Eagle Bancorp Montana (EBMT) 8-K Eagle Bancorp Montana Earns $605,000 in Fourth Fiscal Quarter and $2.2 Million in Fiscal 2012; Declares Regular Quarterly Cash Dividend

Exhibit 99.1

Eagle Bancorp Montana Earns $605,000 in Fourth Fiscal Quarter and $2.2 Million in Fiscal 2012; Declares Regular Quarterly Cash Dividend

HELENA, Montana--(BUSINESS WIRE)--July 24, 2012--Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the “Company,” “Eagle”), the holding company of American Federal Savings Bank, today reported its earnings increased 26% to $605,000, or $0.15 per diluted share, in the fourth fiscal quarter ended June 30, 2012, compared to $482,000, or $0.12 per diluted share, in the fourth quarter a year ago. In the quarter ended March 31, 2012 it earned $658,000, or $0.17 per diluted share. In fiscal 2012 Eagle earned $2.2 million, or $0.56 per diluted share, compared to $2.4 million, or $0.62 per diluted share, in fiscal 2011.

The Company also announced its board of directors has declared a regular quarterly cash dividend of $0.07125 per share payable August 24, 2012 to shareholders of record on August 3, 2012.

“For the past two years we have explored several growth opportunities in our markets and surrounding areas. The highlight of the year so far is our definitive agreement to purchase seven branch banking locations from Sterling Savings Bank, a wholly-owned subsidiary of Sterling Financial Corporation (NASDAQ: STSA), which we announced on July 2, 2012,” said Peter J. Johnson, President and CEO. “The transaction will more than double our franchise to 13 branches and extends our branch network throughout Southern Montana. It will provide our existing customers with added convenience and service and our new customers with the opportunity to enjoy the outstanding personalized service and commitment of a Montana-based community bank.”

Of the seven branches being acquired six are in new markets for Eagle, including two in Missoula, one in Billings, and one each in Hamilton, Livingston and Big Timber. The seventh is in Bozeman where Eagle already has a presence.

Fourth Quarter Fiscal 2012 Highlights

• Eagle earned $605,000 or $0.15 per diluted share, in the fourth quarter of fiscal 2012 compared to $658,000, or $0.17 per diluted share in the preceding quarter and $482,000, or $0.12 per diluted share in the fourth quarter of fiscal 2011.
• Net interest margin was 3.51% in the fourth quarter, compared to 3.73% in the preceding quarter and 3.71% in the fourth quarter a year ago.
• Nonperforming assets were $5.6 million, or 1.70% of total assets at June 30, 2012, compared to $5.4 million, or 1.62% of total assets three months earlier and $4.1 million, or 1.24% of total assets a year ago.
• Nonperforming loans totaled $3.2 million, or 1.83% of total loans at June 30, 2012 compared to $3.5 million, or 1.95% of total loans three months earlier and $2.9 million, or 1.57% of total loans a year ago.
• Total deposits increased 5.16% year-over-year to $220.0 million.
• Capital ratios remain strong with a Tier 1 leverage ratio of 17.22%.
• Declared regular quarterly cash dividend of $0.07125 per share.

Balance Sheet Results

“Demand for new loans has been modest and as a result the total loan portfolio contracted compared to a year ago,” said Johnson. “Loan payoffs have also been a contributing factor to the contracting loan portfolio.” Total loans declined 6.30% to $175.5 million at June 30, 2012 compared to $187.3 million at June 30, 2011. Commercial real estate loans remained relatively unchanged at $64.7 million compared to a year earlier and residential mortgage loans decreased 11.9% to $61.7 million compared to $70.0 million a year earlier. Commercial loans increased 45.2% to $15.3 million and home equity loans decreased 14.8% to $23.7 million compared to a year ago.

Total deposits increased 5.16% to $220.0 million at the end of June compared to $209.2 million a year ago. Checking and money market accounts represent 44.6% of total deposits, savings accounts represent 18.5% of total deposits, and CDs comprise 36.9% of the total deposit portfolio at June 30, 2012. Eagle had no brokered deposits at the end of June.

Total assets were $327.3 million at June 30, 2012, compared to $331.1 million a year earlier. Shareholders’ equity was $53.7 million at June 30, 2012, compared to $52.5 million a year ago and the tangible book value increased to $13.83 per share at June 30, 2012, compared to $13.39 per share a year ago.

Credit Quality

“The overall trend in credit quality has stabilized, with nonaccrual loans dropping significantly and very little new loans moved into delinquency status as of June 30, 2012,” said Clint Morrison, SVP and CFO. “During the fourth quarter we restructured several loans or moved them to OREO. As a result, restructured loans totaled $1.40 million during the fourth quarter.”

Nonperforming loans (NPLs) were $3.2 million, or 1.83% of total loans at June 30, 2012, compared to $3.5 million, or 1.95% of total loans, three months earlier, and $2.9 million, or 1.57% of total loans, a year ago. Other real estate owned (OREO) and other repossessed assets totaled $2.4 million at June 30, 2012 compared to $1.9 million three months earlier and $1.2 million a year earlier.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, totaled $5.6 million, or 1.70% of total assets, at June 30, 2012, compared to $5.4 million, or 1.62% of total assets in the preceding quarter, and $4.1 million, or 1.24% of total assets, a year ago.

Eagle’s fourth quarter provision for loan losses was $260,000, compared to $258,000 in the preceding quarter and $155,000 in the fourth quarter a year ago. Net charge offs were $335,000 in the fourth quarter compared to net charge offs of $58,000 in the preceding quarter and $6,000 in the fourth quarter a year ago. For fiscal 2012 the provision for loan losses totaled $1.1 million compared to $948,000 for fiscal 2011. The allowance for loan losses now stands at $1.63 million, or 0.93% of total loans at March 31, 2012, compared to $1.70 million, or 0.95% of total loans at March 31, 2012, and $1.80 million, or 0.96% of total loans a year ago.

Operating Results

“The net interest margin contracted again during the quarter as asset yields continued to decline with interest rates reaching historic lows,” said Morrison. The net interest margin was 3.51% in the fourth quarter, compared to 3.73% in the preceding quarter and 3.71% in the fourth quarter a year ago. Funding costs for the fourth quarter of fiscal 2012 decreased 13 basis points compared to the previous quarter and asset yields decreased 34 basis points compared to the previous quarter. In fiscal 2012 the net interest margin improved six basis points to 3.68% compared to 3.62% in fiscal 2011.

Net interest income before the provision for loan loss was $2.58 million in the fourth quarter of fiscal 2012, compared to $2.76 million in the preceding quarter and $2.77 million in the fourth quarter a year ago. For the fiscal year, the net interest income before the provision for loan loss was $10.93 million, compared to $10.87 million in fiscal year 2011.

Noninterest income increased 56.0% to $1.23 million, compared to $786,000 in the fourth quarter a year ago. In the third quarter of fiscal 2012 noninterest income was $1.30 million. In fiscal 2012 noninterest income was $4.17 million compared to $4.62 million in fiscal 2011.

Largely due to increased mortgage refinance activity recently resulting from the low interest rate environment, Eagle’s third quarter net gain on the sale of loans increased to $534,000 compared to $522,000 in the preceding quarter and $225,000 in the fourth quarter a year ago. However, for all of fiscal 2012 the net gain on the sale of loans decreased 22.5% to $1.70 million, compared to $2.19 million in fiscal 2011 when mortgage loan activity was at its peak.

In the fourth quarter of fiscal 2012 noninterest expense was $2.79 million, compared to $2.91 million in the preceding quarter and $2.71 million in the fourth quarter a year ago. In fiscal 2012 noninterest expense totaled $11.03 million compared to $11.09 million in fiscal 2011. Consulting fees increased substantially to $528,000 in fiscal 2012 compared to $180,000 in fiscal 2011, largely due to costs associated with the previously announced definitive agreement to purchase seven branch banking locations from Sterling Savings Bank and other acquisition studies.

Eagle’s fourth quarter return on average equity (ROAE) was 4.46% compared to 4.88% in the preceding quarter and 3.81% in the fourth quarter a year ago. Return on average assets (ROAA) was 0.74% in the fourth quarter compared to 0.80% in the preceding quarter and 0.58% in the fourth quarter a year ago. In fiscal 2012, Eagle’s ROAE was 4.06% compared to 4.50% in fiscal 2011 and its ROAA was 0.66% compared to 0.73% in fiscal 2011.

Capital Management

Eagle Bancorp Montana continues to meet the well capitalized thresholds for regulatory purposes with a Tier 1 leverage ratio of 17.22% at June 30, 2012. “When we complete our acquisition of the seven branches from Sterling Savings Bank, our Tier 1 leverage ratio should be approximately 10.80%, still high enough to be considered well capitalized by our regulators,” Johnson concluded.

About the Company

Eagle Bancorp Montana, Inc. is the stock holding company of American Federal Savings Bank. American Federal Savings Bank was formed in 1922 and is headquartered in Helena, Montana. It has additional branches in Butte, Bozeman and Townsend. Eagle Bancorp Montana, Inc. commenced operations on April 5, 2010 following the conversion of Eagle Financial MHC and the sale of Eagle Bancorp Montana, Inc. stock. Eagle's common stock trades 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," "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.

Balance Sheet
(Dollars in thousands, except per share data)		(Unaudited)			(Unaudited)			(Audited)
		June 30,			March 31,			June 30,
			2012			2012			2011
Assets:
	Cash and due from banks	$	3,534		$	3,889		$	2,703
	Interest-bearing deposits with banks		16,280			6,714			1,837
	Federal funds sold		-			5,001			5,000
	Total cash and cash equivalents		19,814			15,604			9,540
	Securities available-for-sale, at market value		89,277			94,019			102,700
	FHLB stock, at cost		2,003			2,003			2,003
	Investment in Eagle Bancorp Statutory Trust I		155			155			155
	Loans held-for-sale		10,613			11,885			1,784
	Loans:
	Residential mortgage (1-4 family)		61,671			63,225			70,003
	Commercial loans		15,343			15,014			10,564
	Commercial real estate		64,672			65,820			64,701
	Construction loans		1,455			1,935			5,020
	Consumer loans		8,778			8,798			9,343
	Home equity		23,709			24,336			27,816
	Unearned loan fees		(164	)		(145	)		(176	)
	Total loans		175,464			178,983			187,271
	Allowance for loan losses		(1,625	)		(1,700	)		(1,800	)
	Net loans		173,839			177,283			185,471
	Accrued interest and dividends receivable		1,371			1,451			1,558
	Mortgage servicing rights, net		2,218			2,135			2,142
	Premises and equipment, net		15,561			15,700			16,151
	Cash surrender value of life insurance		9,172			9,101			6,900
	Real estate and other assets acquired in settlement of loans, net of allowance for losses
			2,361			1,872			1,181
	Other assets		915			960			1,508
	Total assets	$	327,299		$	332,168		$	331,093
Liabilities:
	Deposit accounts:
	Noninterest bearing		23,425			24,353			19,052
	Interest bearing		196,564			195,801			190,134
	Total deposits		219,989			220,154			209,186
	Accrued expense and other liabilities		5,809			4,652			3,371
	Federal funds purchased		-			-			-
	FHLB advances and other borrowings		42,696			48,746			60,896
	Subordinated debentures		5,155			5,155			5,155
	Total liabilities		273,649			278,707			278,608
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; 3,878,971; 3,878,971; and 3,918,687 outstanding at June 30, 2012, March 31, 2012 and June 30, 2011, respectively
			41			41			41
	Additional paid-in capital		22,112			22,111			22,110
	Unallocated common stock held by employee stock ownership plan (ESOP)		(1,556	)		(1,598	)		(1,722	)
	Treasury stock, at cost (204,156; 204,156; and 164,440 shares at June 30, 2012, March 31, 2012, and June 30, 2011, respectively)
			(2,210	)		(2,210	)		(1,796	)
	Retained earnings		32,990			32,661			31,918
	Accumulated other comprehensive gain		2,273			2,456			1,934
	Total shareholders' equity		53,650			53,461			52,485
	Total liabilities and shareholders' equity	$	327,299		$	332,168		$	331,093

	Income Statement	(Unaudited)								(Unaudited)
	(Dollars in thousands, except per share data)	Three Months Ended								Twelve Months Ended
		June 30			March 31			June 30		June 30			June 30
			2012			2012			2011		2012			2011
Interest and dividend Income:
	Interest and fees on loans	$	2,535		$	2,744		$	2,785	$	10,884		$	11,279
	Securities available-for-sale		715			778			899		3,192			3,653
	Interest on deposits with banks		4			4			6		17			21
	Total interest and dividend income		3,254			3,526			3,690		14,093			14,953
Interest Expense:
	Interest expense on deposits		252			260			302		1,074			1,392
	Advances and other borrowings		398			481			593		1,994			2,502
	Subordinated debentures		24			25			22		94			186
	Total interest expense		674			766			917		3,162			4,080
Net interest income			2,580			2,760			2,773		10,931			10,873
Provision for loan losses			260			258			155		1,101			948
	Net interest income after provision for loan losses		2,320			2,502			2,618		9,830			9,925
Noninterest income:
	Service charges on deposit accounts		161			141			180		672			733
	Net gain on sale of loans		534			522			225		1,695			2,187
	Mortgage loan servicing fees		225			214			227		891			830
	Net gain on sale of available-for-sale securities		209			115			19		490			19
	Net gain (loss) on sale of OREO		6			(12	)		-		(6	)		(2	)
	Net gain (loss) on fair value hedge-FASB ASC 815		(137	)		94			-		(417	)		198
	Other income		228			230			135		849			658
	Total noninterest income		1,226			1,304			786		4,174			4,623
	Noninterest expense:
	Salaries and employee benefits		1,335			1,367			1,208		5,072			4,948
	Occupancy and equipment expense		348			350			341		1,380			1,346
	Data processing		155			170			110		611			568
	Advertising		214			92			150		568			524
	Amortization of mortgage servicing fees		161			201			125		629			1,158
	Federal insurance premiums		50			51			64		187			257
	Postage		37			23			27		123			123
	Legal, accounting and examination fees		79			71			87		342			363
	Consulting fees		78			55			86		528			180
	Provision for valuation loss on OREO		4			165			140		169			201
	Other		332			361			375		1,425			1,414
	Total noninterest expense		2,793			2,906			2,713		11,034			11,082
Income before provision for income taxes			753			900			691		2,970			3,466
Provision for income taxes			148			242			209		792			1,056
Net income		$	605		$	658		$	482	$	2,178		$	2,410
Basic earnings per share		$	0.16		$	0.18		$	0.12	$	0.59		$	0.62
Diluted Earnings per share		$	0.15		$	0.17		$	0.12	$	0.56		$	0.62
	Weighted average shares outstanding (basic EPS)
			3,720,651			3,716,480			3,869,139		3,725,002			3,892,141
	Weighted average shares outstanding (diluted EPS)
			3,924,807			3,920,636			3,908,187		3,918,566			3,901,902

Financial Ratios and Other Data
(Dollars in thousands, except per share data)
(Unaudited)		June 30,		March 31,		June 30,
			2012		2012		2011
Asset Quality:
	Nonaccrual loans	$	1,814	$	3,286	$	2,939
	Loans 90 days past due		-		-		-
	Restructured loans, net		1,404		213		-
	Total nonperforming loans		3,218		3,499		2,939
	Other real estate owned and other repossed assets, net		2,361		1,872		1,181
	Total nonperforming assets	$	5,579	$	5,371	$	4,120
	Nonperforming loans / portfolio loans		1.83%		1.95%		1.57%
	Nonperforming assets / assets		1.70%		1.62%		1.24%
	Allowance for loan losses / portfolio loans		0.93%		0.95%		0.96%
	Allowance / nonperforming loans		50.50%		48.59%		61.25%
	Gross loan charge-offs for the quarter	$	346	$	63	$	9
	Gross loan recoveries for the quarter	$	11	$	5	$	3
	Net loan charge-offs for the quarter	$	335	$	58	$	6
Capital Data (At quarter end):
	Book value per share	$	13.83	$	13.78	$	13.39
	Shares outstanding		3,878,971		3,878,971		3,918,687
Profitability Ratios (For the quarter):
	Efficiency ratio*		71.16%		69.12%		73.26%
	Return on average assets		0.74%		0.80%		0.58%
	Return on average equity		4.46%		4.88%		3.81%
	Net interest margin		3.51%		3.73%		3.71%
Profitability Ratios (Year-to-date):
	Efficiency ratio*		70.82%		70.29%		68.98%
	Return on average assets		0.66%		0.63%		0.73%
	Return on average equity		4.06%		3.92%		4.50%
	Net interest margin		3.68%		3.73%		3.62%
Other Information
	Average total assets for the quarter	$	328,350	$	330,072	$	330,531
	Average total assets year to date	$	331,161	$	332,175	$	331,615
	Average earning assets for the quarter	$	293,934	$	295,643	$	298,712
	Average earning assets year to date	$	297,174	$	298,336	$	300,110
	Average loans for the quarter **	$	184,076	$	190,561	$	188,614
	Average loans year to date **	$	188,502	$	189,978	$	185,223
	Average equtiy for the quarter	$	54,209	$	53,893	$	50,591
	Average equity year to date	$	53,675	$	53,479	$	53,540
	Average deposits for the quarter	$	219,398	$	214,270	$	211,023
	Average deposits year to date	$	214,490	$	212,951	$	205,754
* 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

CONTACT:
Eagle Bancorp Montana, Inc.
Peter J. Johnson, President and CEO, 406-457-4006
or
Clint J. Morrison, SVP and CFO, 406-457-4007