Bar Harbor Bankshares Reports Record Fourth Quarter Revenues
*BAR HARBOR, MAINE / ACCESSWIRE / January 28, 2020 /* Bar Harbor Bankshares (NYSE American: *BHB)* reported fourth quarter 2019 net income of $4.2 million, or $0.27 per share, compared to $5.0 million, or $0.32 per share, in the prior quarter and $7.6 million or $0.49 per share in the fourth quarter of 2018. The non-GAAP measure of core earnings in the fourth quarter 2019 increased 20% to $8.8 million, or $0.56 per share, from $7.3 million, or $0.47 per share in the prior quarter and decreased from $9.2 million, or $0.59 per share in the fourth quarter of 2018. On October 25, 2019, the Company completed the previously announced acquisition of eight branches within Central Maine and closed five branches effective December 31, 2019, as part of its strategic review. During the quarter the Company recorded non-core charges totaling $0.29 per share after-tax, primarily related to the one-time costs associated with the acquisition and balance sheet optimization initiatives that were part of the strategic review.
*FOURTH QUARTER FINANCIAL HIGHLIGHTS *(compared to prior quarter, unless otherwise noted):
· 98% loan to deposit ratio, improved from 103%
· 6% increase in total revenue to $31.9 million
· 20 basis point expansion in net interest margin to 2.95%
· 0.44% non-performing loans to total loans, down from 0.65%
· Called higher cost subordinated debt and replaced with upsized issuance
President and Chief Executive Officer, Curtis C. Simard stated, "We finished the year with what I can only classify as judicious and efficient execution on all fronts. This includes repositioning the Company's balance sheet, expanding our footprint within Central Maine and affirming our profitability strategies. Our strong performance and the recalibration of the balance sheet increased core return on assets to 0.96% for the quarter. In the fourth quarter, we achieved record revenues from higher interest and fee income, as well as lower cost of funds resulting from the expansion of our franchise."
Mr. Simard continued, "We completed several initiatives in the fourth quarter that reduced our cost of funds while improving interest rate risk and overall capital positions. Following the completion of the Central Maine branch acquisition, the Company used the net deposit proceeds to extinguish approximately $140 million of higher cost FHLB borrowings. Shortly thereafter, given the change in our balance sheet profile and funding needs, we terminated $90 million in interest rate caps related to rolling three-month FHLB borrowings. The losses from the caps were reclassified from other comprehensive income to earnings, with no further dilution to equity. We also completed a $40 million subordinated debt issuance which replaced $22 million of higher cost subordinated notes called earlier in the quarter. The offering was more than two times oversubscribed, driven by one of the most effective executions for 2019, and presented an opportunity to upsize the deal. It's this level of interest in our Company and belief in our long-term strategy that will allow us to continue building franchise value for our shareholders."
Mr. Simard went on to say, "Our loan origination teams continue to adhere to our disciplined underwriting practices and selectively pursue those opportunities that are accretive to our profitability metrics. This resulted in originations that kept relative pace with loan payoffs as we remixed the balance sheet and curtailed growth in lower yielding assets. In addition we exited certain non-performing loans further improving our non-performing loans to total loans to 0.44%. Implementation of all of these strategies, along with additional investment remixes that started in the third quarter resulted in net interest margin expanding 20 basis points in the fourth quarter, despite the current rate environment."
Mr. Simard concluded, "Our efforts these past few quarters have positioned us well for 2020 and will move us towards our stated goals of higher quality earnings and capital growth with continued focus on our customers and relationships which are driving current momentum."
*FINANCIAL CONDITION*
Total assets increased in the fourth quarter 2019 by $56.7 million to $3.7 billion primarily due to loans, goodwill and other intangible assets recorded from the branch acquisition. Securities available for sale declined $12.4 million as the Company both de-levered and remixed the investment portfolio as part of the strategic review. Loans in the fourth quarter grew by $63.8 million as acquired balances of $100.8 million were recorded and principally offset by run-off in jumbo residential loans of $14.2 million and two commercial relationships of $17.2 million that paid-off during the quarter.* *Mortgage growth on-balance sheet was curtailed as the secondary market platform was leveraged for fee income given the current rate environment. Non-maturity deposits increased by $172.2 million in the quarter including acquired balances, net of any year-end seasonal dips in demand deposit balances. Cash proceeds received from the acquisition were used to pay off approximately $140.0 million of higher cost FHLB borrowings during the quarter. Longer term subordinated borrowings increased by $17.0 million as existing notes at higher rates were called and opportunistically replaced with an upsized $40.0 million private placement issued in November 2019. The loan to deposit ratio improved to 98% in the fourth quarter 2019 compared to 103% in the prior quarter as a result of the branch acquisition.
Non-accruing loans in the fourth quarter 2019 decreased $5.1 million primarily due to one commercial real estate relationship that was settled with a $530 thousand recovery. The settlement also contributed to the improvement of the non-performing loans to total loans ratio to 0.44% from 0.65% in the prior quarter. The increase in 30-day past due accounts for the quarter is attributable to the payment schedules and calendar dates.
The Company's book value per share was $25.48 at year-end 2019 compared with $25.37 at the end of the third quarter 2019 and $23.87 at year-end 2018. Tangible book value per share was $17.30 compared to $18.49 at the end of the third quarter and $16.94 at year-end 2018, with the decrease during the quarter reflecting the goodwill and intangibles recorded from the branch acquisition. Excluding the impact from the acquisition, tangible book value per share increased to $18.62; an increase of 10% annualized from the third quarter 2019 and for the year.
*RESULTS OF OPERATIONS*
Net income in the fourth quarter 2019 was $4.2 million, or $0.27 per share, compared to $5.0 million, or $0.32 per share, in the prior quarter and $7.6 million, or $0.49 per share in the fourth quarter 2018. The non-GAAP measure of core earnings in the fourth quarter 2019 was $8.8 million or $0.56 per share, up 20% from $7.3 million or $0.47 per share in the previous quarter and down from $9.2 million or $0.59 per share in the fourth quarter 2018. Results in the fourth quarter included operations from the branch acquisition as of the October 25, 2019 effective date. Total revenue comprising of net interest income and total non-interest income increased to $31.9 million in the fourth quarter 2019 as compared to $30.1 million in the previous quarter and $29.7 million in the fourth quarter of 2018. Net interest income grew $1.7 million during the quarter primarily as a result of leveraging the low cost of deposits acquired to repay higher cost of funds. Net interest margin in the fourth quarter 2019 expanded 20 basis points due to the strategic initiatives previously discussed. Execution of these strategies improved cost of borrowings by 32 basis points on a quarter-over-quarter basis.
Non-interest income was $7.8 million compared to $7.6 million for the third quarter 2019 and $7.4 million in the fourth quarter of 2018. The increase in the quarter was driven by trust and investment management fee income and customer services fees associated from the branch acquisition.
Non-interest expense increased to $26.8 million in the fourth quarter 2019 from $23.4 million in the prior quarter and $20.1 million in the fourth quarter of 2018. The increase in the quarter is primarily a result of a $700 thousand increase in occupancy costs related to the acquired properties and other costs associated with the acquisition and strategic review. The $3.2 million loss associated with the termination of the interest rate caps was reclassified from shareholders' equity and included in acquisition, conversion and other expenses. The prior quarter included $2.2 million of branch optimization costs.
*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 heading "FOURTH QUARTER FINANCIAL HIGHLIGHTS" 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, 2018. 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*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
*PER SHARE DATA*
Net earnings, diluted
$
0.27
$
0.32
$
0.39
$
0.47
$
0.49
Core earnings, diluted ^(1) (2)
0.56
0.47
0.41
0.47
0.59
Total book value
25.48
25.37
25.13
24.54
23.87
Tangible book value ^(2)
17.30
18.49
18.23
17.63
16.94
Market price at period end
25.39
24.93
26.59
25.87
22.43
Dividends
0.22
0.22
0.22
0.20
0.20
*PERFORMANCE RATIOS *^(3)
Return on assets
0.46
%
0.55
%
0.67
%
0.83
%
0.85
%
Core return on assets ^(1) (2)
0.96
0.80
0.70
0.83
1.03
Return on equity
4.21
5.04
6.33
7.83
8.31
Core return on equity ^(1) (2)
8.81
7.36
6.57
7.83
10.01
Core return on tangible equity ^(1) (2)
12.66
10.31
9.30
11.19
14.46
Net interest margin, fully taxable equivalent (FTE) ^(2) (4)
2.95
2.75
2.65
2.77
2.78
Net interest margin (FTE), excluding purchased loan accretion ^(2) (4)
2.88
2.65
2.56
2.67
2.70
Efficiency ratio ^(2)
62.56
65.02
68.48
63.94
59.91
*ORGANIC GROWTH (Year-to-date, annualized) *^(2) (6)
Total commercial loans
6.0
%
10.5
%
10.1
%
(3.3
%)
1.4
%
Total loans
2.0
4.7
7.1
5.9
0.2
Total deposits
(1.8
)
0.6
(0.1
)
(2.8
)
5.6
*FINANCIAL DATA (In millions)*
Total assets
$
3,669
$
3,612
$
3,688
$
3,629
$
3,608
Total earning assets ^(5)
3,336
3,270
3,355
3,312
3,263
Total investments
684
703
784
782
761
Total loans
2,641
2,577
2,578
2,527
2,490
Allowance for loan losses
15
15
15
14
14
Total goodwill and intangible assets
127
107
107
107
108
Total deposits
2,696
2,494
2,481
2,466
2,483
Total shareholders' equity
396
394
391
381
371
Net income
4
5
6
7
8
Core earnings ^(1) (2)
9
7
6
7
9
*ASSET QUALITY AND CONDITION RATIOS*
Net charge-offs (current quarter annualized)/average loans
0.08
%
0.02
%
-
%
0.03
%
0.03
%
Allowance for loan losses/total loans
0.58
0.60
0.57
0.55
0.56
Loans/deposits
98
103
104
102
100
Shareholders' equity to total assets
10.80
10.92
10.59
10.50
10.27
Tangible shareholders' equity to tangible assets
7.60
8.20
7.92
7.77
7.51
_________________
(1) Core measurements are non-GAAP financial measures that are 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 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*
*(in thousands)*
*Dec 31, 2019*
*Sep 30, 2019*
*Jun 30, 2019*
*Mar 31, 2019*
*Dec 31, 2018*
*Assets*
Cash and due from banks
$
37,261
$
50,032
$
42,657
$
37,504
$
35,208
Interest-bearing deposits with the Federal Reserve Bank
19,649
21,561
17,203
16,599
63,546
Total cash and cash equivalents
56,910
71,593
59,860
54,103
98,754
Securities available for sale, at fair value
663,230
675,675
748,560
747,235
725,837
Federal Home Loan Bank stock
20,679
27,469
35,220
35,107
35,659
Total securities
683,909
703,144
783,780
782,342
761,496
Commercial real estate
930,661
923,773
881,479
821,567
826,699
Commercial and industrial
423,291
402,706
416,725
409,937
404,870
Residential real estate
1,151,857
1,143,452
1,167,759
1,184,053
1,144,698
Consumer
135,283
107,375
112,275
111,402
113,960
Total loans
2,641,092
2,577,306
2,578,238
2,526,959
2,490,227
Less: Allowance for loan losses
(15,353
)
(15,353
)
(14,572
)
(13,997
)
(13,866
)
Net loans
2,625,739
2,561,953
2,563,666
2,512,962
2,476,361
Premises and equipment, net
51,205
47,644
50,230
49,661
48,804
Other real estate owned
2,236
2,455
2,351
2,351
2,351
Goodwill
118,649
100,085
100,085
100,085
100,085
Other intangible assets
8,641
6,879
7,072
7,266
7,459
Cash surrender value of bank-owned life insurance
75,863
75,368
74,871
74,352
73,810
Deferred tax asset, net
3,865
4,988
5,649
7,632
9,514
Other assets
42,111
38,365
40,071
38,441
29,853
Total assets
$
3,669,128
$
3,612,474
$
3,687,635
$
3,629,195
$
3,608,487
*Liabilities and shareholders' equity*
Demand and other non-interest bearing deposits
$
414,534
$
380,707
$
354,125
$
342,030
$
370,889
NOW deposits
575,809
490,315
472,576
470,277
484,717
Savings deposits
388,683
360,570
352,657
346,813
358,888
Money market deposits
384,090
359,328
305,506
349,833
335,951
Time deposits
932,635
902,665
996,512
956,818
932,793
Total deposits
2,695,751
2,493,585
2,481,376
2,465,771
2,483,238
Senior borrowings
471,396
641,819
733,084
703,283
680,823
Subordinated borrowings
59,920
42,928
42,943
42,958
42,973
Total borrowings
531,316
684,747
776,027
746,241
723,796
Other liabilities
45,654
39,683
39,670
36,160
30,874
Total liabilities
3,272,721
3,218,015
3,297,073
3,248,172
3,237,908
Total common shareholders' equity
396,407
394,459
390,562
381,023
370,579
Total liabilities and shareholders' equity
$
3,669,128
$
3,612,474
$
3,687,635
$
3,629,195
$
3,608,487
*Net shares outstanding*
15,558
15,549
15,544
15,524
15,523
*BAR HARBOR BANKSHARES*
*CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED*
*LOAN ANALYSIS*
*Organic Annualized Growth %*
*(in thousands)*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
*Acquired^(1)*
*Quarter End*
*Year to Date*
Commercial real estate
$
930,661
$
923,773
$
881,479
$
821,567
$
826,699
$
25,054
(7.9
)%
9.5
%
Commercial and industrial
318,988
301,590
312,029
305,185
309,544
19,739
(3.1
)
(3.3
)
Total commercial loans
1,249,649
1,225,363
1,193,508
1,126,752
1,136,243
44,793
(6.7
)
6.0
Residential real estate
1,151,857
1,143,452
1,167,759
1,184,053
1,144,698
23,716
(5.4
)
(1.4
)
Consumer
135,283
107,375
112,275
111,402
113,960
29,530
(6.0
)
(7.2
)
Tax exempt and other
104,303
101,116
104,696
104,752
95,326
2,753
1.7
6.5
Total loans
$
2,641,092
$
2,577,306
$
2,578,238
$
2,526,959
$
2,490,227
$
100,792
(5.7
)%
2.0
%
(1) Acquired loans from eight branches purchased from People's United Bank, National Association as of October 25, 2019.
*DEPOSIT ANALYSIS*
*Organic Annualized Growth %*
*(in thousands)*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
*Acquired^(1)*
*Quarter End*
*Year to Date*
Demand
$
414,534
$
380,707
$
354,125
$
342,030
$
370,889
$
51,933
(19.0
)%
(2.2
)%
NOW
575,809
490,315
472,576
470,277
484,717
85,980
(0.4
)
1.1
Savings
388,683
360,570
352,657
346,813
358,888
25,841
2.5
1.1
Money market
384,090
359,328
305,506
349,833
335,951
26,399
(1.8
)
6.5
Total non-maturity deposits
1,763,116
1,590,920
1,484,864
1,508,953
1,550,445
190,153
(4.5
)
1.5
Total time deposits
932,635
902,665
996,512
956,818
932,793
68,240
(17.0
)
(7.3
)
Total deposits
$
2,695,751
$
2,493,585
$
2,481,376
$
2,465,771
$
2,483,238
$
258,393
(9.0
)%
(1.8
)%
(1) Acquired deposits from eight branches purchased from People's United Bank, National Association as of October 25, 2019.
*BAR HARBOR BANKSHARES*
*CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED*
*Three Months Ended
December 31,*
*Twelve Months Ended
December 31,*
*(in thousands, except per share data)*
*2019*
*2018*
*2019*
*2018*
*Interest and dividend income*
Loans
$
28,361
$
26,743
$
111,042
$
104,015
Securities and other
5,756
6,029
24,349
23,436
Total interest and dividend income
34,117
32,772
135,391
127,451
*Interest expense*
Deposits
6,698
5,653
27,034
19,521
Borrowings
3,315
4,855
18,547
17,047
Total interest expense
10,013
10,508
45,581
36,568
*Net interest income*
24,104
22,264
89,810
90,883
Provision for loan losses
538
572
2,317
2,780
Net interest income after provision for loan losses
23,566
21,692
87,493
88,103
*Non-interest income*
Trust and investment management fee income
3,227
2,949
12,063
11,985
Customer service fees
2,791
2,477
10,127
9,538
Gain (loss) on sales of securities, net
80
(924
)
237
(924
)
Bank-owned life insurance income
495
493
2,053
1,821
Customer derivative income
475
315
2,028
860
Other income
738
2,140
2,561
4,655
Total non-interest income
7,806
7,450
29,069
27,935
*Non-interest expense*
Salaries and employee benefits
11,432
9,269
45,000
40,964
Occupancy and equipment
4,113
3,022
14,214
12,386
(Loss) gain on sales of premises and equipment, net
(3
)
-
18
-
Outside services
540
811
1,818
2,408
Professional services
370
458
2,191
1,474
Communication
114
103
821
804
Marketing
453
536
1,872
1,743
Amortization of intangible assets
240
207
861
828
Loss on debt extinguishment
1,096
-
1,096
-
Acquisition, conversion and other expenses
4,998
1,109
8,317
1,728
Other expenses
3,450
4,581
13,525
13,204
Total non-interest expense
26,803
20,096
89,733
75,539
Income before income taxes
4,569
9,046
26,829
40,499
Income tax expense
362
1,426
4,209
7,562
*Net income*
$
4,207
$
7,620
$
22,620
$
32,937
*Earnings per share:*
Basic
$
0.27
$
0.49
$
1.46
$
2.13
Diluted
0.27
0.49
1.45
2.12
*Weighted average shares outstanding:*
Basic
15,554
15,516
15,541
15,488
Diluted
15,602
15,574
15,587
15,564
*BAR HARBOR BANKSHARES*
*CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED*
*(in thousands, except per share data)*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
*Interest and dividend income*
Loans
$
28,361
$
28,157
$
27,660
$
26,864
$
26,743
Securities and other
5,756
6,105
6,125
6,363
6,029
Total interest and dividend income
34,117
34,262
33,785
33,227
32,772
*Interest expense*
Deposits
6,698
7,143
6,886
6,307
5,653
Borrowings
3,315
4,674
5,403
5,155
4,855
Total interest expense
10,013
11,817
12,289
11,462
10,508
*Net interest income*
24,104
22,445
21,496
21,765
22,264
Provision for loan losses
538
893
562
324
572
Net interest income after provision for loan losses
23,566
21,552
20,934
21,441
21,692
*Non-interest income*
Trust and investment management fee income
3,227
3,013
3,066
2,757
2,949
Customer service fees
2,791
2,553
2,618
2,165
2,477
Gain (loss) on sales of securities, net
80
157
-
-
(924
)
Bank-owned life insurance income
495
497
519
542
493
Customer derivative income
475
828
696
29
315
Other income
738
595
554
674
2,140
Total non-interest income
7,806
7,643
7,453
6,167
7,450
*Non-interest expense*
Salaries and employee benefits
11,432
11,364
11,685
10,519
9,269
Occupancy and equipment
4,113
3,415
3,300
3,386
3,022
(Loss) gain on sales of premises and equipment, net
(3
)
-
21
-
-
Outside services
540
424
443
411
811
Professional services
370
707
570
544
458
Communication
114
189
283
235
103
Marketing
453
613
511
295
536
Amortization of intangible assets
240
207
207
207
207
Loss on debt extinguishment
1,096
-
-
-
-
Acquisition, conversion and other expenses
4,998
3,039
280
-
1,109
Other expenses
3,450
3,442
3,606
3,027
4,581
Total non-interest expense
26,803
23,400
20,906
18,624
20,096
Income before income taxes
4,569
5,795
7,481
8,984
9,046
Income tax expense
362
780
1,364
1,703
1,426
*Net income*
$
4,207
$
5,015
$
6,117
$
7,281
$
7,620
*Earnings per share:*
Basic
$
0.27
$
0.32
$
0.39
$
0.47
$
0.49
Diluted
0.27
0.32
0.39
0.47
0.49
*Weighted average shares outstanding:*
Basic
15,554
15,547
15,538
15,523
15,516
Diluted
15,602
15,581
15,586
15,587
15,574
*BAR HARBOR BANKSHARES*
*AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED*
*Quarters Ended*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
*Earning assets*
Commercial real estate
4.69
%
4.74
%
4.74
%
4.78
%
4.71
%
Commercial and industrial
4.58
4.78
4.75
4.79
4.61
Residential
3.89
3.88
3.93
3.94
3.83
Consumer
4.84
5.13
5.21
5.25
5.07
Total loans
4.33
4.38
4.39
4.42
4.31
Securities and other
3.49
3.44
3.29
3.47
3.28
Total earning assets
4.15
%
4.17
%
4.13
%
4.19
%
4.07
%
*Funding liabilities*
NOW
0.44
%
0.51
%
0.49
%
0.51
%
0.50
%
Savings
0.20
0.21
0.21
0.19
0.18
Money market
1.17
1.37
1.44
1.38
0.93
Time deposits
2.06
2.16
2.11
2.00
1.85
Total interest-bearing deposits
1.19
1.33
1.32
1.25
1.12
Borrowings
2.30
2.62
2.74
2.74
2.53
Total interest-bearing liabilities
1.42
%
1.65
%
1.71
%
1.66
%
1.50
%
Net interest spread
2.74
2.52
2.42
2.53
2.57
Net interest margin
2.95
2.75
2.65
2.77
2.78
*BAR HARBOR BANKSHARES*
*AVERAGE BALANCES - UNAUDITED*
*Quarters Ended*
*(in thousands)*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
*Assets*
Commercial real estate
$
928,445
$
900,568
$
846,921
$
825,596
$
836,813
Commercial and industrial
412,595
410,453
416,000
405,107
393,396
Residential real estate
1,156,215
1,154,552
1,176,583
1,143,862
1,137,493
Consumer
127,425
109,562
111,641
113,060
114,960
Total loans ^(1)
2,624,680
2,575,135
2,551,145
2,487,625
2,482,662
Securities and other^ (2)
683,939
732,925
779,072
777,458
762,901
Total earning assets
3,308,619
3,308,060
3,330,217
3,265,083
3,245,563
Cash and due from banks
67,642
62,999
52,728
50,298
68,904
Allowance for loan losses
(15,657
)
(14,965
)
(14,459
)
(14,119
)
(13,922
)
Goodwill and other intangible assets
114,537
107,058
107,252
107,446
107,657
Other assets
179,512
178,804
170,340
152,332
138,074
Total assets
$
3,654,653
$
3,641,956
$
3,646,078
$
3,561,040
$
3,546,276
*Liabilities and shareholders' equity*
NOW
$
551,335
$
487,506
$
459,572
$
468,392
$
475,449
Savings
378,997
359,242
352,733
346,707
346,905
Money market
379,361
338,013
338,095
335,882
272,612
Time deposits
918,528
947,949
935,616
894,160
914,674
Total interest bearing deposits
2,228,221
2,132,710
2,086,016
2,045,141
2,009,640
Borrowings
571,936
708,222
789,953
761,885
761,781
Total interest-bearing liabilities
2,800,157
2,840,932
2,875,969
2,807,026
2,771,421
Non-interest-bearing demand deposits
418,324
368,100
349,322
351,362
384,636
Other liabilities
40,136
37,975
33,107
25,520
26,569
Total liabilities
3,258,617
3,247,007
3,258,398
3,183,908
3,182,626
Total shareholders' equity
396,036
394,949
387,680
377,132
363,650
Total liabilities and shareholders' equity
$
3,654,653
$
3,641,956
$
3,646,078
$
3,561,040
$
3,546,276
_____________________________________
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*
*(in thousands)*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
*NON-PERFORMING ASSETS*
Non-accruing loans:
Commercial real estate
$
3,489
$
8,519
$
7,048
$
7,516
$
8,156
Commercial installment
1,836
2,077
2,081
2,192
2,331
Residential real estate
5,335
5,340
5,965
6,326
7,210
Consumer installment
890
743
861
565
538
Total non-accruing loans
11,550
16,679
15,955
16,599
18,235
Other real estate owned
2,236
2,455
2,351
2,351
2,351
Total non-performing assets
$
13,786
$
19,134
$
18,306
$
18,950
$
20,586
Total non-accruing loans/total loans
0.44
%
0.65
%
0.62
%
0.66
%
0.73
%
Total non-performing assets/total assets
0.38
0.53
0.50
0.52
0.57
*PROVISION AND ALLOWANCE FOR LOAN LOSSES*
Balance at beginning of period
$
15,353
$
14,572
$
13,997
$
13,866
$
13,487
Charged-off loans
(603
)
(215
)
(104
)
(231
)
(631
)
Recoveries on charged-off loans
65
103
117
38
438
Net loans charged-off
(538
)
(112
)
13
(193
)
(193
)
Provision for loan losses
538
893
562
324
572
Balance at end of period
$
15,353
$
15,353
$
14,572
$
13,997
$
13,866
Allowance for loan losses/total loans
0.58
%
0.60
%
0.57
%
0.55
%
0.56
%
Allowance for loan losses/non-accruing loans
133
92
91
84
76
*NET LOAN CHARGE-OFFS*
Commercial real estate
$
(92
)
$
1
$
114
$
(41
)
$
(25
)
Commercial installment
(331
)
62
(12
)
(15
)
53
Residential real estate
(16
)
(124
)
(65
)
(86
)
(31
)
Consumer installment
(99
)
(51
)
(24
)
(51
)
(190
)
Total, net
$
(538
)
$
(112
)
$
13
$
(193
)
$
(193
)
Net charge-offs (QTD annualized)/average loans
0.08
%
0.02
%
0.03
%
0.03
%
0.03
%
Net charge-offs (YTD annualized)/average loans
0.03
0.02
0.01
0.03
0.05
*DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS*
30-89 Days delinquent
0.74
%
0.18
%
0.29
%
0.21
%
0.38
%
90+ Days delinquent and still accruing
0.01
0.03
-
-
0.01
Total accruing delinquent loans
0.75
0.21
0.29
0.21
0.39
Non-accruing loans
0.44
0.65
0.62
0.66
0.73
Total delinquent and non-accruing loans
1.19
%
0.86
%
0.91
%
0.87
%
1.12
%
*BAR HARBOR BANKSHARES*
*RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED*
*At or for the Quarters Ended*
*(in thousands)*
*Dec 31,
2019*
*Sep 30,
2019*
*Jun 30,
2019*
*Mar 31,
2019*
*Dec 31,
2018*
Net income
$
4,207
$
5,015
$
6,117
$
7,281
$
7,620
Plus (less):
(Gain) loss on sale of securities, net
(80
)
(157
)
-
-
924
(Gain) loss on sale of premises and equipment, net
(3
)
-
21
-
-
Loss on other real estate owned
20
146
-
-
5
Loss on debt extinguishment
1,096
-
-
-
-
Acquisition, restructuring and other expenses
4,998
3,039
280
-
1,109
Income tax expense ^(1)
(1,440
)
(720
)
(72
)
-
(485
)
Total core earnings ^(2)
(A)
$
8,798
$
7,323
$
6,346
$
7,281
$
9,173
Net interest income
(B)
$
24,104
$
22,445
$
21,496
$
21,765
$
22,264
Plus: Non-interest income
7,806
7,643
7,453
6,167
7,450
Total Revenue
31,910
30,088
28,949
27,932
29,714
Adj: (Gain) loss on sale of securities, net
(80
)
(157
)
-
-
924
Total core revenue^ (2)
(C)
$
31,830
$
29,931
$
28,949
$
27,932
$
30,638
Total non-interest expense
26,803
23,400
20,906
18,624
20,096
Less: Gain (loss) on sale of premises and equipment, net
3
-
(21
)
-
-
Less: Loss on other real estate owned
(20
)
(146
)
-
-
(5
)
Less: Loss on debt extinguishment
(1,096
)
-
-
-
-
Less: Acquisition, conversion and other expenses
(4,998
)
(3,039
)
(280
)
-
(1,109
)
Core non-interest expense ^(2)
(D)
$
20,692
$
20,215
$
20,605
$
18,624
$
18,982
*(in millions)*
Total average earning assets
(E)
$
3,309
$
3,308
$
3,330
$
3,265
$
3,246
Total average assets
(F)
3,655
3,642
3,646
3,561
3,546
Total average shareholders' equity
(G)
396
395
388
377
364
Total average tangible shareholders' equity ^(2) (3)
(H)
281
288
280
270
256
Total tangible shareholders' equity, period-end ^(2) (3)
(I)
269
287
283
274
263
Total tangible assets, period-end ^(2) (3)
(J)
3,542
3,506
3,580
3,522
3,501
*(in thousands)*
Total common shares outstanding, period-end
(K)
15,558
15,549
15,544
15,524
15,523
Average diluted shares outstanding
(L)
15,602
15,581
15,586
15,587
15,574
Core earnings per share, diluted ^(2)
(A/L)
$
0.56
$
0.47
$
0.41
$
0.47
$
0.59
Tangible book value per share, period-end ^(2)
(I/K)
17.30
18.49
18.23
17.63
16.94
Securities adjustment, net of tax ^(1) (4)
(M)
5,549
8,002
5,550
(1,842
)
(8,663
)
Tangible book value per share, excluding securities adjustment ^(2)
(I+M)/K
16.94
17.98
17.88
17.75
17.50
Total tangible shareholders' equity/total tangible assets ^(2)
(I/J)
7.60
8.20
7.92
7.77
7.51
*Performance ratios* ^(5)
GAAP return on assets
0.46
%
0.55
%
0.67
%
0.83
%
0.85
%
Core return on assets ^(2)
(A/F)
0.96
0.80
0.70
0.83
1.03
GAAP return on equity
4.21
5.04
6.33
7.83
8.31
Core return on equity ^(2)
(A/G)
8.81
7.36
6.57
7.83
10.01
Core return on tangible equity ^(2) (6)
(A+Q)/H
12.66
10.31
9.30
11.19
14.46
Efficiency ratio ^(2) (7)
(D-O-Q)/(C+N)
62.56
65.02
68.48
63.94
59.91
Net interest margin
(B+P)/E
2.95
2.75
2.65
2.77
2.78
*Supplementary data* *(in thousands)*
Taxable equivalent adjustment for efficiency ratio
(N)
$
674
$
658
$
676
$
684
$
633
Franchise taxes included in non-interest expense
(O)
119
119
111
120
39
Tax equivalent adjustment for net interest margin
(P)
516
503
514
515
488
Intangible amortization
(Q)
240
207
207
207
207
_________________
(1) Assumes a marginal tax rate of 23.78% in the first three quarters of 2019 and 23.87% in the fourth quarter 2019. A marginal tax rate of 23.78% was used in the fourth quarter of 2018.
(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 dividing the total core income adjusted for the tax-effected amortization of intangible assets, assuming a marginal rate of 23.78% in the first three quarters of 2019 and 23.87% in the fourth quarter 2019 and 23.78% in the fourth quarter of 2018, by tangible equity.
(7) Efficiency ratio is computed by dividing adjusted non-interest expense by the sum of net interest income on a fully taxable equivalent basis and adjusted non-interest income.
*SOURCE:* Bar Harbor Bankshares
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