Bar Harbor Bankshares Reports Third Quarter Results; Dividend Declared

BAR HARBOR, MAINE / ACCESSWIRE / October 17, 2019 / Bar Harbor Bankshares (NYSE American: BHB or the “Company”) reported third quarter 2019 net income of $5.0 million, or $0.32 diluted earnings per share. Net income in the third quarter of 2018 was $9.0 million, or $0.58 diluted earnings per share. The non-GAAP measure of core earnings in the third quarter 2019 totaled $7.3 million, or $0.47 diluted earnings per share, a 15% increase from the prior quarter. Core earnings per share excludes $0.15 per share of non-core charges related to acquisition and restructuring expenses associated with our previously announced strategic review.

THIRD QUARTER FINANCIAL HIGHLIGHTS (compared to prior quarter):

  • 11% annualized growth in commercial loans
  • 29% annualized growth in non-maturity deposits
  • 10 basis point expansion in net interest margin
  • 3% increase in non-interest income
  • 0.53% non-performing assets to total assets

President and Chief Executive Officer, Curtis C. Simard stated, “We are very excited about the direction our Company is headed. It was a good quarter with improvements across our performance metrics driven by a team focused on the profitability of our operations and initiatives to enhance revenue and create expense efficiencies. We continued to actively manage the balance sheet focusing on core operations and taking advantage of the interest rate environment as we executed a planned deleveraging strategy which resulted in decreasing the securities portfolio by nearly $73.0 million and using the proceeds to pay off higher cost borrowings. This resulted in yields from securities expanding 15 basis points and borrowings costs decreasing 12 basis points compared to the prior quarter. Our commercial team once again delivered another quarter of strong double digit growth across our three state footprint including our loan production office in Portland, Maine, which also contributed to significant customer derivative income. Loan quality continues to be strong with net charge-offs close to zero which is indicative of our disciplined approach to credit quality, risk mitigation, and an effort focused on proven operators with appropriate loan structures. Growth in non-maturity deposits was up during the quarter, 29% on an annualized basis. This is the direct result of the sales culture we’ve been cultivating over the past year under new leadership. All of these efforts in the quarter resulted in a 6% annualized increase to tangible book value per share.”

Mr. Simard further stated, “We completed our strategic review in the third quarter which we announced in the second quarter. This review positions us for improved profitability and judicious deployment of capital, while balancing liquidity and core deposit growth. The results of our strategic review included a branch optimization exercise that evaluated fixed assets, staffing models, and business and operational processes. Towards the end of September we announced our intent to close five branches by year-end and identified other non-branch properties to consolidate across our footprint. In addition we continue to consolidate processes within our wealth management businesses to increase efficiency while improving customer service. These strategic decisions along with the elimination of other redundancies and implemented efficiencies are expected to be accretive to earnings in the first quarter of 2020 thereby allowing a platform for profitable growth with positive operating leverage.”

Mr. Simard further stated, “We are on track to close our branch acquisition this month. Experienced teams from both sides have been working together to ensure a smooth transition of customer accounts and systems. We are excited to welcome our new customers and colleagues as we build our central Maine franchise. While the acquisition will close mid quarter, we do expect it will be accretive for the period.”

Mr. Simard concluded, “From every angle, our teams have embraced our culture and think differently about how we do business, how to serve our customers and how to build and execute strategy. I’m proud of the dedication they’ve shown throughout this process. Just as we have grown as an organization, so too has our brand. Good things happen when we work together with our customers both internally and externally. In summary, the benefits from our current activities along with future initiatives are expected to enhance the intrinsic value of our stock.”

DIVIDEND DECLARED

The Board of Directors voted to declare a cash dividend of $0.22 per share to shareholders of record at the close of business on November 13, 2019, payable on December 13, 2019. This dividend equates to a 3.5% annualized yield based on the $24.93 closing price of the Company’s common stock at the end of the third quarter of 2019.

FINANCIAL CONDITION

Total assets decreased in the third quarter by $75.2 million to $3.6 billion primarily due to the balance sheet deleveraging strategy which decreased the security portfolio by $72.9 million as a result of opportunistic sales and natural run-off. The proceeds were used to pay off higher cost wholesale borrowings. Loans in the third quarter 2019 remained flat at $2.6 billion. The strong double digit growth in commercial loans was offset by a decrease in residential loans as a strategic effort was made to shift more production through the secondary market platform given the overall rate environment and initiatives around profitability. Non-maturity deposit balances increased by $106.1 million or 29% annualized. This growth was led by demand deposit and money market accounts due to new accounts, seasonally high balances, and shifts between time deposits to money market accounts. Growth in demand accounts was 19% from the same quarter 2018. The loan to deposit ratio improved, decreasing to 103% in the third quarter 2019 compared to 104% in prior quarter.

The third quarter 2019 allowance for loan losses to total loans ratio increased to 0.60% from 0.57% in the previous quarter with a coverage ratio to non-accruing loans of 92%. Non-accruing loans increased $724 thousand due primarily to two commercial real estate relationships which were identified through the Bank’s specific reserve process and carry adequate reserves to cover the collateral shortfall. The ratio of non-accruing loans to total loans of 0.65% in the third quarter 2019 was relatively flat compared with the prior quarter of 0.62%.

The Company’s book value per share was $25.37 at the end of the third quarter 2019 compared to $25.13 the end of the second quarter 2019, representing a 4% annualized growth rate. Tangible book value per share (non-GAAP measure) was $18.49 at the end of the third quarter 2019 compared to $18.23 at the end of the second quarter 2019, representing a 6% annualized growth rate. In the third quarter, lower long-term interest rates continued to have a positive impact on the fair value adjustment in the securities portfolio. The unrealized gains on securities available for sale net of tax was $8.0 million in the third quarter 2019 compared to unrealized gains of $5.5 million in the second quarter 2019.

RESULTS OF OPERATIONS

Net income in the third quarter 2019 was $5.0 million, or $0.32 per share, compared to $9.0 million, or $0.58 per share, in the same quarter of 2018. The non-GAAP measure of core earnings in the third quarter 2019 was $7.3 million or $0.47 per share, up 15% from the previous quarter. Interest and dividend income was up 6% to $34.3 million as quarterly yields on earning assets expanded 17 basis points on a year-over-year basis and 4 basis points from the prior quarter to 4.17%. Net interest margin in the third quarter 2019 decreased to 2.75% from 2.81% in the same period of 2018 reflecting the fluctuations in short-term interest rates over the last year. On a quarter-over-quarter basis, net interest margin expanded in the third quarter 2019 by 10 basis points to 2.75% due to various balance sheet deleveraging strategies including a decrease of $72.9 million in securities yielding an average of 2.1% and using the proceeds to pay-off wholesale borrowings with an average cost of 2.4%, and adjusting our mortgage strategy to shift more production through the secondary market platform versus portfolio.

The third quarter 2019 provision for loan losses increased to $893 thousand from $643 thousand in the same quarter 2018, which is reflective of the increased commercial loan growth over the last two quarters. The net charged-off loans to average loans ratio is at 0.02% annualized rate for the third quarter 2019 compared to 0.04% in the same quarter 2018. Asset quality continues to be strong with non-accruing loans to total loans at 0.65% in the third quarter 2019, down from 0.88% in the same quarter of 2018.

Non-interest income in the third quarter 2019 increased 7% to $7.6 million from $7.1 million in the same quarter in 2018. The increase was driven by $828 thousand increase in customer derivative income associated with the commercial loan growth and $157 thousand net gain on sales of securities associated with the balance sheet deleverage strategy after considering the $685 thousand gain recorded in the third quarter of 2018 associated with sale of Visa B shares.

Non-interest expense increased to $23.4 million in the third quarter 2019 from $17.9 million in the prior year in part as a result of higher salaries and benefits attributable to previously announced strategic hires and an increase in professional service fees. Acquisition, restructuring, and other expense activity in 2019 totaled $3.0 million and are considered non-core as they do not represent reoccurring 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 “THIRD 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  
 
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
 
PER SHARE DATA
                             
Net earnings, diluted
  0.32     0.39     0.47     0.49     0.58  
Core earnings, diluted (1) (2)
    0.47       0.41       0.47       0.59       0.58  
Total book value
    25.37       25.13       24.54       23.87       23.06  
Tangible book value (2)
    18.49       18.23       17.63       16.94       16.11  
Market price at period end
    24.93       26.59       25.87       22.43       28.72  
Dividends
    0.22       0.22       0.20       0.20       0.20  
 
                                       
PERFORMANCE RATIOS (3)
                                       
Return on assets
    0.55 %     0.67 %     0.83 %     0.85 %     1.01 %
Core return on assets (1) (2)
    0.80       0.70       0.83       1.03       1.01  
Return on equity
    5.04       6.33       7.83       8.31       9.92  
Core return on equity (1) (2)
    7.36       6.57       7.83       10.01       9.98  
Core return on tangible equity (1) (2)
    10.31       9.30       11.19       14.46       14.52  
Net interest margin, fully taxable equivalent (FTE) (2) (4)
    2.75       2.65       2.77       2.78       2.81  
Net interest margin (FTE), excluding purchased loan accretion (2) (4)
    2.65       2.56       2.67       2.70       2.71  
Efficiency ratio (2)
    65.02       68.48       63.94       59.91       57.88  
 
                                       
GROWTH (Year-to-date, annualized) (2)
                                       
Total commercial loans
    10.5 %     10.1 %     (3.3 %)     1.4 %     2.8 %
Total loans
    4.7       7.1       5.9       0.2       (0.1 )
Total deposits
    0.6       (0.1 )     (2.8 )     5.6       2.2  
 
                                       
FINANCIAL DATA (In millions)
                                       
Total assets
  3,612     3,688     3,629     3,608     3,561  
Total earning assets (2) (5)
    3,270       3,355       3,312       3,263       3,253  
Total investments
    703       784       782       761       747  
Total loans
    2,577       2,578       2,527       2,490       2,484  
Allowance for loan losses
    15       15       14       14       13  
Total goodwill and intangible assets
    107       107       107       108       108  
Total deposits
    2,494       2,481       2,466       2,483       2,390  
Total shareholders’ equity
    394       391       381       371       358  
Net income
    5       6       7       8       9  
Core income (1) (2)
    7       6       7       9       9  
 
                                       
ASSET QUALITY AND CONDITION RATIOS
                                       
Net charge-offs (current quarter annualized)/average loans
    0.02 %     %     0.03 %     0.03 %     0.04 %
Allowance for loan losses/total loans
    0.60       0.57       0.55       0.56       0.54  
Loans/deposits
    103       104       102       100       104  
Shareholders’ equity to total assets
    10.92       10.59       10.50       10.27       10.04  
Tangible shareholders’ equity to tangible assets
    8.20       7.92       7.77       7.51       7.24  

_____________________________________

(1) Core measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions, restructurings, system conversions 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.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS – UNAUDITED

(in thousands)
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
 
Assets
                             
Cash and due from banks
  50,032     42,657     37,504     35,208     53,154  
Interest-bearing deposits with the Federal Reserve Bank
    21,561       17,203       16,599       63,546       19,420  
Total cash and cash equivalents
    71,593       59,860       54,103       98,754       72,574  
Securities available for sale, at fair value
    675,675       748,560       747,235       725,837       712,658  
Federal Home Loan Bank stock
    27,469       35,220       35,107       35,659       34,154  
Total securities
    703,144       783,780       782,342       761,496       746,812  
Commercial real estate
    923,773       881,479       821,567       826,699       840,018  
Commercial and industrial
    402,706       416,725       409,937       404,870       385,814  
Residential real estate
    1,143,452       1,167,759       1,184,053       1,144,698       1,140,519  
Consumer
    107,375       112,275       111,402       113,960       117,239  
Total loans
    2,577,306       2,578,238       2,526,959       2,490,227       2,483,590  
Less: Allowance for loan losses
    (15,353 )     (14,572 )     (13,997 )     (13,866 )     (13,487 )
Net loans
    2,561,953       2,563,666       2,512,962       2,476,361       2,470,103  
 
                                       
Premises and equipment, net
    47,644       50,230       49,661       48,804       47,621  
Other real estate owned
    2,455       2,351       2,351       2,351       68  
Goodwill
    100,085       100,085       100,085       100,085       100,085  
Other intangible assets
    6,879       7,072       7,266       7,459       7,690  
Cash surrender value of bank-owned life insurance
    75,368       74,871       74,352       73,810       73,316  
Deferred tax asset, net
    4,988       5,649       7,632       9,514       11,527  
Other assets
    38,365       40,071       38,441       29,853       31,196  
Total assets
  3,612,474     3,687,635     3,629,195     3,608,487     3,560,992  
 
                                       
Liabilities and shareholders’ equity
                                       
Demand and other non-interest bearing deposits
  380,707     354,125     342,030     370,889     372,358  
NOW deposits
    490,315       472,576       470,277       484,717       471,326  
Savings deposits
    360,570       352,657       346,813       358,888       354,908  
Money market deposits
    359,328       305,506       349,833       335,951       254,142  
Time deposits
    902,665       996,512       956,818       932,793       937,615  
Total deposits
    2,493,585       2,481,376       2,465,771       2,483,238       2,390,349  
 
                                       
Senior borrowings
    641,819       733,084       703,283       680,823       739,224  
Subordinated borrowings
    42,928       42,943       42,958       42,973       42,988  
Total borrowings
    684,747       776,027       746,241       723,796       782,212  
 
                                       
Other liabilities
    39,683       39,670       36,160       30,874       30,746  
Total liabilities
    3,218,015       3,297,073       3,248,172       3,237,908       3,203,307  
 
                                       
Total shareholders’ equity
    394,459       390,562       381,023       370,579       357,685  
Total liabilities and shareholders’ equity
  3,612,474     3,687,635     3,629,195     3,608,487     3,560,992  
 
                                       
Net shares outstanding
    15,549       15,544       15,524       15,523       15,509  
                                         

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS – UNAUDITED

LOAN ANALYSIS

 
                                September 30, 2019
Annualized Growth %
 
(in thousands)
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
    Quarter
End
    Year to
Date
 
Commercial real estate
  923,773     881,479     821,567     826,699     840,018       19.2 %     15.7 %
Commercial and industrial
    301,590       312,029       305,185       309,544       303,984       (13.4 )     (3.4 )
Total commercial loans
    1,225,363       1,193,508       1,126,752       1,136,243       1,144,002       10.7       10.5  
Residential real estate
    1,143,452       1,167,759       1,184,053       1,144,698       1,140,519       (8.3 )     (0.1 )
Consumer
    107,375       112,275       111,402       113,960       117,239       (17.5 )     (7.7 )
Tax exempt
    101,116       104,696       104,752       95,326       81,830       (13.7 )     8.1  
Total loans
  2,577,306     2,578,238     2,526,959     2,490,227     2,483,590       (0.1 )%     4.7 %
                                                         

DEPOSIT ANALYSIS

 
                                September 30, 2019
Annualized Growth %
 
(in thousands)
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
    Quarter
End
    Year to
Date
 
Demand
  380,707     354,125     342,030     370,889     372,358       30.0 %     3.5 %
NOW
    490,315       472,576       470,277       484,717       471,326       15.0       1.5  
Savings
    360,570       352,657       346,813       358,888       354,908       9.0       0.6  
Money Market
    359,328       305,506       349,833       335,951       254,142       70.5       9.3  
Total non-maturity deposits
    1,590,920       1,484,864       1,508,953       1,550,445       1,452,734       28.6       3.5  
Total time deposits
    902,665       996,512       956,818       932,793       937,615       (37.7 )     (4.3 )
Total deposits
  2,493,585     2,481,376     2,465,771     2,483,238     2,390,349       2.0 %     0.6 %
                                                         

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

 
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands, except per share data)
  2019     2018     2019     2018  
Interest and dividend income
                       
Loans
  28,157     26,212     82,681     77,272  
Securities and other
    6,105       5,972       18,593       17,407  
Total interest and dividend income
    34,262       32,184       101,274       94,679  
Interest expense
                               
Deposits
    7,143       5,478       20,336       13,868  
Borrowings
    4,674       4,237       15,232       12,192  
Total interest expense
    11,817       9,715       35,568       26,060  
Net interest income
    22,445       22,469       65,706       68,619  
Provision for loan losses
    893       643       1,779       2,208  
Net interest income after provision for loan losses
    21,552       21,826       63,927       66,411  
Non-interest income
                               
Trust and investment management fee income
    3,013       2,952       8,836       9,036  
Customer service fees
    2,553       2,490       7,336       7,061  
Gain on sales of securities, net
    157             157        
Bank-owned life insurance income
    497       505       1,558       1,328  
Customer derivative income
    828             1,553       545  
Other income
    595       1,179       1,823       2,515  
Total non-interest income
    7,643       7,126       21,263       20,485  
Non-interest expense
                               
Salaries and employee benefits
    11,364       10,331       33,568       31,695  
Occupancy and equipment
    3,415       3,366       10,101       9,364  
Loss on sales of premises and equipment, net
                21        
Outside services
    424       456       1,278       1,597  
Professional services
    707       223       1,821       1,016  
Communication
    189       217       707       701  
Marketing
    613       293       1,419       1,207  
Amortization of intangible assets
    207       207       621       621  
Acquisition, restructuring and other expenses
    3,039       70       3,319       619  
Other expenses
    3,442       2,743       10,075       8,623  
Total non-interest expense
    23,400       17,906       62,930       55,443  
 
                               
Income before income taxes
    5,795       11,046       22,260       31,453  
Income tax expense
    780       2,076       3,847       6,136  
Net income
  5,015     8,970     18,413     25,317  
 
                               
Earnings per share:
                               
Basic
  0.32     0.58     1.19     1.64  
Diluted
  0.32     0.58       1.18       1.63  
 
                               
Weighted average shares outstanding:
                               
Basic
    15,547       15,503       15,536       15,478  
Diluted
    15,581       15,580       15,582       15,564  
                                 

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

(in thousands, except per share data)
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
 
Interest and dividend income
                             
Loans
  28,157     27,660     26,864     26,743     26,212  
Securities and other
    6,105       6,125       6,363       6,029       5,972  
Total interest and dividend income
    34,262       33,785       33,227       32,772       32,184  
Interest expense
                                       
Deposits
    7,143       6,886       6,307       5,653       5,478  
Borrowings
    4,674       5,403       5,155       4,855       4,237  
Total interest expense
    11,817       12,289       11,462       10,508       9,715  
Net interest income
    22,445       21,496       21,765       22,264       22,469  
Provision for loan losses
    893       562       324       572       643  
Net interest income after provision for loan losses
    21,552       20,934       21,441       21,692       21,826  
Non-interest income
                                       
Trust and investment management fee income
    3,013       3,066       2,757       2,949       2,952  
Customer service fees
    2,553       2,618       2,165       2,477       2,490  
Gain (loss) on sales of securities, net
    157                   (924 )      
Bank-owned life insurance income
    497       519       542       493       505  
Customer derivative income
    828       696       29       315        
Other income
    595       554       674       2,140       1,179  
Total non-interest income
    7,643       7,453       6,167       7,450       7,126  
Non-interest expense
                                       
Salaries and employee benefits
    11,364       11,685       10,519       9,269       10,331  
Occupancy and equipment
    3,415       3,300       3,386       3,022       3,366  
Loss on sales of premises and equipment, net
          21                    
Outside services
    424       443       411       811       456  
Professional services
    707       570       544       458       223  
Communication
    189       283       235       103       217  
Marketing
    613       511       295       536       293  
Amortization of intangible assets
    207       207       207       207       207  
Acquisition, restructuring and other expenses
    3,039       280             1,109       70  
Other expenses
    3,442       3,606       3,027       4,581       2,743  
Total non-interest expense
    23,400       20,906       18,624       20,096       17,906  
 
                                       
Income before income taxes
    5,795       7,481       8,984       9,046       11,046  
Income tax expense
    780       1,364       1,703       1,426       2,076  
Net income
  5,015     6,117     7,281     7,620     8,970  
 
                                       
Earnings per share:
                                       
Basic
  0.32     0.39     0.47     0.49     0.58  
Diluted
  0.32     0.39     0.47     0.49     0.58  
 
                                       
Weighted average shares outstanding:
                                       
Basic
    15,547       15,538       15,523       15,516       15,503  
Diluted
    15,581       15,586       15,587       15,574       15,580  
                                         

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

 
  Quarters Ended  
 
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
 
Earning assets
                             
Commercial real estate
    4.74 %     4.74 %     4.78 %     4.71 %     4.57 %
Commercial and industrial
    4.78       4.75       4.79       4.61       4.59  
Residential
    3.88       3.93       3.94       3.83       3.83  
Consumer
    5.13       5.21       5.25       5.07       4.85  
Total loans
    4.38       4.39       4.42       4.31       4.25  
Securities and other
    3.44       3.29       3.47       3.28       3.21  
Total earning assets
    4.17 %     4.13 %     4.19 %     4.07 %     4.00 %
 
                                       
Funding liabilities
                                       
NOW
    0.51 %     0.49 %     0.51 %     0.50 %     0.43 %
Savings
    0.21       0.21       0.19       0.18       0.17  
Money market
    1.37       1.44       1.38       0.93       0.76  
Time deposits
    2.16       2.11       2.00       1.85       1.78  
Total interest bearing deposits
    1.33       1.32       1.25       1.12       1.06  
Borrowings
    2.62       2.74       2.74       2.53       2.26  
Total interest-bearing liabilities
    1.65 %     1.71 %     1.66 %     1.50 %     1.38 %
 
                                       
Net interest spread
    2.52       2.42       2.53       2.57       2.62  
Net interest margin
    2.75       2.65       2.77       2.78       2.81  
                                         

BAR HARBOR BANKSHARES
AVERAGE BALANCES – UNAUDITED

 
  Quarters Ended  
(in thousands)
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
 
Assets
                             
Commercial real estate
  900,568     846,921     825,596     836,813     837,058  
Commercial and industrial
    410,453       416,000       405,107       393,396       388,831  
Residential
    1,154,552       1,176,583       1,143,862       1,137,493       1,120,336  
Consumer
    109,562       111,641       113,060       114,960       117,735  
Total loans (1)
    2,575,135       2,551,145       2,487,625       2,482,662       2,463,960  
Securities and other (2)
    732,925       779,072       777,458       762,901       773,562  
Total earning assets
    3,308,060       3,330,217       3,265,083       3,245,563       3,237,522  
Cash and due from banks
    62,999       52,728       50,298       68,904       63,272  
Allowance for loan losses
    (14,965 )     (14,459 )     (14,119 )     (13,922 )     (13,463 )
Goodwill and other intangible assets
    107,058       107,252       107,446       107,657       107,887  
Other assets
    178,804       170,340       152,332       138,074       137,466  
Total assets
  3,641,956     3,646,078     3,561,040     3,546,276     3,532,684  
 
                                       
Liabilities and shareholders’ equity
                                       
NOW
  487,506     459,572     468,392     475,449     461,875  
Savings
    359,242       352,733       346,707       346,905       356,834  
Money market
    338,013       338,095       335,882       272,612       259,738  
Time deposits
    947,949       935,616       894,160       914,674       964,108  
Total interest bearing deposits
    2,132,710       2,086,016       2,045,141       2,009,640       2,042,555  
Borrowings
    708,222       789,953       761,885       761,781       744,632  
Total interest-bearing liabilities
    2,840,932       2,875,969       2,807,026       2,771,421       2,787,187  
Non-interest-bearing demand deposits
    368,100       349,322       351,362       384,636       357,856  
Other liabilities
    37,975       33,107       25,520       26,569       28,943  
Total liabilities
    3,247,007       3,258,398       3,183,908       3,182,626       3,173,986  
 
                                       
Total shareholders’ equity
    394,949       387,680       377,132       363,650       358,698  
 
                                       
Total liabilities and shareholders’ equity
  3,641,956     3,646,078     3,561,040     3,546,276     3,532,684  
                                         

_____________________________________

(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)
  Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
 
NON-PERFORMING ASSETS
                             
Non-accruing loans:
                             
Commercial real estate
  8,519     7,048     7,516     8,156     8,348  
Commercial installment
    2,077       2,081       2,192       2,331       2,303  
Residential real estate
    5,340       5,965       6,326       7,210       10,396  
Consumer installment
    743       861       565       538       727  
Total non-accruing loans
    16,679       15,955       16,599       18,235       21,774  
Other real estate owned
    2,455       2,351       2,351       2,351       68  
Total non-performing assets
  19,134     18,306     18,950     20,586     21,842  
 
                                       
Total non-accruing loans/total loans
    0.65 %     0.62 %     0.66 %     0.73 %     0.88 %
Total non-performing assets/total assets
    0.53       0.50       0.52       0.57       0.61  
 
                                       
PROVISION AND ALLOWANCE FOR LOAN LOSSES
                                       
Balance at beginning of period
  14,572     13,997     13,866     13,487     13,090  
Charged-off loans
    (215 )     (104 )     (231 )     (631 )     (298 )
Recoveries on charged-off loans
    103       117       38       438       52  
Net loans charged-off
    (112 )     13       (193 )     (193 )     (246 )
Provision for loan losses
    893       562       324       572       643  
Balance at end of period
  15,353     14,572     13,997     13,866     13,487  
 
                                       
Allowance for loan losses/total loans
    0.60 %     0.57 %     0.55 %     0.56 %     0.54 %
Allowance for loan losses/non-accruing loans
    92       91       84       76       62  
 
                                       
NET LOAN CHARGE-OFFS
                                       
Commercial real estate
  1     114     (41 )   (25 )   (27 )
Commercial installment
    62       (12 )     (15 )     53       (53 )
Residential real estate
    (124 )     (65 )     (86 )     (31 )     (123 )
Consumer installment
    (51 )     (24 )     (51 )     (190 )     (43 )
Total, net
  (112 )   13     (193 )   (193 )   (246 )
 
                                       
Net charge-offs (QTD annualized)/average loans
    0.02 %     %     0.03 %     0.03 %     0.04 %
Net charge-offs (YTD annualized)/average loans
    0.02       0.01       0.03       0.05       0.06  
 
                                       
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
                                       
30-89 Days delinquent
    0.18 %     0.29 %     0.21 %     0.38 %     0.17 %
90+ Days delinquent and still accruing
    0.03                   0.01        
Total accruing delinquent loans
    0.21       0.29       0.21       0.39       0.17  
Non-accruing loans
    0.65       0.62       0.66       0.73       0.88  
Total delinquent and non-accruing loans
    0.86 %     0.91 %     0.87 %     1.12 %     1.05 %
                                         

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

 
        At or for the Quarters Ended  
(in thousands)
        Sep 30,
2019
    Jun 30,
2019
    Mar 31,
2019
    Dec 31,
2018
    Sep 30,
2018
 
Net income
        5,015     6,117     7,281     7,620     8,970  
Plus (less):
                                             
(Gain) loss on sale of securities, net
          (157 )                 924        
Loss on sale of premises and equipment, net
                21                    
Loss (gain) on other real estate owned
          146                   5       (8 )
Acquisition, restructuring and other expenses
          3,039       280             1,109       70  
Income tax expense (1)
          (720 )     (72 )           (485 )     (12 )
Total core earnings (2)
        7,323     6,346     7,281     9,173     9,020  
 
                                             
Net-interest income
  (B)     22,445     21,496     21,765     22,264     22,469  
Plus: Non-interest income
          7,643       7,453       6,167       7,450       7,126  
Total Revenue
          30,088       28,949       27,932       29,714       29,595  
Plus: (Gain) loss on sale of securities, net
          (157 )                 924        
Total core revenue (2)
  (C)     29,931     28,949     27,932     30,638     29,595  
 
                                             
Total non-interest expense           23,400       20,906       18,624       20,096       17,906  
Less: Loss on sale of premises and equipment, net                 (21 )                  
Less: (Loss) gain on other real estate owned           (146 )                 (5 )     8  
Less: Acquisition, restructuring and other expenses
          (3,039 )     (280 )           (1,109 )     (70 )
Core non-interest expense (2)
  (D)     20,215     20,605     18,624     18,982     17,844  
 
                                             
(in millions)                                              
Total average earning assets
  (E)     3,308     3,330     3,265     3,246     3,238  
Total average assets
  (F)       3,642       3,646       3,561       3,546       3,533  
Total average shareholders’ equity
  (G)       395       388       377       364       359  
Total average tangible shareholders’ equity (2) (3)
  (H)       288       280       270       256       251  
Total tangible shareholders’ equity, period-end (2) (3)
  (I)       287       283       274       263       250  
Total tangible assets, period-end (2) (3)
  (J)       3,506       3,580       3,522       3,501       3,453  
 
                                             
(in thousands)
 
 
 
 
                                         
Total common shares outstanding, period-end
  (K)       15,549       15,544       15,524       15,523       15,509  
Weighted average diluted shares outstanding
  (L)       15,581       15,586       15,587       15,574       15,580  
 
                                             
Core earnings per share, diluted (2)
    (A/L)     0.47     0.41     0.47     0.59     0.58  
Tangible book value per share, period-end (2)
    (I/K)       18.49       18.23       17.63       16.94       16.11  
Securities adjustment, net of tax (1) (4)
  (M)       8,002       5,550       (1,842 )     (8,663 )     (17,152 )
Tangible book value per share, excluding securities adjustment (2)
    (I+M)/K       17.98       17.88       17.75       17.50       17.22  
Total tangible shareholders’ equity/total tangible assets (2)
    (I/J)       8.20       7.92       7.77       7.51       7.24  
 
                                               
Performance ratios (5)
                                               
GAAP return on assets
            0.55 %     0.67 %     0.83 %     0.85 %     1.01 %
Core return on assets (2)
    (A/F)       0.80       0.70       0.83       1.03       1.01  
GAAP return on equity
            5.04       6.33       7.83       8.31       9.92  
Core return on equity (2)
    (A/G)       7.36       6.57       7.83       10.01       9.98  
Core return on tangible equity (2) (6)
    (A+Q)/H       10.31       9.30       11.19       14.46       14.52  
Efficiency ratio (2) (7)
  (D-O-Q)/(C+N)       65.02       68.48       63.94       59.91       57.88  
Net interest margin
    (B+P)/E       2.75       2.65       2.77       2.78       2.81  
Supplementary data (in thousands)
                                               
Taxable equivalent adjustment for efficiency ratio
  (N)     658     676     684     633     654  
Franchise taxes included in non-interest expense
  (O)       119       111       120       39       129  
Tax equivalent adjustment for net interest margin
  (P)       503       514       515       488       493  
Intangible amortization
  (Q)       207       207       207       207       207  

_____________________________________

(1) Assumes a marginal tax rate of 23.78% in 2019. A marginal tax rate of 23.78% was used in the third and 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 2019 and 23.78% in the third and 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

View source version on accesswire.com:
https://www.accesswire.com/563414/Bar-Harbor-Bankshares-Reports-Third-Quarter-Results-Dividend-Declared

error: Content is protected !!