Eagle Bancorp Montana Earns $1.1 Million, Or $0.27 Per Diluted Share, In Second Quarter; Increases Regular Quarterly Cash Dividend To $0.09 Per Share And Renews Stock Repurchase Plan

HELENA, Mont., July 21, 2017 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the "Company," "Eagle"), the holding company of Opportunity Bank of Montana, today reported second quarter net income of $1.1 million, or $0.27 per diluted share, compared to $1.3 million, or $0.32 per diluted share, in the second quarter a year ago.  In the preceding quarter, Eagle earned $763,000, or $0.20 per diluted share.  In the first six months of 2017, net income was $1.8 million, or $0.47 per diluted share, compared to $1.9 million, or $0.49 per diluted share, in the first six months of 2016.

Eagle's board of directors increased its regular quarterly cash dividend by 12.5% to $0.09 per share.  The dividend will be payable September 1, 2017 to shareholders of record August 11, 2017.  The current annualized yield is 1.76% at recent market prices.

"During the first half of 2017 we generated solid operating results while growing the loan portfolio and expanding our net interest margin," said Peter J. Johnson, President and CEO. "We have both the infrastructure and banking teams in place to continue to grow and gain market share.  We are pleased to be able to increase our quarterly cash dividend for over seventeen consecutive years."

Second Quarter 2017 Highlights (at or for the three-month period ended June 30, 2017, except where noted)
  • Net income grew 39.7% to $1.1 million, or $0.27 per diluted share in the second quarter, compared to $763,000, or $0.20 per diluted share in the preceding quarter, and was down compared to $1.3 million, or $0.32 per diluted share, in the second quarter of 2016.
  • Net interest margin was 3.65%, which was up four basis points compared to the preceding quarter and a 34 basis point improvement compared to the second quarter a year ago.
  • Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 8.0% to $9.5 million compared to $8.7 million in the same period a year ago. 
  • Total loans increased 14.5% to $508.1 million at June 30, 2017, compared to $443.9 million a year earlier. 
  • Commercial real estate loans increased 22.5% to $246.0 million, or 48.4% of total loans at June 30, 2017, compared to $200.8 million, or 45.2% of total loans a year earlier.
  • Capital ratios remain strong with a tangible shareholders' equity ratio of 11.29% at June 30, 2017.
  • Increased quarterly cash dividend by 12.5% to $0.09 per share.

Balance Sheet Results

"New loan originations were up during the quarter, and loan demand remains strong.  We are benefiting from a healthy local economy and a seasoned lending team," said Johnson.  Total loans increased 3.9% to $508.1 million at June 30, 2017, compared to $488.9 million three months earlier and increased 14.5% compared to $443.9 million a year earlier. 

Eagle originated $84.3 million in new residential mortgages during the quarter, excluding construction loans, and sold $73.3 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.00%.  This production compares to residential mortgage originations of $51.7 million in the preceding quarter with sales of $56.6 million.

Commercial real estate loans increased 22.5% to $246.0 million at June 30, 2017, compared to $200.8 million a year earlier, while residential mortgage loans decreased 4.6% to $110.9 million compared to $116.2 million a year earlier.  Commercial loans increased 18.9% to $58.2 million, home equity loans increased 3.0% to $49.3 million and construction loans increased 79.7% to $29.4 million, compared to a year ago.  

Eagle's total deposits increased modestly to $514.3 million at June 30, 2017, compared to $508.9 million a year earlier but decreased compared to $526.3 million at March 31, 2017.  As of quarter-end, checking and money market accounts represent 53.8%, savings accounts represent 17.2%, and CDs comprise 29.0% of the total deposit portfolio.  

Total assets increased 7.1% to $710.2 million at June 30, 2017, compared to $663.3 million a year earlier and increased 3.9% compared to $683.7 million three months earlier.  Shareholders' equity increased 3.5% to $62.1 million at June 30, 2017, compared to $60.0 million three months earlier and increased 5.3% compared to $59.0 million one year earlier.  Tangible book value was $14.37 per share at June 30, 2017, compared to $13.81 per share at March 31, 2017, and $13.63 per share a year earlier. 

Operating Results

"Our net interest margin improved four basis points compared to the preceding quarter and expanded 34 basis points compared to the year ago quarter, largely due to profitable loan growth," Johnson said.  Eagle's net interest margin was 3.65% in the second quarter, compared to 3.61% in the preceding quarter, and 3.31% in the second quarter a year ago.  Year-to-date, Eagle's net interest margin improved 30 basis points to 3.63% compared to 3.33% in the first six months of 2016.  Funding costs for the second quarter were up 12 basis points while asset yields were up 46 basis points compared to a year ago.  The investment securities portfolio decreased to $123.2 million at June 30, 2017, compared to $140.4 million a year ago, which had a positive impact on the average yields on earning assets. 

Eagle's second quarter revenues increased to $9.5 million, compared to $8.7 million in both the preceding quarter and the second quarter a year ago.  Year-to-date, revenues increased 9.9% to $18.1 million compared to $16.5 million in the first six months of 2016.  Net interest income before the provision for loan loss increased 19.0% to $5.9 million in the second quarter compared to $4.9 million in the second quarter one year ago, and increased 7.2% compared to $5.5 million in the preceding quarter.  In the first six months of the year, net interest income increased 15.8% to $11.4 million, compared to $9.8 million in the first six months of 2016.

Noninterest income decreased 6.2% to $3.6 million in the second quarter, compared to $3.8 million in the second quarter a year ago, but increased 11.3% compared to $3.2 million in the preceding quarter.  The net gain on sale of mortgage loans totaled $2.3 million in the second quarter, compared to $1.8 million in the preceding quarter and $2.4 million in the second quarter a year ago.  In the first six months of 2017, noninterest income increased modestly to $6.8 million compared to $6.7 million in the first six months one year ago.

Second quarter noninterest expenses were $7.6 million, compared to $7.4 million in the preceding quarter and $6.7 million in the year ago quarter.  Year-to-date, noninterest expenses totaled $15.1 million compared to $13.2 million in the same period a year earlier.  Higher compensation expenses contributed to the majority of the year-over-year increase. 

Credit Quality

Second quarter provision for loan losses was $302,000, compared to $301,000 in the preceding quarter and $459,000 in the second quarter a year ago.  The allowance for loan losses represented 309.2% of nonperforming loans at June 30, 2017, compared to 300.1% three months earlier and 196.0% a year earlier.

Nonperforming loans (NPLs) were $1.7 million at the end of the second quarter, which was unchanged compared to three months earlier, and down 22.2% compared to $2.2 million a year earlier.

Eagle's net charge-offs were $152,000 in the second quarter, compared to net loan recoveries of $4,000 in the preceding quarter and net charge-offs of $139,000 in the second quarter a year ago.  The allowance for loan losses was $5.2 million, or 1.03% of total loans at June 30, 2017, compared to $5.1 million, or 1.04% of total loans at March 31, 2017 and $4.3 million, or 0.96% of total loans a year ago.

Total OREO and other repossessed assets was $493,000 at June 30, 2017, compared to $668,000 at March 31, 2017 and $565,000 a year ago.  Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, were $2.2 million at June 30, 2017 or 0.31% of total assets, compared to $2.4 million, or 0.35% of total assets three months earlier and $2.7 million, or 0.41% 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 11.29% at June 30, 2017.  (Shareholders' equity, plus trust preferred securities, subordinated debt and senior debt, less goodwill and core deposit intangible to tangible assets).

On February 13, 2017, the Company completed the issuance of $10 million of senior unsecured debt.  The net proceeds of $9.8 million was used as capital contribution to its bank subsidiary to support growth.

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)
            June 30, March 31, June 30,
              2017     2017     2016  
                 
Assets:              
  Cash and due from banks       $ 7,244   $ 5,353   $ 5,579  
  Interest-bearing deposits with banks       1,797     813     844  
    Total cash and cash equivalents     9,041     6,166     6,423  
  Securities available-for-sale, at market value       123,191     127,212     140,449  
  FHLB stock, at cost           4,841     3,344     3,735  
  FRB stock           871     871     871  
  Investment in Eagle Bancorp Statutory Trust I       155     155     155  
  Loans held-for-sale           16,206     8,432     21,246  
  Loans:              
    Residential mortgage (1-4 family)     110,906     112,872     116,207  
    Commercial loans       58,230     54,614     48,982  
    Commercial real estate       246,005     234,467     200,848  
    Construction loans       29,440     24,118     16,382  
    Consumer loans       15,293     14,786     14,618  
    Home equity         49,266     49,037     47,842  
    Unearned loan fees       (1,008 )   (1,036 )   (951 )
    Total loans       508,132     488,858     443,928  
  Allowance for loan losses         (5,225 )   (5,075 )   (4,260 )
    Net loans         502,907     483,783     439,668  
  Accrued interest and dividends receivable       2,174     2,101     2,274  
  Mortgage servicing rights, net         6,127     5,892     5,196  
  Premises and equipment, net         20,040     19,750     17,965  
  Cash surrender value of life insurance       14,289     14,191     14,683  
  Real estate and other assets acquired in settlement of loans, net   493     668     565  
  Goodwill           7,034     7,034     7,034  
  Core deposit intangible         328     356     449  
  Deferred tax asset, net         1,132     2,036     313  
  Other assets           1,385     1,686     2,310  
    Total assets       $ 710,214   $ 683,677   $ 663,336  
                 
Liabilities:              
  Deposit accounts:              
  Noninterest bearing           91,811     95,737     88,327  
  Interest bearing           422,454     430,548     420,555  
    Total deposits       514,265     526,285     508,882  
  Accrued expense and other liabilities       4,867     4,309     5,000  
  FHLB advances and other borrowings       104,182     68,266     75,491  
  Long-term debt, net           24,778     24,782     14,959  
    Total liabilities       648,092     623,642     604,332  
                 
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; 3,811,409, 3,811,409 and 3,779,464 shares outstanding            
   at June 30, 2017, March 31, 2017 and June 30, 2016, respectively)   41     41     41  
  Additional paid-in capital         22,444     22,407     22,168  
  Unallocated common stock held by employee stock ownership plan (ESOP)   (725 )   (767 )   (891 )
  Treasury stock, at cost (271,718, 271,718 and 303,663 shares at      
   June 30, 2017, March 31, 2017 and June 30, 2016, respectively)   (2,971 )   (2,971 )   (3,321 )
  Retained earnings           42,460     41,699     38,626  
  Accumulated other comprehensive income (loss)     873     (374 )   2,381  
    Total shareholders' equity     62,122     60,035     59,004  
    Total liabilities and shareholders' equity   $ 710,214   $ 683,677   $ 663,336  
                 

 
Income Statement       (Unaudited)     (Unaudited)
(Dollars in thousands, except per share data)     Three Months Ended   Years Ended
              June 30, March 31, June 30,   June 30,
                2017     2017     2016     2017     2016
Interest and dividend Income:                
  Interest and fees on loans     $ 6,174   $ 5,570   $ 4,955   $ 11,744   $ 9,792
  Securities available-for-sale       714     729     740     1,443     1,487
  FRB and FHLB dividends       36     40     35     76     66
  Interest on deposits with banks       1     -     1     1     1
  Other interest income       -     1     -     1     3
    Total interest and dividend income       6,925     6,340     5,731     13,265     11,349
Interest Expense:                  
  Interest expense on deposits       376     380     381     756     736
  FHLB advances and other borrowings       322     205     212     527     413
  Long-term debt       347     272     195     619     389
    Total interest expense       1,045     857     788     1,902     1,538
Net interest income         5,880     5,483     4,943     11,363     9,811
Loan loss provision     302     301     459     603     909
  Net interest income after loan loss provision     5,578     5,182     4,484     10,760     8,902
             
Noninterest income:              
  Service charges on deposit accounts     239     232     211     471     410
  Net gain on sale of loans     2,263     1,825     2,438     4,088     4,156
  Mortgage loan servicing fees     509     547     442     1,056     805
  Wealth management income       180     141     159     321     295
  Interchange and ATM fees       228     206     223     434     425
  Appreciation in cash surrender value of life insurance     126     124     113     250     225
  Net (loss) gain on sale of available-for-sale securities     (14 )   -     84     (14 )   84
  Net (loss) gain on sale of real estate owned and other repossessed property   (24 )   (1 )   12     (25 )   12
  Other noninterest income     63     134     124     197     290
  Total noninterest income     3,570     3,208     3,806     6,778     6,702
             
Noninterest expense:              
  Salaries and employee benefits     4,586     4,433     3,916     9,019     7,606
  Occupancy and equipment expense     672     717     671     1,389     1,460
  Data processing     566     567     463     1,133     1,011
  Advertising     269     189     150     458     338
  Amortization of mortgage servicing fees     262     262     285     524     513
  Amortization of core deposit intangible and tax credits     107     107     111     214     223
  Federal insurance premiums     36     84     123     120     206
  Postage     51     48     34     99     88
  Legal, accounting and examination fees     200     85     61     285     159
  Consulting fees     59     49     34     108     117
  Write-down on real estate owned and other repossessed property   9     36     -     45     -
  Other noninterest expense     803     862     838     1,665     1,513
  Total noninterest expense     7,620     7,439     6,686     15,059     13,234
             
Income before income taxes       1,528     951     1,604     2,479     2,370
Income tax provision       462     188     340     650     459
Net income         $ 1,066   $ 763   $ 1,264   $ 1,829   $ 1,911
             
Basic earnings per share     $ 0.28   $ 0.20   $ 0.34   $ 0.48   $ 0.51
Diluted earnings per share     $ 0.27   $ 0.20   $ 0.32   $ 0.47   $ 0.49
Weighted average shares              
  outstanding (basic EPS)     3,811,409     3,811,409     3,779,464     3,811,409     3,779,464
Weighted average shares              
  outstanding (diluted EPS)     3,869,885     3,875,677     3,873,171     3,872,765     3,873,171
       

 
Financial Ratios and Other Data      
(Dollars in thousands, except per share data)      
(Unaudited)   June 30 March 31 June 30
        2017     2017     2016  
Asset Quality:        
  Nonaccrual loans   $ 1,611   $ 651   $ 2,040  
  Loans 90 days past due   79     998     89  
  Restructured loans, net   -     42     44  
    Total nonperforming loans   1,690     1,691     2,173  
  Other real estate owned and other repossessed assets   493     668     565  
    Total nonperforming assets $ 2,183   $ 2,359   $ 2,738  
  Nonperforming loans / portfolio loans   0.33 %   0.35 %   0.49 %
  Nonperforming assets / assets   0.31 %   0.35 %   0.41 %
  Allowance for loan losses / portfolio loans   1.03 %   1.04 %   0.96 %
  Allowance / nonperforming loans   309.17 %   300.12 %   196.04 %
  Gross loan charge-offs for the quarter $ 189   $ 9   $ 148  
  Gross loan recoveries for the quarter $ 37   $ 13   $ 9  
  Net loan charge-offs for the quarter $ 152   $ (4 ) $ 139  
           
Capital Data (At quarter end):      
  Tangible book value per share $ 14.37   $ 13.81   $ 13.63  
  Shares outstanding   3,811,409     3,811,409     3,779,464  
           
           
Profitability Ratios (For the quarter):      
  Efficiency ratio*     79.50 %   84.36 %   75.15 %
  Return on average assets   0.61 %   0.46 %   0.78 %
  Return on average equity   6.97 %   5.19 %   8.76 %
  Net interest margin     3.65 %   3.61 %   3.31 %
           
Profitability Ratios (Year-to-date):      
  Efficiency ratio *     81.83 %   84.36 %   78.79 %
  Return on average assets   0.54 %   0.46 %   0.60 %
  Return on average equity   6.10 %   5.19 %   6.68 %
  Net interest margin     3.63 %   3.61 %   3.33 %
           
Other Information        
  Average total assets for the quarter $ 700,682   $ 662,541   $ 649,585  
  Average total assets year to date $ 682,486   $ 662,541   $ 641,188  
  Average earning assets for the quarter $ 644,885   $ 607,048   $ 596,479  
  Average earning assets year to date $ 626,791   $ 607,048   $ 589,432  
  Average loans for the quarter ** $ 512,138   $ 474,439   $ 448,158  
  Average loans year to date ** $ 493,393   $ 474,439   $ 438,283  
  Average equity for the quarter $ 61,134   $ 58,752   $ 57,746  
  Average equity year to date $ 59,959   $ 58,752   $ 57,257  
  Average deposits for the quarter $ 512,736   $ 515,851   $ 493,879  
  Average deposits year to date $ 515,054   $ 515,851   $ 487,463  
           
* 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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