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 | |||||||||||
Peter J. Johnson, President and CEO (406) 457-4006 Laura F. Clark, SVP and CFO (406) 457-4007
