Eagle Bancorp Montana Earns $1.3 Million in the Second Quarter; Increases Regular Quarterly Cash Dividend to $0.0925 per Share and Renews Stock Repurchase Plan - Eagle Bancorp Montana (NASDAQ:EBMT)

HELENA, Mont., July 24, 2018 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. EBMT, (the "Company," "Eagle"), the holding company of Opportunity Bank of Montana, today reported net income increased 132.6% to $1.3 million, or $0.24 per diluted share, in the second quarter of 2018 compared to $573,000, or $0.11 per diluted share, in the first quarter of 2018, and increased 25.0% compared to $1.1 million, or $0.27 per diluted share, in the second quarter of 2017. Second quarter 2018 operating results were impacted by $131,000 of acquisition-related expenses, compared to $234,000 of acquisition-related expenses in the preceding quarter and no acquisition expenses in the second quarter of 2017. In the first six months of 2018, net income increased 4.2% to $1.9 million, or $0.35 per diluted share, compared to $1.8 million, or $0.47 per diluted share, in the first six months of 2017.

Additionally, Eagle's board of directors increased its regular quarterly cash dividend to $0.0925 per share. The dividend will be payable September 7, 2018 to shareholders of record August 17, 2018. The current annualized yield is 1.92% based on recent market prices.

"Our expansion in our Montana markets continues to deliver strong loan growth and is supporting our strong net interest margin," stated Peter J. Johnson, President and CEO. "Profitability in our second quarter was solid, and year-to-date earnings grew 4.2% compared to the first six months of 2017, reflecting the success of our completed acquisition with Ruby Valley Bank, as well as other growth initiatives we are implementing."

The acquisition, which was completed during the first quarter of 2018, added approximately $94 million in assets, $82 million in deposits and $55 million in gross loans and made Opportunity Bank the fifth largest Montana-based bank based on asset size.

Second Quarter 2018 Highlights (at or for the three-month period ended June 30, 2018, except where noted)

Net income was $1.3 million, or $0.24 per diluted share.
Acquisition costs were $131,000 in the second quarter.
Purchase discount on loans from the Ruby Valley Bank Portfolio was $1.8 million at January 31, 2018 (the "acquisition date"), of which $1.4 million remains as of June 30, 2018.
The accretion of the loan purchase discount into loan interest income from the Ruby Valley Bank transaction was $425,000 in the second quarter, compared to zero in the preceding quarter.
Net interest margin improved 41 basis points to 4.18% in the second quarter, compared to 3.77% in the preceding quarter.
Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 15.2% to $10.9 million, compared to $9.4 million in the second quarter a year ago.
Return on average assets was 0.65%.
Return on average equity was 5.83%.
Total loans increased 14.5% to $581.7 million at June 30, 2018, compared to $508.1 million a year earlier.
Commercial real estate loans increased 13.0% to $216.3 million at June 30, 2018, compared to $191.4 million a year earlier.
Total deposits increased 19.2% to $613.2 million, compared to $514.3 million a year ago.
Capital ratios remain well capitalized with a tangible common shareholders' equity ratio of 9.59% at June 30, 2018.
Declared quarterly cash dividend of $0.0925 per share.

Balance Sheet Results

Total assets increased 16.4% to $826.8 million at June 30, 2018, compared to $710.2 million a year ago, in large part due to the Ruby Valley Bank acquisition. At March 31, 2018, total assets were $815.9 million.

"Loan production continues to grow at a healthy pace, increasing 2.6% in the second quarter, or 10.4%, on an annualized basis," said Johnson. Total loans increased 14.5% to $581.7 million at June 30, 2018, compared to $508.1 million a year earlier and increased 2.6% compared to $567.0 million three months earlier.

Eagle originated $84.0 million in new residential mortgages during the quarter, excluding construction loans, and sold $73.6 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.3%. This production compares to residential mortgage originations of $50.9 million in the preceding quarter with sales of $49.0 million.

Commercial real estate loans increased 13.0% to $216.3 million at June 30, 2018, compared to $191.4 million a year earlier. Residential mortgage loans increased modestly to $112.3 million, compared to $110.9 million a year earlier. Commercial loans increased 25.3% to $70.0 million, home equity loans increased 7.9% to $53.2 million, residential construction loans increased 5.3% to $31.0 million and construction and development loans decreased 18.3% to $36.6 million, compared to a year ago. Loans related to agriculture increased as a result of the acquisition.

Total deposits were $613.2 million at June 30, 2018, a 2.0% decrease compared to $625.9 million at March 31, 2018, and a 19.2% increase compared to $514.3 million a year ago. At June 30, 2018, checking and money market accounts represent 55.7%, savings accounts represent 17.7%, and CDs comprise 26.6% of the total deposit portfolio.

Shareholders' equity increased modestly to $91.8 million at March 31, 2018, compared to $90.9 million three months earlier and increased 47.8% compared to $62.1 million one year earlier. Tangible book value was $14.28 per share at June 30, 2018, compared to $14.09 per share at March 31, 2018, and $14.37 per share a year earlier.

Operating Results

"Our net interest margin increased 41 basis points compared to the preceding quarter and 52 basis points compared to the second quarter a year ago, in part due to rising interest rates which produced higher yields on loans," said Johnson. "In addition, the interest accretion on purchased loans totaled $425,000 and resulted in a 23 basis point increase in the NIM during the second quarter, compared to no interest accretion in the preceding quarter." Eagle's net interest margin was 4.18% in the second quarter, compared to 3.77% in the preceding quarter, and 3.66% in the second quarter a year ago. In the first six months of 2018, Eagle's net interest margin was 3.91% compared to 3.66% in the first six months a year ago. The investment securities portfolio increased to $154.3 million at June 30, 2018, compared to $123.2 million a year ago, which increased the average yields on earning assets to 4.52% from 4.27% a year ago.

Fueled by solid loan growth and expanding yields on portfolio loans, Eagle's second quarter revenues increased 14.3% to $10.9 million, compared to $9.5 million in the preceding quarter and increased 15.2% when compared to $9.4 million in the second quarter a year ago. Year-to-date, revenues increased 12.5% to $20.4 million, compared to $18.1 million in the first six months of 2017. Net interest income before the provision for loan loss increased 14.1% to $7.8 million in the second quarter compared to $6.8 million in the preceding quarter, and increased 32.8% compared to $5.9 million in the second quarter a year ago. In the first six months of 2018, net interest income increased 29.0% to $14.7 million, compared to $11.4 million in the first six months of 2017.

With solid gains from loan sales, noninterest income increased 15.1% to $3.1 million in the second quarter, compared to $2.7 million in the preceding quarter, but decreased 13.6% compared to $3.6 million in the second quarter a year ago, when residential mortgage loan originations were very robust. The net gain on sale of mortgage loans totaled $1.7 million in the second quarter, compared to $1.4 million in the preceding quarter and $2.3 million in the second quarter a year ago. Year-to-date, noninterest income was $5.8 million, compared to $6.8 million in the first six months of 2017.

Second quarter noninterest expenses were $9.2 million compared to $8.3 million in the preceding quarter and $7.6 million in the second quarter a year ago. Acquisition costs totaled $131,000 for the current quarter, compared to $234,000 for the preceding quarter. There were no acquisition costs in the second quarter one year ago. In the first six months of the year, noninterest expenses totaled $17.6 million, compared to $15.1 million in the first six months of 2017.

For the second quarter of 2018, Eagle recorded $293,000 in income tax expense for an effective tax rate of 18.0%, reflecting the new lower corporate tax rates.

Credit Quality

Asset quality continues to improve with lower balances of nonperforming assets and gradual increase in reserves. The allowance for loan losses represented 370.7% of nonaccrual loans at June 30, 2018, compared to 352.3% three months earlier and 309.2% a year earlier. The second quarter provision for loan losses was $24,000, compared to $502,000 in the preceding quarter and $302,000 in the second quarter a year ago.

Total OREO and other repossessed assets decreased to $457,000 at June 30, 2018, compared to $639,000 at March 31, 2018 and $493,000 a year ago. Nonperforming assets (NPAs), consisting of nonaccrual loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, decreased to $2.1 million at June 30, 2018 or 0.26% of total assets, compared to $2.4 million, or 0.29% of total assets three months earlier and $2.2 million, or 0.31% of total assets a year earlier.

Nonperforming loans (NPLs) were $1.7 million at June 30, 2018, which was unchanged from both three months earlier and a year earlier.

Net charge-offs were $4,000 in the second quarter, compared to $122,000 in the preceding quarter and $152,000 in the second quarter a year ago. The allowance for loan losses was $6.2 million, or 1.06% of total loans at June 30, 2018, compared to $6.1 million, or 1.08% of total loans at March 31, 2018 and $5.2 million, or 1.03% of total loans a year ago.

Capital Management

Eagle Bancorp Montana continues to be well capitalized with the ratio of tangible common shareholders' equity to tangible asset of 9.59% at June 30, 2018. (Shareholders' equity, less goodwill and core deposit intangible to tangible assets).

"Our ongoing ability to access the capital markets on favorable terms is one of the primary strengths of our franchise," said Johnson. On October 13, 2017, Eagle successfully completed a public offering of its common stock, and issued 1,189,041 shares and received approximately $20.1 million in net cash proceeds.

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 1.8% 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 17 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 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," "will"' "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, merger with Ruby Valley Bank, 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; our ability to continue to increase and manage our commercial real estate, commercial business and agricultural loans; 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; other economic, governmental, competitive, regulatory and technological factors that may affect our operations; the effect of our acquisition of Ruby Valley Bank including the failure to achieve expected revenue growth and/or expense savings, the failure to effectively integrate their operations and the diversion of management time on issues related to the integration. 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)
		June 30,			March 31,			June 30,
			2018			2018			2017

Assets:
	Cash and due from banks	$	7,583		$	7,679		$	7,244
	Interest bearing deposits in banks		1,397			1,641			1,797
	Federal funds sold		-			3,591			-
	Total cash and cash equivalents		8,980			12,911			9,041
	Securities available-for-sale, at market value		154,265			158,417			123,191
	FHLB stock		4,559			3,704			4,841
	FRB stock		2,019			2,019			871
	Investment in Eagle Bancorp Statutory Trust I		155			155			155
	Loans held-for-sale		11,700			8,979			16,206
	Loans:
	Real Estate loans:
	Residential 1-4 family		112,314			112,891			110,906
	Residential 1-4 family construction		31,009			26,608			29,440
	Commercial real estate		216,264			215,208			191,427
	Commercial construction and development		36,581			32,308			44,776
	Farmland		28,680			25,399			9,802
	Other loans:
	Home equity		53,178			52,028			49,266
	Consumer		16,635			17,252			15,293
	Commercial		69,951			69,538			55,836
	Agricultural		18,145			16,758			2,394
	Unearned loan fees		(1,029	)		(1,008	)		(1,008	)
	Total loans		581,728			566,982			508,132
	Allowance for loan losses		(6,150	)		(6,130	)		(5,225	)
	Net loans		575,578			560,852			502,907
	Accrued interest and dividends receivable		3,668			3,212			2,174
	Mortgage servicing rights, net		6,716			6,613			6,127
	Premises and equipment, net		27,969			27,364			20,040
	Cash surrender value of life insurance		14,670			14,575			14,289
	Real estate and other repossessed assets acquired in
	settlement of loans, net		457			639			493
	Goodwill		12,124			12,124			7,034
	Core deposit intangible		1,702			1,859			328
	Deferred tax asset, net		2,012			2,040			1,132
	Other assets		253			472			1,385
	Total assets	$	826,827		$	815,935		$	710,214

Liabilities:
	Deposit accounts:
	Noninterest bearing		133,736			133,933			91,811
	Interest bearing		479,439			492,002			422,454
	Total deposits		613,175			625,935			514,265
	Accrued expense and other liabilities		5,535			4,697			4,867
	FHLB advances and other borrowings		91,469			69,528			104,182
	Other long-term debt, net		24,843			24,827			24,778
	Total liabilities		735,022			724,987			648,092

Shareholders' Equity:
	Preferred stock (par value $0.01 per share; 1,000,000 shares
	authorized; no shares issued or outstanding)		-			-			-
	Common stock (par value $0.01; 8,000,000 shares authorized;
	5,718,942, 5,718,942 and 4,083,127 shares issued; 5,460,452,
	5,460,452 and 3,811,409 shares outstanding at June 30, 2018,
	March 31, 2018 and June 30, 2017, respectively)		57			57			41
	Additional paid-in capital		51,890			51,849			22,444
	Unallocated common stock held by Employee Stock Ownership Plan		(559	)		(601	)		(725	)
	Treasury stock, at cost (258,490, 258,490 and 271,718 shares at
	June 30, 2018, March 31, 2018 and June 30, 2018, respectively)		(2,826	)		(2,826	)		(2,971	)
	Retained earnings		44,862			44,020			42,460
	Accumulated other comprehensive (loss) income		(1,619	)		(1,551	)		873
	Total shareholders' equity		91,805			90,948			62,122
	Total liabilities and shareholders' equity	$	826,827		$	815,935		$	710,214


Income Statement						(Unaudited)						(Unaudited)
(Dollars in thousands, except per share data)			Three Months Ended									Six Months Ended
			June 30,			March 31,			June 30,			June 30,
				2018			2018			2017			2018			2017
Interest and dividend Income:
	Interest and fees on loans		$	7,862		$	6,872		$	6,174		$	14,734		$	11,744
	Securities available-for-sale			1,021			989			714			2,010			1,443
	FRB and FHLB dividends			74			79			36			153			76
	Interest on deposits in banks			18			17			1			35			1
	Other interest income			1			-			-			1			1
		Total interest and dividend income		8,976			7,957			6,925			16,933			13,265
Interest Expense:
	Interest expense on deposits			494			426			376			920			756
	FHLB advances and other borrowings			315			337			322			652			527
	Other long-term debt			357			347			347			704			619
		Total interest expense		1,166			1,110			1,045			2,276			1,902
Net interest income				7,810			6,847			5,880			14,657			11,363
Loan loss provision				24			502			302			526			603
		Net interest income after loan loss provision		7,786			6,345			5,578			14,131			10,760

Noninterest income:
	Service charges on deposit accounts			214			226			239			440			471
	Net gain on sale of loans			1,720			1,439			2,263			3,159			4,088
	Mortgage loan servicing fees			563			560			509			1,123			1,056
	Wealth management income			147			132			180			279			321
	Interchange and ATM fees			271			225			228			496			434
	Appreciation in cash surrender value of life insurance			146			124			126			270			250
	Net gain (loss) on sale of available-for-sale securities			15			(105	)		(14	)		(90	)		(14	)
	Net loss on sale of real estate owned and other repossessed property			(32	)		(25	)		(24	)		(57	)		(25	)
	Other noninterest income			40			103			63			143			197
		Total noninterest income		3,084			2,679			3,570			5,763			6,778

Noninterest expense:
	Salaries and employee benefits			5,461			4,909			4,586			10,370			9,019
	Occupancy and equipment expense			835			828			672			1,663			1,389
	Data processing			673			637			566			1,310			1,133
	Advertising			298			278			269			576			458
	Amortization of mortgage servicing fees			369			241			262			610			524
	Amortization of core deposit intangible and tax credits			235			102			107			337			214
	Loan costs			179			136			134			315			299
	Federal insurance premiums			69			69			36			138			120
	Postage			84			50			51			134			99
	Legal, accounting and examination fees			184			142			200			326			285
	Consulting fees			25			17			59			42			108
	Acquisition costs			131			234			-			365			-
	Write-down on real estate owned and other repossessed property			-			-			9			-			45
	Other noninterest expense			701			681			669			1,382			1,366
		Total noninterest expense		9,244			8,324			7,620			17,568			15,059

Income before income taxes				1,626			700			1,528			2,326			2,479
Income tax expense				293			127			462			420			650
Net income			$	1,333		$	573		$	1,066		$	1,906		$	1,829

Basic earnings per share			$	0.24		$	0.11		$	0.28		$	0.35		$	0.48
Diluted earnings per share			$	0.24		$	0.11		$	0.27		$	0.35		$	0.47
Weighted average shares
	outstanding (basic EPS)			5,460,452			5,311,527			3,811,409			5,386,401			3,811,409
Weighted average shares
	outstanding (diluted EPS)			5,524,912			5,375,987			3,869,885			5,450,861			3,872,765


ADDITIONAL FINANCIAL INFORMATION	Three Months Ended
(Dollars in thousands, except per share data)(Unaudited)	June 30,			March 31,			June 30,
		2018			2018			2017
Performance Ratios (for the Quarter):
Return on average assets		0.65	%		0.28	%		0.61	%
Return on average equity		5.83	%		2.58	%		6.97	%
Net interest margin***		4.18	%		3.77	%		3.66	%
Efficiency ratio*		82.70	%		86.31	%		79.50	%

Performance Ratios (Year-to-date):
Return on average assets		0.46	%		0.28	%		0.54	%
Return on average equity		4.94	%		2.58	%		6.10	%
Net interest margin***		3.91	%		3.77	%		3.66	%
Efficiency ratio*		84.38	%		86.31	%		81.83	%

Asset Quality Ratios and Data:	As of or for the Three Months Ended
	June 30,			March 31,			June 30,
		2018			2018			2017

Nonaccrual loans	$	1,500		$	1,740		$	1,611
Loans 90 days past due and still accruing		159			-			79
Restructured loans, net		-			-			-
Total nonperforming loans		1,659			1,740			1,690
Other real estate owned and other repossessed assets		457			639			493
Total nonperforming assets	$	2,116		$	2,379		$	2,183

Nonperforming loans / portfolio loans		0.29	%		0.31	%		0.33	%
Nonperforming assets / assets		0.26	%		0.29	%		0.31	%
Allowance for loan losses / portfolio loans		1.06	%		1.08	%		1.03	%
Allowance / nonperforming loans		370.71	%		352.30	%		309.17	%
Gross loan charge-offs for the quarter	$	24		$	130		$	189
Gross loan recoveries for the quarter	$	20		$	8		$	37
Net loan charge-offs for the quarter	$	4		$	122		$	152

Capital Data (At quarter end):
Tangible book value per share	$	14.28		$	14.09		$	14.37
Shares outstanding		5,460,452			5,460,452			3,811,409
Tangible common equity to tangible assets		9.59	%		9.60	%		7.79	%

Other Information:
Average total assets for the quarter	$	823,916		$	816,688		$	700,682
Average total assets year to date	$	835,643		$	816,688		$	682,486
Average earning assets for the quarter	$	749,725		$	736,002		$	644,885
Average earning assets year to date	$	755,885		$	736,002		$	626,791
Average loans for the quarter **	$	585,366		$	573,015		$	512,138
Average loans year to date **	$	579,191		$	573,015		$	493,393
Average equity for the quarter	$	91,462		$	88,677		$	61,134
Average equity year to date	$	77,170		$	88,677		$	59,959
Average deposits for the quarter	$	623,285		$	605,572		$	512,736
Average deposits year to date	$	614,300		$	605,572		$	515,054

* 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
***Based on actual days. Previously calculated on a 360 day basis.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles utilized in the United States, or GAAP, the Financial Ratios and Other Data contains our efficiency ratio and tangible book value per share, which are non-GAAP financial measures. The numerator for the efficiency ratio is calculated by subtracting intangible asset amortization from noninterest expense. Tangible assets and tangible common shareholders' equity are calculated by excluding intangible assets from assets and shareholders' equity, respectively. For these financial measures, our intangible assets consist of goodwill and core deposit intangible. Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of common shares outstanding. We believe that this measure is consistent with the capital treatment by our bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios, and present this measure to facilitate the comparison of the quality and composition of our capital over time and in comparison to our competitors.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Further, the non-GAAP financial measure of tangible book value per share should not be considered in isolation or as a substitute for book value per share or total shareholders' equity determined in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Reconciliation of the GAAP and non-GAAP financial measures are presented below.


Efficiency Ratio						(Unaudited)						(Unaudited)
(Dollars in thousands, except per share data)			Three Months Ended									Year Ended
			June 30,			March 31,			June 30,			June 30,
				2018			2018			2017			2018			2017
Calculation of Efficiency Ratio:
	Noninterest expense		$	9,244		$	8,324		$	7,620		$	17,568		$	15,059
	Intangible asset amortization			(235	)		(102	)		(107	)		(337	)		(214	)
		Efficiency ratio numerator		9,009			8,222			7,513			17,231			14,845

	Net interest income			7,810			6,847			5,880			14,657			11,363
	Noninterest income			3,084			2,679			3,570			5,763			6,778
		Efficiency ratio denominator		10,894			9,526			9,450			20,420			18,141

	Efficiency ratio			82.70	%		86.31	%		79.50	%		84.38	%		81.83	%


Tangible Book Value and Tangible Assets			(Unaudited)
(Dollars in thousands, except per share data)			June 30,			March 31,			June 30,
				2018			2018			2017
Tangible Book Value:
	Shareholders' equity		$	91,805		$	90,948		$	62,122
	Goodwill and core deposit intangible, net			(13,826	)		(13,983	)		(7,362	)
		Tangible common shareholders' equity	$	77,979		$	76,965		$	54,760

	Common shares outstanding at end of period			5,460,452			5,460,452			3,811,409

	Common shareholders' equity (book value) per share (GAAP)		$	16.81		$	16.66		$	16.30

	Tangible common shareholders' equity (tangible book value)
		per share (non-GAAP)	$	14.28		$	14.09		$	14.37

Tangible Assets:
	Total assets		$	826,827		$	815,935		$	710,214
	Goodwill and core deposit intangible, net			(13,826	)		(13,983	)		(7,362	)
		Tangible assets (non-GAAP)	$	813,001		$	801,952		$	702,852

	Tangible common shareholders' equity to tangible assets
		(non-GAAP)		9.59	%		9.60	%		7.79	%

Contacts: Peter J. Johnson, President and CEO
                        (406) 457-4006
                        Laura F. Clark, EVP and CFO
                        (406) 457-4007

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