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

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HELENA, Mont., July 21, 2017 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. 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. 

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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 30March 31June 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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