Eagle Bancorp Montana Earns $1.4 Million, or $0.37 per Diluted Share, in 4Q16 and Record Earnings of $5.1 Million, or $1.32 per Diluted Share, in 2016; Declares Regular Quarterly Cash Dividend of $0.08 per Share

HELENA, Mont., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ:EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported net income increased 98.9% to $5.1 million, or $1.32 per diluted share, in 2016, compared to $2.6 million, or $0.67 per diluted share, in 2015.  For the fourth quarter of 2016, net income increased 64.5% to $1.4 million, or $0.37 per diluted share, compared to $881,000, or $0.22 per diluted share, in the fourth quarter a year ago.  In the preceding quarter, Eagle earned a record $1.8 million, or $0.46 per diluted share.

Eagle’s board of directors declared a regular quarterly cash dividend of $0.08 per share.  The dividend will be payable March 3, 2017 to shareholders of record February 10, 2017.  The current annualized yield is 1.63% at recent market prices.

“We achieved record 2016 earnings, along with strong fourth quarter earnings of $1.4 million,” said Peter J. Johnson, President and CEO.  “We continue to produce solid loan and core deposit growth, which highlights our ability to deepen and grow customer relationships, as well as gain new customers and market share.  With steady balance sheet growth and significant and ongoing improvements in revenue generation, we are continuing to produce and retain earnings while paying appropriate dividends to increase value for our shareholders.”

Fourth Quarter 2016 Highlights (at or for the three month period ended December 31, 2016, except where noted)

• Net income grew 64.5% to $1.4 million, or $0.37 per diluted share in the fourth quarter, compared to $881,000, or $0.22 per diluted share in the fourth quarter a year ago.
• Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 34.4% to $10.2 million compared to $7.6 million in the same period a year ago.
• Net interest margin improved 20 basis points to 3.61% compared to a year ago.
• Total loans increased 14.5% to $466.2 million at December 31, 2016, compared to $407.3 million a year earlier.
• Commercial real estate loans increased 28.0% to $214.9 million, or 46.1% of total loans at December 31, 2016, compared to $167.9 million, or 41.2% of total loans a year earlier.
• Total deposits increased 6.1% to $512.8 million at December 31, 2016, from $483.2 million a year earlier.
• Capital ratios remain strong with a tangible shareholders equity ratio of 10.03% at December 31, 2016.
• Declared quarterly cash dividend to $0.08 per share, providing a 1.63% current yield at recent market prices.

Balance Sheet Results

“The loan portfolio continues to expand, which is a reflection of the strong local economy and demand in our markets.  The commercial real estate and C&I loan segments of our loan portfolio, in particular, continue to build momentum,” said Johnson.  Total loans increased 1.0% to $466.2 million at December 31, 2016, compared to $461.5 million three months earlier and increased 14.5% compared to $407.3 million a year earlier.

Eagle originated $96.5 million in new residential mortgages during the quarter, excluding construction loans, and sold $90.6 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.41%.  This production compares to residential mortgage originations of $101.2 million in the preceding quarter with sales of $95.6 million.

Commercial real estate loans increased 28.0% to $214.9 million at December 31, 2016, compared to $167.9 million a year earlier, while residential mortgage loans decreased 4.1% to $113.3 million compared to $118.1 million a year earlier.  Commercial loans increased 40.0% to $54.7 million, home equity loans increased 8.1% to $49.0 million and construction loans decreased 10.5% to $20.5 million, compared to a year ago.

Total deposits increased 6.1% to $512.8 million at December 31, 2016, compared to $483.2 million a year earlier but were down slightly compared to $515.3 million at September 30, 2016.  As of year-end, checking and money market accounts represent 51.8%, savings accounts represent 16.0%, and CDs comprise 32.2% of the total deposit portfolio.

Eagle’s total assets increased 6.9% to $673.9 million at December 31, 2016, compared to $630.3 million a year earlier and decreased slightly compared to $674.5 million three months earlier.  Shareholders’ equity was $59.5 million at December 31, 2016, compared to $60.0 million three months earlier and increased 7.2% compared to $55.5 million one year earlier.  Tangible book value was $13.65 per share at December 31, 2016, compared to $13.91 per share at September 30, 2016, and $12.67 per share a year earlier.

Operating Results

“Our 2016 net interest margin improved eight basis points to 3.46% compared to 3.38% in 2015, primarily as a result of growing both in core deposits and loans,” Johnson said.  Eagle’s net interest margin increased six basis point to 3.61% in the fourth quarter, compared to 3.55% in the preceding quarter and increased 20 basis point from 3.41% in the fourth quarter a year ago.  For the full year, Eagle’s net interest margin was 3.46% compared to 3.38% in 2015.  Funding costs for the fourth quarter were up two basis points while asset yields increased 22 basis points compared to a year ago.  The investment securities portfolio decreased to $128.4 million at December 31, 2016, compared to $145.7 million a year ago, which had a slight positive impact on the average yields on earning assets.

Fourth quarter revenues increased 33.8% to $10.2 million compared to $7.6 million in the fourth quarter a year ago, and increased modestly compared to $10.1 million in the preceding quarter.  For the year, revenues increased 23.5% to $36.8 million, compared to $29.8 million in 2015.  Net interest income before the provision for loan loss increased 2.6% to $5.6 million in the fourth quarter compared to $5.4 million in the preceding quarter, and increased 14.3% compared to $4.9 million in the fourth quarter a year ago.  For the year, net interest income increased 15.4% to $20.8 million, compared to $18.0 million in 2015.

Eagle’s noninterest income increased 70.8% to $4.6 million in the fourth quarter, compared to $2.7 million in the fourth quarter a year ago, but decreased modestly compared to $4.7 million in the preceding quarter.  For the full year, noninterest income increased 36.0% to $16.0 million compared to $11.8 million in 2015.  Mortgage servicing fees and net gain on sale of mortgage loans contributed to the growth.  Fourth quarter noninterest expenses were $7.6 million, compared to $7.2 million in the preceding quarter and $6.4 million in the year ago quarter.  Increased compensation due to additional loan production and year end benefit expenses contributed to the increase.  In 2016, noninterest expense was up modestly to $28.0 million compared to $25.7 million in 2015.

Credit Quality

Eagle’s fourth quarter provision for loan losses was $452,000, compared to $472,000 in the preceding quarter and $343,000 in the fourth quarter a year ago.  As of December 31, 2016, the allowance for loan losses represented 414.1% of nonperforming loans compared to 263.3% three months earlier and 139.3% a year earlier.  Nonperforming loans (NPLs) were $1.2 million at the end of the year, which was down 34.8% compared to $1.8 million three months earlier, and down 54.8% compared to $2.5 million a year earlier.

Fourth quarter net charge-offs totaled $332,000, compared to $82,000 in the preceding quarter and $23,000 in the fourth quarter a year ago.  The allowance for loan losses was $4.8 million, or 1.02% of total loans at December 31, 2016, compared to $4.7 million, or 1.01% of total loans at September 30, 2016, and $3.6 million, or 0.87% of total loans a year ago.

OREO and other repossessed assets was $825,000 at December 31, 2016, which was an increase compared to $513,000 at September 30, 2016.  Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, improved to $2.0 million at December 31, 2016, or 0.29% of total assets, compared to $2.3 million, or 0.34% of total assets three months earlier and $3.1 million, or 0.50% 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 10.03% at December 31, 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.

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