninterest expense was up modestly to $28.0 million compared to $25.7 million in 2015.

Credit Quality

Eagle’s fourth quarter provision for loan losses was $452,000, compared to $472,000 in the preceding quarter and $343,000 in the fourth quarter a year ago. As of December 31, 2016, the allowance for loan losses represented 414.1% of nonperforming loans compared to 263.3% three months earlier and 139.3% a year earlier. Nonperforming loans (NPLs) were $1.2 million at the end of the year, which was down 34.8% compared to $1.8 million three months earlier, and down 54.8% compared to $2.5 million a year earlier.

Fourth quarter net charge-offs totaled $332,000, compared to $82,000 in the preceding quarter and $23,000 in the fourth quarter a year ago. The allowance for loan losses was $4.8 million, or 1.02% of total loans at December 31, 2016, compared to $4.7 million, or 1.01% of total loans at September 30, 2016, and $3.6 million, or 0.87% of total loans a year ago.

OREO and other repossessed assets was $825,000 at December 31, 2016, which was an increase compared to $513,000 at September 30, 2016. Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, improved to $2.0 million at December 31, 2016, or 0.29% of total assets, compared to $2.3 million, or 0.34% of total assets three months earlier and $3.1 million, or 0.50% 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 10.03% at December 31, 2016. (Shareholders’ equity, plus trust preferred securities and subordinated debt, less goodwill and core deposit intangible to tangible assets).

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)(Unaudited)(Audited)
December 31,September 30,December 31,
2016 2016 2015
Assets:
Cash and due from banks $ 6,531 $ 6,802 $ 6,468
Interest-bearing deposits with banks 787 1,029 970
Total cash and cash equivalents 7,318 7,831 7,438
Securities available-for-sale, at market value 128,436 133,754 145,738
FHLB stock, at cost 4,012 3,870 3,397
FRB stock 871 871 887
Investment in Eagle Bancorp Statutory Trust I 155 155 155
Loans held-for-sale 18,230 19,415 18,702
Loans:
Residential mortgage (1-4 family) 113,262 113,287 118,133
Commercial loans 54,706 60,102 39,072
Commercial real estate 214,927 205,819 167,930
Construction loans 20,540 20,649 22,958
Consumer loans 14,800 14,867 14,641
Home equity 49,018 47,694 45,345
Unearned loan fees (1,092) (919) (795)
Total loans 466,161 461,499 407,284
Allowance for loan losses (4,770) (4,650) (3,550)
Net loans 461,391 456,849 403,734
Accrued interest and dividends receivable 2,123 2,138 2,278
Mortgage servicing rights, net 5,853 5,439 4,968
Premises and equipment, net 19,393 19,543 18,217
Cash surrender value of life insurance 14,095 13,996 12,514
Real estate and other assets acquired in settlement of loans, net 825 513 595
Goodwill 7,034 7,034 7,034
Core deposit intangible 384 416 514
Other assets 3,805 2,671 4,176
Total assets $ 673,925 $ 674,495 $ 630,347
Liabilities:
Deposit accounts:
Noninterest bearing 82,877 89,242 77,031
Interest bearing 429,918 426,035 406,151
Total deposits 512,795 515,277 483,182
Accrued expense and other liabilities 4,291 5,363 4,050
FHLB advances and other borrowings 82,413 78,855 72,716
Subordinated debentures, net 14,970 14,965 14,949
Total liabilities 614,469 614,460 574,897
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, 3,779,464, and 3,779,464 shares outstanding
at December 31, 2016, September 30, 2016 and December 31, 2015, respectively) 41 41 41
Additional paid-in capital 22,366 22,184 22,152
Unallocated common stock held by employee stock ownership plan (ESOP) (809) (850) (975)
Treasury stock, at cost (271,718, 303,663 and 303,663 shares at
December 31, 2016, September 30, 2016 and December 31, 2015, respectively) (2,971) (3,321) (3,321)
Retained earnings 41,240 40,096 37,301
Accumulated other comprehensive (loss) income (411) 1,885 252
Total shareholders' equity 59,456 60,035 55,450
Total liabilities and shareholders' equity $ 673,925 $ 674,495 $ 630,347


Income Statement (Unaudited) (Unaudited)
(Dollars in thousands, except per share data) Three Months Ended Years Ended
December 31,September 30,December 31, December 31,
2016 2016 2015 2016 2015
Interest and dividend Income:
Interest and fees on loans $ 5,589$ 5,461 $ 4,725 $ 20,842$ 17,332
Securities available-for-sale 721 709 803 2,917 3,058
FRB and FHLB dividends 39 37 42 142 67
Interest on deposits with banks - - - 1 1
Other interest income 2 1 - 6 5
Total interest and dividend income 6,351 6,208 5,570 23,908 20,463
Interest Expense:
Interest expense on deposits 399 383 364 1,518 1,457
Advances and other borrowings 193 209 149 815 550
Subordinated debentures 198 195 191 782 445
Total interest expense 790 787 704 3,115 2,452
Net interest income 5,561 5,421 4,866 20,793 18,011
Loan loss provision 452 472 343 1,833 1,303
Net interest income after loan loss provision 5,109 4,949 4,523 18,960 16,708
Noninterest income:
Service charges on deposit accounts 226 229 226 865 1,009
Net gain on sale of loans 3,026 3,164 1,546 10,346 6,672
Mortgage loan servicing fees 568 462 358 1,835 1,718
Wealth management income 140 166 155 601 625
Interchange and ATM fees 221 227 144 873 580
Appreciation in cash surrender value of life insurance 126 133 111 484 426
Net gain on sale of available-for-sale securities 55 110 - 249 234
Net (loss) gain on sale of OREO - (2) (4) 10 (4)
Net loss on fair value hedge - - - - (93)
Other noninterest income 237 200 156 727 594
Total noninterest income 4,599 4,689 2,692 15,990 11,761
Noninterest expense:
Salaries and employee benefits 4,503 4,177 3,672 16,286 14,350
Occupancy and equipment expense 657 698 681 2,815 2,988
Data processing 513 456 654 1,980 2,259
Advertising 166 192 237 696 800
Amortization of mortgage servicing fees 410 326 159 1,249 799
Amortization of core deposit intangible and tax credits 110 112 115 445 432
Federal insurance premiums 99 99 81 404 332
Postage 46 60 29 194 181
Legal, accounting and examination fees 115 120 105 394 520
Consulting fees 41 44 53 202 576
Other noninterest expense 966 875 615 3,354 2,489
Total noninterest expense 7,626 7,159 6,401 28,019 25,726
Income before income taxes 2,082 2,479 814 6,931 2,743
Income tax provision (benefit) 633 707 (67) 1,799 163
Net income $ 1,449$ 1,772 $ 881 $ 5,132$ 2,580
Basic earnings per share $ 0.39$ 0.46 $ 0.23 $ 1.36$ 0.68
Diluted earnings per share $ 0.37$ 0.46 $ 0.22 $ 1.32$ 0.67
Weighted average shares
outstanding (basic EPS) 3,800,645 3,779,464 3,781,023 3,784,788 3,813,090
Weighted average shares
outstanding (diluted EPS) 3,874,833 3,873,171 3,855,095 3,873,589 3,859,625


Financial Ratios and Other Data
(Dollars in thousands, except per share data)
(Unaudited) December 31September 30, December 31
2016 2016 2015
Asset Quality:
Nonaccrual loans $ 614 $ 1,421 $ 2,030
Loans 90 days past due 495 301 472
Restructured loans, net 43 44 46
Total nonperforming loans 1,152 1,766 2,548
Other real estate owned and other repossessed assets 825 513 595
Total nonperforming assets$ 1,977 $ 2,279 $ 3,143
Nonperforming loans / portfolio loans 0.25% 0.25% 0.63%
Nonperforming assets / assets 0.29% 0.34% 0.50%
Allowance for loan losses / portfolio loans 1.02% 1.01% 0.87%
Allowance / nonperforming loans 414.06% 263.31% 139.32%
Gross loan charge-offs for the quarter$ 338 $ 83 $ 32
Gross loan recoveries for the quarter$ 6 $ 1 $ 9
Net loan charge-offs for the quarter$ 332 $ 82 $ 23
Capital Data (At quarter end):
Tangible book value per share$ 13.65 $ 13.91 $ 12.67
Shares outstanding 3,811,409 3,779,464 3,779,464
Profitability Ratios (For the quarter):
Efficiency ratio* 73.98% 69.70% 83.17%
Return on average assets 0.86% 1.07% 0.57%
Return on average equity 9.57% 11.82% 6.39%
Net interest margin 3.61% 3.55% 3.41%
Profitability Ratios (Year-to-date):
Efficiency ratio * 74.96% 75.34% 84.96%
Return on average assets 0.78% 0.76% 0.44%
Return on average equity 8.73% 8.44% 4.77%
Net interest margin 3.46% 3.40% 3.38%
Other Information
Average total assets for the quarter$ 670,469 $ 664,580 $ 621,808
Average total assets year to date$ 654,811 $ 649,203 $ 583,658
Average earning assets for the quarter$ 615,539 $ 611,055 $ 570,302
Average earning assets year to date$ 601,824 $ 596,858 $ 533,261
Average loans for the quarter **$ 479,229 $ 471,437 $ 415,332
Average loans year to date **$ 456,808 $ 449,334 $ 374,849
Average equity for the quarter$ 60,544 $ 59,958 $ 55,170
Average equity year to date$ 58,754 $ 58,157 $ 54,051
Average deposits for the quarter$ 515,771 $ 500,381 $ 478,559
Average deposits year to date$ 498,224 $ 491,987 $ 465,276
* 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


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

Source:Eagle Bancorp Montana, Inc.