Eagle Bancorp Montana Earns $881,000, or $0.22 Per Diluted Share, in 4Q15; Pretax Profits Increase 59% Fueled by 28% Loan Growth in 2015; Declares Regular Quarterly Cash Dividend to $0.0775 per Share


HELENA, Mont., Jan. 26, 2016 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported net income was $881,000, or $0.22 per diluted share, in the fourth quarter of 2015, compared to $521,000, or $0.14 per diluted share, in the preceding quarter.  In the fourth quarter of 2014, Eagle earned $924,000, or $0.24 per diluted share, which included a $512,000 income tax benefit. 

For all of 2015, Eagle’s earnings were $2.6 million, or $0.67 per diluted share, compared to $2.6 million, or $0.66 per diluted share, in 2014, which included a $881,000 income tax benefit.  For 2015, pretax profits increased 58.5% to $2.7 million from $1.7 million in 2014.  There were several “non-core” items affecting both 2015 and 2014 results. (See page 4 – “Non-GAAP Financial Information”)

“The diversification of Montana’s economy in our markets has allowed us to achieve strong financial performance in 2015.  Our bank and brand are well positioned to continue those results in the coming year,” said Peter J. Johnson, President and CEO.  “We will continue to focus our efforts on gathering core deposits, growing the loan portfolio and expanding our customer base.  We believe that our franchise is starting to generate forward momentum, and we are encouraged by the outlook for our business in the next few years.”

Eagle’s board of directors declared a regular quarterly cash dividend of $0.0775 per share.  The dividend will be payable March 4, 2016 to shareholders of record February 12, 2016. The current annualized yield is 2.64% at recent market prices.

Fourth Quarter 2015 Highlights (at or for the three month period ended December 31, 2015, except where noted)

  • Net income was $881,000, or $0.22 per diluted share in the fourth quarter, compared to $924,000, or $0.24 per diluted share in the same period a year ago.
  • Pretax profits increased 97.6% to $814,000 in the fourth quarter of 2015 from $412,000 in the year ago quarter and grew 49.9% from $543,000 the third quarter of 2015.  For 2015, pretax profits increased 58.5% to $2.7 million from $1.7 million in 2014.
  • EPS of $0.67 per diluted share in 2015 is a record for the Company.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 10.7% to $7.6 million compared to $6.8 million in the same period a year ago. 
  • Net interest margin was 3.41% in the fourth quarter, compared to 3.47% in the same period a year earlier.
  • Total loans increased 27.8% to $407.3 million compared to $318.7 million a year earlier. 
  • Commercial real estate loans increased 44.6% to $167.9 million at December 31, 2015, compared to $116.1 million a year earlier.
  • Total deposits increased 9.5% to $483.2 million at December 31, 2015, from $441.4 million a year earlier.
  • Capital ratios remain strong with a tangible shareholders equity ratio of 10.07% at December 31, 2015.
  • Declared a quarterly cash dividend of $0.0775 per share, providing a 2.6% current yield at recent market prices.

Balance Sheet Results

Total assets increased 12.5% to $630.3 million at December 31, 2015, compared to $560.2 million a year earlier, and increased 3.1% compared to $611.4 million three months earlier. 

“New loan activity is improving across all categories, particularly in commercial real estate and mortgage lending.  We don’t see any sign of the pace slowing down,” said Johnson.  Total loans increased 4.0% to $407.3 million at December 31, 2015, compared to $391.5 million three months earlier and increased 27.8% compared to $318.7 million a year earlier. 

Eagle originated $63.5 million in new residential mortgages during the quarter, excluding construction loans, and sold $54.1 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.97%.  This production compares to residential mortgage originations of $77.8 million in the preceding quarter with sales of $59.5 million.

Commercial real estate loans increased 44.6% to $167.9 million at December 31, 2015, compared to $116.1 million a year earlier, while residential mortgage loans increased 14.2% to $118.1 million compared to $103.4 million a year earlier.  Home equity loans increased 13.0% to $45.3 million, commercial loans increased 9.8% to $39.1 million, and construction loans increased 126.2% to $23.0 million, compared to a year ago.  

Total deposits increased 9.5% to $483.2 million at December 31, 2015, compared to $441.4 million a year earlier and were up modestly compared to $481.1 million at September 30, 2015.  As of year-end, checking and money market accounts represent 53.6%, savings accounts represent 14.8%, and CDs comprise 31.6% of the total deposit portfolio.  

Eagle’s shareholders’ equity improved to $55.5 million at December 31, 2015, compared to $54.4 million three months earlier and $54.5 million one year earlier.  Tangible book value was $12.67 per share at December 31, 2015, compared to $12.40 per share at September 30, 2015 and $12.07 per share a year earlier.  The year-over-year increase continues to be a result of steady growth in earnings.

Credit Quality

The fourth quarter provision for loan losses was $343,000, compared to $310,000 in the preceding quarter and $300,000 in the fourth quarter a year ago. For the year, Eagle’s provision for loan losses totaled $1.3 million, compared to $811,000 in 2014.   As of December 31, 2015, the allowance for loan losses represented 139.3% of nonperforming loans compared to 216.6% three months earlier and 242.6% a year earlier.

“During the quarter we had $1.5 million that moved into nonaccrual status.  The increase was due primarily to one large residential mortgage loan and one large commercial real estate loan moving into nonaccrual this quarter.  Both loans are in workout and we are optimistic for a resolution by next quarter,” said Johnson.  At December 31, 2015, nonperforming loans (NPLs) were $2.5 million, compared to $1.5 million three months earlier, and $1.0 million a year ago.   

Eagle’s net charge-offs totaled $23,000 in the fourth quarter, compared to $30,000 in the preceding quarter and $150,000 in the fourth quarter a year ago.  The allowance for loan losses was $3.6 million, or 0.88% of total loans at December 31, 2015, compared to $3.2 million, or 0.83% of total loans at September 30, 2015, and $2.5 million, or 0.77% of total loans a year ago.

OREO and other repossessed assets was $595,000 at December 31, 2015, which was down slightly compared to $619,000 at September 30, 2015.  Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $3.1 million at December 31, 2015, or 0.50% of total assets, compared to $2.1 million, or 0.35% of assets three months earlier and $1.6 million, or 0.30% of assets a year earlier. 

Operating Results

Eagle’s fourth quarter revenues increased 2.9% to $7.6 million compared to $7.3 million in the preceding quarter and increased 10.7% compared to $6.8 million in the fourth quarter a year ago.  For the year ended December 31, 2015, revenues increased 14.7% to $29.8 million compared to $26.0 million in 2014.  Net interest income before the provision for loan loss increased 9.8% to $4.9 million in the fourth quarter compared to $4.4 million in both the preceding quarter and in the fourth quarter a year ago.  For the year, Eagle’s net interest income increased 9.8% to $18.0 million compared to $16.4 million a year earlier.

“Our net interest margin improved nicely this quarter, as the growth in interest income has more than surpassed the additional interest expense from the subordinated debt issuance in the middle of 2015,” Johnson said.  Eagle’s net interest margin was 3.41% in the fourth quarter compared to 3.28% in the preceding quarter and 3.47% in the fourth quarter a year ago.  Funding costs for the quarter were up eleven basis points while asset yields increased three basis points compared to a year ago.  The investment securities portfolio decreased to $145.7 million at December 31, 2015, compared to $161.8 million a year ago, which increased average yields on earning asset balances moderately. For the year, Eagle’s net interest margin was 3.38% compared to 3.25% in 2014.

Eagle’s noninterest income increased 10.6% to $2.7 million in the fourth quarter compared to $2.4 million in the fourth quarter a year ago.  In the preceding quarter Eagle’s noninterest income was $2.9 million.  For the year, noninterest income increased 22.9% to $11.8 million compared to $9.6 million in 2014.

Fourth quarter noninterest expenses were $6.4 million, compared to $6.5 million in the preceding quarter and $6.1 million in the fourth quarter a year ago.  In 2015, noninterest expense increased to $25.7 million compared to $23.4 million in 2014.  The year-over-year increase is primarily attributable to higher employee and incentive costs due to higher loan production.

Stock Repurchase

During the quarter, the company repurchased 15,000 shares of EBMT stock at an average price of $11.75 per share.

Capital Management

Eagle Bancorp Montana continues to be well capitalized with the ratio of shareholders’ equity to tangible asset of 10.07% at December 31, 2015.  (Shareholders’ equity, plus trust preferred securities and subordinated debt, less goodwill and core deposit intangible to tangible assets).

During the second quarter of 2015, Eagle issued $10.0 million in subordinated debt.  The subordinated notes were issued on June 19, 2015, bear a fixed rate of interest of 6.75% per annum, payable quarterly, and mature on June 19, 2025.  The net cash proceeds from the sale of the subordinated notes were $9.9 million, and the subordinated notes qualify as Tier 2 capital for regulatory purposes.  The net proceeds from the offering are being used for general corporate purposes, to support organic growth and fund acquisitions should appropriate opportunities arise.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures.  Eagle Bancorp Montana, Inc. believes that certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report are urged to review these non-GAAP financial measures in conjunction with GAAP results as reported.

          
Non-GAAP Financial Information      
          
(unaudited)    12 Months Ended 
      December 31, 2015 December 31, 2014 
Most Directly Comparable GAAP Financial Measurement    
Income before taxes (thousands)   $  2,743  $  1,731  
Reconciliation to Non GAAP Financial Measurement     
 Add:        
   Loan loss provision   $  1,303  $  811  
   Net loss on fair value hedge  $  93  $  498  
          
 Deduct:        
   Net gain on sale of available-for-sale securities$  234  $  572  
   Gain on sale of branch building  $  310  $  -  
          
Non GAAP Financial Measurement      
 Income before tax, provision and      
  "non-core" items   $  3,595  $  2,468  
          

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)(Unaudited)(Audited)
      December 31,September 30,December 31,
       2015  2015  2014 
         
Assets:       
 Cash and due from banks   $  6,468 $  6,529 $  11,889 
 Interest-bearing deposits with banks     970    717    613 
 Federal funds sold       -     -     -  
  Total cash and cash equivalents    7,438    7,246    12,502 
 Securities available-for-sale, at market value     145,738    147,460    161,787 
 FHLB stock, at cost        3,397    2,853    1,968 
 FRB stock       887    642    641 
 Investment in Eagle Bancorp Statutory Trust I     155    155    155 
 Loans held-for-sale       18,702    14,731    17,587 
 Loans:       
  Residential mortgage (1-4 family)    118,133    117,320    103,420 
  Commercial loans     39,072    33,884    35,582 
  Commercial real estate     167,930    156,293    116,105 
  Construction loans     22,958    23,210    10,149 
  Consumer loans     14,641    14,885    13,827 
  Home equity      45,345    46,632    40,123 
  Unearned loan fees     (795)   (750)   (486)
   Total loans     407,284    391,474    318,720 
 Allowance for loan losses      (3,550)   (3,230)   (2,450)
  Net loans      403,734    388,244    316,270 
 Accrued interest and dividends receivable     2,278    2,332    2,318 
 Mortgage servicing rights, net      4,968    4,808    4,115 
 Premises and equipment, net      18,217    18,290    19,964 
 Cash surrender value of life insurance     12,514    12,429    11,735 
 Real estate and other assets acquired in settlement of loans, net   595    619    637 
 Goodwill       7,034    7,034    7,034 
 Core deposit intangible      514    550    663 
 Other assets       4,176    4,016    2,831 
  Total assets   $  630,347 $  611,409 $  560,207 
         
Liabilities:       
 Deposit accounts:       
 Noninterest bearing       77,031    82,842    60,924 
 Interest bearing       406,151    398,286    380,476 
  Total deposits     483,182    481,128    441,400 
 Accrued expense and other liabilities     4,050    5,372    4,161 
 FHLB advances and other borrowings     72,716    55,534    54,993 
 Subordinated debentures, net      14,949    14,951    5,155 
  Total liabilities     574,897    556,985    505,709 
         
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; 3,779,464, 3,776,916, and 3,878,781 shares outstanding  
   at December 31, 2015, September 30, 2015 and December 31, 2014, respectively)   41    41    41 
 Additional paid-in capital      22,152    22,134    22,122 
 Unallocated common stock held by employee stock ownership plan (ESOP)   (975)   (1,016)   (1,141)
 Treasury stock, at cost (303,663, 306,211 and 204,346 shares at    
   December 31, 2015, September 30, 2015 and December 31, 2014, respectively)   (3,321)   (3,338)   (2,194)
 Retained earnings       37,301    36,714    35,885 
 Accumulated other comprehensive gain (loss)     252    (111)   (215)
  Total shareholders' equity     55,450    54,424    54,498 
  Total liabilities and shareholders' equity $  630,347 $  611,409 $  560,207 
         


Income Statement   (Unaudited)  (Unaudited) 
(Dollars in thousands, except per share data) Three Months Ended Years Ended 
       December 31,September 30,December 31, December 31, 
        2015  2015  2014   2015  2014  
Interest and dividend Income:         
 Interest and fees on loans  $  4,725 $  4,390 $  3,904  $  17,332 $  14,195  
 Securities available-for-sale     803    759    982     3,058    4,209  
 FRB and FHLB dividends     42    5    19     67    19  
 Interest on deposits with banks     -     -     -      1    2  
 Other interest income     -     -     -      5    3  
  Total interest and dividend income    5,570    5,154    4,905     20,463    18,428  
Interest Expense:          
 Interest expense on deposits     364    400    339     1,457    1,338  
 Advances and other borrowings    149    130    154     550    609  
 Subordinated debentures     191    191    21     445    84  
  Total interest expense     704    721    514     2,452    2,031  
Net interest income      4,866    4,433    4,391     18,011    16,397  
Loan loss provision    343    310    300     1,303    811  
 Net interest income after loan loss provision    4,523    4,123    4,091     16,708    15,586  
        
Noninterest income:        
 Service charges on deposit accounts    226    317    254     1,009    1,017  
 Net gain on sale of loans    1,546    1,639    1,466     6,672    4,896  
 Mortgage loan servicing fees    358    523    387     1,718    1,486  
 Net gain on sale of available-for-sale securities    -     -    141     234    572  
 Net loss on sale of OREO     (4)   -     -      (4)   -  
 Wealth management income     155    174    178     625    561  
 Net loss on fair value hedge     -    -    (317)    (93)   (498) 
 Other noninterest income    411    259    326     1,600    1,532  
 Total noninterest income    2,692    2,912    2,435     11,761    9,566  
        
Noninterest expense:        
 Salaries and employee benefits     3,672    3,660    3,143     14,350    12,666  
 Occupancy and equipment expense    681    838    731     2,988    2,825  
 Data processing    654    560    542     2,259    2,021  
 Advertising    237    170    242     800    767  
 Amortization of mortgage servicing fees    159    218    162     799    624  
 Amortization of core deposit intangible and tax credits   115    116    103     432    418  
 Federal insurance premiums    81    83    101     332    277  
 Postage    29    63    51     181    178  
 Legal, accounting and examination fees    105    126    207     520    755  
 Consulting fees    53    72    175     576    733  
 Write-down on OREO    -     -     -     -     10  
 Other noninterest expense    615    586    657     2,489    2,147  
 Total noninterest expense    6,401    6,492    6,114     25,726    23,421  
        
Income before income taxes      814    543    412     2,743    1,731  
Income tax (benefit) provision      (67)   22    (512)    163    (881) 
Net income    $  881 $  521 $  924  $  2,580 $  2,612  
        
Basic earnings per share  $  0.23 $  0.14 $  0.24  $  0.68 $  0.67  
Diluted earnings per share  $  0.22 $  0.14 $  0.24  $  0.67 $  0.66  
Weighted average shares        
 outstanding (basic EPS)    3,781,023    3,804,532    3,875,150     3,813,090    3,899,165  
Weighted average shares        
 outstanding (diluted EPS)    3,855,095    3,841,787    3,918,699     3,859,625    3,951,132  
     

 

Financial Ratios and Other Data    
(Dollars in thousands, except per share data)    
(Unaudited) December 31September 30June 30December 31
    2015  2015  2015  2014 
Asset Quality:     
 Nonaccrual loans $  2,030 $  556 $  541 $  962 
 Loans 90 days past due   472    888    -    - 
 Restructured loans, net   46    47    47    48 
  Total nonperforming loans   2,548    1,491    588    1,010 
 Other real estate owned and other repossessed assets   595    619    623    637 
  Total nonperforming assets$  3,143 $  2,110 $  1,211 $  1,647 
 Nonperforming loans / portfolio loans 0.63% 0.38% 0.16% 0.32%
 Nonperforming assets / assets 0.50% 0.35% 0.21% 0.30%
 Allowance for loan losses / portfolio loans 0.87% 0.83% 0.82% 0.77%
 Allowance / nonperforming loans 139.32% 216.63% 501.70% 242.57%
 Gross loan charge-offs for the quarter$  32 $  39 $  4 $  168 
 Gross loan recoveries for the quarter$  9 $  9 $  1 $  18 
 Net loan charge-offs for the quarter$  23 $  30 $  3 $  150 
       
Capital Data (At quarter end):    
 Tangible book value per share$  12.67 $  12.40 $  11.75 $  12.07 
 Shares outstanding 3,779,464  3,776,916  3,822,981  3,878,781 
       
       
Profitability Ratios (For the quarter):    
 Efficiency ratio*  83.17% 86.79% 82.06% 88.06%
 Return on average assets 0.57% 0.35% 0.56% 0.67%
 Return on average equity 6.39% 3.87% 5.96% 6.92%
 Net interest margin  3.41% 3.28% 3.46% 3.47%
       
Profitability Ratios (Year-to-date):    
 Efficiency ratio *  84.96% 85.57% 84.96% 88.60%
 Return on average assets 0.44% 0.40% 0.42% 0.47%
 Return on average equity 4.77% 4.22% 4.39% 4.93%
 Net interest margin  3.38% 3.36% 3.41% 3.25%
       
Other Information     
 Average total assets for the quarter$  621,808 $  593,947 $  567,553 $  552,845 
 Average total assets year to date$  583,658 $  570,948 $  559,524 $  550,447 
 Average earning assets for the quarter$  570,302 $  540,222 $  518,291 $  506,380 
 Average earning assets year to date$  533,261 $  520,925 $  511,356 $  503,927 
 Average loans for the quarter **$  415,332 $  384,275 $  360,782 $  325,842 
 Average loans year to date **$  374,849 $  361,355 $  349,895 $  315,316 
 Average equity for the quarter$  55,170 $  53,894 $  53,193 $  53,414 
 Average equity year to date$  54,051 $  53,701 $  53,642 $  52,971 
 Average deposits for the quarter$  478,559 $  478,635 $  457,743 $  440,999 
 Average deposits year to date$  465,276 $  460,816 $  451,931 $  438,750 
       
* 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
  



            

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