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Bar Harbor Bankshares Reports Second Quarter Results; Declares Dividend

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BAR HARBOR, ME / ACCESSWIRE / July 21, 2021 / Bar Harbor Bankshares (NYSE American:BHB) reported second quarter 2021 net income of $9.0 million or $0.60 per share from $8.5 million or $0.55 per share in the same quarter of 2020, an increase of 9% in earnings per share. Core earnings (non-GAAP) were $9.4 million, or $0.63 per share, compared to $8.6 million, or $0.56 per share for the same periods. Non-core items (non-GAAP) reduced net income in the second quarter 2021 by $384 thousand, or $0.02 per share.

SECOND QUARTER FINANCIAL HIGHLIGHTS (compared to the second quarter 2020, unless otherwise noted)

  • 9% growth in earnings per share, 13% growth in core earnings (non-GAAP)

  • 0.97% return on assets; 1.01% core return on assets (non-GAAP)

  • 8% annualized total commercial loan growth, excluding PPP loans

  • 14% annualized increase in core deposits

  • 13% increase in fee income

  • Exceptional credit quality

President and Chief Executive Officer, Curtis C. Simard stated, "We had another quarter of double-digit core earnings growth and core return on assets of over 1.00%. Profitability increased on higher fee income driven from growth in core deposits and assets under management (AUM). Customer service income returned to pre-pandemic levels suggesting a potentially meaningful recovery in regional activity, augmented by a lift from our previously announced fee strategies implemented at the start of this year. The 8% annualized growth in commercial loans during the quarter, excluding PPP, reflects our commitment to meeting the needs of our existing customers and developing new relationships as we navigate past PPP activities. Our Wealth Management business continues to be a significant contributor to total non-interest income while our Retail and Commercial loan teams continue to generate new core deposit accounts, especially in DDA categories. More than 1,000 new banking relationships were created in the second quarter, highlighting both existing customer retention efforts and new customer initiatives. With the increase in mortgage rates late in the first quarter, we chose to opportunistically add balances to the balance sheet which helped stem the attrition. However, a focus on IRR management remains top of mind."

Mr. Simard continued, "We continued to organically grow our capital levels expanding tangible equity to tangible assets (non-GAAP) to 8.23%, while maintaining exceptional credit quality. All credit metrics remain strong and further improved in the quarter, primarily marked by lower past dues, minimal net charge-offs and improved coverage ratios. Overall, we continue to see favorable migration in risk ratings across most loan categories. Loan modification concessions made during the pandemic have essentially all resumed normal repayment schedules as of the end of the quarter."

Mr. Simard stated, "As we think about net interest margin (NIM) quarter over quarter, the second quarter had substantially less PPP fee acceleration and was further impacted by the excess cash on hand. Of note, $105 million of wholesale deposits matured on the last day of the quarter which will benefit our cost of funds going forward. We are starting to see a leveling off of NIM, excluding non-recurring items, as reliance on wholesale borrowings continues to be reduced and DDA growth continues. Given our overall asset sensitive balance sheet position and a more core-funded profile, we are well positioned for when rates start to move back up. Excluding the effects of one-time items, our second quarter NIM was 2.95% compared with the same adjusted metric of 2.86% in the first quarter 2021."

Mr. Simard commented, "In the first quarter, we announced the initiation of a comprehensive review of our non-interest expenses which included an annual reduction to salary and benefits of more than $3.0 million, along with additional cost savings associated with vendor contracts and process efficiencies. While some savings have been immediately realized in our second quarter run-rates, others will be phased in depending on contract timelines. As we continue to resume business-as-usual activities, we are also rolling out cost containment initiatives to absorb any potential increases associated with pandemic-delayed expenses. Lastly, we evaluate profitability at each branch within our footprint, at least annually, taking into consideration the unique geography of Northern New England and our customer needs."

Mr. Simard concluded, "As we move into the second half of the year, we are encouraged by an improving economic outlook and better operating conditions. Our collective resilience has prepared and positioned us to move forward with the same resolve that has sustained us throughout the pandemic. We have a unique complementary footprint that is enabling us to utilize all earnings levers that align with our model and strategy. We look forward to continuing to serve our customers and communities in the way they are accustomed to."

DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of $0.24 per share to shareholders of record at the close of business on August 17, 2021, payable on September 17, 2021. This dividend equates to a 3.35% annualized yield based on the $28.62 closing price of the Company's common stock at the end of the second quarter of 2021.

FINANCIAL CONDITION
Total assets were $3.6 billion at the end of the second quarter as the Company leveraged excess cash liquidity to reduce maturing brokered deposits of $104.7 million during the quarter. Loans decreased $35.5 million during the quarter, or 6% on an annualized basis, primarily due to PPP loan forgiveness and prepayments on residential loans.

During the quarter we developed 76 new commercial relationships, resulting in commercial real estate loan growth of 6% on an annualized basis and commercial and industrial loan growth 13% on an annualized basis, exclusive of PPP loans. PPP loan balances totaled $65.9 million at quarter-end, consisting of $62.7 million of 2021 originations and $3.2 million from 2020. Unearned deferred fee balances on PPP loans totaled $3.7 million at the end of the quarter. These balances are expected to be realized through early 2022. COVID loan modifications totaled $19.0 million, down from $43.0 million at the end of the first quarter 2021, as 97% of modified loans have resumed normal payment schedules. Total residential loans decreased $47.5 million, which includes $84.0 million of originations, $56.0 million of sales in the secondary market and $75.5 million of prepayments/amortization. Total originations during the quarter included $51.0 million that was sold on the secondary market and $33.0 million that was recorded on the balance sheet.

The allowance for credit losses decreased to $22.8 million during the second quarter due to stronger economic forecasts, offset by changes in overall loan mix. Net charge offs totaled $73 thousand, or less than 0.01% of the total loan portfolio, and non-accruing loans decreased to $13.6 million, or 0.54% of the total loans. The ratio of past due loans to total loans improved to 0.15% of total loans at June 30, 2021, decreasing from 0.44% in the first quarter of 2021. Commercial past due loans totaled $1.9 million at quarter end, which is the lowest level since 2016 when the portfolio was approximately 36% of its current size.

Total deposits decreased $90.0 million to $2.8 billion during the quarter, due to lower time deposits, offset by significant growth in core deposits. Core deposits increased $77.8 million, or 14% on an annualized basis, during the quarter. Over 1,000 new customer relationships were added in the quarter. Time deposits decreased $167.7 million during the quarter, primarily due to $104.7 million of brokered deposits not being replaced upon maturity due to excess liquidity. Retail time deposits decreased $63.0 million as customers moved funds to transactional accounts upon contractual maturity.

The Company's book value per share was $27.76 at June 30, 2021, compared with $27.13 at the end of the first quarter 2021. Tangible book value per share (non-GAAP measure) was $19.30 at the end of the second quarter 2021, compared to $18.64 at the end of the first quarter 2021, equating to an annualized growth rate of 14%. Other comprehensive income included unrealized gains on securities totaling $7.2 million in the second quarter 2021 compared to $4.5 million at the end of the first quarter 2021.

RESULTS OF OPERATIONS
Net income in the second quarter 2021 was $9.0 million, or $0.60 per share, compared to $8.5 million, or $0.55 per share, in the same quarter of 2020. Net income benefited from higher fee income and a credit provision recapture in the quarter. Core earnings totaled $9.4 million or $0.63 per share, compared to $8.6 million, or $0.56 per share, in the same quarter of 2020. Non-core items (non-GAAP) reduced net income by $384 thousand and $119 thousand in second quarters of 2021 and 2020, respectively.

Net interest margin equaled 2.74% compared to 2.93% in the same period of 2020. PPP loans contributed 7 basis points to NIM during the quarter as the majority of the remaining 2020 originations were forgiven. Accretion on PPP loans originated in 2021 are not expected to materially affect NIM until loans are forgiven starting in the third quarter 2021. Interest-bearing cash balances, held mostly at the Federal Reserve Bank, reduced NIM by 19 basis points. The yield on earning assets totaled 3.26% compared to 3.73% in the second quarter 2020. Excluding the impact of PPP and excess cash, the yield on earning assets totaled 3.44% and 3.98% for the same periods. Costs of funds decreased to 0.66% from 0.96% in the second quarter 2020 due to lower deposit rates and reductions to wholesale funding afforded by significant growth in core deposits. Brokered deposits that matured during second quarter carried 9 basis points of the total funding cost.

The provision for credit losses for the quarter was a benefit of $765 thousand, compared to an expense of $1.4 million in the second quarter of 2020. The provision recapture in the second quarter 2021 is attributable to improving economic forecasts and strong credit quality, offset by shifts in our loan mix.

Non-interest income in the second quarter 2021 equaled $9.5 million, compared to $9.7 million in the same quarter of 2020. Non-interest income, excluding gain on sales of securities, increased 13% on higher customer service fees, wealth management income, and gains on loan sales. Wealth management income increased 20% over the same quarter of 2020 as assets under management increased to $2.4 billion or 12% compared to the same period of 2020. Customer service fees increased $818 thousand compared to the second quarter of 2020 as customer activity and transactions now exceed pre-pandemic levels. Mortgage banking activities continue to contribute a significant amount of fee income, increasing to $1.6 million, compared to $1.1 million in the same period of 2020.

Non-interest expense improved to $21.7 million in the second quarter 2021 from $22.3 million in the same quarter of 2020. Salaries and benefits expense decreased 5% due to implementing workforce reduction programs at the beginning of the second quarter. Non-core expenses (non-GAAP) in the second quarter 2021 totaled $553 thousand and were mostly one-time reduction in workforce. In the same quarter of 2020 non-core expenses (non-GAAP) totaled $1.5 million and included costs to consolidate our wealth management systems and a loss on debt extinguishment.

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 "SECOND 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, 2020 and any subsequently filed Quarterly Reports on Form 10-Q. 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

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

2021

2021

2020

2020

2020

PER SHARE DATA






Net earnings, diluted

$

0.60

$

0.63

$

0.58

$

0.56

$

0.55

Core earnings, diluted (1) (2)

0.63

0.68

0.62

0.61

0.56

Total book value

27.76

27.13

27.58

27.09

26.56

Tangible book value (2)

19.30

18.64

19.05

18.56

18.18

Market price at period end

28.62

29.42

22.59

20.55

22.39

Dividends

0.24

0.22

0.22

0.22

0.22

PERFORMANCE RATIOS (3)

Return on assets

0.97

%

1.03

%

0.92

%

0.88

%

0.90

%

Core return on assets (1) (2)

1.01

1.11

0.98

0.96

0.91

Pre-tax, pre-provision return on assets

1.13

1.22

1.30

1.29

1.27

Core pre-tax, pre-provision return on assets (1) (2)

1.18

1.32

1.38

1.39

1.29

Return on equity

8.76

9.45

8.39

8.22

8.40

Core return on equity (1) (2)

9.13

10.13

8.95

8.98

8.52

Return on tangible equity

12.88

14.01

12.45

12.24

12.55

Core return on tangible equity (1) (2)

13.42

15.00

13.27

13.36

12.72

Net interest margin, fully taxable equivalent (FTE) (2) (4)

2.74

2.88

3.02

2.90

2.93

Core net interest margin (1) (2) (5)

2.67

2.78

2.79

2.89

2.92

Efficiency ratio (2)

63.45

61.95

61.98

59.47

60.67

ORGANIC GROWTH (Year-to-date, annualized) (2)

Total commercial loans

9

%

14

%

17

%

27

%

33

%

Total loans

(4

)

(2

)

(3

)

3

5

Total deposits

(6

)

1

8

12

(0)

FINANCIAL DATA (In millions)

Total assets

$

3,640

$

3,730

$

3,726

$

3,860

$

3,780

Total earning assets (6)

3,274

3,371

3,360

3,496

3,414

Total investments

636

641

599

619

662

Total loans

2,516

2,551

2,563

2,685

2,706

Allowance for credit losses

23

24

19

18

17

Total goodwill and intangible assets

127

127

127

127

128

Total deposits

2,822

2,912

2,906

2,935

2,695

Total shareholders' equity

416

406

411

404

404

Net income

9

9

9

8

8

Core earnings (1) (2)

9

10

9

9

9

ASSET QUALITY AND CONDITION RATIOS

Net charge-offs (current quarter annualized)/average loans

0.01

%

0.03

%

0.03

%

0.06

%

0.02

%

Allowance for credit losses/total loans

0.91

0.93

0.74

0.67

0.61

Loans/deposits

89

88

88

91

100

Shareholders' equity to total assets

11.42

10.87

11.04

10.48

10.69

Tangible shareholders' equity to tangible assets

8.23

7.73

7.90

7.42

7.57

(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) Core net interest margin excludes Paycheck Protection Program loans.
(6) Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost.

BAR HARBOR BANKSHARES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

(in thousands)

2021

2021

2020

2020

2020

Assets






Cash and due from banks

$

41,440

$

39,039

$

27,566

$

22,722

$

24,430

Interest-bearing deposits with other banks

132,278

184,473

198,441

192,935

46,243

Total cash and cash equivalents

173,718

223,512

226,007

215,657

70,673

Securities available for sale

621,849

626,403

585,046

604,529

641,574

Federal Home Loan Bank stock

14,145

14,826

14,036

13,975

20,265

Total securities

635,994

641,229

599,082

618,504

661,839

Loans held for sale

7,942

10,148

23,988

23,721

22,979

Total loans

2,515,560

2,551,064

2,562,885

2,684,970

2,706,438

Less: Allowance for credit losses

(22,815

)

(23,653

)

(19,082

)

(17,907

)

(16,509

)

Net loans

2,492,745

2,527,411

2,543,803

2,667,063

2,689,929

Premises and equipment, net

51,119

52,253

52,458

51,424

50,464

Other real estate owned

-

-

-

1,983

2,318

Goodwill

119,477

119,477

119,477

119,477

119,477

Other intangible assets

7,198

7,431

7,670

7,913

8,155

Cash surrender value of bank-owned life insurance

78,886

78,388

77,870

77,388

76,896

Deferred tax asset, net

4,349

5,639

1,745

2,180

2,451

Other assets

68,247

64,742

73,662

74,400

75,084

Total assets

$

3,639,675

$

3,730,230

$

3,725,762

$

3,859,710

$

3,780,265

Liabilities and shareholders' equity

Demand and other non-interest bearing deposits

$

599,598

$

586,487

$

544,636

$

515,064

$

504,325

NOW deposits

802,681

761,817

738,849

706,048

642,908

Savings deposits

578,361

560,095

521,638

511,938

466,668

Money market deposits

371,075

365,507

402,731

388,356

402,835

Time deposits

470,758

638,436

698,361

813,509

678,126

Total deposits

2,822,473

2,912,342

2,906,215

2,934,915

2,694,862

Senior borrowings

279,991

292,210

276,062

385,472

546,863

Subordinated borrowings

60,042

60,003

59,961

59,920

59,879

Total borrowings

340,033

352,213

336,023

445,392

606,742

Other liabilities

61,597

60,094

72,183

74,958

74,487

Total liabilities

3,224,103

3,324,649

3,314,421

3,455,265

3,376,091

Total common shareholders' equity

415,572

405,581

411,341

404,445

404,174

Total liabilities and shareholders' equity

$

3,639,675

$

3,730,230

$

3,725,762

$

3,859,710

$

3,780,265

Net shares outstanding

14,972

14,950

14,916

14,929

15,214

BAR HARBOR BANKSHARES

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS











Annualized
Growth %

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Quarter

Year to

(in thousands)

2021

2021

2020

2020

2020

End

Date

Commercial real estate

$

1,135,857

$

1,118,669

$

1,084,381

$

1,045,635

$

982,070

6

%

9

%

Commercial and industrial

327,729

317,500

323,864

324,647

340,898

13

2

Paycheck Protection Program (PPP)

65,918

77,878

53,774

131,537

131,626

(61

)

45

Total commercial loans

1,529,504

1,514,047

1,462,019

1,501,819

1,454,594

4

9

Total commercial loans, excluding PPP

1,463,586

1,436,169

1,408,245

1,370,282

1,322,968

8

8

Residential real estate

822,774

868,084

923,891

997,485

1,060,729

(21

)

(22

)

Consumer

103,589

106,835

113,544

119,340

124,197

(12

)

(18

)

Tax exempt and other

59,693

62,098

63,431

66,326

66,918

(15

)

(12

)

Total loans

$

2,515,560

$

2,551,064

$

2,562,885

$

2,684,970

$

2,706,438

(6

)%

(4

)%

DEPOSIT ANALYSIS






Annualized
Growth %

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Quarter

Year to

(in thousands)

2021

2021

2020

2020

2020

End

Date

Demand

$

599,598

$

586,487

$

544,636

$

515,064

$

504,325

9

%

20

%

NOW

802,681

761,817

738,849

706,048

642,908

21

17

Savings

578,361

560,095

521,638

511,938

466,668

13

22

Money market

371,075

365,507

402,731

388,356

402,835

6

(16

)

Total non-maturity deposits

2,351,715

2,273,906

2,207,854

2,121,406

2,016,736

14

13

Total time deposits

470,758

638,436

698,361

813,509

678,126

*

(65

)

Total deposits

$

2,822,473

$

2,912,342

$

2,906,215

$

2,934,915

$

2,694,862

(12

)%

(6

)%

*Indicates ratios of 100% or greater.

BAR HARBOR BANKSHARES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

Three Months Ended

Six Months Ended

June 30,

June 30,

(in thousands, except per share data)

2021

2020

2021

2020

Interest and dividend income





Loans

$

23,191

$

26,493

$

47,396

$

54,480

Securities and other

3,992

4,942

7,971

10,449

Total interest and dividend income

27,183

31,435

55,367

64,929

Interest expense

Deposits

2,603

4,548

5,554

10,568

Borrowings

1,826

2,297

3,637

5,208

Total interest expense

4,429

6,845

9,191

15,776

Net interest income

22,754

24,590

46,176

49,153

Provision for credit losses

(765

)

1,354

(1,254

)

2,465

Net interest income after provision for credit losses

23,519

23,236

47,430

46,688

Non-interest income

Trust and investment management fee income

3,801

3,159

7,467

6,528

Customer service fees

3,257

2,439

6,227

5,551

Gain on sales of securities, net

50

1,351

50

1,486

Mortgage banking income

1,553

1,124

4,123

1,581

Bank-owned life insurance income

498

496

1,016

1,033

Customer derivative income

86

513

496

1,101

Other income

260

628

374

851

Total non-interest income

9,505

9,710

19,753

18,131

Non-interest expense

Salaries and employee benefits

11,356

11,909

23,532

23,793

Occupancy and equipment

3,894

3,860

8,222

8,280

Loss (gain) on sales of premises and equipment, net

1

(2

)

9

90

Outside services

533

442

965

976

Professional services

151

337

709

1,009

Communication

198

194

519

483

Marketing

534

282

824

670

Amortization of intangible assets

233

256

474

512

Loss on debt extinguishment

-

1,351

-

1,351

Acquisition, conversion and other expenses

552

158

1,441

261

Other expenses

4,272

3,479

7,520

7,200

Total non-interest expense

21,724

22,266

44,215

44,625

Income before income taxes

11,300

10,680

22,968

20,194

Income tax expense

2,275

2,199

4,463

3,992

Net income

$

9,025

$

8,481

$

18,505

$

16,202

Earnings per share:

Basic

$

0.60

$

0.55

$

1.24

$

1.05

Diluted

0.60

0.55

1.23

1.04

Weighted average shares outstanding:

Basic

14,965

15,424

14,950

15,500

Diluted

15,042

15,441

15,026

15,523

BAR HARBOR BANKSHARES

CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

(in thousands, except per share data)

2021

2021

2020

2020

2020

Interest and dividend income






Loans

$

23,191

$

24,205

$

26,687

$

25,918

$

26,493

Securities and other

3,992

3,979

4,013

4,557

4,942

Total interest and dividend income

27,183

28,184

30,700

30,475

31,435

Interest expense

Deposits

2,603

2,951

3,606

3,869

4,548

Borrowings

1,826

1,811

1,732

1,941

2,297

Total interest expense

4,429

4,762

5,338

5,810

6,845

Net interest income

22,754

23,422

25,362

24,665

24,590

Provision for credit losses

(765

)

(489

)

1,360

1,800

1,354

Net interest income after provision for credit losses

23,519

23,911

24,002

22,865

23,236

Non-interest income

Trust and investment management fee income

3,801

3,666

3,318

3,532

3,159

Customer service fees

3,257

2,970

2,890

2,886

2,439

Gain on sales of securities, net

50

-

3,959

-

1,351

Mortgage banking income

1,553

2,570

2,654

2,649

1,124

Bank-owned life insurance income

498

518

482

492

496

Customer derivative income

86

410

1,086

316

513

Other income

260

114

334

227

628

Total non-interest income

9,505

10,248

14,723

10,102

9,710

Non-interest expense

Salaries and employee benefits

11,356

12,176

13,318

11,809

11,909

Occupancy and equipment

3,894

4,328

4,192

4,279

3,860

Loss (gain) on sales of premises and equipment, net

1

8

(122

)

-

(2

)

Outside services

533

432

571

438

442

Professional services

151

558 ...572 479 337

Communication
198 321 194 215 194
Marketing
534 290 415 300 282
Amortization of intangible assets
233 241 256 256 256
Loss on debt extinguishment
- - - - 1,351
Acquisition, conversion and other expenses
552 889 4,849 691 158
Other expenses
4,272 3,248 3,571 3,952 3,479
Total non-interest expense
21,724 22,491 27,816 22,419 22,266
Income before income taxes
11,300 11,668 10,909 10,548 10,680
Income tax expense
2,275 2,188 2,269 2,146 2,199
Net income
$9,025 $9,480 $8,640 $8,402 $8,481
Earnings per share:
Basic
$0.60 $0.63 $0.58 $0.56 $0.55
Diluted
0.60 0.63 0.58 0.56 0.55
Weighted average shares outstanding:
Basic
14,965 14,934 14,909 15,079 15,424
Diluted
15,042 15,007 14,952 15,103 15,441

BAR HARBOR BANKSHARES

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

Quarters Ended

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

2021

2021

2020

2020

2020

Earning assets






Interest-bearing deposits with other banks (1)

0.09

%

0.09

%

0.11

%

0.09

%

0.08

%

Securities available for sale and FHLB stock

2.66

2.79

2.97

3.04

3.26

Loans:

Commercial real estate

3.54

3.68

3.74

3.81

4.11

Commercial and industrial

3.60

3.86

3.92

4.39

4.13

Paycheck protection program

5.56

8.12

11.56

3.18

3.34

Residential real estate

3.80

3.76

3.74

3.71

3.81

Consumer

3.44

3.56

3.65

3.42

3.81

Total loans

3.70

3.85

4.03

3.81

3.94

Total earning assets

3.26

%

3.46

%

3.65

%

3.57

%

3.73

%

Funding liabilities

Deposits:

NOW

0.12

%

0.14

%

0.15

%

0.14

%

0.14

%

Savings

0.10

0.13

0.13

0.13

0.15

Money market

0.12

0.14

0.14

0.16

0.40

Time deposits

1.37

1.44

1.64

1.69

1.94

Total interest-bearing deposits

0.45

0.51

0.61

0.66

0.81

Borrowings

2.12

2.16

1.83

1.60

1.51

Total interest-bearing liabilities

0.66

%

0.72

%

0.77

%

0.82

%

0.96

%

Net interest spread

2.60

2.74

2.88

2.75

2.77

Net interest margin (1)

2.74

2.88

3.02

2.90

2.93

Core net interest margin (2)

2.67

2.78

2.79

2.89

2.92

(1) Income from interest-bearing deposits with other banks has been separated from securities and restated for prior periods to conform to the current period presentation.
(2) Core net interest margin excludes Paycheck Protection Program loans.

BAR HARBOR BANKSHARES

AVERAGE BALANCES - UNAUDITED

Quarters Ended

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

(in thousands)

2021

2021

2020

2020

2020

Assets






Interest-bearing deposits with other banks (1)

$

228,825

$

176,728

$

176,747

$

92,066

$

71,067

Securities available for sale and FHLB stock (2)

635,978

613,459

563,118

627,162

648,185

Loans:

Commercial real estate

1,122,831

1,099,937

1,059,574

1,012,194

952,264

Commercial and industrial

378,634

377,176

386,201

399,734

417,620

Paycheck protection program

76,701

65,149

91,109

131,605

104,740

Residential real estate

850,119

916,633

995,173

1,060,084

1,117,608

Consumer

104,851

109,802

115,876

121,248

126,413

Total loans (3)

2,533,136

2,568,697

2,647,933

2,724,865

2,718,645

Total earning assets

3,397,939

3,358,884

3,387,798

3,444,093

3,437,897

Cash and due from banks

21,414

23,221

22,473

36,521

43,165

Allowance for credit losses

(23,419

)

(24,822

)

(18,690

)

(17,028

)

(15,678

)

Goodwill and other intangible assets

126,789

127,024

127,264

127,508

127,751

Other assets

223,369

232,477

237,424

223,316

213,986

Total assets

$

3,746,092

$

3,716,784

$

3,756,269

$

3,814,410

$

3,807,121

Liabilities and shareholders' equity

Deposits:

NOW

$

781,836

$

749,100

$

713,464

$

677,706

$

611,860

Savings

568,193

541,203

516,266

488,508

450,621

Money market

368,826

378,743

399,543

396,351

411,232

Time deposits

619,454

675,422

734,523

777,424

776,042

Total interest-bearing deposits

2,338,309

2,344,468

2,363,796

2,339,989

2,249,755

Borrowings

345,896

340,209

376,437

481,687

612,538

Total interest-bearing liabilities

2,684,205

2,684,677

2,740,233

2,821,676

2,862,293

Non-interest-bearing demand deposits

591,982

550,657

535,402

507,844

472,688

Other liabilities

56,630

74,646

71,119

78,072

66,302

Total liabilities

3,332,817

3,309,980

3,346,754

3,407,592

3,401,283

Total shareholders' equity

413,275

406,804

409,515

406,818

405,838

Total liabilities and shareholders' equity

$

3,746,092

$

3,716,784

$

3,756,269

$

3,814,410

$

3,807,121

(1) Total average interest-bearing deposits with other banks is net of Federal Reserve daily cash letter.
(2) Average balances for securities available-for-sale are based on amortized cost.
(3) Total average loans include non-accruing loans and loans held for sale.

BAR HARBOR BANKSHARES

ASSET QUALITY ANALYSIS - UNAUDITED

At or for the Quarters Ended

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Jun 30,

(in thousands)

2021

2021

2020

2020

2020

NON-PERFORMING ASSETS






Non-accruing loans:






Commercial real estate

$

4,367

$

4,664

$

4,251

$

4,714

$

3,981

Commercial installment

1,370

1,534

1,466

1,820

1,790

Residential real estate

6,788

6,753

5,729

7,154

7,194

Consumer installment

1,054

1,118

742

720

1,023

Total non-accruing loans

13,579

14,069

12,188

14,408

13,988

Other real estate owned

-

-

-

1,983

2,318

Total non-performing assets

$

13,579

$

14,069

$

12,188

$

16,391

$

16,306

Total non-accruing loans/total loans

0.54

%

0.55

%

0.48

%

0.54

%

0.52

%

Total non-performing assets/total assets

0.37

0.38

0.33

0.42

0.43

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

Balance at beginning of period

$

23,653

$

19,082

$

17,907

$

16,509

$

15,297

Impact of CECL adoption

-

5,228

-

-

-

Charged-off loans

(239

)

(216

)

(297

)

(439

)

(220

)

Recoveries on charged-off loans

166

48

112

37

78

Net loans charged-off

(73

)

(168

)

(185

)

(402

)

(142

)

Provision for credit losses

(765

)

(489

)

1,360

1,800

1,354

Balance at end of period

$

22,815

$

23,653

$

19,082

$

17,907

$

16,509

Allowance for credit losses/total loans

0.91

%

0.93

%

0.74

%

0.66

%

0.60

%

Allowance for credit losses/non-accruing loans

168

168

157

124

118

NET LOAN CHARGE-OFFS

Commercial real estate

$

(105

)

$

(131

)

$

63

$

(252

)

$

71

Commercial installment

(7

)

1

(228

)

(10

)

(155

)

Residential real estate

88

(28

)

(21

)

1

(20

)

Consumer installment

(49

)

(10

)

1

(141

)

(38

)

Total, net

$

(73

)

$

(168

)

$

(185

)

$

(402

)

$

(142

)

Net charge-offs (QTD annualized)/average loans

0.01

%

0.03

%

0.03

%

0.06

%

0.02

%

Net charge-offs (YTD annualized)/average loans

0.02

0.03

0.07

0.08

0.10

DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS

30-89 Days delinquent

0.13

%

0.43

%

0.58

%

0.16

%

0.28

%

90+ Days delinquent and still accruing

0.02

0.01

-

0.08

0.04

Total accruing delinquent loans

0.15

0.44

0.58

0.24

0.32

Non-accruing loans

0.54

0.55

0.48

0.54

0.52

Total delinquent and non-accruing loans

0.69

%

0.99

%

1.06

%

0.78

%

0.84

%

BAR HARBOR BANKSHARES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED



At or for the Quarters Ended

(in thousands)


Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Net income

$

9,025

$

9,480

$

8,640

$

8,402

$

8,481

Non-core items:

(Gain) on sale of securities, net

(50

)

-

(3,959

)

-

(1,351

)

Loss (gain) on sale of premises and equipment, net

1

8

(122

)

-

(2

)

(Gain) loss on other real estate owned

-

-

(11

)

335

-

Loss on debt extinguishment

-

-

-

-

1,351

Acquisition, conversion and other expenses

552

889

4,849

691

158

Income tax expense (1)

(119

)

(213

)

(179

)

(245

)

(37

)

Total non-core items

384

684

578

781

119

Core earnings (2)

(A)

$

9,409

$

10,164

$

9,218

$

9,183

$

8,600



Net interest income

(B)

$

22,754

$

23,422

$

25,362

$

24,665

$

24,590

Non-interest income

9,505

10,248

14,723

10,102

9,710

Total Revenue


32,259

33,670

40,085

34,767

34,300

(Gain) on sale of securities, net

(50

)

-

(3,959

)

-

(1,351

)

Total core revenue (2)

(C)

$

32,209

$

33,670

$

36,126

$

34,767

$

32,949



Total non-interest expense


21,724

22,491

27,816

22,419

22,266

Non-core expenses:


(Loss) gain on sale of premises and equipment, net

(1

)

(8

)

122

-

2

Gain (loss) on other real estate owned

-

-

11

(335

)

-

Loss on debt extinguishment

-

-

-

-

(1,351

)

Acquisition, conversion and other expenses

(552

)

(889

)

(4,849

)

(691

)

(158

)

Total non-core expenses

(553

)

(897

)

(4,716

)

(1,026

)

(1,507

)

Core non-interest expense (2)

(D)

$

21,171

$

21,594

$

23,100

$

21,393

$

20,759



Total revenue

32,259

33,670

40,085

34,767

34,300

Total non-interest expense

21,724

22,491

27,816

22,419

22,266

Pre-tax, pre-provision net revenue

$

10,535

$

11,179

$

12,269

$

12,348

$

12,034



Core revenue


32,209

33,670

36,126

34,767

32,949

Core non-interest expense

21,171

21,594

23,100

21,393

20,759

Core pre-tax, pre-provision net revenue

(U)

$

11,038

$

12,076

$

13,026

$

13,374

$

12,190



(in millions)


Average earning assets

(E)

$

3,398

$

3,359

$

3,388

$

3,444

$

3,438

Average paycheck protection program (PPP) loans

(R)

77

65

91

132

105

Average earning assets, excluding PPP loans

(S)

3,321

3,294

3,297

3,312

3,333

Average assets

(F)

3,746

3,717

3,756

3,814

3,807

Average shareholders' equity

(G)

413

407

410

407

406

Average tangible shareholders' equity (2) (3)

(H)

287

280

282

279

278

Tangible shareholders' equity, period-end (2) (3)

(I)

289

279

284

277

277

Tangible assets, period-end (2) (3)

(J)

3,513

3,603

3,598

3,732

3,653



BAR HARBOR BANKSHARES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED


At or for the Quarters Ended

(in thousands)

Jun 30,
2021

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Common shares outstanding, period-end

(K)

14,972

14,950

14,916

14,929

15,214

Average diluted shares outstanding

(L)

15,042

15,007

14,952

15,103

15,441


Core earnings per share, diluted (2)

(A/L)

$

0.63

$

0.68

$

0.62

$

0.61

$

0.56

Tangible book value per share, period-end (2)

(I/K)

19.30

18.64

19.05

18.56

18.18

Securities adjustment, net of tax (1) (4)

(M)

7,237

4,510

10,023

11,681

11,412

Tangible book value per share, excluding securities adjustment (2) (4)

(I+M)/K

18.81

18.34

18.38

17.78

17.43

Tangible shareholders' equity/total tangible assets (2)

(I/J)

8.22

7.73

7.90

7.42

7.57


Performance ratios (5)

GAAP return on assets

0.97

%

1.03

%

0.92

%

0.88

%

0.90

%

Core return on assets (2)

(A/F)

1.01

1.11

0.98

0.96

0.91

Pre-tax, pre-provision return on assets

1.13

1.22

1.30

1.29

1.27

Core pre-tax, pre-provision return on assets (2)

(U/F)

1.18

1.32

1.38

1.39

1.29

GAAP return on equity

8.76

9.45

8.39

8.22

8.40

Core return on equity (2)

(A/G)

9.13

10.13

8.95

8.98

8.52

Return on tangible equity

12.88

14.01

12.45

12.24

12.55

Core return on tangible equity (1) (2)

(A+Q)/H

13.42

15.00

13.27

13.36

12.72

Efficiency ratio (2) (6)

(D-O-Q) /(C+N)

63.45

61.95

61.98

59.47

60.67

Net interest margin

(B+P)/E

2.74

2.88

3.02

2.90

3.04

Core net interest margin (2) (7)

(B+P-T)/S

2.67

2.78

2.79

2.89

2.92


Supplementary data (in thousands)

Taxable equivalent adjustment for efficiency ratio

(N)

$

586

$

595

$

542

$

570

$

646

Franchise taxes included in non-interest expense

(O)

128

125

117

121

120

Tax equivalent adjustment for net interest margin

(P)

430

433

396

416

490

Intangible amortization

(Q)

233

241

256

256

256

Interest and fees on PPP loans

(T)

1,064

1,304

2,648

1,052

869

(1) Assumes a marginal tax rate of 23.71% in the first and second quarter of 2021 and fourth quarter of 2020 and 23.87% for the first three quarters of 2020.
(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) 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.
(7) Core net interest margin excludes Paycheck Protection Program loans.

SOURCE: Bar Harbor Bank and Trust



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