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Eagle Bancorp Montana Earns $1.1 Million, or $0.27 per Diluted Share, in Second Quarter; Increases Regular Quarterly Cash Dividend to $0.09 per Share and Renews Stock Repurchase Plan

HELENA, Mont., July 21, 2017 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported second quarter net income of $1.1 million, or $0.27 per diluted share, compared to $1.3 million, or $0.32 per diluted share, in the second quarter a year ago. In the preceding quarter, Eagle earned $763,000, or $0.20 per diluted share. In the first six months of 2017, net income was $1.8 million, or $0.47 per diluted share, compared to $1.9 million, or $0.49 per diluted share, in the first six months of 2016.

Eagle’s board of directors increased its regular quarterly cash dividend by 12.5% to $0.09 per share. The dividend will be payable September 1, 2017 to shareholders of record August 11, 2017. The current annualized yield is 1.76% at recent market prices.

“During the first half of 2017 we generated solid operating results while growing the loan portfolio and expanding our net interest margin,” said Peter J. Johnson, President and CEO. “We have both the infrastructure and banking teams in place to continue to grow and gain market share. We are pleased to be able to increase our quarterly cash dividend for over seventeen consecutive years.”

Second Quarter 2017 Highlights (at or for the three-month period ended June 30, 2017, except where noted)

  • Net income grew 39.7% to $1.1 million, or $0.27 per diluted share in the second quarter, compared to $763,000, or $0.20 per diluted share in the preceding quarter, and was down compared to $1.3 million, or $0.32 per diluted share, in the second quarter of 2016.
  • Net interest margin was 3.65%, which was up four basis points compared to the preceding quarter and a 34 basis point improvement compared to the second quarter a year ago.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 8.0% to $9.5 million compared to $8.7 million in the same period a year ago.
  • Total loans increased 14.5% to $508.1 million at June 30, 2017, compared to $443.9 million a year earlier.
  • Commercial real estate loans increased 22.5% to $246.0 million, or 48.4% of total loans at June 30, 2017, compared to $200.8 million, or 45.2% of total loans a year earlier.
  • Capital ratios remain strong with a tangible shareholders’ equity ratio of 11.29% at June 30, 2017.
  • Increased quarterly cash dividend by 12.5% to $0.09 per share.

Balance Sheet Results

“New loan originations were up during the quarter, and loan demand remains strong. We are benefiting from a healthy local economy and a seasoned lending team,” said Johnson. Total loans increased 3.9% to $508.1 million at June 30, 2017, compared to $488.9 million three months earlier and increased 14.5% compared to $443.9 million a year earlier.

Eagle originated $84.3 million in new residential mortgages during the quarter, excluding construction loans, and sold $73.3 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.00%. This production compares to residential mortgage originations of $51.7 million in the preceding quarter with sales of $56.6 million.

Commercial real estate loans increased 22.5% to $246.0 million at June 30, 2017, compared to $200.8 million a year earlier, while residential mortgage loans decreased 4.6% to $110.9 million compared to $116.2 million a year earlier. Commercial loans increased 18.9% to $58.2 million, home equity loans increased 3.0% to $49.3 million and construction loans increased 79.7% to $29.4 million, compared to a year ago.

Eagle’s total deposits increased modestly to $514.3 million at June 30, 2017, compared to $508.9 million a year earlier but decreased compared to $526.3 million at March 31, 2017. As of quarter-end, checking and money market accounts represent 53.8%, savings accounts represent 17.2%, and CDs comprise 29.0% of the total deposit portfolio.

Total assets increased 7.1% to $710.2 million at June 30, 2017, compared to $663.3 million a year earlier and increased 3.9% compared to $683.7 million three months earlier. Shareholders’ equity increased 3.5% to $62.1 million at June 30, 2017, compared to $60.0 million three months earlier and increased 5.3% compared to $59.0 million one year earlier. Tangible book value was $14.37 per share at June 30, 2017, compared to $13.81 per share at March 31, 2017, and $13.63 per share a year earlier.

Operating Results

“Our net interest margin improved four basis points compared to the preceding quarter and expanded 34 basis points compared to the year ago quarter, largely due to profitable loan growth,” Johnson said. Eagle’s net interest margin was 3.65% in the second quarter, compared to 3.61% in the preceding quarter, and 3.31% in the second quarter a year ago. Year-to-date, Eagle’s net interest margin improved 30 basis points to 3.63% compared to 3.33% in the first six months of 2016. Funding costs for the second quarter were up 12 basis points while asset yields were up 46 basis points compared to a year ago. The investment securities portfolio decreased to $123.2 million at June 30, 2017, compared to $140.4 million a year ago, which had a positive impact on the average yields on earning assets.

Eagle’s second quarter revenues increased to $9.5 million, compared to $8.7 million in both the preceding quarter and the second quarter a year ago. Year-to-date, revenues increased 9.9% to $18.1 million compared to $16.5 million in the first six months of 2016. Net interest income before the provision for loan loss increased 19.0% to $5.9 million in the second quarter compared to $4.9 million in the second quarter one year ago, and increased 7.2% compared to $5.5 million in the preceding quarter. In the first six months of the year, net interest income increased 15.8% to $11.4 million, compared to $9.8 million in the first six months of 2016.

Noninterest income decreased 6.2% to $3.6 million in the second quarter, compared to $3.8 million in the second quarter a year ago, but increased 11.3% compared to $3.2 million in the preceding quarter. The net gain on sale of mortgage loans totaled $2.3 million in the second quarter, compared to $1.8 million in the preceding quarter and $2.4 million in the second quarter a year ago. In the first six months of 2017, noninterest income increased modestly to $6.8 million compared to $6.7 million in the first six months one year ago.

Second quarter noninterest expenses were $7.6 million, compared to $7.4 million in the preceding quarter and $6.7 million in the year ago quarter. Year-to-date, noninterest expenses totaled $15.1 million compared to $13.2 million in the same period a year earlier. Higher compensation expenses contributed to the majority of the year-over-year increase.

Credit Quality

Second quarter provision for loan losses was $302,000, compared to $301,000 in the preceding quarter and $459,000 in the second quarter a year ago. The allowance for loan losses represented 309.2% of nonperforming loans at June 30, 2017, compared to 300.1% three months earlier and 196.0% a year earlier.

Nonperforming loans (NPLs) were $1.7 million at the end of the second quarter, which was unchanged compared to three months earlier, and down 22.2% compared to $2.2 million a year earlier.

Eagle’s net charge-offs were $152,000 in the second quarter, compared to net loan recoveries of $4,000 in the preceding quarter and net charge-offs of $139,000 in the second quarter a year ago. The allowance for loan losses was $5.2 million, or 1.03% of total loans at June 30, 2017, compared to $5.1 million, or 1.04% of total loans at March 31, 2017 and $4.3 million, or 0.96% of total loans a year ago.

Total OREO and other repossessed assets was $493,000 at June 30, 2017, compared to $668,000 at March 31, 2017 and $565,000 a year ago. Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.2 million at June 30, 2017 or 0.31% of total assets, compared to $2.4 million, or 0.35% of total assets three months earlier and $2.7 million, or 0.41% 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 11.29% at June 30, 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 growth.

Stock Repurchase

Eagle announced that its Board of Directors has authorized the repurchase of up to 100,000 shares of its common stock, representing approximately 2.6% of outstanding shares. Under the plan, shares may be purchased by the company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations.

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)
June 30,March 31,June 30,
2017 2017 2016
Assets:
Cash and due from banks $7,244 $5,353 $5,579
Interest-bearing deposits with banks 1,797 813 844
Total cash and cash equivalents 9,041 6,166 6,423
Securities available-for-sale, at market value 123,191 127,212 140,449
FHLB stock, at cost 4,841 3,344 3,735
FRB stock 871 871 871
Investment in Eagle Bancorp Statutory Trust I 155 155 155
Loans held-for-sale 16,206 8,432 21,246
Loans:
Residential mortgage (1-4 family) 110,906 112,872 116,207
Commercial loans 58,230 54,614 48,982
Commercial real estate 246,005 234,467 200,848
Construction loans 29,440 24,118 16,382
Consumer loans 15,293 14,786 14,618
Home equity 49,266 49,037 47,842
Unearned loan fees (1,008) (1,036) (951)
Total loans 508,132 488,858 443,928
Allowance for loan losses (5,225) (5,075) (4,260)
Net loans 502,907 483,783 439,668
Accrued interest and dividends receivable 2,174 2,101 2,274
Mortgage servicing rights, net 6,127 5,892 5,196
Premises and equipment, net 20,040 19,750 17,965
Cash surrender value of life insurance 14,289 14,191 14,683
Real estate and other assets acquired in settlement of loans, net 493 668 565
Goodwill 7,034 7,034 7,034
Core deposit intangible 328 356 449
Deferred tax asset, net 1,132 2,036 313
Other assets 1,385 1,686 2,310
Total assets $710,214 $683,677 $663,336
Liabilities:
Deposit accounts:
Noninterest bearing 91,811 95,737 88,327
Interest bearing 422,454 430,548 420,555
Total deposits 514,265 526,285 508,882
Accrued expense and other liabilities 4,867 4,309 5,000
FHLB advances and other borrowings 104,182 68,266 75,491
Long-term debt, net 24,778 24,782 14,959
Total liabilities 648,092 623,642 604,332
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 June 30, 2017, March 31, 2017 and June 30, 2016, respectively) 41 41 41
Additional paid-in capital 22,444 22,407 22,168
Unallocated common stock held by employee stock ownership plan (ESOP) (725) (767) (891)
Treasury stock, at cost (271,718, 271,718 and 303,663 shares at
June 30, 2017, March 31, 2017 and June 30, 2016, respectively) (2,971) (2,971) (3,321)
Retained earnings 42,460 41,699 38,626
Accumulated other comprehensive income (loss) 873 (374) 2,381
Total shareholders' equity 62,122 60,035 59,004
Total liabilities and shareholders' equity $710,214 $683,677 $663,336

Income Statement (Unaudited) (Unaudited)
(Dollars in thousands, except per share data) Three Months Ended Years Ended
June 30,March 31,June 30, June 30,
2017 2017 2016 2017 2016
Interest and dividend Income:
Interest and fees on loans $6,174 $5,570 $4,955 $11,744 $9,792
Securities available-for-sale 714 729 740 1,443 1,487
FRB and FHLB dividends 36 40 35 76 66
Interest on deposits with banks 1 - 1 1 1
Other interest income - 1 - 1 3
Total interest and dividend income 6,925 6,340 5,731 13,265 11,349
Interest Expense:
Interest expense on deposits 376 380 381 756 736
FHLB advances and other borrowings 322 205 212 527 413
Long-term debt 347 272 195 619 389
Total interest expense 1,045 857 788 1,902 1,538
Net interest income 5,880 5,483 4,943 11,363 9,811
Loan loss provision 302 301 459 603 909
Net interest income after loan loss provision 5,578 5,182 4,484 10,760 8,902
Noninterest income:
Service charges on deposit accounts 239 232 211 471 410
Net gain on sale of loans 2,263 1,825 2,438 4,088 4,156
Mortgage loan servicing fees 509 547 442 1,056 805
Wealth management income 180 141 159 321 295
Interchange and ATM fees 228 206 223 434 425
Appreciation in cash surrender value of life insurance 126 124 113 250 225
Net (loss) gain on sale of available-for-sale securities (14) - 84 (14) 84
Net (loss) gain on sale of real estate owned and other repossessed property (24) (1) 12 (25) 12
Other noninterest income 63 134 124 197 290
Total noninterest income 3,570 3,208 3,806 6,778 6,702
Noninterest expense:
Salaries and employee benefits 4,586 4,433 3,916 9,019 7,606
Occupancy and equipment expense 672 717 671 1,389 1,460
Data processing 566 567 463 1,133 1,011
Advertising 269 189 150 458 338
Amortization of mortgage servicing fees 262 262 285 524 513
Amortization of core deposit intangible and tax credits 107 107 111 214 223
Federal insurance premiums 36 84 123 120 206
Postage 51 48 34 99 88
Legal, accounting and examination fees 200 85 61 285 159
Consulting fees 59 49 34 108 117
Write-down on real estate owned and other repossessed property 9 36 - 45 -
Other noninterest expense 803 862 838 1,665 1,513
Total noninterest expense 7,620 7,439 6,686 15,059 13,234
Income before income taxes 1,528 951 1,604 2,479 2,370
Income tax provision 462 188 340 650 459
Net income $1,066 $763 $1,264 $1,829 $1,911
Basic earnings per share $0.28 $0.20 $0.34 $0.48 $0.51
Diluted earnings per share $0.27 $0.20 $0.32 $0.47 $0.49
Weighted average shares
outstanding (basic EPS) 3,811,409 3,811,409 3,779,464 3,811,409 3,779,464
Weighted average shares
outstanding (diluted EPS) 3,869,885 3,875,677 3,873,171 3,872,765 3,873,171

Financial Ratios and Other Data
(Dollars in thousands, except per share data)
(Unaudited) June 30March 31June 30
2017 2017 2016
Asset Quality:
Nonaccrual loans $1,611 $651 $2,040
Loans 90 days past due 79 998 89
Restructured loans, net - 42 44
Total nonperforming loans 1,690 1,691 2,173
Other real estate owned and other repossessed assets 493 668 565
Total nonperforming assets$2,183 $2,359 $2,738
Nonperforming loans / portfolio loans 0.33% 0.35% 0.49%
Nonperforming assets / assets 0.31% 0.35% 0.41%
Allowance for loan losses / portfolio loans 1.03% 1.04% 0.96%
Allowance / nonperforming loans 309.17% 300.12% 196.04%
Gross loan charge-offs for the quarter$189 $9 $148
Gross loan recoveries for the quarter$37 $13 $9
Net loan charge-offs for the quarter$152 $(4)$139
Capital Data (At quarter end):
Tangible book value per share$14.37 $13.81 $13.63
Shares outstanding 3,811,409 3,811,409 3,779,464
Profitability Ratios (For the quarter):
Efficiency ratio* 79.50% 84.36% 75.15%
Return on average assets 0.61% 0.46% 0.78%
Return on average equity 6.97% 5.19% 8.76%
Net interest margin 3.65% 3.61% 3.31%
Profitability Ratios (Year-to-date):
Efficiency ratio * 81.83% 84.36% 78.79%
Return on average assets 0.54% 0.46% 0.60%
Return on average equity 6.10% 5.19% 6.68%
Net interest margin 3.63% 3.61% 3.33%
Other Information
Average total assets for the quarter$700,682 $662,541 $649,585
Average total assets year to date$682,486 $662,541 $641,188
Average earning assets for the quarter$644,885 $607,048 $596,479
Average earning assets year to date$626,791 $607,048 $589,432
Average loans for the quarter **$512,138 $474,439 $448,158
Average loans year to date **$493,393 $474,439 $438,283
Average equity for the quarter$61,134 $58,752 $57,746
Average equity year to date$59,959 $58,752 $57,257
Average deposits for the quarter$512,736 $515,851 $493,879
Average deposits year to date$515,054 $515,851 $487,463
* 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.