Eagle Bancorp Montana (NASDAQ:EBMT), a community-focused banking institution with a presence across Montana, released its Q2 FY2025 earnings results on July 29, 2025. The company reported GAAP revenue of $23.0 million, surpassing analysts’ expectations of $21.85 million, while EPS (GAAP) came in at $0.41, just below the consensus estimate of $0.42. Compared to the prior-year period (Q2 2024), both revenue (GAAP) and profitability (GAAP) increased meaningfully. The quarter was characterized by continued loan and deposit growth, improved net interest margin, and stable asset quality, although increased provisioning for credit losses and higher expenses weighed on the bottom line.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.41 | $0.42 | $0.22 | 86.4% |
| Revenue (GAAP) | $23.0 million | $21.85 million | $19.9 million | 15.6% |
| Net Interest Margin | 3.91% | 3.41% | 0.50 pp | |
| Net Interest Income | $18.1 million | $15.6 million | 16.0% | |
| Noninterest Income | $4.8 million | $4.3 million | 11.6% |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategy
The company operates a community banking network with 30 branches throughout Montana, offering various deposit services and a range of loans including commercial real estate, agricultural, home equity, and residential mortgages. It targets individuals, small businesses, and agricultural operators across both urban and rural communities. Recognized for an active acquisition strategy, Eagle continues to grow its branch footprint and customer base while seeking operating scale within its region.
Its recent focus areas include integrating newly acquired banks, diversifying its loan book, and emphasizing deposit growth. Key success factors are effective loan diversification, competitive deposit pricing, cost management, and maintaining robust capital and asset quality ratios. In a market crowded with commercial banks and credit unions, scale and strategic positioning are vital for continued growth and profitability.
Quarterly Performance Drivers
Revenue (GAAP) topped analyst estimates by $1.15 million, attributed to higher net interest income and rising noninterest income. Net interest margin, which represents the difference between the income generated from lending activities and the interest paid to depositors and other funding sources, reached 3.91 %, up 0.50 percentage points from one year ago. This expansion signals better profitability from lending and deposit activities.
Loan growth was a significant positive, with total loans increasing 3.4% year over year and 3.0% from the prior sequential quarter to $1.57 billion. Segment results showed commercial real estate loans rising 7.6 % year over year to $675.3 million, Agricultural and farmland loans increased 13.5% to $317.3 million as of June 30, 2025, and Commercial loans increased 6.1% to $152.3 million as of June 30, 2025. Home equity lending also grew by 10.3% as of June 30, 2025, compared to June 30, 2024. In contrast, Residential mortgage and commercial construction loans contracted, down 6.3% to $147.1 million and 26.5% to $101.0 million, respectively, as of June 30, 2025, compared to June 30, 2024.
On the funding side, deposits totaled $1.74 billion as of June 30, 2025, an increase of 7.4% year over year. The average cost of deposits was 1.62%, declining from both the prior quarter and the prior year. Noninterest-bearing deposits made up 24.0% of total deposits as of June 30, 2025. Lower deposit pricing supported the expansion in net interest margin.
Noninterest income, which is revenue generated from activities outside traditional lending such as fees and mortgage banking, grew 12.6% year over year to $4.8 million. Mortgage originations and loan sales improved markedly, supported by a 3.81% sales margin, with Mortgage banking income rose to $2.9 million. This segment's rebound drove most of the noninterest income gains for the period.
The company’s provision for credit losses (GAAP) jumped to $1.0 million, compared to $412,000 in Q2 2024. While the percentage of nonperforming loans remained stable at 0.32% of total loans and Net loan charge-offs were very modest at $48,000. Noninterest expense also rose by 5.4% compared to the prior quarter, with increased spending on salaries and benefits, notably from higher mortgage commission payouts linked to origination activity.
The period saw continued progress in capital and shareholder returns. Book value per share (GAAP) and tangible book value per share (non-GAAP) both increased year over year as of June 30, 2025. The company raised its quarterly dividend to $0.145 per share, declared on July 24, 2025, resulting in an annualized yield of approximately 3.32% based on recent market prices. Eagle also repurchased 25,000 shares at an average price of $16.34 per share in Q2 2025. Regulatory capital ratios remained strong in Q2 2025, with a Tier 1 capital ratio at 10.34% (GAAP) and a tangible common equity to tangible assets ratio at 6.77% (non-GAAP), both up versus prior-year levels.
Looking Ahead
Management did not provide explicit forward guidance for revenue or earnings per share. However, commentary notes expectations for further improvement in funding costs if the Federal Reserve maintains current rates. Leadership indicated that as high-rate certificates of deposit mature, repricing should continue to lower overall deposit costs, supporting future net interest margin steadiness or improvement.
In the coming quarters, investors should monitor progress in managing loan portfolio concentrations, especially given that commercial real estate and agricultural loans remain large parts of the overall portfolio. Expense trends, credit provisioning, and the proportion of uninsured deposits are also important markers to watch.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
