Eagle Bancorp ("Eagle") (OTCBB:EBMT), the stock holding company
of American Federal Savings Bank (the "Bank"), reported net income
of $219,000, or $0.20 per share ($0.18 per share diluted), for
the three months ended December 31, 2007, and declared a cash
dividend of $0.24 per share. Earnings for the quarter decreased
by 52.49% from the $461,000 earned for the quarter ended December
31, 2006. Earnings for the six month period ended December 31,
2007 were $683,000, or $0.64 per share ($0.56 per share diluted),
a decrease of $200,000 or 22.65%, compared to $883,000 for the
six month period ended December 31, 2006. "We are pleased with
our growth in net interest income for this quarter and for the
six month period ending December 31, 2007. Excluding the losses
in market value on the preferred stock held in our investment
portfolio, our financial performance has been strong," said CEO
Pete Johnson.
The decrease in net income for the second quarter was the result
of an increase in net interest income of $147,000, offset by a
decrease in noninterest income of $323,000 and an increase in
noninterest expense of $126,000. Eagle's tax provision was $60,000
lower in the current quarter.
Noninterest income decreased substantially due to a loss in market
value on investments in certain preferred stock, issued by Fannie
Mae and Freddie Mac. Under Statement of Financial Accounting Standard
(SFAS) No. 159 Fair Value Option for Financial Assets and Financial
Liabilities, a company elects fair value for the initial and subsequent
measurement for certain financial assets and liabilities on a
contract-by-contract basis and subsequent changes in fair value
are recognized in earnings when incurred. For the fourth quarter,
the market value of Fannie Mae and Freddie Mac preferred stock,
owned by Eagle, decreased $390,000 and is reflected in noninterest
income. In recent months both agencies announced major write-downs
of asset values during the quarter, which impacted their common
equity prices as well. They also each issued new offerings of
preferred stock to bolster their capital. These new issues have
higher coupons than the preferred stock held by Eagle, which also
contributed to the decline in the market value of the issues held
by Eagle.
Eagle's annualized return on assets was 0.35% and its annualized
return on equity was 3.50% for the quarter, compared with 0.78%
and 7.79%, respectively, for the same quarter in 2006.
Total interest and dividend income increased $392,000 to $3,494,000
for the quarter ended December 31, 2007 from $3,102,000 for the
quarter ended December 31, 2006. This was due primarily to an
increase in interest and fees on loans of $373,000. Higher funding
costs caused total interest expense to increase by $245,000 to
$1.7 million for the quarter ended December 31, 2007 from $1.47
million for the quarter ended December 31, 2006. Interest expense
on deposits increased $129,000 and interest expense on advances
increased $116,000.
Earnings for the six month period ended December 31, 2007 were
$683,000, or $0.64 per share ($0.56 per share diluted), a decrease
of $200,000, or 22.65%, compared to $883,000, or $0.82 per share
($0.73 per share diluted) for the six month period ended December
31, 2006. The decrease in net income for the period was the result
of an increase in net interest income of $202,000 off set by a
decrease in noninterest income of $276,000 and an increase in
noninterest expense of $178,000. Eagle's tax provision was $52,000
lower in the current period. Net interest income was higher as
the yield on earning assets outpaced the interest costs of funding.
The decrease in noninterest income was primarily attributable
to the recognition of a decline in value of $431,000 on Fannie
Mae and Freddie Mac preferred stock as described above. Noninterest
expense increase was primarily due to an increase in salaries
and employee benefits of $202,000 resulting from merit raises,
inflationary costs, and a slightly larger staff. Eagle's annualized
return on assets was 0.55% and its annualized return on equity
was 5.55%, compared with 0.76% and 7.61% respectively for the
same six-month period in 2006.
Total assets increased by $6.30 million, or 2.57%, to $250.99
million at December 31, 2007 from $244.69 million at June 30,
2007. Loans receivable increased $6.49 million, or 4.1%, to $164.63
million from $158.14 million. Loans held-for-sale decreased to
$748 thousand from $1.18 million. Deposits decreased $4.64 million,
or 2.58%, to $175.00 million at December 31, 2007 from $179.65
million at June 30, 2007. Advances from the Federal Home Loan
Bank and other borrowings increased $13.7 million, or 45.67%,
to $43.7.0 million from $30.0 million, while federal fund purchases
decreased from $3.8 million to zero. Total stockholders' equity
increased $1.05 million or 4.36%, to $25.14 million at December
31, 2007 from $24.09 million at June 30, 2007, as a result of
the net income for the period of $683,000 and a decrease in accumulated
other comprehensive loss of $771,000 (mainly due to a decrease
in net unrealized loss on securities available-for-sale). These
were partially offset by dividends paid and purchases of treasury
stock.
Eagle's Board of Directors declared a quarterly cash dividend
of $0.24 per share for the second quarter of Eagle's fiscal year.
The dividend is payable February 8, 2008 to shareholders of record
at the close of business on January 25, 2008.
Eagle also announced that the Board of Directors approved a repurchase
program for the company's shares. The Board's action permits Eagle
to acquire up to 28,750 shares of its common stock subject to
market conditions. This represents approximately 6.7% of the outstanding
common stock currently held by the public. Repurchases are authorized
to be made from time to time in open market transactions as, in
the opinion of management, market conditions warrant. The repurchased
shares will be held as treasury stock and will be held for general
corporate purposes and/or issuance pursuant to Eagle's benefit
plans. The repurchase plan also allows for the possibility of
unsolicited negotiated transactions or other types of purchases.
No shares will be purchased from directors or officers of Eagle.
American Federal Savings Bank was formed in 1922 and is headquartered
in Helena, Montana. It has additional branches in Butte, Bozeman
and Townsend. Eagle's common stock trades on the OTC Bulletin
Board under the symbol "EBMT." Eagle is a subsidiary of Eagle
Financial MHC, a federal mutual holding company formed in 2000,
which owns approximately 59% of Eagle Bancorp's outstanding common
stock.
This release may contain certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Eagle intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995, and is
including this statement for purposes of these safe harbor provisions.
