HELENA, Mont., April 28, 2014 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (Nasdaq:EBMT), (the "Company," "Eagle"), the holding company of American Federal Savings Bank, today reported net income was $108,000, or $0.03 per diluted share, in its third fiscal quarter ended March 31, 2014, compared to $474,000, or $0.12 per diluted share in the preceding quarter and $907,000, or $0.23 per diluted share, in the third quarter a year ago. In the first nine months of fiscal 2014, Eagle's net income was $1.2 million, or $0.31 per diluted share compared to $1.3 million, or $0.33 per diluted share, in the first nine months of fiscal 2013.
"Improving asset quality trends, and growing demand for loans and core deposits are contributing to our profitability this year," said Peter J. Johnson, President and CEO. "The steady economy in Montana has increased loan demand from local retail and business customers, and demand for mortgage loans continues to be strong in the markets we serve."
The Company also announced its board of directors has declared its regular quarterly cash dividend of $0.0725 per share payable June 6, 2014 to shareholders of record May 16, 2014.
Third Quarter Fiscal 2014 Highlights
- Net income was $108,000, or $0.03 per diluted share.
- Third quarter net interest margin was 3.29% compared to 3.32% three months earlier.
- Total loans increased 4.5% to $260.8 million at March 31, 2014, compared to $249.5 million three months earlier and increased 22.6% compared to $212.7 million a year earlier.
- Commercial loans increased 69.7%, compared to a year ago, to $29.5 million.
- Total deposits increased 1.5% to $438.8 million at the end of March compared to $432.2 million three months earlier and increased 4.1% compared to $421.6 million a year earlier.
- Nonperforming assets continue to be maintained at a low level and totaled only $1.07 million, or 0.21% of total assets at March 31, 2015, compared to $1.41 million, or 0.27% of total assets three months earlier and $2.06 million, or 0.40% of total assets a year ago.
- Nonperforming loans (NPLs) decreased 37.7% to $618,000 at March 31, 2014, compared to $992,000 three months earlier and decreased 36.5% compared to $973,000 a year ago.
- Capital ratios remain strong with a Tier 1 leverage ratio of 9.94% at March 31, 2014.
- Declared a regular quarterly cash dividend of $0.0725 per share.
Balance Sheet Results
Total loans increased 4.5% to $260.8 million at March 31, 2014, compared to $249.5 million three months earlier and increased 22.6% compared to $212.7 million a year earlier. "Loan activity continued to improve, with the majority of the growth year over year coming from the increase in commercial real estate, commercial loans and residential loans," said Johnson.
Commercial real estate loans increased 12.0% to $89.9 million at March 31, 2014, compared to $80.2 million a year earlier, while residential mortgage loans increased 35.0% to $88.5 million compared to $65.6 million a year earlier. Commercial loans increased 69.7% to $29.5 million and home equity loans remained relatively unchanged at $36.0 million, compared to a year ago.
Eagle's total deposits increased 1.5% to $438.8 million at March 31, 2014, compared to $432.3 million three months earlier and increased 4.1% when compared to $421.6 million a year earlier. "Our quarterly deposit increase came from a combination of higher balances in checking and savings accounts," said Johnson. Checking and money market accounts represent 51%, savings accounts represent 14%, and CDs comprise 35% of the total deposit portfolio at March 31, 2014.
Total assets increased 1.4% to $519.8 million at March 31, 2014, compared to $512.8 million a year earlier and shareholders' equity was $49.5 million at March 31, 2014, compared to $53.0 million a year ago. Tangible book value was $10.64 per share at March 31, 2014, a decline compared to $11.57 per share at March 31, 2013. The year-over-year decline was attributable principally to declines in the fair value of the investment portfolio that were caused by rising interest rates.
Credit Quality
Eagle's third quarter provision for loan losses was $128,000, compared to $153,000 in the preceding quarter and $116,000 in the third quarter a year ago. As of March 31, 2014, the allowance for loan losses represented 351.9% of nonperforming loans compared to 213.7% three months earlier and 189.6% a year earlier.
Net charge-offs were $73,000 in the third quarter compared to $23,000 in the preceding quarter and $42,000 in the third quarter a year ago. The allowance for loan losses was $2.18 million, or 0.83% of total loans at March 31, 2014, compared to $2.12 million, or 0.85% of total loans at December 31, 2013, and $1.90 million, or 0.89% of total loans a year ago.
Nonperforming loans (NPLs) decreased 37.7% to $618,000 at March 31, 2014, compared to $992,000 three months earlier, and decreased 36.5% compared to $973,000 a year ago. The decrease compared to the prior quarter end was principally due to several small loans removed from nonaccrual during the quarter.
"The increase in the other real estate owned (OREO) compared to the preceding quarter was due to one property moving from non-accrual to OREO," said Johnson. OREO and other repossessed assets increased 9.3% to $458,000 at March 31, 2013 compared to $419,000 three months earlier and decreased 57.9% compared to $1.1 million a year earlier.
Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, decreased 23.7% to $1.07 million at March 31, 2014, compared to $1.41 million three months earlier, and decreased 47.8% when compared to $2.06 million a year ago.
Operating Results
Eagle's revenues (net interest income before the provision for loan losses, plus non-interest income) were $5.94 million in the third quarter, compared to $6.27 million in the preceding quarter and $6.85 million in the third quarter a year ago. In the first nine months of fiscal 2014, Eagle's revenues increased 19.0% to $18.93 million compared to $15.91 million in the first nine months of fiscal 2013. Net interest income before the provision for loan loss increased slightly to $3.82 million in the third quarter of fiscal 2014, compared to $3.80 million in the preceding quarter and increased 6.9% compared to $3.57 million in the third quarter a year ago. In the first nine months of the fiscal year, net interest income increased 22.9% to $11.24 million compared to $9.15 million the first nine months a year ago.
"Our net interest margin was down three basis points to 3.29% in the third quarter of fiscal 2014, and up 17 basis points from a year ago," said Johnson. "We do expect to continue to see pressure on loan yields as loans continue to reprice in this very low interest rate environment." Funding costs for the third quarter of fiscal 2014 went down two basis points while asset yields decreased five basis points compared to the preceding quarter. The investment securities portfolio decreased to $191.3 million at March 31, 2014 compared to $226.0 million a year ago, which increased average yields on earning asset balances moderately. In the first nine months of fiscal 2014, Eagle's net interest margin was 3.25% compared to 3.35% in the first nine months of fiscal 2013.
Noninterest income decreased to $2.12 million in the third quarter of fiscal 2014, compared to $2.47 million in the preceding quarter and $3.27 million in the third quarter a year ago. Year-to-date, noninterest income increased 13.7% to $7.69 million compared to $6.77 million in the first nine months of fiscal 2013.
Eagle's third quarter net gain on the sale of loans was $836,000 compared to $963,000 in the preceding quarter and $1.72 million in the third quarter a year ago. "Our gain on sale of loans was down 51.3% compared to the third quarter a year ago when mortgage refinance activity was near its peak," said Johnson. "Montana's housing market continues to improve and demand for residential mortgages, while down from last year's peak from refinance activity, remains healthy. We anticipate steady to improving markets for residential lending in most of our market for the remainder of this year."
In the third quarter of fiscal 2014, noninterest expenses increased 1.5% to $5.70 million, compared to $5.61 million in the preceding quarter but were down 11.7% compared to $6.45 million in the third quarter a year ago. Year-to-date, noninterest expense was $17.17 million compared to $14.67 million in the same period a year earlier. "The increase in noninterest expense compared to a year ago is due to a full period of realized costs associated with operating the seven new branches, as well as the two new mortgage loan origination locations that we acquired in late 2012," Johnson noted.
Capital Management
Eagle Bancorp Montana continues to meet the well capitalized thresholds for regulatory purposes with a Tier 1 leverage ratio of 9.94% at March 31, 2014.
About the Company
Eagle Bancorp Montana, Inc. is a savings and loan holding company headquartered in Helena, Montana and is the holding company of American Federal Savings Bank, a community bank established in 1922 that serves consumers and small businesses in Southern Montana through 13 banking offices. Additional information is available on the bank's website at www.americanfederalsavingsbank.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) | (Unaudited) |
| March 31, | December 31, | March 31, | |
| 2014 | 2013 | 2013 | |
| Assets: | |||
| Cash and due from banks | $ 6,278 | $ 6,439 | $ 4,517 |
| Interest-bearing deposits with banks | 3,013 | 616 | 360 |
| Federal funds sold | -- | -- | 12,161 |
| Total cash and cash equivalents | 9,291 | 7,055 | 17,038 |
| Securities available-for-sale, at market value | 191,280 | 195,007 | 225,999 |
| FHLB stock, at cost | 1,878 | 1,896 | 1,949 |
| Investment in Eagle Bancorp Statutory Trust I | 155 | 155 | 155 |
| Loans held-for-sale | 9,405 | 14,655 | 12,627 |
| Loans: | |||
| Residential mortgage (1-4 family) | 88,507 | 83,445 | 65,554 |
| Commercial loans | 29,477 | 31,348 | 17,373 |
| Commercial real estate | 89,896 | 81,319 | 80,229 |
| Construction loans | 5,050 | 4,213 | 2,228 |
| Consumer loans | 12,299 | 12,796 | 11,371 |
| Home equity | 35,952 | 36,697 | 36,073 |
| Unearned loan fees | (414) | (319) | (106) |
| Total loans | 260,767 | 249,499 | 212,722 |
| Allowance for loan losses | (2,175) | (2,120) | (1,900) |
| Net loans | 258,592 | 247,379 | 210,822 |
| Accrued interest and dividends receivable | 2,219 | 2,388 | 2,237 |
| Mortgage servicing rights, net | 3,602 | 3,526 | 2,832 |
| Premises and equipment, net | 19,655 | 19,155 | 19,040 |
| Cash surrender value of life insurance | 11,004 | 11,035 | 9,393 |
| Real estate and other assets acquired in settlement of loans, net of allowance for losses | 458 | 419 | 1,087 |
| Goodwill | 7,034 | 7,034 | 6,890 |
| Core deposit intangible | 788 | 830 | 981 |
| Other assets | 4,470 | 5,853 | 1,777 |
| Total assets | $ 519,831 | $ 516,387 | $ 512,827 |
| Liabilities: | |||
| Deposit accounts: | |||
| Noninterest bearing | 59,889 | 56,775 | 55,998 |
| Interest bearing | 378,913 | 375,466 | 365,589 |
| Total deposits | 438,802 | 432,241 | 421,587 |
| Accrued expense and other liabilities | 3,164 | 3,167 | 3,714 |
| Federal funds purchased | -- | -- | -- |
| FHLB advances and other borrowings | 23,211 | 28,067 | 29,411 |
| Subordinated debentures | 5,155 | 5,155 | 5,155 |
| Total liabilities | 470,332 | 468,630 | 459,867 |
| 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; 3,918,399; 3,918,399; 3,898,685 outstanding at March 31, 2014, December 31, 2013 and March 31, 2013, respectively) | 41 | 41 | 41 |
| Additional paid-in capital | 22,120 | 22,118 | 22,106 |
| Unallocated common stock held by employee stock ownership plan (ESOP) | (1,265) | (1,307) | (1,431) |
| Treasury stock, at cost (164,728 shares at March 31, 2014 and December 31, 2013 and 184,442 at March 31, 2013) | (1,800) | (1,800) | (1,993) |
| Retained earnings | 34,246 | 34,422 | 33,447 |
| Accumulated other comprehensive (loss) gain | (3,843) | (5,717) | 790 |
| Total shareholders' equity | 49,499 | 47,757 | 52,960 |
| Total liabilities and shareholders' equity | $ 519,831 | $ 516,387 | $ 512,827 |
| Income Statement | (Unaudited) | (Unaudited) | |||
| (Dollars in thousands, except per share data) | Three Months Ended | Nine Months Ended | |||
| March 31, | December 31, | March 31, | March 31, | March 31, | |
| 2014 | 2013 | 2013 | 2014 | 2013 | |
| Interest and dividend Income: | |||||
| Interest and fees on loans | $ 3,254 | $ 3,231 | $ 3,012 | $ 9,606 | $ 8,316 |
| Securities available-for-sale | 1,066 | 1,083 | 1,087 | 3,168 | 2,491 |
| Interest on deposits with banks | 1 | 3 | 10 | 5 | 26 |
| Total interest and dividend income | 4,321 | 4,317 | 4,109 | 12,779 | 10,833 |
| Interest Expense: | |||||
| Interest expense on deposits | 329 | 312 | 305 | 962 | 886 |
| Advances and other borrowings | 152 | 183 | 208 | 517 | 732 |
| Subordinated debentures | 21 | 21 | 22 | 63 | 69 |
| Total interest expense | 502 | 516 | 535 | 1,542 | 1,687 |
| Net interest income | 3,819 | 3,801 | 3,574 | 11,237 | 9,146 |
| Provision for loan losses | 128 | 153 | 116 | 440 | 538 |
| Net interest income after provision for loan losses | 3,691 | 3,648 | 3,458 | 10,797 | 8,608 |
| Noninterest income: | |||||
| Service charges on deposit accounts | 226 | 264 | 197 | 769 | 547 |
| Net gain on sale of loans | 836 | 963 | 1,718 | 3,390 | 3,492 |
| Mortgage loan servicing fees | 359 | 339 | 262 | 1,012 | 743 |
| Net gain on sale of available-for-sale securities | 196 | 405 | 465 | 1,032 | 777 |
| Net loss on sale of OREO | -- | (22) | (9) | (50) | (32) |
| Net (loss) gain on fair value hedge | (72) | 48 | 43 | (1) | 108 |
| Other income | 578 | 472 | 597 | 1,538 | 1,130 |
| Total noninterest income | 2,123 | 2,469 | 3,273 | 7,690 | 6,765 |
| Noninterest expense: | |||||
| Salaries and employee benefits | 3,209 | 3,088 | 3,193 | 9,639 | 6,765 |
| Occupancy and equipment expense | 711 | 688 | 692 | 2,086 | 1,542 |
| Data processing | 458 | 483 | 512 | 1,389 | 852 |
| Advertising | 211 | 206 | 278 | 668 | 697 |
| Amortization of mortgage servicing fees | 132 | 141 | 158 | 466 | 566 |
| Amortization of core deposit intangible and tax credits | 105 | 108 | 145 | 322 | 193 |
| Federal insurance premiums | 84 | 84 | 82 | 252 | 174 |
| Postage | 40 | 50 | 36 | 132 | 99 |
| Legal, accounting and examination fees | 111 | 145 | 123 | 380 | 336 |
| Consulting fees | 164 | 69 | 14 | 319 | 75 |
| Acquisition costs | -- | -- | 712 | -- | 1,920 |
| Provision for valuation loss on OREO | -- | -- | 93 | -- | 191 |
| Other | 474 | 551 | 415 | 1,512 | 1,264 |
| Total noninterest expense | 5,699 | 5,613 | 6,453 | 17,165 | 14,674 |
| Income before provision for income taxes | 115 | 504 | 278 | 1,322 | 699 |
| Provision (benefit) for income taxes | 7 | 30 | (629) | 73 | (590) |
| Net income | $ 108 | $ 474 | $ 907 | $ 1,249 | $ 1,289 |
| Basic earnings per share | $ 0.03 | $ 0.12 | $ 0.24 | $ 0.32 | $ 0.34 |
| Diluted earnings per share | $ 0.03 | $ 0.12 | $ 0.23 | $ 0.31 | $ 0.33 |
| Weighted average shares outstanding (basic EPS) | 3,918,399 | 3,911,756 | 3,752,813 | 3,909,549 | 3,739,806 |
| Weighted average shares outstanding (diluted EPS) | 3,973,202 | 3,978,978 | 3,937,255 | 3,976,599 | 3,933,105 |
| Financial Ratios and Other Data | |||
| (Dollars in thousands, except per share data) | |||
| (Unaudited) | March 31 | December 31, | March 31 |
| 2014 | 2013 | 2013 | |
| Asset Quality: | |||
| Nonaccrual loans | $ 404 | $ 778 | $ 669 |
| Loans 90 days past due | -- | -- | -- |
| Restructured loans, net | 214 | 214 | 304 |
| Total nonperforming loans | 618 | 992 | 973 |
| Other real estate owned and other repossessed assets | 458 | 419 | 1,087 |
| Total nonperforming assets | $ 1,076 | $ 1,411 | $ 2,060 |
| Nonperforming loans / portfolio loans | 0.24% | 0.40% | 0.46% |
| Nonperforming assets / assets | 0.21% | 0.27% | 0.40% |
| Allowance for loan losses / portfolio loans | 0.83% | 0.85% | 0.89% |
| Allowance / nonperforming loans | 351.94% | 213.71% | 195.27% |
| Gross loan charge-offs for the quarter | $ 74 | $ 24 | $ 42 |
| Gross loan recoveries for the quarter | $ 1 | $ 1 | $ -- |
| Net loan charge-offs for the quarter | $ 73 | $ 23 | $ 42 |
| Capital Data (At quarter end): | |||
| Tangible book value per share | $ 10.64 | $ 10.17 | $ 11.57 |
| Shares outstanding | 3,918,399 | 3,918,399 | 3,898,685 |
| Profitability Ratios (For the quarter): | |||
| Efficiency ratio* | 93.39% | 87.13% | 91.36% |
| Return on average assets | 0.08% | 0.37% | 0.71% |
| Return on average equity | 0.88% | 3.87% | 6.82% |
| Net interest margin | 3.29% | 3.32% | 3.12% |
| Profitability Ratios (Year-to-date): | |||
| Efficiency ratio * | 88.31% | 85.98% | 90.26% |
| Return on average assets | 0.33% | 0.45% | 0.43% |
| Return on average equity | 3.42% | 4.71% | 3.19% |
| Net interest margin | 3.25% | 3.23% | 3.35% |
| Other Information | |||
| Average total assets for the quarter | $ 512,395 | $ 509,767 | $ 508,073 |
| Average total assets year to date | $ 511,001 | $ 510,294 | $ 404,232 |
| Average earning assets for the quarter | $ 464,796 | $ 458,480 | $ 458,676 |
| Average earning assets year to date | $ 460,691 | $ 458,615 | $ 363,464 |
| Average loans for the quarter ** | $ 262,579 | $ 254,597 | $ 230,241 |
| Average loans year to date ** | $ 253,914 | $ 249,582 | $ 200,908 |
| Average equity for the quarter | $ 49,018 | $ 49,021 | $ 53,202 |
| Average equity year to date | $ 48,651 | $ 48,434 | $ 53,907 |
| Average deposits for the quarter | $ 433,140 | $ 426,745 | $ 415,789 |
| Average deposits year to date | $ 427,395 | $ 424,522 | $ 307,325 |
| * 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 | |||