Eagle Bancorp Montana Earns $605,000 In Fourth Fiscal Quarter And $2.2 Million In Fiscal 2012; Declares Regular Quarterly Cash Dividend

Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the “Company,” “Eagle”), the holding company of American Federal Savings Bank, today reported its earnings increased 26% to $605,000, or $0.15 per diluted share, in the fourth fiscal quarter ended June 30, 2012, compared to $482,000, or $0.12 per diluted share, in the fourth quarter a year ago. In the quarter ended March 31, 2012 it earned $658,000, or $0.17 per diluted share. In fiscal 2012 Eagle earned $2.2 million, or $0.56 per diluted share, compared to $2.4 million, or $0.62 per diluted share, in fiscal 2011.

The Company also announced its board of directors has declared a regular quarterly cash dividend of $0.07125 per share payable August 24, 2012 to shareholders of record on August 3, 2012.

“For the past two years we have explored several growth opportunities in our markets and surrounding areas. The highlight of the year so far is our definitive agreement to purchase seven branch banking locations from Sterling Savings Bank, a wholly-owned subsidiary of Sterling Financial Corporation (NASDAQ: STSA), which we announced on July 2, 2012,” said Peter J. Johnson, President and CEO. “The transaction will more than double our franchise to 13 branches and extends our branch network throughout Southern Montana. It will provide our existing customers with added convenience and service and our new customers with the opportunity to enjoy the outstanding personalized service and commitment of a Montana-based community bank.”

Of the seven branches being acquired six are in new markets for Eagle, including two in Missoula, one in Billings, and one each in Hamilton, Livingston and Big Timber. The seventh is in Bozeman where Eagle already has a presence.

Fourth Quarter Fiscal 2012 Highlights
  • Eagle earned $605,000 or $0.15 per diluted share, in the fourth quarter of fiscal 2012 compared to $658,000, or $0.17 per diluted share in the preceding quarter and $482,000, or $0.12 per diluted share in the fourth quarter of fiscal 2011.
  • Net interest margin was 3.51% in the fourth quarter, compared to 3.73% in the preceding quarter and 3.71% in the fourth quarter a year ago.
  • Nonperforming assets were $5.6 million, or 1.70% of total assets at June 30, 2012, compared to $5.4 million, or 1.62% of total assets three months earlier and $4.1 million, or 1.24% of total assets a year ago.
  • Nonperforming loans totaled $3.2 million, or 1.83% of total loans at June 30, 2012 compared to $3.5 million, or 1.95% of total loans three months earlier and $2.9 million, or 1.57% of total loans a year ago.
  • Total deposits increased 5.16% year-over-year to $220.0 million.
  • Capital ratios remain strong with a Tier 1 leverage ratio of 17.22%.
  • Declared regular quarterly cash dividend of $0.07125 per share.

Balance Sheet Results

“Demand for new loans has been modest and as a result the total loan portfolio contracted compared to a year ago,” said Johnson. “Loan payoffs have also been a contributing factor to the contracting loan portfolio.” Total loans declined 6.30% to $175.5 million at June 30, 2012 compared to $187.3 million at June 30, 2011. Commercial real estate loans remained relatively unchanged at $64.7 million compared to a year earlier and residential mortgage loans decreased 11.9% to $61.7 million compared to $70.0 million a year earlier. Commercial loans increased 45.2% to $15.3 million and home equity loans decreased 14.8% to $23.7 million compared to a year ago.

Total deposits increased 5.16% to $220.0 million at the end of June compared to $209.2 million a year ago. Checking and money market accounts represent 44.6% of total deposits, savings accounts represent 18.5% of total deposits, and CDs comprise 36.9% of the total deposit portfolio at June 30, 2012. Eagle had no brokered deposits at the end of June.

Total assets were $327.3 million at June 30, 2012, compared to $331.1 million a year earlier. Shareholders’ equity was $53.7 million at June 30, 2012, compared to $52.5 million a year ago and the tangible book value increased to $13.83 per share at June 30, 2012, compared to $13.39 per share a year ago.

Credit Quality

“The overall trend in credit quality has stabilized, with nonaccrual loans dropping significantly and very little new loans moved into delinquency status as of June 30, 2012,” said Clint Morrison, SVP and CFO. “During the fourth quarter we restructured several loans or moved them to OREO. As a result, restructured loans totaled $1.40 million during the fourth quarter.”

Nonperforming loans (NPLs) were $3.2 million, or 1.83% of total loans at June 30, 2012, compared to $3.5 million, or 1.95% of total loans, three months earlier, and $2.9 million, or 1.57% of total loans, a year ago. Other real estate owned (OREO) and other repossessed assets totaled $2.4 million at June 30, 2012 compared to $1.9 million three months earlier and $1.2 million a year earlier.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, totaled $5.6 million, or 1.70% of total assets, at June 30, 2012, compared to $5.4 million, or 1.62% of total assets in the preceding quarter, and $4.1 million, or 1.24% of total assets, a year ago.

Eagle’s fourth quarter provision for loan losses was $260,000, compared to $258,000 in the preceding quarter and $155,000 in the fourth quarter a year ago. Net charge offs were $335,000 in the fourth quarter compared to net charge offs of $58,000 in the preceding quarter and $6,000 in the fourth quarter a year ago. For fiscal 2012 the provision for loan losses totaled $1.1 million compared to $948,000 for fiscal 2011. The allowance for loan losses now stands at $1.63 million, or 0.93% of total loans at March 31, 2012, compared to $1.70 million, or 0.95% of total loans at March 31, 2012, and $1.80 million, or 0.96% of total loans a year ago.

Operating Results

“The net interest margin contracted again during the quarter as asset yields continued to decline with interest rates reaching historic lows,” said Morrison. The net interest margin was 3.51% in the fourth quarter, compared to 3.73% in the preceding quarter and 3.71% in the fourth quarter a year ago. Funding costs for the fourth quarter of fiscal 2012 decreased 13 basis points compared to the previous quarter and asset yields decreased 34 basis points compared to the previous quarter. In fiscal 2012 the net interest margin improved six basis points to 3.68% compared to 3.62% in fiscal 2011.

Net interest income before the provision for loan loss was $2.58 million in the fourth quarter of fiscal 2012, compared to $2.76 million in the preceding quarter and $2.77 million in the fourth quarter a year ago. For the fiscal year, the net interest income before the provision for loan loss was $10.93 million, compared to $10.87 million in fiscal year 2011.

Noninterest income increased 56.0% to $1.23 million, compared to $786,000 in the fourth quarter a year ago. In the third quarter of fiscal 2012 noninterest income was $1.30 million. In fiscal 2012 noninterest income was $4.17 million compared to $4.62 million in fiscal 2011.

Largely due to increased mortgage refinance activity recently resulting from the low interest rate environment, Eagle’s third quarter net gain on the sale of loans increased to $534,000 compared to $522,000 in the preceding quarter and $225,000 in the fourth quarter a year ago. However, for all of fiscal 2012 the net gain on the sale of loans decreased 22.5% to $1.70 million, compared to $2.19 million in fiscal 2011 when mortgage loan activity was at its peak.

In the fourth quarter of fiscal 2012 noninterest expense was $2.79 million, compared to $2.91 million in the preceding quarter and $2.71 million in the fourth quarter a year ago. In fiscal 2012 noninterest expense totaled $11.03 million compared to $11.09 million in fiscal 2011. Consulting fees increased substantially to $528,000 in fiscal 2012 compared to $180,000 in fiscal 2011, largely due to costs associated with the previously announced definitive agreement to purchase seven branch banking locations from Sterling Savings Bank and other acquisition studies.

Eagle’s fourth quarter return on average equity (ROAE) was 4.46% compared to 4.88% in the preceding quarter and 3.81% in the fourth quarter a year ago. Return on average assets (ROAA) was 0.74% in the fourth quarter compared to 0.80% in the preceding quarter and 0.58% in the fourth quarter a year ago. In fiscal 2012, Eagle’s ROAE was 4.06% compared to 4.50% in fiscal 2011 and its ROAA was 0.66% compared to 0.73% in fiscal 2011.

Capital Management

Eagle Bancorp Montana continues to meet the well capitalized thresholds for regulatory purposes with a Tier 1 leverage ratio of 17.22% at June 30, 2012. “When we complete our acquisition of the seven branches from Sterling Savings Bank, our Tier 1 leverage ratio should be approximately 10.80%, still high enough to be considered well capitalized by our regulators,” Johnson concluded.

About the Company

Eagle Bancorp Montana, Inc. is the stock holding company of American Federal Savings Bank. American Federal Savings Bank was formed in 1922 and is headquartered in Helena, Montana. It has additional branches in Butte, Bozeman and Townsend. Eagle Bancorp Montana, Inc. commenced operations on April 5, 2010 following the conversion of Eagle Financial MHC and the sale of Eagle Bancorp Montana, Inc. stock. Eagle's common stock trades on the NASDAQ Global 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.
 

Balance Sheet
(Dollars in thousands, except per share data)   (Unaudited)   (Unaudited)   (Audited)
  June 30, March 31, June 30,
  2012       2012       2011  
 
Assets:
Cash and due from banks $ 3,534 $ 3,889 $ 2,703
Interest-bearing deposits with banks 16,280 6,714 1,837
Federal funds sold   -       5,001       5,000  
Total cash and cash equivalents 19,814 15,604 9,540
Securities available-for-sale, at market value 89,277 94,019 102,700
FHLB stock, at cost 2,003 2,003 2,003
Investment in Eagle Bancorp Statutory Trust I 155 155 155
Loans held-for-sale 10,613 11,885 1,784
Loans:
Residential mortgage (1-4 family) 61,671 63,225 70,003
Commercial loans 15,343 15,014 10,564
Commercial real estate 64,672 65,820 64,701
Construction loans 1,455 1,935 5,020
Consumer loans 8,778 8,798 9,343
Home equity 23,709 24,336 27,816
Unearned loan fees   (164 )     (145 )     (176 )
Total loans 175,464 178,983 187,271
Allowance for loan losses   (1,625 )     (1,700 )     (1,800 )
Net loans 173,839 177,283 185,471
Accrued interest and dividends receivable 1,371 1,451 1,558
Mortgage servicing rights, net 2,218 2,135 2,142
Premises and equipment, net 15,561 15,700 16,151
Cash surrender value of life insurance 9,172 9,101 6,900
Real estate and other assets acquired in settlement of loans, net of allowance for losses
2,361 1,872 1,181
Other assets   915       960       1,508  
Total assets $ 327,299     $ 332,168     $ 331,093  
 
Liabilities:
Deposit accounts:
Noninterest bearing 23,425 24,353 19,052
Interest bearing   196,564       195,801       190,134  
Total deposits 219,989 220,154 209,186
Accrued expense and other liabilities 5,809 4,652 3,371
Federal funds purchased - - -
FHLB advances and other borrowings 42,696 48,746 60,896
Subordinated debentures   5,155       5,155       5,155  
Total liabilities 273,649 278,707 278,608
 
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; 3,878,971; 3,878,971; and 3,918,687 outstanding at June 30, 2012, March 31, 2012 and June 30, 2011, respectively
 
41 41 41
Additional paid-in capital 22,112 22,111 22,110
Unallocated common stock held by employee stock ownership plan (ESOP) (1,556 ) (1,598 ) (1,722 )

Treasury stock, at cost (204,156; 204,156; and 164,440 shares at June 30, 2012, March 31, 2012, and June 30, 2011, respectively)
 
(2,210 ) (2,210 ) (1,796 )
Retained earnings 32,990 32,661 31,918
Accumulated other comprehensive gain   2,273       2,456       1,934  
Total shareholders' equity 53,650 53,461 52,485
Total liabilities and shareholders' equity $ 327,299     $ 332,168     $ 331,093  
 

         

Income Statement
(Unaudited) (Unaudited)
(Dollars in thousands, except per share data) Three Months Ended Twelve Months Ended  
    June 30 March 31   June 30 June 30 June 30
  2012       2012       2011   2012       2011  
Interest and dividend Income:
Interest and fees on loans $ 2,535 $ 2,744 $ 2,785 $ 10,884 $ 11,279
Securities available-for-sale 715 778 899 3,192 3,653
Interest on deposits with banks   4       4       6   17       21  
Total interest and dividend income 3,254 3,526 3,690 14,093 14,953
Interest Expense:
Interest expense on deposits 252 260 302 1,074 1,392
Advances and other borrowings 398 481 593 1,994 2,502
Subordinated debentures   24       25       22   94       186  
Total interest expense   674       766       917   3,162       4,080  
Net interest income 2,580 2,760 2,773 10,931 10,873
Provision for loan losses   260       258       155   1,101       948  
Net interest income after provision for loan losses 2,320 2,502 2,618 9,830 9,925
 
Noninterest income:
Service charges on deposit accounts 161 141 180 672 733
Net gain on sale of loans 534 522 225 1,695 2,187
Mortgage loan servicing fees 225 214 227 891 830
Net gain on sale of available-for-sale securities 209 115 19 490 19
Net gain (loss) on sale of OREO 6 (12 ) - (6 ) (2 )
Net gain (loss) on fair value hedge-FASB ASC 815 (137 ) 94 - (417 ) 198
Other income   228       230       135   849       658  
Total noninterest income 1,226 1,304 786 4,174 4,623
 
Noninterest expense:
Salaries and employee benefits 1,335 1,367 1,208 5,072 4,948
Occupancy and equipment expense 348 350 341 1,380 1,346
Data processing 155 170 110 611 568
Advertising 214 92 150 568 524
Amortization of mortgage servicing fees 161 201 125 629 1,158
Federal insurance premiums 50 51 64 187 257
Postage 37 23 27 123 123
Legal, accounting and examination fees 79 71 87 342 363
Consulting fees 78 55 86 528 180
Provision for valuation loss on OREO 4 165 140 169 201
Other   332       361       375   1,425       1,414  
Total noninterest expense 2,793 2,906 2,713 11,034 11,082
 
Income before provision for income taxes   753       900       691   2,970       3,466  
Provision for income taxes   148       242       209   792       1,056  
Net income $ 605     $ 658     $ 482 $ 2,178     $ 2,410  
 
Basic earnings per share $ 0.16     $ 0.18     $ 0.12 $ 0.59     $ 0.62  
Diluted Earnings per share $ 0.15     $ 0.17     $ 0.12 $ 0.56     $ 0.62  

Weighted average shares outstanding (basic EPS)
  3,720,651       3,716,480       3,869,139   3,725,002       3,892,141  
Weighted average shares outstanding (diluted EPS)
  3,924,807       3,920,636       3,908,187   3,918,566       3,901,902  
 

         

Financial Ratios and Other Data
(Dollars in thousands, except per share data)
(Unaudited)

June 30,
March 31, June 30,
  2012      

2012
      2011
Asset Quality:
Nonaccrual loans $ 1,814 $ 3,286 $ 2,939
Loans 90 days past due - - -
Restructured loans, net   1,404       213       -
Total nonperforming loans 3,218 3,499 2,939
Other real estate owned and other repossed assets, net   2,361       1,872       1,181
Total nonperforming assets $ 5,579     $ 5,371     $ 4,120
Nonperforming loans / portfolio loans 1.83% 1.95% 1.57%
Nonperforming assets / assets 1.70% 1.62% 1.24%
Allowance for loan losses / portfolio loans 0.93% 0.95% 0.96%
Allowance / nonperforming loans 50.50% 48.59% 61.25%
Gross loan charge-offs for the quarter $ 346 $ 63 $ 9
Gross loan recoveries for the quarter $ 11 $ 5 $ 3
Net loan charge-offs for the quarter $ 335 $ 58 $ 6
 
Capital Data (At quarter end):
Book value per share $ 13.83 $ 13.78 $ 13.39
Shares outstanding 3,878,971 3,878,971 3,918,687
 
Profitability Ratios (For the quarter):

Efficiency ratio*
71.16% 69.12% 73.26%
Return on average assets 0.74% 0.80% 0.58%
Return on average equity 4.46% 4.88% 3.81%
Net interest margin 3.51% 3.73% 3.71%
 
Profitability Ratios (Year-to-date):

Efficiency ratio*
70.82% 70.29% 68.98%
Return on average assets 0.66% 0.63% 0.73%
Return on average equity 4.06% 3.92% 4.50%
Net interest margin 3.68% 3.73% 3.62%
 
Other Information
Average total assets for the quarter $ 328,350 $ 330,072 $ 330,531
Average total assets year to date $ 331,161 $ 332,175 $ 331,615
Average earning assets for the quarter $ 293,934 $ 295,643 $ 298,712
Average earning assets year to date $ 297,174 $ 298,336 $ 300,110
Average loans for the quarter ** $ 184,076 $ 190,561 $ 188,614
Average loans year to date ** $ 188,502 $ 189,978 $ 185,223
Average equtiy for the quarter $ 54,209 $ 53,893 $ 50,591
Average equity year to date $ 53,675 $ 53,479 $ 53,540
Average deposits for the quarter $ 219,398 $ 214,270 $ 211,023
Average deposits year to date $ 214,490 $ 212,951 $ 205,754
 
* 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
 

Copyright Business Wire 2010

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