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Eagle Bancorp Montana Earns a Record $1.3 Million, or $0.32 Per Diluted Share, in 2Q16; Increases Regular Quarterly Cash Dividend to $0.08 per Share and Announces Stock Repurchase Plan

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07/28/2016 | 08:32pm CEST

HELENA, Mont., July 28, 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 59.6% to $1.3 million, or $0.32 per diluted share, in the second quarter of 2016, compared to $792,000, or $0.21 per diluted share, in the second quarter a year ago.  In the preceding quarter, Eagle earned $647,000, or $0.17 per diluted share. 

In the first six months of 2016, net income increased 62.2% to $1.9 million, or $0.49 per diluted share, compared to $1.2 million, or $0.30 per diluted share, in the first six months of 2015.

“Our second quarter financial results reflect strong loan and deposit growth, robust mortgage production and only moderate increases in operating expenses,” 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.  As we improve our revenue generation while holding the line on overhead expenses, our operating efficiency is beginning to show reliable improvement.”

Eagle’s board of directors declared a regular quarterly cash dividend of $0.08 per share.  The dividend will be payable September 2, 2016 to shareholders of record August 12, 2016. The current annualized yield is 2.45% at recent market prices.

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

  • Net income grew 59.6% to $1.3 million, or $0.32 per diluted share in the second quarter, compared to $792,000, or $0.21 per diluted share in the second quarter a year ago.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 12.7% to $8.7 million compared to $7.8 million in the same period a year ago. 
  • Net interest margin remained healthy at 3.31%.
  • Total loans increased 5.0% to $443.9 million at June 30, 2016, compared to $422.9 million three months earlier and increased 23.9% compared to $358.4 million a year earlier. 
  • Commercial real estate loans increased 43.7% to $200.8 million at June 30, 2016, compared to $139.8 million a year earlier, and remain well within regulatory concentration limits.
  • Total deposits increased 9.3% to $508.9 million at June 30, 2016, from $465.6 million a year earlier.
  • Capital ratios remain strong with a tangible shareholders equity ratio of 10.11% at June 30, 2016.
  • Increased quarterly cash dividend to $0.08 per share, providing a 2.45% current yield at recent market prices.

Balance Sheet Results

Total assets increased 13.7% to $663.3 million at June 30, 2016, compared to $583.4 million a year earlier, and increased 3.2% compared to $643.0 million three months earlier.  Total loans increased 5.0% to $443.9 million at June 30, 2016, compared to $422.9 million three months earlier and increased 23.9% compared to $358.4 million a year earlier.  “Loan growth picked up again during the quarter, with our loan pipeline showing strong demand for  C&I and commercial real estate loans,” added Johnson.

Eagle originated $80.5 million in new residential mortgages during the quarter, excluding construction loans, and sold $68.7 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.62%.  This production compares to residential mortgage originations of $55.8 million in the preceding quarter with sales of $52.1 million.

Commercial real estate loans increased 43.7% to $200.8 million at June 30, 2016, compared to $139.8 million a year earlier, while residential mortgage loans increased 8.8% to $116.2 million compared to $106.9 million a year earlier.  Home equity loans increased 16.8% to $47.8 million, commercial loans increased 5.6% to $49.0 million, and construction loans increased 55.8% to $16.4 million, compared to a year ago.  

Eagle’s total deposits increased 9.3% to $508.9 million at June 30, 2016, compared to $465.6 million a year earlier and were up 2.9% compared to $494.4 million at March 31, 2016.  As of June 30, 2016, checking and money market accounts represent 51.9%, savings accounts represent 16.9%, and CDs comprise 31.2% of the total deposit portfolio.  

Shareholders’ equity improved to $59.0 million at June 30, 2016, compared to $56.5 million three months earlier and $53.7 million one year earlier.  Tangible book value improved to $13.63 per share at June 30, 2016, compared to $12.97 per share at March 31, 2016 and $12.05 per share a year earlier. 

Operating Results

“Our second quarter net interest margin contracted compared to the second quarter a year ago due to the additional interest expense from the subordinated debt issuance in the middle of 2015,” Johnson said.  Eagle’s net interest margin was 3.31% in the second quarter compared to 3.35% in the preceding quarter and 3.46% in the second quarter a year ago.  In the first six months of the year, Eagle’s net interest margin was 3.33% compared to 3.41% in the same period one year ago.  Funding costs for the quarter were up 12 basis points while asset yields decreased three basis points compared to a year ago.  The investment securities portfolio decreased to $140.4 million at June 30, 2016, compared to $148.8 million a year ago, which had a slight positive impact on the average yields on earning assets. 

Eagle’s second quarter revenues increased 12.7% to $8.7 million compared to $7.8 million in both the preceding quarter and in the second quarter a year ago.  In the first six months of 2016, revenues increased 11.1% to $16.5 million, compared to $14.9 million in the first six months of 2015.  Net interest income before the provision for loan loss was $4.9 million in the second quarter, which was unchanged compared to the preceding quarter and increased 10.1% compared to $4.5 million in the second quarter a year ago.  In the first six months of the year, net interest income increased 12.6% to $9.8 million, compared to $8.7 million in the first six months of 2015.

Primarily a result of the net gain on sale of loans during the quarter, noninterest income increased 31.4% to $3.8 million in the second quarter, compared to $2.9 million in the preceding quarter, and increased 16.2% compared to $3.3 million in the second  quarter a year ago.  Year-to-date, noninterest income increased 8.9% to $6.7 million compared to $6.2 million in the first six months a year ago.  Second quarter noninterest expenses were $6.7 million, compared to $6.5 million in both the preceding quarter and the year ago quarter.  Year-to-date, noninterest expense was up modestly to $13.2 million compared to $12.8 million in the first six months of 2015.

Credit Quality

Eagle’s second quarter provision for loan losses was $459,000, compared to $450,000 in the preceding quarter and $328,000 in the second quarter a year ago.  As of June 30, 2016, the allowance for loan losses represented 196.0% of nonperforming loans compared to 168.7% three months earlier and 501.7% a year earlier.  At June 30, 2016, nonperforming loans (NPLs) were $2.2 million, which was down slightly compared to $2.3 million three months earlier, and an increase compared to $588,000 a year earlier.   

Second quarter net charge-offs totaled $139,000, compared to $60,000 in the preceding quarter and $3,000 in the second quarter a year ago.  The allowance for loan losses was $4.3 million, or 0.96% of total loans at June 30, 2016, compared to $3.9 million, or 0.93% of total loans at March 31, 2016, and $3.0 million, or 0.82% of total loans a year ago.

OREO and other repossessed assets was $565,000 at June 30, 2016, which was down slightly compared to $606,000 at March 31, 2016.  Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.7 million at June 30, 2016, or 0.41% of total assets, compared to $2.9 million, or 0.46% of total assets three months earlier and $1.2 million, or 0.21% 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 10.11% at June 30, 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.

Stock Repurchase

Eagle announced that its Board of Directors has authorized the repurchase of up to 100,000 shares of its common stock, representing approximately 2.6% of outstanding shares. Under the plan, shares may be purchased by the company on the open market or in privately negotiated transactions. The extent to which the company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations.

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)
       As Restated 
      June 30,March 31,June 30,
       2016  2016  2015 
         
Assets:       
 Cash and due from banks  $5,579 $5,620 $8,108 
 Interest-bearing deposits with banks   844  993  619 
 Total cash and cash equivalents   6,423  6,613  8,727 
 Securities available-for-sale, at market value   140,449  145,070  148,766 
 FHLB stock, at cost   3,735  3,564  2,326 
 FRB stock   871  871  642 
 Investment in Eagle Bancorp Statutory Trust I   155  155  155 
 Loans held-for-sale   21,246  18,284  17,184 
 Loans:     
 Residential mortgage (1-4 family)   116,207  113,364  106,852 
 Commercial loans   48,982  40,614  46,372 
 Commercial real estate   200,848  194,479  139,812 
 Construction loans   16,382  15,673  10,513 
 Consumer loans   14,618  14,229  14,480 
 Home equity   47,842  45,404  40,946 
 Unearned loan fees   (951) (882) (605)
      Total loans   443,928  422,881  358,370 
 Allowance for loan losses   (4,260) (3,940) (2,950)
 Net loans    439,668  418,941  355,420 
 Accrued interest and dividends receivable   2,274  2,213  2,337 
 Mortgage servicing rights, net   5,196  4,988  4,517 
 Premises and equipment, net   17,965  18,145  18,459 
 Cash surrender value of life insurance   14,683  12,598  11,898 
 Real estate and other assets acquired in settlement of loans, net   565  606  623 
 Goodwill   7,034  7,034  7,034 
 Core deposit intangible   449  481  588 
 Other assets   2,623  3,441  4,691 
 Total assets  $663,336 $643,004 $583,367 
         
Liabilities:       
 Deposit accounts:     
 Noninterest bearing   88,327  90,517  69,565 
 Interest bearing   420,555  403,877  396,016 
 Total deposits   508,882  494,394  465,581 
 Accrued expense and other liabilities   5,000  5,933  5,463 
 FHLB advances and other borrowings   75,491  71,204  43,611 
 Subordinated debentures, net   14,959  14,954  15,005 
 Total liabilities   604,332  586,485  529,660 
         
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 June 30, 2016, March 31, 2016 and June 30, 2015, respectively)    41  41  41 
 Additional paid-in capital   22,168  22,157  22,129 
 Unallocated common stock held by employee stock ownership plan (ESOP)   (891) (933) (1,057)
 Treasury stock, at cost (303,663, 303,663 and 260,146 shares at     
 June 30, 2016, March 31, 2016 and June 30, 2015, respectively)   (3,321) (3,321) (2,810)
 Retained earnings   38,626  37,655  36,490 
 Accumulated other comprehensive income (loss)  2,381  920  (1,086)
 Total shareholders' equity  59,004  56,519  53,707 
 Total liabilities and shareholders' equity $663,336 $643,004 $583,367 
         


Income Statement   (Unaudited) (Unaudited)
(Dollars in thousands, except per share data) Three Months Ended Six Months Ended
        As Restated    
       June 30,March 31,June 30, June 30,
        2016  2016  2015   2016  2015 
Interest and dividend Income:        
 Interest and fees on loans  $  4,955 $  4,837 $  4,255  $  9,792 $  8,217 
 Securities available-for-sale     740    747    737     1,487    1,496 
 FRB and FHLB dividends     35    31    20     66    20 
 Interest on deposits with banks     1    -     1     1    1 
 Other interest income     -    3    2     3    5 
  Total interest and dividend income    5,731    5,618    5,015     11,349    9,739 
Interest Expense:         
 Interest expense on deposits     381    355    356     736    693 
 Advances and other borrowings    212    201    128     413    271 
 Subordinated debentures     195    194    42     389    63 
  Total interest expense     788    750    526     1,538    1,027 
Net interest income      4,943    4,868    4,489     9,811    8,712 
Loan loss provision      459    450    328     909    650 
  Net interest income after loan loss provision    4,484    4,418    4,161     8,902    8,062 
             
Noninterest income:         
 Service charges on deposit accounts    211    199    243     410    466 
 Net gain on sale of loans     2,438    1,718    1,856     4,156    3,487 
 Mortgage loan servicing fees     442    363    422     805    837 
 Wealth management income     159    136    111     295    296 
 Interchange and ATM fees     223    202    164     425    290 
 Appreciation in cash surrender value of life insurance   113    112    105     225    210 
 Net gain on sale of available-for-sale securities    84    -     48     84    234 
 Net loss on sale of OREO     (12)   -     -      (12)   -  
 Net loss on fair value hedge     -    -     -      -     (93)
 Other noninterest income     148    166    326     314    430 
  Total noninterest income     3,806    2,896    3,275     6,702    6,157 
             
Noninterest expense:        
 Salaries and employee benefits     3,916    3,690    3,639     7,606    7,018 
 Occupancy and equipment expense    671    789    733     1,460    1,469 
 Data processing     463    548    536     1,011    1,045 
 Advertising      150    188    174     338    393 
 Amortization of mortgage servicing fees    285    228    205     513    422 
 Amortization of core deposit intangible and tax credits   111    112    101     223    201 
 Federal insurance premiums     123    83    73     206    168 
 Postage       34    54    43     88    89 
 Legal, accounting and examination fees    61    98    133     159    289 
 Consulting fees     34    83    211     117    451 
 Other noninterest expense     838    675    624     1,513    1,288 
  Total noninterest expense     6,686    6,548    6,472     13,234    12,833 
             
Income before income taxes      1,604    766    964     2,370    1,386 
Income tax provision     340    119    172     459    208 
Net income    $  1,264 $  647 $  792  $  1,911 $  1,178 
             
Basic earnings per share  $  0.34 $  0.17 $  0.21  $  0.51 $  0.31 
Diluted earnings per share  $  0.32 $  0.17 $  0.21  $  0.49 $  0.30 
Weighted average shares        
 outstanding (basic EPS)     3,779,464    3,779,464    3,822,981     3,779,464    3,833,739 
Weighted average shares        
 outstanding (diluted EPS)     3,873,171    3,873,171    3,860,236     3,873,171    3,870,994 
             


Financial Ratios and Other Data   
(Dollars in thousands, except per share data)   
(Unaudited) As Restated
   June 30March 31June 30
    2016  2016  2015 
Asset Quality:    
 Nonaccrual loans $2,040 $1,580 $541 
 Loans 90 days past due 89  710  - 
 Restructured loans, net 44  45  47 
 Total nonperforming loans 2,173  2,335  588 
 Other real estate owned and other repossessed assets 565  606  623 
 Total nonperforming assets$2,738 $2,941 $1,211 
 Nonperforming loans / portfolio loans 0.49% 0.55% 0.16%
 Nonperforming assets / assets 0.41% 0.46% 0.21%
 Allowance for loan losses / portfolio loans 0.96% 0.93% 0.82%
 Allowance / nonperforming loans 196.04% 168.74% 501.70%
 Gross loan charge-offs for the quarter$148 $63 $4 
 Gross loan recoveries for the quarter$9 $3 $1 
 Net loan charge-offs for the quarter$139 $60 $3 
      
Capital Data (At quarter end):   
 Tangible book value per share$13.63 $12.97 $12.05 
 Shares outstanding 3,779,464  3,779,464  3,822,981 
      
      
Profitability Ratios (For the quarter):   
 Efficiency ratio*  75.15% 82.90% 82.06%
 Return on average assets 0.78% 0.41% 0.56%
 Return on average equity 8.76% 4.56% 5.96%
 Net interest margin  3.31% 3.35% 3.46%
      
Profitability Ratios (Year-to-date):   
 Efficiency ratio *  78.79% 82.90% 84.96%
 Return on average assets 0.60% 0.41% 0.42%
 Return on average equity 6.68% 4.56% 4.39%
 Net interest margin  3.33% 3.35% 3.41%
      
Other Information    
 Average total assets for the quarter$649,585 $631,998 $567,553 
 Average total assets year to date$641,188 $631,998 $559,524 
 Average earning assets for the quarter$596,479 $581,594 $518,291 
 Average earning assets year to date$589,432 $581,594 $511,356 
 Average loans for the quarter **$448,158 $428,408 $360,782 
 Average loans year to date **$438,283 $428,408 $349,895 
 Average equity for the quarter$57,746 $56,767 $53,193 
 Average equity year to date$57,257 $56,767 $53,642 
 Average deposits for the quarter$493,879 $480,255 $457,743 
 Average deposits year to date$487,463 $480,255 $451,931 
      
* 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   
   
Contacts:
Peter J. Johnson, President and CEO
(406) 457-4006 
Laura F. Clark, SVP and CFO
(406) 457-4007

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© GlobeNewswire 2016
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