Eagle Bancorp Montana Earns a Record $1.8 Million, or $0.46 per Diluted Share, in 3Q16; Declares Regular Quarterly Cash Dividend of $0.08 per Share


HELENA, Mont., Oct. 25, 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 240% to $1.8 million, or $0.46 per diluted share, in the third quarter of 2016, compared to $521,000, or $0.14 per diluted share, in the third quarter a year ago.  In the preceding quarter, Eagle earned $1.3 million, or $0.32 per diluted share.  In the first nine months of 2016, net income increased 117% to $3.7 million, or $0.95 per diluted share, compared to $1.7 million, or $0.44 per diluted share, in the first nine months of 2015.

Eagle’s board of directors declared a regular quarterly cash dividend of $0.08 per share.  The dividend will be payable December 2, 2016 to shareholders of record November 11, 2016.  The current annualized yield is 2.20% at recent market prices.

“We produced record operating results during the quarter, with strong revenue growth, robust mortgage production, double digit annualized loan growth and an improved net interest margin,” said Peter J. Johnson, President and CEO.  “Our focus on gathering core deposits, growing the loan portfolio and expanding our customer base throughout Montana continues to gain momentum.  We continue to improve upon our performance metrics with a return on average assets of 1.07%, a return on average equity of 11.82% and an improved efficiency ratio of 69.70%, for the third quarter of 2016. This solid financial performance is a reflection of the hard work of our employees and their commitment to our customers.”

Third Quarter 2016 Highlights (at or for the three month period ended September 30, 2016, except where noted)

  • Net income grew 240% to $1.8 million, or $0.46 per diluted share in the third quarter, compared to $521,000, or $0.14 per diluted share in the third quarter a year ago.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 37.6% to $10.1 million compared to $7.3 million in the same period a year ago. 
  • Net interest margin improved 27 basis points compared to a year ago to 3.55%.
  • Total loans increased 4.0% to $461.5 million at September 30, 2016, compared to $443.9 million three months earlier and increased 17.9% compared to $391.5 million a year earlier. 
  • Commercial real estate loans increased 31.7% to $205.8 million at September 30, 2016, compared to $156.3 million a year earlier.
  • Total deposits increased 7.1% to $515.3 million at September 30, 2016, from $481.1 million a year earlier.
  • Capital ratios remain strong with a tangible shareholders equity ratio of 10.10% at September 30, 2016.
  • Declared quarterly cash dividend to $0.08 per share, providing a 2.20% current yield at recent market prices.

Balance Sheet Results

“Loan production remained solid, as did the regional economy, and we continue to see significant potential for growth in our loan origination pipelines, particularly with commercial real estate and C&I loan segments,” said Johnson.  Total loans increased 4.0% to $461.5 million at September 30, 2016, compared to $443.9 million three months earlier and increased 17.9% compared to $391.5 million a year earlier. 

Eagle originated $101.2 million in new residential mortgages during the quarter, excluding construction loans, and sold $95.6 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.30%.  This production compares to residential mortgage originations of $80.5 million in the preceding quarter with sales of $68.7 million.

Commercial real estate loans increased 31.7% to $205.8 million at September 30, 2016, compared to $156.3 million a year earlier, while residential mortgage loans decreased 3.4% to $113.3 million compared to $117.3 million a year earlier.  Commercial loans increased 77.4% to $60.1 million, home equity loans increased 2.3% to $47.7 million and construction loans decreased 11.0% to $20.6 million, compared to a year ago.  

Eagle’s total deposits increased 7.1% to $515.3 million at September 30, 2016, compared to $481.1 million a year earlier and were up 1.3% compared to $508.9 million at June 30, 2016.  As of September 30, 2016, checking and money market accounts represent 51.5%, savings accounts represent 15.6%, and CDs comprise 32.9% of the total deposit portfolio.

Total assets increased 10.3% to $674.5 million at September 30, 2016, compared to $611.4 million a year earlier and increased 1.7% compared to $663.3 million three months earlier.  Shareholders’ equity improved to $60.0 million at September 30, 2016, compared to $59.0 million three months earlier and $54.4 million one year earlier.  Tangible book value improved to $13.91 per share at September 30, 2016, compared to $13.63 per share at June 30, 2016 and $12.40 per share a year earlier. 

Operating Results

“Third quarter net interest margin improved 24 basis points compared to the preceding quarter and 27 basis points compared to the third quarter a year ago, primarily as a result of our strong loan growth,” Johnson said.  Eagle’s net interest margin was 3.55% in the third quarter, compared to 3.31% in the preceding quarter and 3.28% in the third quarter a year ago.  In the first nine months of the year, Eagle’s net interest margin was 3.40% compared to 3.36% in the same period one year ago.  Funding costs for the quarter were down one basis point while asset yields increased 26 basis points compared to a year ago.  The investment securities portfolio decreased to $133.8 million at September 30, 2016, compared to $147.5 million a year ago, which had a slight positive impact on the average yields on earning assets. 

Eagle’s third quarter revenues increased 15.6% to $10.1 million compared to $8.8 million in the preceding quarter and increased 37.6% compared to $7.3 million in the third quarter a year ago.  In the first nine months of 2016, revenues increased 19.8% to $26.6 million, compared to $22.2 million in the first nine months of 2015.  Net interest income before the provision for loan loss increased 9.7% to $5.4 million in the third quarter compared to $4.9 million in the preceding quarter, and increased 22.3% compared to $4.4 million in the third quarter a year ago.  In the first nine months of the year, net interest income increased 15.9% to $15.2 million, compared to $13.1 million in the first nine months of 2015.

Primarily as a result of the net gain on sale of loans, noninterest income increased 23.2% to $4.7 million in the third quarter, compared to $3.8 million in the preceding quarter, and increased 61.0% compared to $2.9 million in the third quarter a year ago.  Year-to-date, noninterest income increased 25.6% to $11.4 million compared to $9.1 million in the first nine months a year ago.  Third quarter noninterest expenses were $7.2 million, compared to $6.7 million in the preceding quarter and $6.5 million in the year ago quarter.  Year-to-date, noninterest expense was up modestly to $20.4 million compared to $19.3 million in the first nine months of 2015.

Credit Quality

The third quarter provision for loan losses was $472,000, compared to $459,000 in the preceding quarter and $310,000 in the third quarter a year ago.  As of September 30, 2016, the allowance for loan losses represented 263.3% of nonperforming loans compared to 196.0% three months earlier and 216.6% a year earlier.  At September 30, 2016, nonperforming loans (NPLs) were $1.8 million, which was down 18.7% compared to $2.2 million three months earlier, and an increase compared to $1.5 million a year earlier.   

Eagle’s third quarter net charge-offs totaled $82,000, compared to $139,000 in the preceding quarter and $30,000 in the third quarter a year ago.  The allowance for loan losses was $4.7 million, or 1.01% of total loans at September 30, 2016, compared to $4.3 million, or 0.96% of total loans at June 30, 2016, and $3.2 million, or 0.83% of total loans a year ago.

OREO and other repossessed assets was $513,000 at September 30, 2016, down slightly compared to $565,000 at June 30, 2016.  Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.3 million at September 30, 2016, or 0.34% of total assets, compared to $2.7 million, or 0.41% of total assets three months earlier and $2.1 million, or 0.35% 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 10.10% at September 30, 2016.  (Shareholders’ equity, plus trust preferred securities and subordinated debt, less goodwill and core deposit intangible to tangible assets).

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)(Unaudited)(Unaudited)
      September 30,June 30,September 30,
       2016  2016  2015 
         
Assets:       
 Cash and due from banks   $  6,802 $  5,579 $  6,529 
 Interest-bearing deposits with banks     1,029    844    717 
  Total cash and cash equivalents    7,831    6,423    7,246 
 Securities available-for-sale, at market value     133,754    140,449    147,460 
 FHLB stock, at cost        3,870    3,735    2,853 
 FRB stock       871    871    642 
 Investment in Eagle Bancorp Statutory Trust I     155    155    155 
 Loans held-for-sale       19,415    21,246    14,731 
 Loans:       
  Residential mortgage (1-4 family)    113,287    116,207    117,320 
  Commercial loans     60,102    48,982    33,884 
  Commercial real estate     205,819    200,848    156,293 
  Construction loans     20,649    16,382    23,210 
  Consumer loans     14,867    14,618    14,885 
  Home equity      47,694    47,842    46,632 
  Unearned loan fees     (919)   (951)   (750)
   Total loans     461,499    443,928    391,474 
 Allowance for loan losses      (4,650)   (4,260)   (3,230)
  Net loans      456,849    439,668    388,244 
 Accrued interest and dividends receivable     2,138    2,274    2,332 
 Mortgage servicing rights, net      5,439    5,196    4,808 
 Premises and equipment, net      19,543    17,965    18,290 
 Cash surrender value of life insurance     13,996    14,683    12,429 
 Real estate and other assets acquired in settlement of loans, net   513    565    619 
 Goodwill       7,034    7,034    7,034 
 Core deposit intangible      416    449    550 
 Other assets       2,671    2,623    4,016 
  Total assets   $  674,495 $  663,336 $  611,409 
         
Liabilities:       
 Deposit accounts:       
 Noninterest bearing       89,242    88,327    82,842 
 Interest bearing       426,035    420,555    398,286 
  Total deposits     515,277    508,882    481,128 
 Accrued expense and other liabilities     5,363    5,000    5,372 
 FHLB advances and other borrowings     78,855    75,491    55,534 
 Subordinated debentures, net      14,965    14,959    14,951 
  Total liabilities     614,460    604,332    556,985 
         
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 3,776,916 shares outstanding  
   at September 30, 2016, June 30, 2016 and September 30, 2015, respectively)   41    41    41 
 Additional paid-in capital      22,184    22,168    22,134 
 Unallocated common stock held by employee stock ownership plan (ESOP)   (850)   (891)   (1,016)
 Treasury stock, at cost (303,663, 303,663 and 306,211 shares at    
   September 30, 2016, June 30, 2016 and September 30, 2015, respectively)   (3,321)   (3,321)   (3,338)
 Retained earnings       40,096    38,626    36,714 
 Accumulated other comprehensive income (loss)    1,885    2,381    (111)
  Total shareholders' equity     60,035    59,004    54,424 
  Total liabilities and shareholders' equity $  674,495 $  663,336 $  611,409 
         

 

Income Statement   (Unaudited)  (Unaudited)
(Dollars in thousands, except per share data) Three Months Ended Nine Months Ended
       September 30,June 30,September 30, September 30,
        2016  2016  2015   2016  2015 
Interest and dividend Income:        
 Interest and fees on loans  $  5,461 $  4,955 $  4,390  $  15,253 $  12,607 
 Securities available-for-sale     709    740    759     2,196    2,255 
 FRB and FHLB dividends     37    35    5     103    25 
 Interest on deposits with banks     -    1    -      1    1 
 Other interest income     1    -     -      4    5 
  Total interest and dividend income    6,208    5,731    5,154     17,557    14,893 
Interest Expense:         
 Interest expense on deposits     383    381    400     1,119    1,093 
 Advances and other borrowings    209    212    130     622    401 
 Subordinated debentures     195    195    191     584    254 
  Total interest expense     787    788    721     2,325    1,748 
Net interest income      5,421    4,943    4,433     15,232    13,145 
Loan loss provision    472    459    310     1,381    960 
 Net interest income after loan loss provision    4,949    4,484    4,123     13,851    12,185 
       
Noninterest income:       
 Service charges on deposit accounts    229    211    317     639    783 
 Net gain on sale of loans    3,164    2,438    1,639     7,320    5,126 
 Mortgage loan servicing fees    462    442    523     1,267    1,360 
 Wealth management income     166    159    174     461    470 
 Interchange and ATM fees     227    223    146     652    436 
 Appreciation in cash surrender value of life insurance   133    113    105     358    315 
 Net gain on sale of available-for-sale securities    110    84    -      194    234 
 Net (loss) gain on sale of OREO    (2)   12    -      10    -  
 Net loss on fair value hedge     -    -     -      -     (93)
 Other noninterest income    200    124    8     490    438 
 Total noninterest income    4,689    3,806    2,912     11,391    9,069 
       
Noninterest expense:       
 Salaries and employee benefits     4,177    3,916    3,660     11,783    10,678 
 Occupancy and equipment expense    698    671    838     2,158    2,307 
 Data processing    456    463    560     1,467    1,605 
 Advertising    192    150    170     530    563 
 Amortization of mortgage servicing fees    326    285    218     839    640 
 Amortization of core deposit intangible and tax credits   112    111    116     335    317 
 Federal insurance premiums    99    123    83     305    251 
 Postage    60    34    63     148    152 
 Legal, accounting and examination fees    120    61    126     279    415 
 Consulting fees    44    34    72     161    523 
 Other noninterest expense    875    838    586     2,388    1,874 
 Total noninterest expense    7,159    6,686    6,492     20,393    19,325 
       
Income before income taxes      2,479    1,604    543     4,849    1,929 
Income tax provision     707    340    22     1,166    230 
Net income    $  1,772 $  1,264 $  521  $  3,683 $  1,699 
       
Basic earnings per share  $  0.46 $  0.34 $  0.14  $  0.97 $  0.44 
Diluted earnings per share  $  0.46 $  0.32 $  0.14  $  0.95 $  0.44 
Weighted average shares       
 outstanding (basic EPS)    3,779,464    3,779,464    3,804,532     3,779,464    3,823,896 
Weighted average shares       
 outstanding (diluted EPS)    3,873,171    3,873,171    3,841,787     3,873,171    3,861,151 
    

 

Financial Ratios and Other Data   
(Dollars in thousands, except per share data)   
(Unaudited) September 30,June 30,September 30,
    2016  2016  2015 
Asset Quality:    
 Nonaccrual loans $  1,421 $  2,040 $  556 
 Loans 90 days past due   301    89    888 
 Restructured loans, net   44    44    47 
  Total nonperforming loans   1,766    2,173    1,491 
 Other real estate owned and other repossessed assets   513    565    619 
  Total nonperforming assets$  2,279 $  2,738 $  2,110 
 Nonperforming loans / portfolio loans 0.38% 0.49% 0.38%
 Nonperforming assets / assets 0.34% 0.41% 0.35%
 Allowance for loan losses / portfolio loans 1.01% 0.96% 0.83%
 Allowance / nonperforming loans 263.31% 196.04% 216.63%
 Gross loan charge-offs for the quarter$  83 $  148 $  39 
 Gross loan recoveries for the quarter$  1 $  9 $  9 
 Net loan charge-offs for the quarter$  82 $  139 $  30 
      
Capital Data (At quarter end):   
 Tangible book value per share$  13.91 $  13.63 $  12.40 
 Shares outstanding 3,779,464  3,779,464  3,776,916 
      
      
Profitability Ratios (For the quarter):   
 Efficiency ratio*  69.70% 75.15% 86.79%
 Return on average assets 1.07% 0.78% 0.35%
 Return on average equity 11.82% 8.76% 3.87%
 Net interest margin  3.55% 3.31% 3.28%
      
Profitability Ratios (Year-to-date):   
 Efficiency ratio *  75.34% 78.79% 85.57%
 Return on average assets 0.76% 0.60% 0.40%
 Return on average equity 8.44% 6.68% 4.22%
 Net interest margin  3.40% 3.33% 3.36%
      
Other Information    
 Average total assets for the quarter$  664,580 $  649,585 $  593,947 
 Average total assets year to date$  649,203 $  641,188 $  570,948 
 Average earning assets for the quarter$  611,055 $  596,479 $  540,222 
 Average earning assets year to date$  596,858 $  589,432 $  520,925 
 Average loans for the quarter **$  471,437 $  448,158 $  384,275 
 Average loans year to date **$  449,334 $  438,283 $  361,355 
 Average equity for the quarter$  59,958 $  57,746 $  53,894 
 Average equity year to date$  58,157 $  57,257 $  53,701 
 Average deposits for the quarter$  500,381 $  493,879 $  478,635 
 Average deposits year to date$  491,987 $  487,463 $  460,816 
      
* 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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