3/8/25
Eagle Bancorp Montana (NASDAQ: EBMT) isn’t a stock that gets a lot of headlines, but for investors who like steady dividend payers, it’s worth a closer look. This Montana-based bank holding company operates through Opportunity Bank of Montana, providing various lending and deposit services. Community banks like EBMT often fly under the radar, yet they can offer consistent dividends and a strong regional presence, making them an attractive option for long-term income investors.
The question is—does EBMT’s dividend make it a worthwhile addition to a portfolio? Let’s break it down.
Key Dividend Metrics
🔵 Dividend Yield: 3.27%
🟢 Annual Dividend: $0.57 per share
🔴 Payout Ratio: 45.56%
🟡 5-Year Average Yield: 2.92%
🔵 Ex-Dividend Date: February 14, 2025
🟢 Dividend Growth: Slow but steady
🔴 Dividend Safety: Moderately secure
Dividend Overview
EBMT’s current dividend yield sits at 3.27%, slightly above its historical average. That’s good news for income investors looking for stable payouts. The company pays an annual dividend of $0.57 per share, and with a payout ratio of 45.56%, there’s still room for future increases.
For a smaller bank like EBMT, the priority is keeping dividends steady rather than pushing for aggressive growth. That means shareholders can likely count on continued payouts without worrying too much about dividend cuts. The bank’s financials support this, but it’s important to keep an eye on the company’s overall earnings and loan performance, especially in a changing interest rate environment.
Dividend Growth and Safety
While EBMT doesn’t have a track record of significant dividend increases, it has managed to maintain payouts consistently. For income investors, that’s often just as valuable as high growth.
Several factors support the sustainability of its dividend:
- The payout ratio of 45.56% indicates that the company is using less than half of its earnings to pay dividends. That leaves a buffer for challenging times.
- The bank’s earnings have grown by 58.6% year over year, which strengthens its ability to maintain and possibly grow dividends.
- A return on equity of 5.68% is on the lower side, meaning the bank is not as efficient in generating profits from its capital compared to larger banks.
EBMT’s dividend looks secure for now, but it doesn’t offer the rapid growth seen in some other financial stocks. That makes it a better fit for investors who prefer stability over aggressive income growth.
Chart Analysis
The chart for Eagle Bancorp Montana (EBMT) shows a stock that has been in a steady uptrend over the past several months, with some periods of volatility. The price has been respecting key moving averages, and recent price action suggests a shift in momentum that investors should pay close attention to.
Moving Averages and Trend
The 50-day simple moving average (SMA) is above the 200-day SMA, which is generally a bullish signal. This suggests that the medium-term trend remains intact, even after a recent pullback from highs near $18. The 200-day SMA is sloping upward, reinforcing the idea that the broader trend is positive.
A significant breakout occurred in February, pushing prices well above both moving averages. However, the recent decline suggests that some profit-taking has occurred, bringing the stock back toward the 50-day SMA. As long as the price remains above the 200-day SMA, the long-term trend remains intact.
Volume and Buying Interest
The volume spikes in late February suggest strong buying pressure, which likely contributed to the sharp rally. However, the pullback over the past few days has been accompanied by lower volume, indicating that sellers are not overwhelming the market. This could be a sign of consolidation before another move higher.
If volume increases on a rebound, it would confirm renewed buying interest. On the other hand, if selling volume picks up, it could indicate a deeper pullback toward stronger support levels.
Relative Strength Index (RSI)
The RSI recently reached overbought levels before turning lower. This signals that the stock may have been due for a short-term cooldown after its strong rally. Currently, RSI is declining, but it has not yet reached oversold territory.
If RSI stabilizes and turns back upward, it would suggest that the selling pressure is weakening, and the stock may attempt another move higher. If RSI continues lower, it could indicate further downside pressure in the near term.
Support and Resistance Levels
The recent high around $18.37 serves as a key resistance level. If the stock can regain momentum and push through that level, it could signal another leg higher.
On the downside, support appears around the $16 level, where the stock consolidated before its most recent rally. A break below that could bring the 200-day moving average into play as the next major support area.
Analyst Ratings
Eagle Bancorp Montana, Inc. (NASDAQ: EBMT) has seen mixed analyst sentiment recently, with both upgrades and downgrades reflecting changing market conditions and company performance.
Downgrades
🔴 October 27, 2022 – Janney Montgomery Scott shifted its rating on EBMT from Buy to Neutral while lowering its price target from $23 to $21. Analysts cited concerns over the bank’s loan growth trajectory and the potential impact of fluctuating interest rates on its net interest margin. With regional banks facing increasing pressure from higher borrowing costs, this adjustment reflected a more cautious outlook.
🔴 June 29, 2022 – DA Davidson also adjusted its stance on EBMT, moving from Buy to Neutral and reducing its price target from $25 to $22. The downgrade was influenced by growing competition in the regional banking space and potential concerns about asset quality. Analysts noted that while the bank had a solid foundation, external pressures could make it more difficult to maintain aggressive growth.
Upgrades
🟢 January 29, 2025 – StockNews.com upgraded EBMT from Hold to Buy, citing the company’s steady earnings performance and improved operational efficiency. The bank’s ability to manage costs effectively while maintaining profitability played a key role in this shift. Analysts also pointed to the stock’s valuation, noting that it remained attractive relative to peers in the regional banking sector.
Consensus Price Target
📊 The latest consensus price target for EBMT stands at $17.00, reflecting a balanced view among analysts. While some remain cautious about interest rate impacts and competition, others see potential for continued operational strength and earnings stability.
These recent adjustments in ratings and price targets highlight both the opportunities and risks facing Eagle Bancorp Montana, providing investors with key insights into how the stock is currently perceived in the market.
Earnings Report Summary
Eagle Bancorp Montana, Inc. (EBMT) wrapped up the fourth quarter of 2024 with solid financial results, showing steady growth in key areas. The company, which operates as the parent of Opportunity Bank of Montana, continues to expand its loan and deposit base while maintaining strong asset quality.
Quarterly Performance at a Glance
For the last quarter of the year, EBMT posted a net income of $3.4 million, or $0.44 per diluted share. That’s a nice jump from the $2.7 million, or $0.34 per share, reported in the previous quarter. Even compared to the same period last year, the bank’s earnings are up, which shows they’re managing their business effectively despite the challenging economic environment.
One of the highlights was the bank’s net interest margin, which improved to 3.59% from 3.34% in the prior quarter. That means the bank is making more money on the difference between what it earns on loans and what it pays on deposits—a good sign in an environment where interest rates have been fluctuating.
Total revenue came in at $21.4 million, a modest increase from the previous quarter and a slight rise year-over-year. Meanwhile, total loans reached $1.52 billion, growing by 2.4% over the last 12 months. Deposits also increased by about $46 million, which shows that customers continue to trust the bank with their money.
Another positive takeaway was the improvement in credit quality. Nonperforming loans dropped significantly from $8.4 million last year to $3.9 million, meaning fewer borrowers are struggling to make payments. That’s a sign of solid risk management and a stable lending portfolio.
Full-Year Breakdown
Looking at the entire year, EBMT brought in $9.8 million in net income, or $1.24 per share. While slightly lower than last year’s earnings of $10.1 million, the bank still showed resilience in a competitive landscape. Net interest income saw a slight bump to $63.4 million, and while noninterest income dropped due to slower mortgage banking activity, cost-cutting efforts helped offset some of the impact.
On the expense side, EBMT managed to trim operating costs by nearly 4% for the year, which helped keep profitability in check. With rising costs in banking operations, keeping expenses under control is always a plus.
Dividend News
Investors who count on EBMT for steady income will be happy to hear that the company is keeping its quarterly dividend at $0.1425 per share. That brings the annualized yield to about 3.93%, which remains an attractive payout for income-focused investors.
Management’s Take
CEO Laura F. Clark pointed to the bank’s strong deposit growth and solid revenue performance as key highlights for the quarter. She emphasized that credit quality remains strong and that the company expects continued, steady loan growth in the year ahead.
Balance Sheet and Financial Strength
Total assets edged up slightly to $2.1 billion, and the bank’s liquidity remains strong, with about $404 million in available borrowing capacity if needed. Their tangible equity ratio also improved, signaling that the bank is maintaining a healthy capital position.
Looking Ahead
As EBMT heads into 2025, the focus remains on maintaining loan quality, keeping costs under control, and growing at a steady, manageable pace. With a solid balance sheet and a history of reliable dividends, the bank is positioning itself for another stable year ahead.
Financial Health and Stability
A company’s ability to sustain dividends depends on its financial foundation, and for a bank, that means looking at profitability, assets, and overall stability.
- Profit margins are currently at 12.12%, a decent figure but not outstanding for the banking sector.
- The operating margin of 20.22% suggests the company is managing costs well.
- The stock trades below its book value, with a book value per share of $21.77 compared to the current price of around $17.33. That could indicate a buying opportunity.
- Return on assets sits at 0.47%, which is on the low side, meaning the bank isn’t generating high returns from its assets.
Debt is another factor to consider. EBMT carries $200 million in debt, a notable figure for a bank of its size. While that’s not necessarily a red flag—banks often rely on leverage to operate—it does mean investors should keep an eye on interest rate trends and how they impact borrowing costs.
Valuation and Stock Performance
Valuation metrics suggest EBMT may be trading at an attractive level for those looking for undervalued dividend stocks.
- The trailing price-to-earnings ratio stands at 14.05, while the forward P/E is 10.25. That’s relatively low, meaning the stock isn’t overly expensive.
- The price-to-book ratio is 0.80, reinforcing the idea that the stock is currently priced below its intrinsic value.
- Price-to-sales comes in at 1.72, a reasonable level for a regional bank.
In terms of stock performance, EBMT has been on an upward trend.
- The stock’s 52-week high is $18.37, while the low sits at $12.32.
- The 50-day moving average is $15.87, showing that the stock has been gaining traction in recent months.
- The 200-day moving average is $15.22, which further indicates a steady rise.
This suggests that while the stock has seen some volatility, it’s generally been moving in the right direction. For investors looking for a solid dividend payer that isn’t overvalued, EBMT presents an interesting opportunity.
Risks and Considerations
No investment is without risk, and while EBMT has some attractive qualities, there are potential downsides to consider.
- Interest rate movements have a big impact on banks, and changes in monetary policy could affect net interest margins.
- The stock is relatively thinly traded, with an average daily volume of around 25,000 to 34,000 shares. That can make it harder to build or exit a position efficiently.
- As a regional bank, EBMT faces competition from larger financial institutions and online banking services. Continued competition could pressure its growth.
- Regulatory factors always play a role in banking stocks. Changes in compliance requirements could affect profitability.
- The company’s debt levels are something to watch, especially if interest rates continue to rise.
While none of these risks are dealbreakers, they are important considerations for anyone looking to add EBMT to a dividend portfolio.
Final Thoughts
For income investors, EBMT offers a steady dividend with a reasonable yield and a manageable payout ratio. The stock trades below book value, and earnings growth has been strong, both of which could support future dividend stability.
However, dividend growth has been moderate rather than aggressive, so those looking for rapid increases may need to look elsewhere. The company’s financial position appears solid, but factors like interest rates, debt levels, and market competition should be monitored.
Overall, EBMT is a steady performer in the community banking space. For investors who value stable income and a potentially undervalued stock, it may be worth considering.
Recent Comments