HELENA, Mont., Oct. 27, 2015 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the "Company," "Eagle"), the holding company of Opportunity Bank of Montana, today reported net income was $521,000, or $0.14 per diluted share, in the third quarter of 2015, compared to $792,000, or $0.21 per diluted share, in the preceding quarter, and $718,000, or $0.18 per diluted share, in the same period a year ago. In the first nine months of 2015, Eagle's earnings were $1.7 million, or $0.44 per diluted share, compared to $1.7 million, or $0.43 per diluted share, in the first nine months of 2014.
"Eagle generated another solid quarter of loan growth, with both commercial and residential projects contributing to loan portfolio expansion," said Peter J. Johnson, President and CEO. "We will continue to capitalize on Montana's economic strengths by focusing our efforts on gathering strong core deposits, growing the loan portfolio and expanding our customer base."
Eagle's board of directors declared a regular quarterly cash dividend of $0.0775 per share. The dividend will be payable December 4, 2015 to shareholders of record November 13, 2015.
Third Quarter 2015 Highlights (at or for the three month period ended September 30, 2015, except where noted)
- Net income was $521,000, or $0.14 per diluted share in the third quarter, compared to $718,000, or $0.18 per diluted share in the same period a year ago.
- Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 7.3% to $7.3 million compared to $6.8 million in the same period a year ago.
- Net interest margin was 3.28% in the third quarter, compared to 3.34% in the same period a year earlier.
- Total loans increased 30.1% to $391.5 million compared to $300.9 million a year earlier.
- Commercial real estate loans increased 60.2% to $164.0 million at September 30, 2015, compared to $102.4 million a year earlier.
- Total deposits increased 9.1% to $481.1 million at September 30, 2015, from $440.8 million a year earlier.
- Capital ratios remain strong with a tangible shareholders equity ratio of 10.23% at September 30, 2015.
- Declared a quarterly cash dividend of $0.0775 per share, providing a 2.7% current yield at recent market prices.
Balance Sheet Results
Total assets increased 10.4% to $611.4 million at September 30, 2015, compared to $553.9 million a year earlier, and increased 4.8% compared to $583.4 million three months earlier.
"Demand for loans remains strong, contributing to higher originations. Activity is improving across all loan categories, particularly in commercial real estate and mortgage lending, and we don't see any sign of the pace slowing down in the near term," said Johnson. Total loans increased 9.2% to $391.5 million at September 30, 2015, compared to $358.4 million three months earlier and increased 30.1% compared to $300.9 million a year earlier.
Eagle originated $77.8 million in new residential mortgages during the quarter, excluding construction loans, and sold $59.5 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.77%. This production compares to residential mortgage originations of $65.5 million in the preceding quarter with sales of $59.1 million.
Commercial real estate loans increased 60.2% to $164.0 million at September 30, 2015, compared to $102.4 million a year earlier, while residential mortgage loans increased 15.3% to $113.7 million compared to $98.5 million a year earlier. Home equity loans increased 22.0% to $48.1 million, commercial loans decreased 10.5% to $34.4 million, and construction loans increased 92.3% to $17.2 million, compared to a year ago.
Total deposits increased 9.1% to $481.1 million at September 30, 2015, compared to $440.8 million a year earlier and were up 3.2% compared to $466.1 million at June 30, 2015. As of September 30, 2015, checking and money market accounts represent 54.2%, savings accounts represent 14.0%, and CDs comprise 31.8% of the total deposit portfolio.
Eagle's shareholders' equity improved to $54.4 million at September 30, 2015, compared to $53.7 million three months earlier and $52.6 million one year earlier. Tangible book value was $12.40 per share at September 30, 2015, compared to $12.34 per share at June 30, 2015 and $11.62 per share a year earlier. The year-over-year increase continues to be a result of steady growth in earnings and increases in the fair value of the investment portfolio caused by lower interest rates.
Credit Quality
Eagle's provision for loan losses for the third quarter was $310,000, compared to $328,000 in the preceding quarter and $215,000 in the third quarter a year ago. As of September 30, 2015, the allowance for loan losses represented 216.6% of nonperforming loans compared to 501.7% three months earlier and 429.1% a year earlier.
"During the quarter we had $888,000 that moved into the 90 days past due status. The increase was due primarily to a few residential mortgages that are in the process of collection," said Johnson. At September 30, 2015, nonperforming loans (NPLs) were $1.5 million, compared to $588,000 three months earlier, and $536,000 a year ago.
Net charge-offs totaled $30,000 in the third quarter, compared to $3,000 in the preceding quarter and $40,000 in the third quarter a year ago. The allowance for loan losses was $3.2 million, or 0.83% of total loans at September 30, 2015, compared to $3.0 million, or 0.82% of total loans at June 30, 2015, and $2.3 million, or 0.76% of total loans a year ago.
OREO and other repossessed assets was $619,000 at September 30, 2015, which was down slightly compared to $623,000 at June 30, 2015. Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.1 million at September 30, 2015, compared to $1.2 million both three months earlier and a year earlier.
Operating Results
Eagle's third quarter revenues were $7.3 million compared to $7.8 million in the preceding quarter and increased 7.3% compared to $6.8 million in the third quarter a year ago. Year-to-date revenues increased 16.1% to $22.2 million compared to $19.1 million in the first nine months of 2014. Net interest income before the provision for loan loss increased 5.9% to $4.4 million in the third quarter compared to $4.2 million in the third quarter a year ago. Net interest income was $4.5 million in the preceding quarter. In the first nine months of the year, Eagle's net interest income increased 9.5% to $13.1 million compared to $12.0 million in the same period a year earlier.
"Our net interest margin contracted this quarter, and we expect to see continued pressure on loan yields as loans reprice in this very low interest rate environment. In addition, the interest cost for the newly issued subordinated debt increased interest expense by $149,000 in the quarter," Johnson noted. Eagle's net interest margin was 3.28% in the third quarter compared to 3.46% in the preceding quarter and 3.34% in the third quarter a year ago. Funding costs for the quarter were up 14 basis points while asset yields increased 8 basis points compared to a year ago. The investment securities portfolio decreased to $147.5 million at September 30, 2015, compared to $178.4 million a year ago, which increased average yields on earning asset balances moderately. In the first nine months of the year, Eagle's net interest margin was 3.36% compared to 3.32% in the first nine months a year earlier.
Noninterest income increased 9.6% to $2.9 million in the third quarter compared to $2.7 million in the third quarter a year ago. In the preceding quarter Eagle's noninterest income was $3.3 million. The preceding quarter's noninterest income included both a $310,000 gain on sale of fixed assets resulting from the sale of a branch building as well as the net gain on the sale of loans of $1.9 million. Year-to-date, noninterest income increased 27.2% to $9.1 million compared to $7.1 million in the nine month period a year earlier.
Eagle's third quarter noninterest expenses were $6.5 million, the same as in the preceding quarter. This compares to $5.9 million in the third quarter one year ago. In the first nine months of 2015, noninterest expense increased to $19.3 million compared to $17.3 million in the first nine months of 2014. The year-over-year increase for both the quarter and year-to-date periods is primarily due to higher salary and employee benefits, part of which is attributed to commission-based compensation related to the robust loan growth.
Stock Repurchase
During the quarter, the company repurchased 46,065 shares of EBMT stock at an average price of $11.47 per share.
Capital Management
Eagle Bancorp Montana continues to be well capitalized with the ratio of shareholders' equity to tangible asset of 10.23% at September 30, 2015. (Shareholders' equity, plus trust preferred securities and subordinated debt, less goodwill and core deposit intangible to tangible assets).
During the preceding quarter, Eagle booked $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 are expected to qualify as Tier 2 capital for regulatory purposes. The net proceeds from the offering are expected to be 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) | (Unaudited) | (Unaudited) | |||
September 30, 2015 | June 30, 2015 | September 30, 2014 | ||||
Assets: | ||||||
Cash and due from banks | $ 6,529 | $ 8,108 | $ 3,295 | |||
Interest-bearing deposits with banks | 717 | 619 | 615 | |||
Federal funds sold | -- | -- | -- | |||
Total cash and cash equivalents | 7,246 | 8,727 | 3,910 | |||
Securities available-for-sale, at market value | 147,460 | 148,766 | 178,428 | |||
FHLB stock, at cost | 2,853 | 2,326 | 1,878 | |||
FRB stock | 642 | 642 | -- | |||
Investment in Eagle Bancorp Statutory Trust I | 155 | 155 | 155 | |||
Loans held-for-sale | 14,731 | 17,184 | 21,656 | |||
Loans: | ||||||
Residential mortgage (1-4 family) | 113,658 | 106,852 | 98,543 | |||
Commercial loans | 34,370 | 46,372 | 38,387 | |||
Commercial real estate | 164,040 | 139,812 | 102,377 | |||
Construction loans | 17,234 | 10,513 | 8,962 | |||
Consumer loans | 14,860 | 14,480 | 13,692 | |||
Home equity | 48,062 | 40,946 | 39,408 | |||
Unearned loan fees | (750) | (605) | (456) | |||
Total loans | 391,474 | 358,370 | 300,913 | |||
Allowance for loan losses | (3,230) | (2,950) | (2,300) | |||
Net loans | 388,244 | 355,420 | 298,613 | |||
Accrued interest and dividends receivable | 2,332 | 2,337 | 2,340 | |||
Mortgage servicing rights, net | 4,808 | 4,517 | 3,913 | |||
Premises and equipment, net | 18,290 | 18,459 | 20,037 | |||
Cash surrender value of life insurance | 12,429 | 11,898 | 11,653 | |||
Real estate and other assets acquired in settlement of loans, net | 619 | 623 | 619 | |||
Goodwill | 7,034 | 7,034 | 7,034 | |||
Core deposit intangible | 550 | 588 | 703 | |||
Other assets | 4,016 | 4,691 | 2,927 | |||
Total assets | $ 611,409 | $ 583,367 | $ 553,866 | |||
Liabilities: | ||||||
Deposit accounts: | ||||||
Noninterest bearing | 82,842 | 70,043 | 66,943 | |||
Interest bearing | 398,286 | 396,016 | 373,882 | |||
Total deposits | 481,128 | 466,059 | 440,825 | |||
Accrued expense and other liabilities | 5,372 | 4,985 | 4,069 | |||
FHLB advances and other borrowings | 55,534 | 43,611 | 51,172 | |||
Subordinated debentures, net | 14,951 | 15,005 | 5,155 | |||
Total liabilities | 556,985 | 529,660 | 501,221 | |||
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; 3,776,916; 3,822,981; 3,866,233 outstanding at September 30, 2015, June 30, 2015 and September 30, 2014, respectively) | 41 | 41 | 41 | |||
Additional paid-in capital | 22,134 | 22,129 | 22,126 | |||
Unallocated common stock held by employee stock ownership plan (ESOP) | (1,016) | (1,057) | (1,182) | |||
Treasury stock, at cost (306,211 shares at September 30, 2015, 260,146 shares at June 30, 2015 and 216,894 shares at September 30, 2014) | (3,338) | (2,810) | (2,333) | |||
Retained earnings | 36,714 | 36,490 | 35,252 | |||
Accumulated other comprehensive (loss) | (111) | (1,086) | (1,259) | |||
Total shareholders' equity | 54,424 | 53,707 | 52,645 | |||
Total liabilities and shareholders' equity | $ 611,409 | $ 583,367 | $ 553,866 |
Income Statement | (Unaudited) | (Unaudited) | |||||
(Dollars in thousands, except per share data) | Three Months Ended | Nine Months Ended | |||||
September 30, 2015 |
June 30, 2015 |
September 30, 2014 |
September 30, 2015 |
September 30, 2014 |
|||
Interest and dividend Income: | |||||||
Interest and fees on loans | $ 4,390 | $ 4,255 | $ 3,658 | $ 12,607 | $ 10,291 | ||
Securities available-for-sale | 759 | 737 | 1,044 | 2,255 | 3,227 | ||
FRB and FHLB dividends | 5 | 20 | -- | 25 | -- | ||
Interest on deposits with banks | -- | 3 | 1 | 6 | 5 | ||
Total interest and dividend income | 5,154 | 5,015 | 4,703 | 14,893 | 13,523 | ||
Interest Expense: | |||||||
Interest expense on deposits | 400 | 356 | 338 | 1,093 | 999 | ||
Advances and other borrowings | 130 | 128 | 156 | 401 | 455 | ||
Subordinated debentures | 191 | 42 | 21 | 254 | 63 | ||
Total interest expense | 721 | 526 | 515 | 1,748 | 1,517 | ||
Net interest income | 4,433 | 4,489 | 4,188 | 13,145 | 12,006 | ||
Loan loss provision | 310 | 328 | 215 | 960 | 511 | ||
Net interest income after loan loss provision | 4,123 | 4,161 | 3,973 | 12,185 | 11,495 | ||
Noninterest income: | |||||||
Service charges on deposit accounts | 317 | 243 | 284 | 783 | 763 | ||
Net gain on sale of loans | 1,639 | 1,856 | 1,398 | 5,126 | 3,430 | ||
Mortgage loan servicing fees | 523 | 422 | 380 | 1,360 | 1,099 | ||
Net gain on sale of available-for-sale securities | -- | 48 | 194 | 234 | 431 | ||
Wealth management income | 174 | 111 | 112 | 470 | 383 | ||
Net loss on fair value hedge | -- | -- | (47) | (93) | (181) | ||
Other income | 259 | 595 | 336 | 1,189 | 1,206 | ||
Total noninterest income | 2,912 | 3,275 | 2,657 | 9,069 | 7,131 | ||
Noninterest expense: | |||||||
Salaries and employee benefits | 3,660 | 3,639 | 3,131 | 10,678 | 9,523 | ||
Occupancy and equipment expense | 838 | 733 | 695 | 2,307 | 2,094 | ||
Data processing | 560 | 536 | 540 | 1,605 | 1,479 | ||
Advertising | 170 | 174 | 166 | 563 | 525 | ||
Amortization of mortgage servicing fees | 218 | 205 | 166 | 640 | 462 | ||
Amortization of core deposit intangible and tax credits | 116 | 101 | 105 | 317 | 315 | ||
Federal insurance premiums | 83 | 73 | 73 | 251 | 176 | ||
Postage | 63 | 43 | 44 | 152 | 127 | ||
Legal, accounting and examination fees | 126 | 133 | 262 | 415 | 548 | ||
Consulting fees | 72 | 211 | 176 | 523 | 558 | ||
Write-down on OREO | -- | -- | -- | -- | 10 | ||
Other expense | 586 | 624 | 507 | 1,874 | 1,490 | ||
Total noninterest expense | 6,492 | 6,472 | 5,865 | 19,325 | 17,307 | ||
Income before income taxes | 543 | 964 | 765 | 1,929 | 1,319 | ||
Income tax provision (benefit) | 22 | 172 | 47 | 230 | (369) | ||
Net income | $ 521 | $ 792 | $ 718 | $ 1,699 | $ 1,688 | ||
Basic earnings per share | $ 0.14 | $ 0.21 | $ 0.18 | $ 0.44 | $ 0.43 | ||
Diluted earnings per share | $ 0.14 | $ 0.21 | $ 0.18 | $ 0.44 | $ 0.43 | ||
Weighted average shares outstanding (basic EPS) | 3,804,532 | 3,822,981 | 3,889,603 | 3,823,896 | 3,907,259 | ||
Weighted average shares outstanding (diluted EPS) | 3,841,787 | 3,860,236 | 3,944,406 | 3,861,151 | 3,962,062 |
Financial Ratios and Other Data | ||||||||
(Dollars in thousands, except per share data) | ||||||||
(Unaudited) | September 30 | June 30 | March 31 | September 30 | ||||
2015 | 2015 | 2015 | 2014 | |||||
Asset Quality: | ||||||||
Nonaccrual loans | $ 556 | $ 541 | $ 176 | $ 486 | ||||
Loans 90 days past due | 888 | -- | -- | -- | ||||
Restructured loans, net | 47 | 47 | 47 | 50 | ||||
Total nonperforming loans | 1,491 | 588 | 223 | 536 | ||||
Other real estate owned and other repossessed assets | 619 | 623 | 642 | 619 | ||||
Total nonperforming assets | $ 2,110 | $ 1,211 | $ 865 | $ 1,155 | ||||
Nonperforming loans / portfolio loans | 0.38% | 0.16% | 0.07% | 0.18% | ||||
Nonperforming assets / assets | 0.35% | 0.21% | 0.15% | 0.21% | ||||
Allowance for loan losses / portfolio loans | 0.83% | 0.82% | 0.78% | 0.76% | ||||
Allowance / nonperforming loans | 216.63% | 501.70% | 1177.13% | 429.10% | ||||
Gross loan charge-offs for the quarter | $ 39 | $ 4 | $ 148 | $ 80 | ||||
Gross loan recoveries for the quarter | $ 9 | $ 1 | $ 1 | $ 40 | ||||
Net loan charge-offs for the quarter | $ 30 | $ 3 | $ 147 | $ 40 | ||||
Capital Data (At quarter end): | ||||||||
Tangible book value per share | $ 12.40 | $ 12.05 | $ 12.34 | $ 11.62 | ||||
Shares outstanding | 3,776,916 | 3,822,981 | 3,822,981 | 3,866,233 | ||||
Profitability Ratios (For the quarter): | ||||||||
Efficiency ratio* | 86.79% | 82.06% | 88.12% | 84.15% | ||||
Return on average assets | 0.35% | 0.56% | 0.28% | 0.52% | ||||
Return on average equity | 3.87% | 5.96% | 2.82% | 5.49% | ||||
Net interest margin | 3.28% | 3.46% | 3.35% | 3.34% | ||||
Profitability Ratios (Year-to-date): | ||||||||
Efficiency ratio * | 85.57% | 84.96% | 88.12% | 88.79% | ||||
Return on average assets | 0.40% | 0.42% | 0.28% | 0.43% | ||||
Return on average equity | 4.22% | 4.39% | 2.82% | 4.45% | ||||
Net interest margin | 3.36% | 3.41% | 3.35% | 3.32% | ||||
Other Information | ||||||||
Average total assets for the quarter | $ 593,947 | $ 567,553 | $ 550,980 | $ 547,111 | ||||
Average total assets year to date | $ 570,948 | $ 559,524 | $ 550,980 | $ 529,260 | ||||
Average earning assets for the quarter | $ 540,222 | $ 518,291 | $ 503,894 | $ 500,485 | ||||
Average earning assets year to date | $ 520,925 | $ 511,356 | $ 503,894 | $ 482,289 | ||||
Average loans for the quarter ** | $ 384,275 | $ 360,782 | $ 339,007 | $ 304,791 | ||||
Average loans year to date ** | $ 361,355 | $ 349,895 | $ 339,007 | $ 282,976 | ||||
Average equity for the quarter | $ 53,894 | $ 53,193 | $ 54,847 | $ 52,299 | ||||
Average equity year to date | $ 53,701 | $ 53,642 | $ 54,847 | $ 50,621 | ||||
Average deposits for the quarter | $ 478,635 | $ 457,743 | $ 445,655 | $ 436,044 | ||||
Average deposits year to date | $ 460,816 | $ 451,931 | $ 445,655 | $ 374,864 | ||||
* 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 |