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Bar Harbor Bankshares Reports Third Quarter Results

·25 min read

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

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

  • 13% annualized total commercial loan growth

  • 92% loan to deposit ratio

  • 2.98% net interest margin compared to 2.75%

  • 32% increase in non-interest income

  • 0.56% non-accruing loans to total loans, excluding Paycheck Protection Program (PPP) loans

  • 0.88% return on assets compared to 0.55%; 0.96% core return on assets compared to 0.80% (non-GAAP)

  • 59.5% efficiency ratio compared to 65.0%

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

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

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

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

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

FINANCIAL CONDITION

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

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

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

RESULTS OF OPERATIONS

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

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

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

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

BACKGROUND

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

FORWARD LOOKING STATEMENTS

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

NON-GAAP FINANCIAL MEASURES

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

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

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

CONTACTS

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

TABLE

INDEX

CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)

A

Selected Financial Highlights

B

Footnotes to Selected Financial Highlights

C

Balance Sheets

D

Loan and Deposit Analysis

E

Statements of Income

F

Statements of Income (Five Quarter Trend)

G

Average Yields and Costs

H

Average Balances

I

Asset Quality Analysis

J

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

BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED

At or for the Quarters Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

PER SHARE DATA

Net earnings, diluted

$

0.56

$

0.55

$

0.50

$

0.27

$

0.32

Core earnings, diluted (1) (2)

0.61

0.56

0.50

0.56

0.47

Total book value

27.09

26.56

25.90

25.48

25.37

Tangible book value (2)

18.56

18.18

17.70

17.30

18.49

Market price at period end

20.55

22.39

17.28

25.39

24.93

Dividends

0.22

0.22

0.22

0.22

0.22

PERFORMANCE RATIOS (3)

Return on assets

0.88

%

0.90

%

0.85

%

0.46

%

0.55

%

Core return on assets (1) (2)

0.96

0.91

0.86

0.96

0.80

Return on equity

8.22

8.40

7.64

4.21

5.04

Core return on equity (1) (2)

8.98

8.52

7.71

8.81

7.36

Core return on tangible equity (1) (2)

13.36

12.72

11.54

12.66

10.31

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

2.98

3.00

3.06

2.95

2.75

Net interest margin (FTE), excluding purchased loan accretion (2) (4)

2.92

2.88

2.99

2.88

2.65

Efficiency ratio (2)

59.47

60.67

64.82

62.56

65.02

ORGANIC GROWTH (Year-to-date, annualized) (2) (6)

Total commercial loans

27

%

33

%

6

%

6

%

11

%

Total loans

3

7

(1

)

2

5

Total deposits

12

(0

)

(7

)

(2

)

1

FINANCIAL DATA (In millions)

Total assets

$

3,860

$

3,780

$

3,677

$

3,669

$

3,612

Total earning assets (5)

3,312

3,376

3,269

3,336

3,270

Total investments

619

662

646

684

703

Total loans

2,709

2,729

2,635

2,641

2,577

Allowance for loan losses

18

17

15

15

15

Total goodwill and intangible assets

127

128

128

127

107

Total deposits

2,935

2,695

2,651

2,696

2,494

Total shareholders' equity

404

404

404

396

394

Net income

8

8

8

4

5

Core earnings (1) (2)

9

9

8

9

7

ASSET QUALITY AND CONDITION RATIOS

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

0.06

%

0.02

%

0.18

%

0.08

%

0.02

%

Allowance for loan losses/total loans

0.66

0.60

0.58

0.58

0.60

Loans/deposits

92

101

99

98

103

Shareholders' equity to total assets

10.48

10.69

10.98

10.80

10.92

Tangible shareholders' equity to tangible assets

7.42

7.57

7.77

7.60

8.20

  1. Core measurements are non-GAAP financial measures adjusted to exclude net non-operating charges primarily related to acquisitions, restructurings, system conversions, loss on debt extinguishment and gain or loss on sale of securities, other real estate owned and premises and equipment. Refer to the Reconciliation of Non-GAAP Financial Measures in table J for additional information.

  2. Non-GAAP financial measure.

  3. All performance ratios are based on average balance sheet amounts, where applicable.

  4. Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.

  5. Earning assets includes non-accruing loans and securities are valued at amortized cost.

  6. Assets acquired from eight branches purchased from People's United Bank, National Association as of October 25, 2019, were excluded from calculation.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(in thousands)

2020

2020

2020

2019

2019

Assets

Cash and due from banks

$

53,173

$

52,776

$

68,481

$

37,261

$

50,032

Interest-bearing deposits with the Federal Reserve Bank

162,484

17,897

17,174

19,649

21,561

Total cash and cash equivalents

215,657

70,673

85,655

56,910

71,593

Securities available for sale, at fair value

604,529

641,574

626,341

663,230

675,675

Federal Home Loan Bank stock

13,975

20,265

19,897

20,679

27,469

Total securities

618,504

661,839

646,238

683,909

703,144

Commercial real estate

1,045,635

982,070

948,178

930,661

923,773

Commercial and industrial

522,510

539,442

426,357

423,291

402,706

Residential real estate

1,021,206

1,083,708

1,132,328

1,151,857

1,143,452

Consumer

119,340

124,197

128,120

135,283

107,375

Total loans

2,708,691

2,729,417

2,634,983

2,641,092

2,577,306

Less: Allowance for loan losses

(17,907

)

(16,509

)

(15,297

)

(15,353

)

(15,353

)

Net loans

2,690,784

2,712,908

2,619,686

2,625,739

2,561,953

Premises and equipment, net

51,424

50,464

49,978

51,205

47,644

Other real estate owned

1,983

2,318

2,205

2,236

2,455

Goodwill

119,477

119,477

119,477

118,649

100,085

Other intangible assets

7,913

8,155

8,398

8,641

6,879

Cash surrender value of bank-owned life insurance

77,388

76,896

76,400

75,863

75,368

Deferred tax asset, net

2,180

2,451

3,166

3,865

4,988

Other assets

74,400

75,084

66,139

42,111

38,365

Total assets

$

3,859,710

$

3,780,265

$

3,677,342

$

3,669,128

$

3,612,474

Liabilities and shareholders' equity

Demand and other non-interest bearing deposits

$

515,064

$

504,325

$

400,410

$

414,534

$

380,707

NOW deposits

706,048

642,908

578,320

575,809

490,315

Savings deposits

511,938

466,668

423,345

388,683

360,570

Money market deposits

388,356

402,835

404,385

384,090

359,328

Time deposits

813,509

678,126

844,097

932,635

902,665

Total deposits

2,934,915

2,694,862

2,650,557

2,695,751

2,493,585

Senior borrowings

385,472

546,863

497,580

471,396

641,819

Subordinated borrowings

59,920

59,879

59,849

59,920

42,928

Total borrowings

445,392

606,742

557,429

531,316

684,747

Other liabilities

74,958

74,487

65,601

45,654

39,683

Total liabilities

3,455,265

3,376,091

3,273,587

3,272,721

3,218,015

Total common shareholders' equity

404,445

404,174

403,755

396,407

394,459

Total liabilities and shareholders' equity

$

3,859,710

$

3,780,265

$

3,677,342

$

3,669,128

$

3,612,474

Net shares outstanding

14,929

15,214

15,587

15,558

15,549

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

Annualized

Growth %

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Quarter

Year to

(in thousands)

2020

2020

2020

2019

2019

End

Date

Commercial real estate

$

1,045,635

$

982,070

$

948,178

$

930,661

$

923,773

26

%

16

%

Commercial and industrial

456,184

472,524

321,605

318,988

301,590

(14

)

57

Total commercial loans

1,501,819

1,454,594

1,269,783

1,249,649

1,225,363

13

27

Residential real estate

1,021,206

1,083,708

1,132,328

1,151,857

1,143,452

(23

)

(15

)

Consumer

119,340

124,197

128,120

135,283

107,375

(16

)

(16

)

Tax exempt and other

66,326

66,918

104,752

104,303

101,116

(4

)

(49

)

Total loans

$

2,708,691

$

2,729,417

$

2,634,983

$

2,641,092

$

2,577,306

(3

)%

3

%

DEPOSIT ANALYSIS

Annualized

Growth %

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Quarter

Year to

(in thousands)

2020

2020

2020

2019

2019

End

Date

Demand

$

515,064

$

504,325

$

400,410

$

414,534

$

380,707

9

%

32

%

NOW

706,048

642,908

578,320

575,809

490,315

39

30

Savings

511,938

466,668

423,345

388,683

360,570

39

42

Money market

388,356

402,835

404,385

384,090

359,328

(14

)

1

Total non-maturity deposits

2,121,406

2,016,736

1,806,460

1,763,116

1,590,920

21

27

Total time deposits

813,509

678,126

844,097

932,635

902,665

80

(17

)

Total deposits

$

2,934,915

$

2,694,862

$

2,650,557

$

2,695,751

$

2,493,585

36

%

12

%

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands, except per share data)

2020

2019

2020

2019

Interest and dividend income

Loans

$

25,918

$

28,157

$

80,398

$

82,681

Securities and other

4,557

6,105

15,006

18,593

Total interest and dividend income

30,475

34,262

95,404

101,274

Interest expense

Deposits

3,869

7,143

14,437

20,336

Borrowings

1,941

4,674

7,149

15,232

Total interest expense

5,810

11,817

21,586

35,568

Net interest income

24,665

22,445

73,818

65,706

Provision for loan losses

1,800

893

4,265

1,779

Net interest income after provision for loan losses

22,865

21,552

69,553

63,927

Non-interest income

Trust and investment management fee income

3,532

3,013

10,060

8,836

Customer service fees

2,886

2,553

8,437

7,336

Gain on sales of securities, net

-

157

1,486

157

Mortgage banking income

2,649

452

4,230

1,094

Bank-owned life insurance income

492

497

1,525

1,558

Customer derivative income

316

828

1,417

1,553

Other income

227

143

1,078

729

Total non-interest income

10,102

7,643

28,233

21,263

Non-interest expense

Salaries and employee benefits

11,809

11,364

35,602

33,568

Occupancy and equipment

4,279

3,415

12,559

10,101

Loss on sales of premises and equipment, net

-

-

90

21

Outside services

438

424

1,414

1,278

Professional services

479

707

1,488

1,821

Communication

215

189

698

707

Marketing

300

613

970

1,419

Amortization of intangible assets

256

207

768

621

Loss on debt extinguishment

-

-

1,351

-

Acquisition, conversion and other expenses

691

3,039

952

3,319

Other expenses

3,952

3,442

11,152

10,075

Total non-interest expense

22,419

23,400

67,044

62,930

Income before income taxes

10,548

5,795

30,742

22,260

Income tax expense

2,146

780

6,138

3,847

Net income

$

8,402

$

5,015

$

24,604

$

18,413

Earnings per share:

Basic

$

0.56

$

0.32

$

1.60

$

1.19

Diluted

0.56

0.32

1.60

1.18

Weighted average shares outstanding:

Basic

15,079

15,547

15,359

15,536

Diluted

15,103

15,581

15,382

15,582

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

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(in thousands, except per share data)

2020

2020

2020

2019

2019

Interest and dividend income

Loans

$

25,918

$

26,493

$

27,987

$

28,361

$

28,157

Securities and other

4,557

4,942

5,507

5,756

6,105

Total interest and dividend income

30,475

31,435

33,494

34,117

34,262

Interest expense

Deposits

3,869

4,548

6,020

6,698

7,143

Borrowings

1,941

2,297

2,911

3,315

4,674

Total interest expense

5,810

6,845

8,931

10,013

11,817

Net interest income

24,665

24,590

24,563

24,104

22,445

Provision for loan losses

1,800

1,354

1,111

538

893

Net interest income after provision for loan losses

22,865

23,236

23,452

23,566

21,552

Non-interest income

Trust and investment management fee income

3,532

3,159

3,369

3,227

3,013

Customer service fees

2,886

2,439

3,112

2,791

2,553

Gain on sales of securities, net

-

1,351

135

80

157

Mortgage banking income

2,649

1,124

457

532

452

Bank-owned life insurance income

492

496

537

495

497

Customer derivative income

316

513

588

475

828

Other income

227

628

223 206 143

Total non-interest income
10,102 9,710 8,421 7,806 7,643
Non-interest expense
Salaries and employee benefits
11,809 11,909 11,884 11,432 11,364
Occupancy and equipment
4,279 3,860 4,420 4,113 3,415
(Gain) loss on sales of premises and equipment, net
- (2) 92 (3) -
Outside services
438 442 534 540 424
Professional services
479 337 672 370 707
Communication
215 194 289 114 189
Marketing
300 282 388 453 613
Amortization of intangible assets
256 256 256 240 207
Loss on debt extinguishment
- 1,351 - 1,096 -
Acquisition, conversion and other expenses
691 158 103 4,998 3,039
Other expenses
3,952 3,479 3,721 3,450 3,442
Total non-interest expense
22,419 22,266 22,359 26,803 23,400
Income before income taxes
10,548 10,680 9,514 4,569 5,795
Income tax expense
2,146 2,199 1,793 362 780
Net income
$8,402 $8,481 $7,721 $4,207 $5,015
Earnings per share:
Basic
$0.56 $0.55 $0.50 $0.27 $0.32
Diluted
0.56 0.55 0.50 0.27 0.32
Weighted average shares outstanding:
Basic
15,079 15,424 15,558 15,554 15,547
Diluted
15,103 15,441 15,593 15,602 15,581

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

Quarters Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Earning assets

Commercial real estate

3.81

%

4.11

%

4.46

%

4.69

%

4.74

%

Commercial and industrial

4.09

3.97

4.89

4.58

4.78

Residential

3.71

3.81

3.84

3.89

3.88

Consumer

3.42

3.81

5.20

4.84

5.13

Total loans

3.81

3.94

4.30

4.33

4.38

Securities and other

3.05

3.26

3.53

3.49

3.44

Total earning assets

3.67

%

3.81

%

4.14

%

4.15

%

4.17

%

Funding liabilities

NOW

0.14

%

0.14

%

0.40

%

0.44

%

0.51

%

Savings

0.13

0.15

0.25

0.20

0.21

Money market

0.16

0.40

1.01

1.17

1.37

Time deposits

1.69

1.94

1.92

2.06

2.16

Total interest-bearing deposits

0.66

0.81

1.08

1.19

1.33

Borrowings

1.60

1.51

2.10

2.30

2.62

Total interest-bearing liabilities

0.82

%

0.96

%

1.28

%

1.42

%

1.65

%

Net interest spread

2.85

2.85

2.86

2.73

2.52

Net interest margin

2.98

3.00

3.06

2.95

2.75

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED

Quarters Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(in thousands)

2020

2020

2020

2019

2019

Assets

Commercial real estate

$

1,012,194

$

952,264

$

945,851

$

928,445

$

900,568

Commercial and industrial

531,339

522,360

423,393

412,595

410,453

Residential real estate

1,060,084

1,117,608

1,141,908

1,156,215

1,154,552

Consumer

121,248

126,413

130,471

127,425

109,562

Total loans (1)

2,724,865

2,718,645

2,641,623

2,624,680

2,575,135

Securities and other (2)

627,162

648,185

661,848

683,939

732,925

Total earning assets

3,352,027

3,366,830

3,303,471

3,308,619

3,308,060

Cash and due from banks

128,587

114,232

57,751

67,642

62,999

Allowance for loan losses

(17,028

)

(15,678

)

(15,242

)

(15,657

)

(14,965

)

Goodwill and other intangible assets

127,508

127,751

128,014

114,537

107,058

Other assets

223,316

213,986

187,765

179,512

178,804

Total assets

$

3,814,410

$

3,807,121

$

3,661,759

$

3,654,653

$

3,641,956

Liabilities and shareholders' equity

NOW

$

677,706

$

611,860

$

570,127

$

551,335

$

487,506

Savings

488,508

450,621

410,931

378,997

359,242

Money market

396,351

411,232

373,650

379,361

338,013

Time deposits

777,424

776,042

892,654

918,528

947,949

Total interest bearing deposits

2,339,989

2,249,755

2,247,362

2,228,221

2,132,710

Borrowings

481,687

612,538

556,824

571,936

708,222

Total interest-bearing liabilities

2,821,676

2,862,293

2,804,186

2,800,157

2,840,932

Non-interest-bearing demand deposits

507,844

472,688

406,951

418,324

368,100

Other liabilities

78,072

66,302

44,343

40,136

37,975

Total liabilities

3,407,592

3,401,283

3,255,480

3,258,617

3,247,007

Total shareholders' equity

406,818

405,838

406,279

396,036

394,949

Total liabilities and shareholders' equity

$

3,814,410

$

3,807,121

$

3,661,759

$

3,654,653

$

3,641,956

  1. Total loans include non-accruing loans.

  2. Average balances for securities available-for-sale are based on amortized cost.

BAR HARBOR BANKSHARES
ASSET QUALITY ANALYSIS - UNAUDITED

At or for the Quarters Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(in thousands)

2020

2020

2020

2019

2019

NON-PERFORMING ASSETS

Non-accruing loans:

Commercial real estate

$

4,714

$

3,981

$

2,227

$

3,489

$

8,519

Commercial installment

1,820

1,790

1,996

1,836

2,077

Residential real estate

7,154

7,194

5,089

5,335

5,340

Consumer installment

720

1,023

744

890

743

Total non-accruing loans

14,408

13,988

10,056

11,550

16,679

Other real estate owned

1,983

2,318

2,205

2,236

2,455

Total non-performing assets

$

16,391

$

16,306

$

12,261

$

13,786

$

19,134

Total non-accruing loans/total loans

0.53

%

0.51

%

0.38

%

0.44

%

0.65

%

Total non-performing assets/total assets

0.42

0.43

0.33

0.38

0.53

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$

16,509

$

15,297

$

15,353

$

15,353

$

14,572

Charged-off loans

(439

)

(220

)

(1,211

)

(603

)

(215

)

Recoveries on charged-off loans

37

78

44

65

103

Net loans charged-off

(402

)

(142

)

(1,167

)

(538

)

(112

)

Provision for loan losses

1,800

1,354

1,111

538

893

Balance at end of period

$

17,907

$

16,509

$

15,297

$

15,353

$

15,353

Allowance for loan losses/total loans

0.66

%

0.60

%

0.58

%

0.58

%

0.60

%

Allowance for loan losses/non-accruing loans

124

118

152

133

92

NET LOAN CHARGE-OFFS

Commercial real estate

$

(252

)

$

71

$

(846

)

$

(92

)

$

1

Commercial installment

(10

)

(155

)

(170

)

(331

)

62

Residential real estate

1

(20

)

(1

)

(16

)

(124

)

Consumer installment

(141

)

(38

)

(150

)

(99

)

(51

)

Total, net

$

(402

)

$

(142

)

$

(1,167

)

$

(538

)

$

(112

)

Net charge-offs (QTD annualized)/average loans

0.06

%

0.02

%

0.18

%

0.08

%

0.02

%

Net charge-offs (YTD annualized)/average loans

0.08

0.10

0.18

0.03

0.02

DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS

30-89 Days delinquent

0.16

%

0.28

%

0.84

%

0.74

%

0.18

%

90+ Days delinquent and still accruing

0.08

0.04

0.08

0.01

0.03

Total accruing delinquent loans

0.24

0.32

0.92

0.75

0.21

Non-accruing loans

0.53

0.51

0.38

0.44

0.65

Total delinquent and non-accruing loans

0.77

%

0.83

%

1.30

%

1.19

%

0.86

%

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

At or for the Quarters Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(in thousands)

2020

2020

2020

2019

2019

Net income

$

8,402

$

8,481

$

7,721

$

4,207

$

5,015

Plus (less):

Gain on sale of securities, net

-

(1,351

)

(135

)

(80

)

(157

)

(Gain) loss on sale of premises and equipment, net

-

(2

)

92

(3

)

-

Loss on other real estate owned

335

-

31

20

146

Loss on debt extinguishment

-

1,351

-

1,096

-

Acquisition, conversion and other expenses

691

158

103

4,998

3,039

Income tax expense (1)

(245

)

(37

)

(22

)

(1,440

)

(720

)

Total core earnings (2)

(A)

$

9,183

$

8,600

$

7,790

$

8,798

$

7,323

Net interest income

(B)

$

24,665

$

24,590

$

24,563

$

24,104

$

22,445

Plus: Non-interest income

10,102

9,710

8,421

7,806

7,643

Total Revenue

34,767

34,300

32,984

31,910

30,088

Adj: Gain on sale of securities, net

-

(1,351

)

(135

)

(80

)

(157

)

Total core revenue (2)

(C)

$

34,767

$

32,949

$

32,849

$

31,830

$

29,931

Total non-interest expense

22,419

22,266

22,359

26,803

23,400

Less: Gain (loss) on sale of premises and equipment, net

-

2

(92

)

3

-

Less: Loss on other real estate owned

(335

)

-

(31

)

(20

)

(146

)

Less: Loss on debt extinguishment

-

(1,351

)

-

(1,096

)

-

Less: Acquisition, conversion and other expenses

(691

)

(158

)

(103

)

(4,998

)

(3,039

)

Core non-interest expense (2)

(D)

$

21,393

$

20,759

$

22,133

$

20,692

$

20,215

(in millions)

Total average earning assets

(E)

$

3,352

$

3,367

$

3,306

$

3,309

$

3,308

Total average assets

(F)

3,814

3,807

3,662

3,655

3,642

Total average shareholders' equity

(G)

407

406

406

396

395

Total average tangible shareholders' equity (2) (3)

(H)

279

278

278

281

288

Total tangible shareholders' equity, period-end (2) (3)

(I)

277

277

276

269

287

Total tangible assets, period-end (2) (3)

(J)

3,732

3,653

3,549

3,542

3,506

(in thousands)

Total common shares outstanding, period-end

(K)

14,929

15,214

15,587

15,558

15,549

Average diluted shares outstanding

(L)

15,103

15,441

15,593

15,602

15,581

Core earnings per share, diluted (2)

(A/L)

$

0.61

$

0.56

$

0.50

$

0.56

$

0.47

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

(I/K)

18.56

18.18

17.70

17.30

18.49

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

(M)

11,681

11,412

9,560

5,549

8,002

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

(I+M)/K

17.78

17.43

17.09

16.94

17.98

Total tangible shareholders' equity/total tangible assets (2)

(I/J)

7.42

7.57

7.77

7.60

8.20

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

At or for the Quarters Ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(in thousands)

2020

2020

2020

2019

2019

Performance ratios (5)

GAAP return on assets

0.88

%

0.90

%

0.85

%

0.46

%

0.55

%

Core return on assets (2)

(A/F)

0.96

0.91

0.86

0.96

0.80

GAAP return on equity

8.22

8.40

7.64

4.21

5.04

Core return on equity (2)

(A/G)

8.98

8.52

7.71

8.81

7.36

Core return on tangible equity (2) (6)

(A+Q)/H

13.36

12.72

11.54

12.66

10.31

Efficiency ratio (2) (7)

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

59.47

60.67

64.82

62.56

65.02

Net interest margin

(B+P)/E

2.98

3.00

3.06

2.95

2.75

Supplementary data (in thousands)

Taxable equivalent adjustment for efficiency ratio

(N)

$

570

$

646

$

719

$

674

$

658

Franchise taxes included in non-interest expense

(O)

121

120

119

119

119

Tax equivalent adjustment for net interest margin

(P)

416

490

551

516

503

Intangible amortization

(Q)

256

256

256

240

207

  1. Assumes a marginal tax rate of 23.87% for the first three quarters of 2020 and the fourth quarter of 2019 and 23.78% in the first three quarters of 2019.

  2. Non-GAAP financial measure.

  3. Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end.

  4. Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity.

  5. All performance ratios are based on average balance sheet amounts, where applicable.

  6. Adjusted return on tangible equity is computed by taking core earnings divided by shareholders' equity less the tax-effected amortization of intangible assets, assuming a marginal rate of 23.87% for the first three quarters of 2020 and the fourth quarter of 2019, and 23.78% in the first three quarters of 2019.

  7. Efficiency ratio is computed by dividing core non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis.

SOURCE: Bar Harbor Bank and Trust



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