Eagle Bancorp Montana Earns $823,000, or $0.21 Per Diluted Share, in 1Q16; Declares Regular Quarterly Cash Dividend of $0.0775 per Share


HELENA, Mont., April 29, 2016 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported net income increased 113% to $823,000, or $0.21 per diluted share, in the first quarter of 2016, compared to $386,000, or $0.10 per diluted share, in the first quarter a year ago.  In the preceding quarter, Eagle earned $881,000, or $0.22 per diluted share. 

“We are pleased with the continuing improvements in our first quarter financial results with exceptional growth in our loan portfolio and solid growth in commercial loans,” 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 across all of our markets in Montana.  Our bank and brand are well positioned to prosper in the coming year, supported by growing technology, manufacturing and tourism throughout the state.”

Eagle’s board of directors declared a regular quarterly cash dividend of $0.0775 per share.  The dividend will be payable June 3, 2016 to shareholders of record May 13, 2016. The current annualized yield is 2.51% at recent market prices.

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

  • Net income more than doubled to $823,000, or $0.21 per diluted share in the first quarter, compared to $386,000, or $0.10 per diluted share in the same period a year ago.
  • Pretax profits increased 131% to $975,000 in the first quarter of 2016 from $422,000 in the year ago quarter and grew 19.8% from $814,000 the fourth quarter of 2015.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 12.2% to $8.0 million compared to $7.1 million in the same period a year ago. 
  • Net interest margin improved 15 basis points to 3.50% in the first quarter, compared to 3.35% in the same period a year earlier.
  • Total loans increased 25.7% to $422.9 million compared to $336.4 million a year earlier. 
  • Commercial real estate loans increased 49.2% to $194.5 million at March 31, 2016, compared to $130.4 million a year earlier.
  • Total deposits increased 9.00% to $494.2 million at March 31, 2016, from $453.4 million a year earlier.
  • Capital ratios remain strong with a tangible shareholders equity ratio of 10.07% at March 31, 2016.
  • Declared a quarterly cash dividend of $0.0775 per share, providing a 2.51% current yield at recent market prices.

Balance Sheet Results

Total loans increased 3.8% to $422.9 million at March 31, 2016, compared to $407.3 million three months earlier and increased 25.7% compared to $336.4 million a year earlier.  “Loan growth was steady during the quarter, although not as fast-paced as in previous quarters,” noted Johnson.  “Our loan pipeline is heavily concentrated in C&I and commercial real estate loans.”

Eagle originated $55.8 million in new residential mortgages during the quarter, excluding construction loans, and sold $52.1 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.38%.  This production compares to residential mortgage originations of $63.5 million in the preceding quarter with sales of $54.1 million.

Commercial real estate loans increased 49.2% to $194.5 million at March 31, 2016, compared to $130.4 million a year earlier, while residential mortgage loans increased 7.5% to $113.4 million compared to $105.4 million a year earlier.  Home equity loans increased 12.6% to $45.4 million, commercial loans increased 10.1% to $40.6 million, and construction loans increased 52.0% to $15.7 million, compared to a year ago.  

Eagle’s total deposits increased 9.0% to $494.2 million at March 31, 2016, compared to $453.4 million a year earlier and were up 2.3% compared to $483.2 million at December 31, 2015.  As of the end of March, checking and money market accounts represent 54.3%, savings accounts represent 15.1%, and CDs comprise 30.6% of the total deposit portfolio.  

Total assets increased 14.9% to $643.0 million at March 31, 2016, compared to $559.4 million a year earlier, and increased 2.0% compared to $630.3 million three months earlier.  Shareholders’ equity improved to $56.7 million at March 31, 2016, compared to $55.5 million three months earlier and $54.8 million one year earlier.  Tangible book value was $13.01 per share at March 31, 2016, compared to $12.67 per share at December 31, 2015 and $12.34 per share a year earlier. 

Credit Quality

Eagle’s first quarter provision for loan losses was $450,000, compared to $343,000 in the preceding quarter and $322,000 in the first quarter a year ago.  As of March 31, 2016, the allowance for loan losses represented 168.7% of nonperforming loans compared to 139.3% three months earlier and 1,177.1% a year earlier.  At March 31, 2016 nonperforming loans (NPLs) were $2.3 million, compared to $2.5 million three months earlier, and $223,000 a year ago.   

Eagle’s net charge-offs totaled $60,000 in the first quarter, compared to $23,000 in the preceding quarter and $147,000 in the first quarter a year ago.  The allowance for loan losses was $3.9 million, or 0.93% of total loans at March 31, 2016, compared to $3.6 million, or 0.88% of total loans at December 31, 2015, and $2.6 million, or 0.78% of total loans a year ago.

OREO and other repossessed assets was $606,000 at March 31, 2016, which was up slightly compared to $595,000 at December 31, 2015.  Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.9 million at March 31, 2016, or 0.46% of total assets, compared to $3.1 million, or 0.50% of total assets three months earlier and $865,000, or 0.15% of total assets a year earlier. 

Operating Results

Eagle’s first quarter revenues increased 5.5% to $8.0 million compared to $7.6 million in the preceding quarter and increased 12.2% compared to $7.1 million in the first quarter a year ago.  Net interest income before the provision for loan loss increased 4.7% to $5.1 million in the first quarter compared to $4.9 million in the preceding quarter and increased 20.6% compared to $4.2 million in the first quarter a year ago. 

“Our solid first quarter net interest margin was a result of our strong interest income growth, which 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 3.50% in the first quarter compared to 3.41% in the preceding quarter and 3.35% in the first quarter a year ago.  Funding costs for the quarter were up 13 basis points while asset yields increased 28 basis points compared to a year ago.  The investment securities portfolio decreased to $145.1 million at March 31, 2016, compared to $152.2 million a year ago, which increased average yields on earning asset balances moderately.  

Eagle’s noninterest income was $2.9 million in the first quarter, which was unchanged compared to the year ago quarter, and a 6.9% increase compared to $2.7 million in the preceding quarter. First quarter noninterest expenses were $6.5 million, compared to $6.4 million in both the preceding quarter and the year ago quarter. 

Capital Management

Eagle Bancorp Montana continues to be well capitalized with the ratio of shareholders’ equity to tangible asset of 10.07% at March 31, 2016.  (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.

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)
      March 31,December 31,March 31,
       2016  2015  2015 
         
Assets:       
 Cash and due from banks   $  5,620 $  6,468 $  3,506 
 Interest-bearing deposits with banks     993    970    1,244 
  Total cash and cash equivalents    6,613    7,438    4,750 
 Securities available-for-sale, at market value     145,070    145,738    152,239 
 FHLB stock, at cost        3,564    3,397    1,967 
 FRB stock       871    887    641 
 Investment in Eagle Bancorp Statutory Trust I     155    155    155 
 Loans held-for-sale       18,284    18,702    17,021 
 Loans:       
  Residential mortgage (1-4 family)    113,364    118,133    105,428 
  Commercial loans     40,614    39,072    36,877 
  Commercial real estate     194,479    167,930    130,374 
  Construction loans     15,673    22,958    10,313 
  Consumer loans     14,229    14,641    13,664 
  Home equity      45,404    45,345    40,312 
  Unearned loan fees     (882)   (795)   (553)
   Total loans     422,881    407,284    336,415 
 Allowance for loan losses      (3,940)   (3,550)   (2,625)
  Net loans      418,941    403,734    333,790 
 Accrued interest and dividends receivable     2,213    2,278    2,146 
 Mortgage servicing rights, net      4,988    4,968    4,271 
 Premises and equipment, net      18,145    18,217    19,694 
 Cash surrender value of life insurance     12,598    12,514    11,816 
 Real estate and other assets acquired in settlement of loans, net   606    595    642 
 Goodwill       7,034    7,034    7,034 
 Core deposit intangible      481    514    625 
 Other assets       3,408    4,176    2,574 
  Total assets   $  642,971 $  630,347 $  559,365 
         
Liabilities:       
 Deposit accounts:       
 Noninterest bearing       90,308    77,031    66,547 
 Interest bearing       403,877    406,151    386,822 
  Total deposits     494,185    483,182    453,369 
 Accrued expense and other liabilities     5,933    4,050    3,380 
 FHLB advances and other borrowings     71,204    72,716    42,640 
 Subordinated debentures, net      14,954    14,949    5,155 
  Total liabilities     586,276    574,897    504,544 
         
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, 3,779,464, and 3,822,981 shares outstanding  
 at March 31, 2016, December 31, 2015 and March 31, 2015, respectively) 41    41    41 
 Additional paid-in capital    22,157    22,152    22,126 
 Unallocated common stock held by employee stock ownership plan (ESOP) (933)   (975)   (1,099)
 Treasury stock, at cost (303,663, 303,663 and 260,146 shares at   
 March 31, 2016, December 31, 2015 and March 31, 2015, respectively) (3,321)   (3,321)   (2,810)
 Retained earnings     37,831    37,301    35,983 
 Accumulated other comprehensive income   920    252    580 
  Total shareholders' equity  56,695    55,450    54,821 
  Total liabilities and shareholders' equity $642,971 $  630,347 $  559,365 
         

 

Income Statement   (Unaudited) 
(Dollars in thousands, except per share data) Three Months Ended
       March 31,December 31,March 31,
        2016  2015  2015 
Interest and dividend Income:     
 Interest and fees on loans  $  5,063 $  4,725 $  3,962 
 Securities available-for-sale     747    803    759 
 FRB and FHLB dividends     31    42    -  
 Interest on deposits with banks     -     -     -  
 Other interest income     3    -     3 
  Total interest and dividend income    5,844    5,570    4,724 
Interest Expense:      
 Interest expense on deposits     355    364    337 
 Advances and other borrowings    201    149    143 
 Subordinated debentures     194    191    21 
  Total interest expense     750    704    501 
Net interest income      5,094    4,866    4,223 
Loan loss provision    450    343    322 
 Net interest income after loan loss provision    4,644    4,523    3,901 
    
Noninterest income:    
 Service charges on deposit accounts    199    226    223 
 Net gain on sale of loans    1,718    1,546    1,631 
 Mortgage loan servicing fees    346    358    415 
 Wealth management income     136    155    185 
 Interchange and ATM fees     202    144    126 
 Appreciation in cash surrender value of life insurance   112    110    105 
 Net gain on sale of available-for-sale securities    -     -    186 
 Net loss on sale of OREO     -     (4)   -  
 Net loss on fair value hedge     -     -    (93)
 Other noninterest income    166    157    104 
 Total noninterest income    2,879    2,692    2,882 
    
Noninterest expense:    
 Salaries and employee benefits    3,690    3,672    3,379 
 Occupancy and equipment expense    789    681    736 
 Data processing    548    654    509 
 Advertising    188    237    219 
 Amortization of mortgage servicing fees    228    159    217 
 Amortization of core deposit intangible and tax credits   112    115    100 
 Federal insurance premiums    83    81    95 
 Postage    54    29    46 
 Legal, accounting and examination fees    98    105    156 
 Consulting fees    83    53    240 
 Other noninterest expense    675    615    664 
 Total noninterest expense    6,548    6,401    6,361 
    
Income before income taxes     975    814    422 
Income tax provision (benefit)     152    (67)   36 
Net income    $  823 $  881 $  386 
    
Basic earnings per share  $  0.22 $  0.23 $  0.10 
Diluted earnings per share  $  0.21 $  0.22 $  0.10 
Weighted average shares    
 outstanding (basic EPS)    3,779,464    3,781,023    3,844,617 
Weighted average shares    
 outstanding (diluted EPS)    3,873,171    3,855,095    3,881,872 
  

 

Financial Ratios and Other Data   
(Dollars in thousands, except per share data)   
(Unaudited) March 31December 31March 31
    2016  2015  2015 
Asset Quality:    
 Nonaccrual loans $  1,580 $  2,030 $  176 
 Loans 90 days past due   710    472    - 
 Restructured loans, net   45    46    47 
  Total nonperforming loans   2,335    2,548    223 
 Other real estate owned and other repossessed assets   606    595    642 
  Total nonperforming assets$  2,941 $  3,143 $  865 
 Nonperforming loans / portfolio loans 0.55% 0.63% 0.07%
 Nonperforming assets / assets 0.46% 0.50% 0.15%
 Allowance for loan losses / portfolio loans 0.93% 0.88% 0.78%
 Allowance / nonperforming loans 168.74% 139.32% 1177.13%
 Gross loan charge-offs for the quarter$  63 $  32 $  148 
 Gross loan recoveries for the quarter$  3 $  9 $  1 
 Net loan charge-offs for the quarter$  60 $  23 $  147 
      
Capital Data (At quarter end):   
 Tangible book value per share$  13.01 $  12.67 $  12.34 
 Shares outstanding 3,779,464  3,779,464  3,822,981 
      
Profitability Ratios (For the quarter):   
 Efficiency ratio*  80.72% 83.17% 88.12%
 Return on average assets 0.52% 0.57% 0.28%
 Return on average equity 5.80% 6.39% 2.82%
 Net interest margin  3.50% 3.41% 3.35%
      
Profitability Ratios (Year-to-date):   
 Efficiency ratio *  80.72% 84.96% 88.12%
 Return on average assets 0.52% 0.44% 0.28%
 Return on average equity 5.80% 4.77% 2.82%
 Net interest margin  3.50% 3.38% 3.35%
      
Other Information    
 Average total assets for the quarter$631,998 $621,808 $550,980 
 Average total assets year to date$631,998 $583,658 $550,980 
 Average earning assets for the quarter$581,594 $570,302 $503,894 
 Average earning assets year to date$581,594 $533,261 $503,894 
 Average loans for the quarter **$428,408 $415,332 $339,007 
 Average loans year to date **$428,408 $374,849 $339,007 
 Average equity for the quarter$56,767 $55,170 $54,847 
 Average equity year to date$56,767 $54,051 $54,847 
 Average deposits for the quarter$480,255 $478,559 $445,655 
 Average deposits year to date$480,255 $465,276 $445,655 
      
* 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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