HELENA, Montana, Oct. 28, 2014 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (Nasdaq:EBMT), (the "Company," "Eagle"), the holding company of Opportunity Bank of Montana, today reported that net income increased 7.6% to $718,000, or $0.18 per diluted share, in the quarter ended September 30, 2014, compared to $667,000, or $0.17 per diluted share, in the quarter ended September 30, 2013. In the preceding quarter Eagle earned $862,000, or $0.21 per diluted share.
"Our Montana franchise continues to generate solid core earnings from operations," stated Peter J. Johnson, President and CEO. "This quarter's revenues were up slightly and earnings per diluted share increased 6% compared to a year ago. The net interest margin held steady in spite of a challenging interest rate environment. Additionally, net loans increased 27.9% compared to a year ago, as the steady economy in Montana continues to drive loan demand from local business customers, and demand for mortgage loans."
In May 2014, the Company applied to the State of Montana to form an interim bank for the purpose of facilitating the conversion of its wholly owned subsidiary, American Federal Savings Bank, from a federally chartered savings bank to a Montana-chartered commercial bank. All regulatory approvals were granted in the quarter ended September 30, 2014, and the conversion became effective on October 14, 2014. As a result of the conversion, the Company's subsidiary has changed its name to Opportunity Bank of Montana.
In August 2014, the Board of Directors approved a change in the Company's fiscal year end from June 30 to December 31 of each year. The fiscal year change is effective beginning with the Company's 2015 fiscal year, which will now begin on January 1, 2015 and end on December 31, 2015. As a result of the change, the Company will have a six-month fiscal transition period beginning June 30, 2014 and ending December 31, 2014.
The Company also announced its board of directors declared its regular quarterly cash dividend of $0.075 per share. The dividend will be payable December 5, 2014 to shareholders of record November 15, 2014.
Quarter Ended September 30, 2014 Highlights
- Net income was $718,000, or $0.18 per diluted share.
- Net interest margin was 3.34% for the quarter ended September 30, 2014, compared to 3.27% three months earlier.
- Total loans increased 27.9% to $300.9 million at September 30, 2014, compared to $235.3 million a year earlier.
- Commercial loans increased 42.6%, compared to a year ago, to $38.4 million.
- Total deposits increased 2.8% to $440.1 million, compared to $428.3 million a year earlier.
- Nonperforming assets remain at a low level and totaled $1.2 million, or 0.21% of total assets at September 30, 2014, compared to $980,000, or 0.18% of total assets three months earlier and $1.1 million, or 0.21% of total assets a year ago.
- Nonperforming loans (NPLs) were $536,000 at September 30, 2014, compared to $522,000 three months earlier and $618,000 a year ago.
- Capital ratios remain strong with a Tier 1 leverage ratio of 9.39% at September 30, 2014.
- Declared a regular quarterly cash dividend of $0.075 per share, providing a 2.8% current yield at recent market prices.
Balance Sheet Results
"Loan activity has been robust, particularly in commercial real estate, commercial loans and residential loans, which are loan categories that we have focused on growing," said Johnson. Total loans increased 9.0% to $300.9 million at September 30, 2014, compared to $276.1 million three months earlier and increased 27.9% compared to $235.3 million a year earlier.
"The residential mortgage business continues to be a profitable market for Eagle, and while mortgage refinance activity has slowed down from its record-setting pace of a few years ago, new mortgage originations have been steadily increasing," said Johnson. "During the quarter ended September 30, 2014, we originated $70.8 million in new residential mortgages, excluding construction loans, and sold $50.8 million in residential mortgages. This production compares to residential mortgage originations of $53.7 million in the preceding quarter with sales of $42.4 million. Our gross margin on sale of mortgage loans was approximately 2.8% for the first quarter."
Commercial real estate loans increased 28.9% to $102.4 million at September 30, 2014, compared to $79.4 million a year earlier, while residential mortgage loans increased 29.6% to $98.5 million compared to $76.0 million a year earlier. Commercial loans increased 42.6% to $38.4 million and home equity loans increased 9.1% to $39.4 million, compared to a year ago.
Eagle's total deposits increased 2.8% to $440.1 million at September 30, 2014, compared to $428.3 million a year earlier, and were up 3.1% compared to $427.0 million at June 30, 2014. Checking and money market accounts represent 52.0%, savings accounts represent 13.7%, and CDs comprise 34.3% of the total deposit portfolio at September 30, 2014.
Total assets increased 7.8% to $553.9 million at September 30, 2014, compared to $513.9 million a year earlier. Shareholders' equity improved to $52.6 million at September 30, 2014, compared to $51.7 million at June 30, 2014, and $48.2 million year ago. Tangible book value was $11.62 per share at September 30, 2014, an increase compared to $11.10 per share at June 30, 2014 and compared to $10.64 per share a year earlier. The year-over-year increase reflects steady growth in earnings and increases in the fair value of the investment portfolio that were caused by lower interest rates.
Credit Quality
"Nearly every credit quality metric improved during the quarter compared to a year ago, with nonperforming loans and net charge-offs both decreasing compared to September 30, 2013," said Johnson. "We increased our provision for loan losses in the first quarter to account for our double digit loan growth." Eagle's provision for loan losses for the quarter ended September 30, 2014, was $215,000, compared to $168,000 in the preceding quarter and $159,000 in the first quarter a year ago. As of September 30, 2014, the allowance for loan losses represented 429.1% of nonperforming loans compared to 407.1% three months earlier and 208.5% a year earlier.
Nonperforming loans (NPLs) were $536,000 at September 30, 2014, compared to $522,000 three months earlier, and $618,000 a year ago. Net charge-offs were $40,000 in the quarter ended September 30, 2014, compared to $218,000 in the preceding quarter and $73,000 in the first quarter a year ago. The allowance for loan losses was $2.3 million, or 0.76% of total loans at September 30, 2014, compared to $2.1 million, or 0.79% of total loans at June 30, 2014, and $2.0 million, or 0.83% of total loans a year ago.
OREO and other repossessed assets increased slightly to $619,000 at September 30, 2014 compared to $458,000 both three months earlier and a year earlier.
Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $1.2 million at September 30, 2014, compared to $980,000 three months earlier, and $1.1 million a year ago.
Operating Results
Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 7.8% to $6.8 million in the quarter ended September 30, 2014, compared to $6.4 million in the preceding quarter and were up modestly compared to $6.7 million in the first quarter a year ago. Net interest income before the provision for loan loss increased 4.7% to $4.2 million in the quarter ended September 30, 2014, compared to $4.0 million in the preceding quarter and increased 15.8% compared to $3.6 million in the first quarter a year ago.
"Our solid first quarter net interest margin was a result of our improved earning asset mix and the shift in our balance sheet from investments to loans," said Johnson. Eagle's net interest margin improved two basis points to 3.34% in the quarter ended September 30, 2014 compared to the preceding quarter and increased 19 basis points from the first quarter a year ago," said Johnson. Funding costs for the quarter ended September 30, 2014 were down four basis points while asset yields increased 15 basis points compared to a year ago. The investment securities portfolio decreased to $178.4 million at September 30, 2014 compared to $201.8 million a year ago, which increased average yields on earning asset balances moderately.
Eagle's noninterest income increased 13.8% to $2.7 million in the quarter ended September 30, 2014 compared to $2.4 million in the preceding quarter but was down compared to $3.1 million in the first quarter a year ago.
This quarter's net gain on the sale of loans increased 16.9% to $1.4 million, compared to $1.2 million in the preceding quarter but was down 12.1% compared to $1.6 million in the first quarter a year ago. "We have seen steady improvements in new home purchase activity, which generated higher gains on sale of loans compared to the preceding quarter," said Johnson. "The year over year decline is due to lower mortgage refinance activity compared to a year ago, when it was at its highest. As Montana's housing market continues to improve, we anticipate steady to improving markets for residential lending over the next few quarters."
In the quarter ended September 30, 2014, noninterest expenses were $5.9 million, which was unchanged from the first quarter of fiscal 2014 and up slightly compared to $5.7 million in the preceding quarter.
Capital Management
Eagle Bancorp Montana continues to meet the well capitalized thresholds for regulatory purposes with a Tier 1 leverage ratio of 9.39% at September 30, 2014.
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 Southern 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) |
| September 30, | June 30, | September 30, | |
| 2014 | 2014 | 2013 | |
| Assets: | |||
| Cash and due from banks | $ 3,295 | $ 6,208 | $ 6,493 |
| Interest-bearing deposits with banks | 615 | 611 | 633 |
| Federal funds sold | -- | -- | -- |
| Total cash and cash equivalents | 3,910 | 6,819 | 7,126 |
| Securities available-for-sale, at market value | 178,428 | 189,553 | 201,832 |
| FHLB stock, at cost | 1,878 | 1,878 | 1,914 |
| Investment in Eagle Bancorp Statutory Trust I | 155 | 155 | 155 |
| Loans held-for-sale | 21,656 | 17,245 | 20,717 |
| Loans: | |||
| Residential mortgage (1-4 family) | 98,543 | 92,321 | 76,017 |
| Commercial loans | 38,387 | 34,412 | 26,920 |
| Commercial real estate | 102,377 | 92,043 | 79,399 |
| Construction loans | 8,962 | 6,923 | 4,224 |
| Consumer loans | 13,692 | 12,964 | 12,883 |
| Home equity | 39,408 | 37,866 | 36,117 |
| Unearned loan fees | (456) | (413) | (215) |
| Total loans | 300,913 | 276,116 | 235,345 |
| Allowance for loan losses | (2,300) | (2,125) | (2,000) |
| Net loans | 298,613 | 273,991 | 233,345 |
| Accrued interest and dividends receivable | 2,340 | 2,429 | 2,339 |
| Mortgage servicing rights, net | 3,913 | 3,756 | 3,420 |
| Premises and equipment, net | 20,037 | 20,101 | 18,801 |
| Cash surrender value of life insurance | 11,653 | 11,082 | 10,953 |
| Real estate and other assets acquired in settlement of loans, net | 619 | 458 | 496 |
| Goodwill | 7,034 | 7,034 | 6,890 |
| Core deposit intangible | 703 | 745 | 875 |
| Other assets | 2,927 | 3,862 | 4,992 |
| Total assets | $ 553,866 | $ 539,108 | $ 513,855 |
| Liabilities: | |||
| Deposit accounts: | |||
| Noninterest bearing | 66,263 | 58,432 | 62,533 |
| Interest bearing | 373,882 | 368,613 | 365,747 |
| Total deposits | 440,145 | 427,045 | 428,280 |
| Accrued expense and other liabilities | 4,749 | 3,749 | 3,761 |
| Federal funds purchased | -- | -- | -- |
| FHLB advances and other borrowings | 51,172 | 51,454 | 28,466 |
| Subordinated debentures | 5,155 | 5,155 | 5,155 |
| Total liabilities | 501,221 | 487,403 | 465,662 |
| 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; 3,866,233; 3,916,233; 3,898,685 outstanding at September 30, 2014, June 30, 2014 and September 30, 2013, respectively) | 41 | 41 | 41 |
| Additional paid-in capital | 22,126 | 22,123 | 22,114 |
| Unallocated common stock held by employee stock ownership plan (ESOP) | (1,182) | (1,224) | (1,348) |
| Treasury stock, at cost | |||
| (216,894 shares at September 30, 2014 166,894 shares at June 30, 2014 and 184,442 shares at September 30, 2013) | (2,333) | (1,800) | (1,993) |
| Retained earnings | 35,252 | 34,824 | 34,233 |
| Accumulated other comprehensive loss | (1,259) | (2,259) | (4,854) |
| Total shareholders' equity | 52,645 | 51,705 | 48,193 |
| Total liabilities and shareholders' equity | $ 553,866 | $ 539,108 | $ 513,855 |
| Income Statement | (Unaudited) | ||
| (Dollars in thousands, except per share data) | Three Months Ended | ||
| September 30, | June 30, | September 30, | |
| 2014 | 2014 | 2013 | |
| Interest and dividend Income: | |||
| Interest and fees on loans | $ 3,658 | $ 3,379 | $ 3,121 |
| Securities available-for-sale | 1,044 | 1,117 | 1,019 |
| Interest on deposits with banks | 1 | 3 | 1 |
| Total interest and dividend income | 4,703 | 4,499 | 4,141 |
| Interest Expense: | |||
| Interest expense on deposits | 338 | 332 | 321 |
| Advances and other borrowings | 156 | 147 | 182 |
| Subordinated debentures | 21 | 21 | 21 |
| Total interest expense | 515 | 500 | 524 |
| Net interest income | 4,188 | 3,999 | 3,617 |
| Loan loss provision | 215 | 168 | 159 |
| Net interest income after loan loss provision | 3,973 | 3,831 | 3,458 |
| Noninterest income: | |||
| Service charges on deposit accounts | 284 | 253 | 279 |
| Net gain on sale of loans | 1,398 | 1,196 | 1,591 |
| Mortgage loan servicing fees | 380 | 360 | 314 |
| Net gain on sale of available-for-sale securities | 194 | 41 | 431 |
| Net loss on sale of OREO | -- | -- | (28) |
| Net (loss) gain on fair value hedge | (47) | (62) | 23 |
| Other income | 448 | 563 | 488 |
| Total noninterest income | 2,657 | 2,351 | 3,098 |
| Noninterest expense: | |||
| Salaries and employee benefits | 3,131 | 3,183 | 3,342 |
| Occupancy and equipment expense | 695 | 688 | 687 |
| Data processing | 540 | 481 | 448 |
| Advertising | 166 | 148 | 251 |
| Amortization of mortgage servicing fees | 166 | 164 | 193 |
| Amortization of core deposit intangible and tax credits | 105 | 105 | 109 |
| Federal insurance premiums | 73 | 19 | 84 |
| Postage | 44 | 43 | 42 |
| Legal, accounting and examination fees | 262 | 175 | 124 |
| Consulting fees | 176 | 218 | 86 |
| Write-down on OREO | -- | 10 | -- |
| Other expense | 507 | 509 | 487 |
| Total noninterest expense | 5,865 | 5,743 | 5,853 |
| Income before income taxes | 765 | 439 | 703 |
| Income tax provision (benefit) | 47 | (423) | 36 |
| Net income | $ 718 | $ 862 | $ 667 |
| Basic earnings per share | $ 0.18 | $ 0.22 | $ 0.17 |
| Diluted earnings per share | $ 0.18 | $ 0.21 | $ 0.17 |
| Weighted average shares outstanding (basic EPS) | 3,889,603 | 3,916,233 | 3,898,685 |
| Weighted average shares outstanding (diluted EPS) | 3,944,406 | 3,971,036 | 3,977,542 |
| Financial Ratios and Other Data | ||||
| (Dollars in thousands, except per share data) | ||||
| (Unaudited) | September 30 | June 30 | March 31 | September 30, |
| 2014 | 2014 | 2014 | 2013 | |
| Asset Quality: | ||||
| Nonaccrual loans | $ 486 | $ 342 | $ 404 | $ 744 |
| Loans 90 days past due | -- | -- | -- | -- |
| Restructured loans, net | 50 | 180 | 214 | 215 |
| Total nonperforming loans | 536 | 522 | 618 | 959 |
| Other real estate owned and other repossessed assets | 619 | 458 | 458 | 496 |
| Total nonperforming assets | $ 1,155 | $ 980 | $ 1,076 | $ 1,455 |
| Nonperforming loans / portfolio loans | 0.18% | 0.19% | 0.24% | 0.41% |
| Nonperforming assets / assets | 0.21% | 0.18% | 0.21% | 0.28% |
| Allowance for loan losses / portfolio loans | 0.76% | 0.79% | 0.83% | 0.85% |
| Allowance / nonperforming loans | 429.10% | 407.09% | 351.94% | 208.55% |
| Gross loan charge-offs for the quarter | $ 80 | $ 236 | $ 74 | $ 160 |
| Gross loan recoveries for the quarter | $ 40 | $ 18 | $ 1 | $ 1 |
| Net loan charge-offs for the quarter | $ 40 | $ 218 | $ 73 | $ 159 |
| Capital Data (At quarter end): | ||||
| Tangible book value per share | $ 11.62 | $ 11.10 | $ 10.64 | $ 10.37 |
| Shares outstanding | 3,866,233 | 3,916,233 | 3,918,399 | 3,898,685 |
| Profitability Ratios (For the quarter): | ||||
| Efficiency ratio* | 84.15% | 88.79% | 93.39% | 84.90% |
| Return on average assets | 0.52% | 0.65% | 0.08% | 0.52% |
| Return on average equity | 5.49% | 6.81% | 0.88% | 5.58% |
| Net interest margin | 3.34% | 3.32% | 3.29% | 3.15% |
| Profitability Ratios (Year-to-date): | ||||
| Efficiency ratio * | 84.15% | 88.94% | 88.31% | 84.90% |
| Return on average assets | 0.54% | 0.32% | 0.33% | 0.52% |
| Return on average equity | 5.67% | 3.38% | 3.42% | 5.58% |
| Net interest margin | 3.34% | 3.27% | 3.25% | 3.15% |
| Other Information | ||||
| Average total assets for the quarter | $ 547,111 | $ 528,435 | $ 512,395 | $ 510,821 |
| Average total assets year to date | $ 547,111 | $ 515,472 | $ 511,001 | $ 510,821 |
| Average earning assets for the quarter | $ 500,485 | $ 481,715 | $ 464,796 | $ 458,750 |
| Average earning assets year to date | $ 500,485 | $ 466,057 | $ 460,691 | $ 458,750 |
| Average loans for the quarter ** | $ 304,791 | $ 281,557 | $ 262,579 | $ 244,567 |
| Average loans year to date ** | $ 304,791 | $ 260,825 | $ 253,914 | $ 244,567 |
| Average equity for the quarter | $ 52,299 | $ 50,627 | $ 49,018 | $ 47,847 |
| Average equity year to date | $ 52,299 | $ 49,136 | $ 48,651 | $ 47,847 |
| Average deposits for the quarter | $ 436,044 | $ 432,033 | $ 433,140 | $ 422,299 |
| Average deposits year to date | $ 436,044 | $ 428,676 | $ 427,395 | $ 422,299 |
| * 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 | ||||