Bar Harbor Bankshares Reports Third Quarter Results

BAR HARBOR, ME/ ACCESSWIRE / October 27, 2020 / Bar Harbor Bankshares (NYSE American: BHB) reported third quarter 2020 net income of $8.4 million or $0.56 per share compared to $5.0 million or $0.32 per share in the same quarter of 2019. The non-GAAP measure of core earnings increased 30% to $9.2 million, or $0.61 per share in the third quarter 2020 compared to $7.3 million or $0.47 per share in the third quarter of 2019.

THIRD QUARTER FINANCIAL HIGHLIGHTS (compared to the third quarter of 2019, unless otherwise noted)

  • 13% annualized total commercial loan growth
  • 92% loan to deposit ratio
  • 2.98% net interest margin compared to 2.75%
  • 32% increase in non-interest income
  • 0.56% non-accruing loans to total loans, excluding Paycheck Protection Program (PPP) loans
  • 0.88% return on assets compared to 0.55%; 0.96% core return on assets compared to 0.80% (non-GAAP)
  • 59.5% efficiency ratio compared to 65.0%

President and Chief Executive Officer, Curtis C. Simard stated, "As a direct result of our well executed strategies, the Company expanded all key performance metrics on a year-over-year and linked quarter basis. These strategies not only entailed expense and deleveraging initiatives, but also focused on increasing core deposits thus reducing overall funding costs, and expanding fee income. Core return on assets increased to 0.96% as we continue to achieve positive operating leverage with minimal reliance on accretion from PPP related fees. We continue to see an upswing in customer activity since our state economies re-opened this past summer on a limited basis and a further rebound in branch operations compared to the first half of the year. Our loan to deposit ratio improved to 92% as we continue to grow deposits on relatively flat, total loan growth. Given the current economic environment, we have selectively grown commercial loans by 14% for the quarter, excluding PPP loans, and pushed much of the mortgage production through our secondary market platform. Our teams did a great job of keeping pace with the high demand of the mortgage markets for new and refinanced loans, resulting in over four times the gains compared to the third quarter 2019. We continue to adhere to our risk-based credit philosophy and profitability disciplines as is evidenced by our results this quarter. Excess liquidity generated during the quarter was used to pay down wholesale borrowings as part of on-going initiatives to de-lever and expand net interest margin."

Mr. Simard continued, "One of our greatest strengths is the diversity in capabilities surrounding fee income. Our wealth management business is a significant contributor to fee income, as well as a keystone for deepening customer relationships with $2.1 billion in assets under management. We had previously consolidated leadership and combined operations onto a common platform in our wealth management business, leading to the unifying of policies and sharing of ideas under one environment driven by best practices. I'm now excited to say we are working with our regulators to bring both of our wealth management companies and our brokerage teams under one name Bar Harbor Wealth Management. Bringing this business together under one brand was the logical next step as we align talent, engagement and culture."

Mr. Simard went on to say, "From an asset quality perspective, the Company experienced a significant decrease in loans under COVID-related forbearance since the second quarter. As of September 30, 2020 total outstanding deferrals, which primarily consist of interest only forbearance, were $78.7 million or 3% of total loans, with consumer mortgages representing $4.6 million of the total or less than half a percent of the consumer portfolio. Our third quarter stress testing resulted in no significant risk-rating downgrades or changes to reserves. Our allowance for loan losses is well established to absorb any inherent losses in our portfolio and increased during the quarter on higher commercial loan growth. Our steady allowance levels coupled with an extensive stress testing process speaks to the quality of our credit culture, while we continue to report low levels of net charge-offs and past due accounts. The increase in non-accruing loans for the quarter is due to one additional commercial loan that has since paid off at its carrying value. The hotel industry is one of our bigger credit exposures; however, we have seen minimal degradation as those borrowers are strong, proven operators with an average loan to value ratio of less than 60% for the segment. More so, any individual hotel exposure with a loan to value ratio greater than 65% was specifically included in our stress testing."

Mr. Simard further stated, "Throughout the year we have supported our customers by originating approximately 1,900 PPP loans totaling $131.6 million. Net unearned fees remaining on PPP loans at the end of the third quarter was $3.8 million and accretion will accelerate as the loans are reimbursed by the Small Business Administration (SBA). At this time we have submitted over 50% of PPP loans to the SBA for forgiveness, pending approval, and our teams continue to work closely with customers on the remaining balance."

Mr. Simard concluded, "Despite the significant challenges posed by the COVID-19 pandemic and related market conditions, we continue to maintain high levels of capital and liquidity, diversified revenue streams, strong credit performance and an exceptional core deposit base. We are confident in our business model to grow investor returns while maintaining our culture and commitment to customers, employees and communities throughout this economic cycle."

FINANCIAL CONDITION

Total assets were $3.9 billion at the end of the third quarter compared to $3.8 billion in the second quarter of 2020. Loan balances in the third quarter 2020 decreased by $20.7 million largely due to secondary market sales and prepayments of residential mortgages offset by total commercial loan growth. Mortgage loan originations totaled $86.5 million from new and refinancing activity given the lower interest rate environment. During the quarter nearly all residential originations were sold in the secondary market to generate fee income. Total commercial loans grew at an annualized rate of 13% led by commercial real estate loans offset by a decrease in commercial and industrial (C&I) loans. The decrease in C&I is primarily due to one customer with loans totaling $39.8 million that were refinanced to a lower principal of $25.0 million along with an open line of credit. Core deposits increased 21% on an annualized basis due to growth from new accounts and an overall decrease in customer spending given current market conditions. As a result the loan to deposit ratio improved to 92% in the third quarter 2020 compared to 101% in the second quarter of 2020. Borrowings decreased by $161.4 million as excess liquidity primarily from higher deposit balances was used to pay down short-term borrowings. As part of the deleveraging strategy, total securities decreased $43.3 million in the third quarter as we allowed for natural run-off of amortizing and maturing fixed rate investments with the pay down of short term borrowings.

The third quarter 2020 allowance for loan losses increased by $1.4 million, which includes a $1.8 million provision for loan loss offset by net charge-offs of $402 thousand. The allowance for loan losses to total loans ratio for the third quarter expanded to 0.66% from 0.60% in the second quarter 2020 based on commercial loan growth and adjustments to reflect current economic conditions. Past due and delinquent loans as a percentage of total loans decreased to 0.77% from 0.83% at the end of the second quarter. The increase in non-accruing loans in the third quarter is primarily due to an additional commercial loan totaling $693 thousand that has subsequently settled at its carrying value. Third quarter stress testing of the Company's commercial loan portfolio included the top 50 relationships, all criticized loans greater than $1.0 million, hospitality loans over $250 thousand with loan to values in excess of 65%, and any seasonal payment, restaurant, or term loans maturing within a year that are greater than $500 thousand. Results of the stress testing led to no significant risk-rating downgrades or changes to reserves. While the impact of COVID-19 and other market conditions remain uncertain, we believe the existing allowance for loan losses is sufficient to absorb inherent losses based on our disciplined credit approach, experienced losses and methodology, and current and ongoing stress testing reviews of the portfolio.

The Company's book value per share was $27.09 at the end of the third quarter 2020 compared to $26.56 at the end of the second quarter 2020. Tangible book value per share (non-GAAP measure) was $18.56 at the end of the third quarter 2020 compared to $18.18 at the second quarter 2020; an annualized growth rate of 8%. A continued low interest rate environment has had a positive impact on the fair value of the Company's securities portfolio. Other comprehensive income included unrealized gains on securities totaling $11.7 million in the third quarter 2020 compared to $11.4 million at the end of the second quarter 2020.

RESULTS OF OPERATIONS

Net income in the third quarter 2020 was $8.4 million, or $0.56 per share, compared to $5.0 million, or $0.32 per share, in the same quarter of 2019. The non-GAAP measure of core earnings in the third quarter 2020 totaled $9.2 million, or $0.61 per share, compared to $7.3 million, or $0.47 per share, in the same quarter of 2019. The improvement in net income is driven by expanded net interest margin and higher non-interest income. Net interest margin in the third quarter 2020 increased to 2.98% from 2.75% in the same period of 2019 primarily due to a lower cost of funds. Costs of funds decreased to 0.82% compared to 1.65% in the third quarter 2019 due to a shift in funding sources from borrowings to core deposits. Cost of deposits and borrowings also benefited from the Federal Reserve rate cuts in 2020 and other key indexes in response to COVID-19. Additionally, excess liquidity was used to pay off $239.4 million of borrowings since the third quarter of 2019 in connection with deleveraging strategies that further reduced interest expense. Yields from earning assets were 3.67% compared to 4.17% in the third quarter 2019 reflecting loan originations and repricing of variable rate products in a lower interest rate environment. Excluding the effects of PPP loans, the third quarter yield on total earning assets was 3.72%. Net unearned fees on PPP loans at the end of the third quarter was $3.8 million and accretion will accelerate as the loans are reimbursed by the Small Business Administration.

The third quarter 2020 provision for loan losses increased to $1.8 million from $893 thousand in the same quarter 2019. While overall credit quality in the loan portfolio remains strong, the increase in the reserve is indicative of the continued commercial loan growth and higher economic adjustments reflecting elevated risk from COVID-19.

Non-interest income in the third quarter 2020 was $10.1 million compared to $7.6 million in the same quarter in 2019. The increase is primarily due to a $2.2 million increase in mortgage banking income associated with secondary market sales of $86.2 million compared to $20.7 million in the same quarter of 2019. Customer service fees increased 13% and trust and investment management fees increased 17% as the result of expanded operations into Central Maine partially offset by lower activity stemming from COVID-19.

Non-interest expense was $22.4 million in the third quarter 2020 compared to $23.4 million in the same quarter of 2019. The decrease is principally due to lower acquisition, conversion and other expenses, which totaled $691 thousand in 2020 compared to $3.0 million in 2019. Salary and benefit expense and occupancy costs were also higher during the third quarter 2020 to support the Company's expanded branch model and wealth management business. Operating expenses remained controlled as demonstrated by the drop in the efficiency ratio to 59.5% compared to 65.0% for the same period a year ago.

BACKGROUND

Bar Harbor Bankshares (NYSE American: BHB) is the parent company of its wholly-owned subsidiary, Bar Harbor Bank & Trust. Founded in 1887, Bar Harbor Bank & Trust is a true community bank serving the financial needs of its clients for over 130 years. Bar Harbor provides full-service community banking with office locations in all three Northern New England states of Maine, New Hampshire and Vermont. For more information, visit www.barharbor.bank.

FORWARD LOOKING STATEMENTS

Certain statements under the headings "THIRD QUARTER FINANCIAL HIGHLIGHTS", "FINANCIAL CONDITION" and "RESULTS OF OPERATIONS" contained in this document that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this earnings release the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions are intended to identify forward-looking statements, but these terms are not the exclusive means of identifying forward-looking statements. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that the Company files with the Securities and Exchange Commission, including but not limited to those discussed in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Because of these and other uncertainties, the Company's actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, the Company's past results of operations do not necessarily indicate future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. The Company is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. The Company qualifies all of its forward-looking statements by these cautionary statements.

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP core earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP core earnings information set forth is not necessarily comparable to non- GAAP information which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information.

The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including gains/losses on securities, premises, equipment and other real estate owned, acquisition costs, restructuring costs, legal settlements, and systems conversion costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense.

The Company also calculates core earnings per share based on its measure of core earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Management also believes that the computation of non-GAAP core earnings and core earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

 

CONTACTS

Josephine Iannelli; EVP, Chief Financial Officer & Treasurer; (207) 288-3314

  

TABLE

 

INDEX

CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)

  

A

Selected Financial Highlights

B

Footnotes to Selected Financial Highlights

C

Balance Sheets

D

Loan and Deposit Analysis

E

Statements of Income

F

Statements of Income (Five Quarter Trend)

G

Average Yields and Costs

H

Average Balances

I

Asset Quality Analysis

J

Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data

 

BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED

  At or for the Quarters Ended 
  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
  2020  2020  2020  2019  2019 
PER SHARE DATA               
Net earnings, diluted $0.56  $0.55  $0.50  $0.27  $0.32 
Core earnings, diluted (1) (2)  0.61   0.56   0.50   0.56   0.47 
Total book value  27.09   26.56   25.90   25.48   25.37 
Tangible book value (2)  18.56   18.18   17.70   17.30   18.49 
Market price at period end  20.55   22.39   17.28   25.39   24.93 
Dividends  0.22   0.22   0.22   0.22   0.22 
                     
PERFORMANCE RATIOS (3)                    
Return on assets  0.88%  0.90%  0.85%  0.46%  0.55%
Core return on assets (1) (2)  0.96   0.91   0.86   0.96   0.80 
Return on equity  8.22   8.40   7.64   4.21   5.04 
Core return on equity (1) (2)  8.98   8.52   7.71   8.81   7.36 
Core return on tangible equity (1) (2)  13.36   12.72   11.54   12.66   10.31 
Net interest margin, fully taxable equivalent (FTE) (2) (4)  2.98   3.00   3.06   2.95   2.75 
Net interest margin (FTE), excluding purchased loan accretion (2) (4)  2.92   2.88   2.99   2.88   2.65 
Efficiency ratio (2)  59.47   60.67   64.82   62.56   65.02 
                     
ORGANIC GROWTH (Year-to-date, annualized) (2) (6)                    
Total commercial loans  27%  33%  6%  6%  11%
Total loans  3   7   (1)  2   5 
Total deposits  12   (0)  (7)  (2)  1 
                     
FINANCIAL DATA (In millions)                    
Total assets $3,860  $3,780  $3,677  $3,669  $3,612 
Total earning assets (5)  3,312   3,376   3,269   3,336   3,270 
Total investments  619   662   646   684   703 
Total loans  2,709   2,729   2,635   2,641   2,577 
Allowance for loan losses  18   17   15   15   15 
Total goodwill and intangible assets  127   128   128   127   107 
Total deposits  2,935   2,695   2,651   2,696   2,494 
Total shareholders' equity  404   404   404   396   394 
Net income  8   8   8   4   5 
Core earnings (1) (2)  9   9   8   9   7 
                     
ASSET QUALITY AND CONDITION RATIOS                    
Net charge-offs (current quarter annualized)/average loans  0.06%  0.02%  0.18%  0.08%  0.02%
Allowance for loan losses/total loans  0.66   0.60   0.58   0.58   0.60 
Loans/deposits  92   101   99   98   103 
Shareholders' equity to total assets  10.48   10.69   10.98   10.80   10.92 
Tangible shareholders' equity to tangible assets  7.42   7.57   7.77   7.60   8.20 
                     
  1. Core measurements are non-GAAP financial measures adjusted to exclude net non-operating charges primarily related to acquisitions, restructurings, system conversions, loss on debt extinguishment and gain or loss on sale of securities, other real estate owned and premises and equipment. Refer to the Reconciliation of Non-GAAP Financial Measures in table J for additional information.
  2. Non-GAAP financial measure.
  3. All performance ratios are based on average balance sheet amounts, where applicable.
  4. Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.
  5. Earning assets includes non-accruing loans and securities are valued at amortized cost.
  6. Assets acquired from eight branches purchased from People's United Bank, National Association as of October 25, 2019, were excluded from calculation.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED

  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
(in thousands) 2020  2020  2020  2019  2019 
Assets               
Cash and due from banks $53,173  $52,776  $68,481  $37,261  $50,032 
Interest-bearing deposits with the Federal Reserve Bank  162,484   17,897   17,174   19,649   21,561 
Total cash and cash equivalents  215,657   70,673   85,655   56,910   71,593 
                     
Securities available for sale, at fair value  604,529   641,574   626,341   663,230   675,675 
Federal Home Loan Bank stock  13,975   20,265   19,897   20,679   27,469 
Total securities  618,504   661,839   646,238   683,909   703,144 
                     
Commercial real estate  1,045,635   982,070   948,178   930,661   923,773 
Commercial and industrial  522,510   539,442   426,357   423,291   402,706 
Residential real estate  1,021,206   1,083,708   1,132,328   1,151,857   1,143,452 
Consumer  119,340   124,197   128,120   135,283   107,375 
Total loans  2,708,691   2,729,417   2,634,983   2,641,092   2,577,306 
Less: Allowance for loan losses  (17,907)  (16,509)  (15,297)  (15,353)  (15,353)
Net loans  2,690,784   2,712,908   2,619,686   2,625,739   2,561,953 
                     
Premises and equipment, net  51,424   50,464   49,978   51,205   47,644 
Other real estate owned  1,983   2,318   2,205   2,236   2,455 
Goodwill  119,477   119,477   119,477   118,649   100,085 
Other intangible assets  7,913   8,155   8,398   8,641   6,879 
Cash surrender value of bank-owned life insurance  77,388   76,896   76,400   75,863   75,368 
Deferred tax asset, net  2,180   2,451   3,166   3,865   4,988 
Other assets  74,400   75,084   66,139   42,111   38,365 
Total assets $3,859,710  $3,780,265  $3,677,342  $3,669,128  $3,612,474 
                     
Liabilities and shareholders' equity                    
Demand and other non-interest bearing deposits $515,064  $504,325  $400,410  $414,534  $380,707 
NOW deposits  706,048   642,908   578,320   575,809   490,315 
Savings deposits  511,938   466,668   423,345   388,683   360,570 
Money market deposits  388,356   402,835   404,385   384,090   359,328 
Time deposits  813,509   678,126   844,097   932,635   902,665 
Total deposits  2,934,915   2,694,862   2,650,557   2,695,751   2,493,585 
                     
Senior borrowings  385,472   546,863   497,580   471,396   641,819 
Subordinated borrowings  59,920   59,879   59,849   59,920   42,928 
Total borrowings  445,392   606,742   557,429   531,316   684,747 
                     
Other liabilities  74,958   74,487   65,601   45,654   39,683 
Total liabilities  3,455,265   3,376,091   3,273,587   3,272,721   3,218,015 
                     
Total common shareholders' equity  404,445   404,174   403,755   396,407   394,459 
Total liabilities and shareholders' equity $3,859,710  $3,780,265  $3,677,342  $3,669,128  $3,612,474 
                     
Net shares outstanding  14,929   15,214   15,587   15,558   15,549 
                     

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

                 Annualized 
                 Growth % 
  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30,  Quarter  Year to 
(in thousands) 2020  2020  2020  2019  2019  End  Date 
Commercial real estate $1,045,635  $982,070  $948,178  $930,661  $923,773   26%  16%
Commercial and industrial  456,184   472,524   321,605   318,988   301,590   (14)  57 
Total commercial loans  1,501,819   1,454,594   1,269,783   1,249,649   1,225,363   13   27 
Residential real estate  1,021,206   1,083,708   1,132,328   1,151,857   1,143,452   (23)  (15)
Consumer  119,340   124,197   128,120   135,283   107,375   (16)  (16)
Tax exempt and other  66,326   66,918   104,752   104,303   101,116   (4)  (49)
Total loans $2,708,691  $2,729,417  $2,634,983  $2,641,092  $2,577,306   (3)%  3%
                             

DEPOSIT ANALYSIS

                 Annualized 
                 Growth % 
  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30,  Quarter  Year to 
(in thousands) 2020  2020  2020  2019  2019  End  Date 
Demand $515,064  $504,325  $400,410  $414,534  $380,707   9%  32%
NOW  706,048   642,908   578,320   575,809   490,315   39   30 
Savings  511,938   466,668   423,345   388,683   360,570   39   42 
Money market  388,356   402,835   404,385   384,090   359,328   (14)  1 
Total non-maturity deposits  2,121,406   2,016,736   1,806,460   1,763,116   1,590,920   21   27 
Total time deposits  813,509   678,126   844,097   932,635   902,665   80   (17)
Total deposits $2,934,915  $2,694,862  $2,650,557  $2,695,751  $2,493,585   36%  12%
                             

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

  Three Months Ended   Nine Months Ended  
  September 30,   September 30,  
(in thousands, except per share data) 2020  2019  2020  2019 
Interest and dividend income            
Loans $25,918  $28,157  $80,398  $82,681 
Securities and other  4,557   6,105   15,006   18,593 
Total interest and dividend income  30,475   34,262   95,404   101,274 
Interest expense                
Deposits  3,869   7,143   14,437   20,336 
Borrowings  1,941   4,674   7,149   15,232 
Total interest expense  5,810   11,817   21,586   35,568 
Net interest income  24,665   22,445   73,818   65,706 
Provision for loan losses  1,800   893   4,265   1,779 
Net interest income after provision for loan losses  22,865   21,552   69,553   63,927 
Non-interest income                
Trust and investment management fee income  3,532   3,013   10,060   8,836 
Customer service fees  2,886   2,553   8,437   7,336 
Gain on sales of securities, net  -   157   1,486   157 
Mortgage banking income  2,649   452   4,230   1,094 
Bank-owned life insurance income  492   497   1,525   1,558 
Customer derivative income  316   828   1,417   1,553 
Other income  227   143   1,078   729 
Total non-interest income  10,102   7,643   28,233   21,263 
Non-interest expense                
Salaries and employee benefits  11,809   11,364   35,602   33,568 
Occupancy and equipment  4,279   3,415   12,559   10,101 
Loss on sales of premises and equipment, net  -   -   90   21 
Outside services  438   424   1,414   1,278 
Professional services  479   707   1,488   1,821 
Communication  215   189   698   707 
Marketing  300   613   970   1,419 
Amortization of intangible assets  256   207   768   621 
Loss on debt extinguishment  -   -   1,351   - 
Acquisition, conversion and other expenses  691   3,039   952   3,319 
Other expenses  3,952   3,442   11,152   10,075 
Total non-interest expense  22,419   23,400   67,044   62,930 
Income before income taxes  10,548   5,795   30,742   22,260 
Income tax expense  2,146   780   6,138   3,847 
Net income $8,402  $5,015  $24,604  $18,413 
                 
Earnings per share:                
Basic $0.56  $0.32  $1.60  $1.19 
Diluted  0.56   0.32   1.60   1.18 
                 
Weighted average shares outstanding:                
Basic  15,079   15,547   15,359   15,536 
Diluted  15,103   15,581   15,382   15,582 
                 

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED

  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
(in thousands, except per share data) 2020  2020  2020  2019  2019 
Interest and dividend income               
Loans $25,918  $26,493  $27,987  $28,361  $28,157 
Securities and other  4,557   4,942   5,507   5,756   6,105 
Total interest and dividend income  30,475   31,435   33,494   34,117   34,262 
Interest expense                    
Deposits  3,869   4,548   6,020   6,698   7,143 
Borrowings  1,941   2,297   2,911   3,315   4,674 
Total interest expense  5,810   6,845   8,931   10,013   11,817 
Net interest income  24,665   24,590   24,563   24,104   22,445 
Provision for loan losses  1,800   1,354   1,111   538   893 
Net interest income after provision for loan losses  22,865   23,236   23,452   23,566   21,552 
Non-interest income                    
Trust and investment management fee income  3,532   3,159   3,369   3,227   3,013 
Customer service fees  2,886   2,439   3,112   2,791   2,553 
Gain on sales of securities, net  -   1,351   135   80   157 
Mortgage banking income  2,649   1,124   457   532   452 
Bank-owned life insurance income  492   496   537   495   497 
Customer derivative income  316   513   588   475   828 
Other income  227   628   223   206   143 
Total non-interest income  10,102   9,710   8,421   7,806   7,643 
Non-interest expense                    
Salaries and employee benefits  11,809   11,909   11,884   11,432   11,364 
Occupancy and equipment  4,279   3,860   4,420   4,113   3,415 
(Gain) loss on sales of premises and equipment, net  -   (2)  92   (3)  - 
Outside services  438   442   534   540   424 
Professional services  479   337   672   370   707 
Communication  215   194   289   114   189 
Marketing  300   282   388   453   613 
Amortization of intangible assets  256   256   256   240   207 
Loss on debt extinguishment  -   1,351   -   1,096   - 
Acquisition, conversion and other expenses  691   158   103   4,998   3,039 
Other expenses  3,952   3,479   3,721   3,450   3,442 
Total non-interest expense  22,419   22,266   22,359   26,803   23,400 
Income before income taxes  10,548   10,680   9,514   4,569   5,795 
Income tax expense  2,146   2,199   1,793   362   780 
Net income $8,402  $8,481  $7,721  $4,207  $5,015 
                     
Earnings per share:                    
Basic $0.56  $0.55  $0.50  $0.27  $0.32 
Diluted  0.56   0.55   0.50   0.27   0.32 
                     
Weighted average shares outstanding:                    
Basic  15,079   15,424   15,558   15,554   15,547 
Diluted  15,103   15,441   15,593   15,602   15,581 
                     

BAR HARBOR BANKSHARES
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED

  Quarters Ended 
  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
  2020  2020  2020  2019  2019 
Earning assets               
Commercial real estate  3.81%  4.11%  4.46%  4.69%  4.74%
Commercial and industrial  4.09   3.97   4.89   4.58   4.78 
Residential  3.71   3.81   3.84   3.89   3.88 
Consumer  3.42   3.81   5.20   4.84   5.13 
Total loans  3.81   3.94   4.30   4.33   4.38 
Securities and other  3.05   3.26   3.53   3.49   3.44 
Total earning assets  3.67%  3.81%  4.14%  4.15%  4.17%
                     
Funding liabilities                    
NOW  0.14%  0.14%  0.40%  0.44%  0.51%
Savings  0.13   0.15   0.25   0.20   0.21 
Money market  0.16   0.40   1.01   1.17   1.37 
Time deposits  1.69   1.94   1.92   2.06   2.16 
Total interest-bearing deposits  0.66   0.81   1.08   1.19   1.33 
Borrowings  1.60   1.51   2.10   2.30   2.62 
Total interest-bearing liabilities  0.82%  0.96%  1.28%  1.42%  1.65%
                     
Net interest spread  2.85   2.85   2.86   2.73   2.52 
Net interest margin  2.98   3.00   3.06   2.95   2.75 
                     

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED

  Quarters Ended 
  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
(in thousands) 2020  2020  2020  2019  2019 
Assets               
Commercial real estate $1,012,194  $952,264  $945,851  $928,445  $900,568 
Commercial and industrial  531,339   522,360   423,393   412,595   410,453 
Residential real estate  1,060,084   1,117,608   1,141,908   1,156,215   1,154,552 
Consumer  121,248   126,413   130,471   127,425   109,562 
Total loans (1)  2,724,865   2,718,645   2,641,623   2,624,680   2,575,135 
Securities and other (2)  627,162   648,185   661,848   683,939   732,925 
Total earning assets  3,352,027   3,366,830   3,303,471   3,308,619   3,308,060 
Cash and due from banks  128,587   114,232   57,751   67,642   62,999 
Allowance for loan losses  (17,028)  (15,678)  (15,242)  (15,657)  (14,965)
Goodwill and other intangible assets  127,508   127,751   128,014   114,537   107,058 
Other assets  223,316   213,986   187,765   179,512   178,804 
Total assets $3,814,410  $3,807,121  $3,661,759  $3,654,653  $3,641,956 
                     
Liabilities and shareholders' equity                    
NOW $677,706  $611,860  $570,127  $551,335  $487,506 
Savings  488,508   450,621   410,931   378,997   359,242 
Money market  396,351   411,232   373,650   379,361   338,013 
Time deposits  777,424   776,042   892,654   918,528   947,949 
Total interest bearing deposits  2,339,989   2,249,755   2,247,362   2,228,221   2,132,710 
Borrowings  481,687   612,538   556,824   571,936   708,222 
Total interest-bearing liabilities  2,821,676   2,862,293   2,804,186   2,800,157   2,840,932 
Non-interest-bearing demand deposits  507,844   472,688   406,951   418,324   368,100 
Other liabilities  78,072   66,302   44,343   40,136   37,975 
Total liabilities  3,407,592   3,401,283   3,255,480   3,258,617   3,247,007 
                     
Total shareholders' equity  406,818   405,838   406,279   396,036   394,949 
                     
Total liabilities and shareholders' equity $3,814,410  $3,807,121  $3,661,759  $3,654,653  $3,641,956 
                     

  1. Total loans include non-accruing loans.
  2. Average balances for securities available-for-sale are based on amortized cost.

BAR HARBOR BANKSHARES
ASSET QUALITY ANALYSIS - UNAUDITED

  At or for the Quarters Ended 
  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
(in thousands) 2020  2020  2020  2019  2019 
NON-PERFORMING ASSETS               
Non-accruing loans:               
Commercial real estate $4,714  $3,981  $2,227  $3,489  $8,519 
Commercial installment  1,820   1,790   1,996   1,836   2,077 
Residential real estate  7,154   7,194   5,089   5,335   5,340 
Consumer installment  720   1,023   744   890   743 
Total non-accruing loans  14,408   13,988   10,056   11,550   16,679 
Other real estate owned  1,983   2,318   2,205   2,236   2,455 
Total non-performing assets $16,391  $16,306  $12,261  $13,786  $19,134 
                     
Total non-accruing loans/total loans  0.53%  0.51%  0.38%  0.44%  0.65%
Total non-performing assets/total assets  0.42   0.43   0.33   0.38   0.53 
                     
PROVISION AND ALLOWANCE FOR LOAN LOSSES                    
Balance at beginning of period $16,509  $15,297  $15,353  $15,353  $14,572 
Charged-off loans  (439)  (220)  (1,211)  (603)  (215)
Recoveries on charged-off loans  37   78   44   65   103 
Net loans charged-off  (402)  (142)  (1,167)  (538)  (112)
Provision for loan losses  1,800   1,354   1,111   538   893 
Balance at end of period $17,907  $16,509  $15,297  $15,353  $15,353 
                     
Allowance for loan losses/total loans  0.66%  0.60%  0.58%  0.58%  0.60%
Allowance for loan losses/non-accruing loans  124   118   152   133   92 
                     
NET LOAN CHARGE-OFFS                    
Commercial real estate $(252) $71  $(846) $(92) $1 
Commercial installment  (10)  (155)  (170)  (331)  62 
Residential real estate  1   (20)  (1)  (16)  (124)
Consumer installment  (141)  (38)  (150)  (99)  (51)
Total, net $(402) $(142) $(1,167) $(538) $(112)
                     
Net charge-offs (QTD annualized)/average loans  0.06%  0.02%  0.18%  0.08%  0.02%
Net charge-offs (YTD annualized)/average loans  0.08   0.10   0.18   0.03   0.02 
                     
DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS                    
30-89 Days delinquent  0.16%  0.28%  0.84%  0.74%  0.18%
90+ Days delinquent and still accruing  0.08   0.04   0.08   0.01   0.03 
Total accruing delinquent loans  0.24   0.32   0.92   0.75   0.21 
Non-accruing loans  0.53   0.51   0.38   0.44   0.65 
Total delinquent and non-accruing loans  0.77%  0.83%  1.30%  1.19%  0.86%
                     

BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED

   At or for the Quarters Ended 
   Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
(in thousands)  2020  2020  2020  2019  2019 
Net income  $8,402  $8,481  $7,721  $4,207  $5,015 
Plus (less):                     
Gain on sale of securities, net   -   (1,351)  (135)  (80)  (157)
(Gain) loss on sale of premises and equipment, net   -   (2)  92   (3)  - 
Loss on other real estate owned   335   -   31   20   146 
Loss on debt extinguishment   -   1,351   -   1,096   - 
Acquisition, conversion and other expenses   691   158   103   4,998   3,039 
Income tax expense (1)   (245)  (37)  (22)  (1,440)  (720)
Total core earnings (2)(A) $9,183  $8,600  $7,790  $8,798  $7,323 
                      
Net interest income(B) $24,665  $24,590  $24,563  $24,104  $22,445 
Plus: Non-interest income   10,102   9,710   8,421   7,806   7,643 
Total Revenue   34,767   34,300   32,984   31,910   30,088 
Adj: Gain on sale of securities, net   -   (1,351)  (135)  (80)  (157)
Total core revenue (2)(C) $34,767  $32,949  $32,849  $31,830  $29,931 
                      
Total non-interest expense   22,419   22,266   22,359   26,803   23,400 
Less: Gain (loss) on sale of premises and equipment, net   -   2   (92)  3   - 
Less: Loss on other real estate owned   (335)  -   (31)  (20)  (146)
Less: Loss on debt extinguishment   -   (1,351)  -   (1,096)  - 
Less: Acquisition, conversion and other expenses   (691)  (158)  (103)  (4,998)  (3,039)
Core non-interest expense (2)(D) $21,393  $20,759  $22,133  $20,692  $20,215 
                      
(in millions)                     
Total average earning assets(E) $3,352  $3,367  $3,306  $3,309  $3,308 
Total average assets(F)  3,814   3,807   3,662   3,655   3,642 
Total average shareholders' equity(G)  407   406   406   396   395 
Total average tangible shareholders' equity (2) (3)(H)  279   278   278   281   288 
Total tangible shareholders' equity, period-end (2) (3)(I)  277   277   276   269   287 
Total tangible assets, period-end (2) (3)(J)  3,732   3,653   3,549   3,542   3,506 
                      
(in thousands)                     
Total common shares outstanding, period-end(K)  14,929   15,214   15,587   15,558   15,549 
Average diluted shares outstanding(L)  15,103   15,441   15,593   15,602   15,581 
                      
Core earnings per share, diluted (2)(A/L) $0.61  $0.56  $0.50  $0.56  $0.47 
Tangible book value per share, period-end (2)(I/K)  18.56   18.18   17.70   17.30   18.49 
Securities adjustment, net of tax (1) (4)(M)  11,681   11,412   9,560   5,549   8,002 
Tangible book value per share, excluding securities adjustment (2)(I+M)/K  17.78   17.43   17.09   16.94   17.98 
Total tangible shareholders' equity/total tangible assets (2)(I/J)  7.42   7.57   7.77   7.60   8.20 
                      

BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED

     At or for the Quarters Ended 
     Sep 30,  Jun 30,  Mar 31,  Dec 31,  Sep 30, 
(in thousands)    2020  2020  2020  2019  2019 
Performance ratios (5)                  
GAAP return on assets     0.88%  0.90%  0.85%  0.46%  0.55%
Core return on assets (2)  (A/F)   0.96   0.91   0.86   0.96   0.80 
GAAP return on equity      8.22   8.40   7.64   4.21   5.04 
Core return on equity (2)  (A/G)   8.98   8.52   7.71   8.81   7.36 
Core return on tangible equity (2) (6)  (A+Q)/H   13.36   12.72   11.54   12.66   10.31 
Efficiency ratio (2) (7) (D-O-Q)/(C+N)   59.47   60.67   64.82   62.56   65.02 
Net interest margin  (B+P)/E   2.98   3.00   3.06   2.95   2.75 
                         
Supplementary data (in thousands)                        
Taxable equivalent adjustment for efficiency ratio (N)  $570  $646  $719  $674  $658 
Franchise taxes included in non-interest expense (O)   121   120   119   119   119 
Tax equivalent adjustment for net interest margin (P)   416   490   551   516   503 
Intangible amortization (Q)   256   256   256   240   207 
                        
  1. Assumes a marginal tax rate of 23.87% for the first three quarters of 2020 and the fourth quarter of 2019 and 23.78% in the first three quarters of 2019.
  2. Non-GAAP financial measure.
  3. Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end.
  4. Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity.
  5. All performance ratios are based on average balance sheet amounts, where applicable.
  6. Adjusted return on tangible equity is computed by taking core earnings divided by shareholders' equity less the tax-effected amortization of intangible assets, assuming a marginal rate of 23.87% for the first three quarters of 2020 and the fourth quarter of 2019, and 23.78% in the first three quarters of 2019.
  7. Efficiency ratio is computed by dividing core non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis.

SOURCE: Bar Harbor Bank and Trust



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