Bar Harbor Bankshares Reports Second Quarter Earnings
BAR HARBOR, MAINE - July 19, 2018 -- Bar Harbor Bankshares (NYSE American: BHB) reported second quarter 2018 GAAP earnings of $8.5 million, or 55 cents per share, compared with $6.6 million, or 42 cents per share in the same quarter of 2017. Core earnings in the second quarter 2018 totaled $8.7 million, or 56 cents per share, up from $8.1 million, or 52 cents in the second quarter of 2017.
SECOND QUARTER FINANCIAL HIGHLIGHTS (comparisons are to the second quarter 2017 unless otherwise noted):
| • | 9% annualized commercial loan growth |
| • | 9% increase in non-interest income |
| • | 58.8% efficiency ratio (non-GAAP measure) |
| • | 1.00% core return on assets (non-GAAP measure) |
| • | 9.86% core return on equity (non-GAAP measure) |
| • | 9% annualized growth in tangible book value per share, excluding security adjustments (non-GAAP measure) |
President and Chief Executive Officer, Curtis C. Simard stated, “Our teams had a successful second quarter as they executed on our strategies and delivered on financial performance. We diversified revenue streams, grew loans under a uniformed brand and banking franchise, adhered to our strong credit culture and maintained a disciplined approach to expense management. As a result, core return on assets improved to 1.00% on stronger core earnings (non-GAAP measure), up 8% on a year-over-year basis. Non-interest income grew by 9% year-over-year on higher customer activity and fees from the build out of our derivatives platform. With the additional talent we’ve hired and evolving needs of our customers, we expanded our derivatives capabilities in the second quarter, which contributed almost 3 cents of earnings per share. We expect this to be a continuing source of non-interest income as we look forward.”
| BHB - Bar Harbor Bankshares | Page 1 | www.bhbt.com |
“Our commercial teams continued to gain market share as we grew commercial loans at an annualized rate of 9%. Our pipeline remains robust going into the third quarter, especially in commercial and industrial products.”
Mr. Simard went on to say, “In April, we officially unified the Bar Harbor Bank & Trust brand throughout our footprint as we now operate under one name. Our brand identity as a True Community Bank is at the heart of who we are and has further strengthened us as a result of this unification.”
“In the third quarter, we will convert our current Visa debit card offering to Mastercard for all of our customers. The introduction of this card will allow us to further enhance security and fraud detection for customers to include EMV chips. In addition to the issuance of new cards, a rewards program and instant issuance capabilities will be rolled out at all of our branches and customer driven Bar Harbor card controls will be provided though mobile devices.”
Mr. Simard further stated, “One of the key elements in being a True Community Bank is the donation of time, money and expertise to those within our surrounding communities. In addition to the countless volunteer hours that we have committed to our communities, the Bank has already donated significantly this year to worthy causes in the places we call home. We also rolled out an employee incentive program to encourage charitable donations that will provide meaningful support to non-profit businesses.”
Mr. Simard concluded, “Excluding security adjustments, we are ahead of schedule on the earn-back of dilution to tangible book value per share and anticipate to be at pre-acquisition levels by year-end. We are proud of our key performance metrics and community achievements and are looking forward to the second half of 2018, as we build upon our current momentum and continue to enhance shareholder value.”
RESULTS OF OPERATIONS
GAAP earnings increased to $8.5 million, or 55 cents per share, in the second quarter of 2018 from $6.6 million, or 42 cents per share, in the same period of 2017. Core earnings were up 8% to $8.7 million, or 56 cents per share, in the second quarter of 2018 compared to $8.1 million, or 52 cents per share, in the second quarter of 2017. Core revenue totaled $30.1 million and includes the benefit of higher non-interest income from expanded customer activity fees and derivative income. Interest income totaled $31.7 million, up 7% on a year-over-year basis, and yields on loans and investments expanded eight basis points in total. However, net interest margin in the second quarter 2018 decreased to 2.91% from 3.16% in the prior year due to higher
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cost of funds driven by short-term interest rate hikes. The Company’s loan to deposit ratio improved two basis points over the prior year to 105 at the end of the second quarter. Given the further flattening of the yield curve, the Company did extend liability durations during the quarter in an effort to mitigate the impact of future Federal Reserve tightening. The contribution from tax-equivalency adjustments also declined over the prior year as a result of the lower federal statutory tax rate. The second quarter provision for loan losses was $770 thousand and exceeded net charge-offs, which follows the positive trend in all quarterly periods presented.
Non-interest expense decreased to $18.7 million in the second quarter 2018 compared to $20.0 million in the second quarter of 2017. The decrease primarily relates to lower acquisition, conversion and other expenses, totaling $214 thousand in 2018 compared to $2.5 million in 2017. Offsetting this, brand consolidation costs also increased other expense in the second quarter 2018 by $318 thousand.
The second quarter effective tax rate decreased to 19.9% in 2018 compared with 31.6% in the same quarter of 2017, primarily reflecting a lower federal statutory tax rate. The effective tax rate in 2017 also benefited from the acquisition and conversion related costs.
FINANCIAL CONDITION
Total assets were $3.5 billion at the end of the second quarter 2018 increasing $30.1 million primarily due to growth in the loan portfolio. Total loans increased $20.6 million in the second quarter with the majority of the growth driven by commercial products lines. Non-accruing loans increased $1.6 million during the quarter mostly due to the deterioration of one specific residential relationship, which is expected to be settled for the full carrying value of the obligation. Overall, asset quality metrics remain strong with an allowance for credit losses to total loans ratio of 0.53%. Excluding the impact of securities fair value adjustments, earnings grew tangible book value per share (non-GAAP measure) to $16.81 compared from $16.44 in the first of quarter of 2018.
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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 125 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.bhbt.com.
FORWARD LOOKING STATEMENTS
Certain statements 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, 2017. 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.
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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 adjusted earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP adjusted 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 adjusted earnings in evaluating operating trends, including components for adjusted revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, 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 adjusted earnings per share based on its measure of adjusted 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 adjusted earnings and adjusted 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.
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CONTACTS
Josephine Iannelli; EVP, Chief Financial Officer & Treasurer; (207) 288-3314
TABLE INDEX | CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED) |
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| BAR HARBOR BANKSHARES | ||||||||||||||||||||
| SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED | ||||||||||||||||||||
At or for the Quarters Ended | ||||||||||||||||||||
| Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | ||||||||||||||||
| PER SHARE DATA | ||||||||||||||||||||
| Net earnings, diluted | $ | 0.55 | $ | 0.50 | $ | 0.43 | $ | 0.56 | $ | 0.42 | ||||||||||
Core earnings, diluted (1) (2) | 0.56 | 0.52 | 0.58 | 0.57 | 0.52 | |||||||||||||||
| Total book value | 22.97 | 22.78 | 22.96 | 22.90 | 22.53 | |||||||||||||||
Tangible book value (2) | 16.00 | 15.78 | 15.94 | 15.84 | 15.44 | |||||||||||||||
| Market price at period end | 30.29 | 27.72 | 27.01 | 31.36 | 30.82 | |||||||||||||||
| Dividends | 0.19 | 0.19 | 0.19 | 0.19 | 0.19 | |||||||||||||||
PERFORMANCE RATIOS (3) | ||||||||||||||||||||
| Return on assets | 0.97 | % | 0.90 | % | 0.75 | % | 0.99 | % | 0.76 | % | ||||||||||
Core return on assets (1) (2) | 1.00 | 0.93 | 1.02 | 1.01 | 0.94 | |||||||||||||||
| Return on equity | 9.65 | 9.01 | 7.35 | 9.67 | 7.55 | |||||||||||||||
Core return on equity (1) (2) | 9.86 | 9.31 | 9.97 | 9.90 | 9.32 | |||||||||||||||
Core return on tangible equity (1) (2) | 14.43 | 13.72 | 14.56 | 14.53 | 13.81 | |||||||||||||||
Net interest margin, fully taxable equivalent (FTE) (2) (4) | 2.91 | 2.97 | 3.04 | 3.06 | 3.16 | |||||||||||||||
Net interest margin (FTE), excluding purchased loan accretion (2) (4) | 2.80 | 2.85 | 2.93 | 2.93 | 3.02 | |||||||||||||||
Efficiency ratio (2) | 58.83 | 60.44 | 53.02 | 53.53 | 54.57 | |||||||||||||||
GROWTH (Year-to-date, annualized) (2) | ||||||||||||||||||||
| Total commercial loans | 5.7 | % | 2.2 | % | 23.8 | % | 20.5 | % | 7.2 | % | ||||||||||
| Total loans | — | (3.4 | ) | 13.1 | 12.2 | 7.0 | ||||||||||||||
| Total deposits | 1.9 | (1.8 | ) | 14.4 | 10.6 | 2.3 | ||||||||||||||
FINANCIAL DATA (In millions) | ||||||||||||||||||||
| Total assets | $ | 3,541 | $ | 3,511 | $ | 3,565 | $ | 3,476 | $ | 3,503 | ||||||||||
Total earning assets (5) | 3,250 | 3,235 | 3,244 | 3,183 | 3,138 | |||||||||||||||
| Total investments | 749 | 757 | 755 | 756 | 763 | |||||||||||||||
| Total loans | 2,485 | 2,464 | 2,486 | 2,429 | 2,377 | |||||||||||||||
| Allowance for loan losses | 13 | 13 | 12 | 12 | 11 | |||||||||||||||
| Total goodwill and intangible assets | 108 | 108 | 108 | 109 | 109 | |||||||||||||||
| Total deposits | 2,375 | 2,341 | 2,352 | 2,275 | 2,213 | |||||||||||||||
| Total shareholders' equity | 356 | 352 | 355 | 353 | 347 | |||||||||||||||
| Net income | 9 | 8 | 7 | 9 | 7 | |||||||||||||||
Core income (1) (2) | 9 | 8 | 9 | 9 | 8 | |||||||||||||||
| ASSET QUALITY AND CONDITION RATIOS | ||||||||||||||||||||
| Net charge-offs (current quarter annualized)/average loans | 0.06 | % | 0.07 | % | 0.04 | % | 0.01 | % | 0.03 | % | ||||||||||
| Allowance for loan losses/total loans | 0.53 | 0.51 | 0.50 | 0.49 | 0.48 | |||||||||||||||
| Loans/deposits | 105 | 105 | 106 | 107 | 107 | |||||||||||||||
| Shareholders' equity to total assets | 10.05 | 10.03 | 9.95 | 10.17 | 9.91 | |||||||||||||||
| Tangible shareholders' equity to tangible assets | 7.22 | 7.17 | 7.12 | 7.26 | 7.01 | |||||||||||||||
A
_____________________________________
(1) Core measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions, system conversions and gain on sale of securities. 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 annualized and 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.
B
| BAR HARBOR BANKSHARES | ||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS - UNAUDITED | ||||||||||||||||||||
| (in thousands) | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 39,327 | $ | 35,088 | $ | 34,262 | $ | 31,223 | $ | 28,112 | ||||||||||
| Interest-bearing deposits with the Federal Reserve Bank | 22,066 | 12,725 | 56,423 | 17,501 | 90,881 | |||||||||||||||
| Total cash and cash equivalents | 61,393 | 47,813 | 90,685 | 48,724 | 118,993 | |||||||||||||||
| Securities available for sale, at fair value | 710,147 | 718,559 | 717,242 | 718,459 | 718,364 | |||||||||||||||
| Federal Home Loan Bank stock | 38,712 | 38,105 | 38,105 | 37,107 | 44,168 | |||||||||||||||
| Total securities | 748,859 | 756,664 | 755,347 | 755,566 | 762,532 | |||||||||||||||
| Commercial real estate | 838,546 | 824,721 | 826,746 | 793,572 | 738,584 | |||||||||||||||
| Commercial and industrial | 400,293 | 387,205 | 379,423 | 357,072 | 350,002 | |||||||||||||||
| Residential real estate | 1,127,895 | 1,132,977 | 1,155,682 | 1,152,628 | 1,160,832 | |||||||||||||||
| Consumer | 118,332 | 119,516 | 123,762 | 125,590 | 127,229 | |||||||||||||||
| Total loans | 2,485,066 | 2,464,419 | 2,485,613 | 2,428,862 | 2,376,647 | |||||||||||||||
| Less: Allowance for loan losses | (13,090 | ) | (12,679 | ) | (12,325 | ) | (11,950 | ) | (11,442 | ) | ||||||||||
| Net loans | 2,471,976 | 2,451,740 | 2,473,288 | 2,416,912 | 2,365,205 | |||||||||||||||
| Premises and equipment, net | 48,038 | 48,464 | 47,708 | 48,309 | 48,590 | |||||||||||||||
| Other real estate owned | 129 | 216 | 122 | 122 | 122 | |||||||||||||||
| Goodwill | 100,085 | 100,085 | 100,085 | 100,255 | 100,255 | |||||||||||||||
| Other intangible assets | 7,921 | 8,152 | 8,383 | 8,811 | 9,047 | |||||||||||||||
| Cash surrender value of bank-owned life insurance | 58,811 | 58,433 | 57,997 | 57,613 | 57,233 | |||||||||||||||
| Deferred tax asset, net | 10,309 | 9,627 | 7,180 | 13,052 | 13,211 | |||||||||||||||
| Other assets | 33,534 | 29,793 | 24,389 | 26,368 | 28,223 | |||||||||||||||
| Total assets | $ | 3,541,055 | $ | 3,510,987 | $ | 3,565,184 | $ | 3,475,732 | $ | 3,503,411 | ||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||
| Demand and other non-interest bearing deposits | $ | 341,773 | $ | 342,192 | $ | 349,055 | $ | 357,398 | $ | 332,339 | ||||||||||
| NOW deposits | 449,715 | 448,992 | 466,610 | 442,085 | 451,171 | |||||||||||||||
| Savings deposits | 350,339 | 361,591 | 364,799 | 373,118 | 360,306 | |||||||||||||||
| Money market deposits | 260,642 | 303,777 | 305,275 | 300,398 | 285,312 | |||||||||||||||
| Time deposits | 972,252 | 884,848 | 866,346 | 802,110 | 783,876 | |||||||||||||||
| Total deposits | 2,374,721 | 2,341,400 | 2,352,085 | 2,275,109 | 2,213,004 | |||||||||||||||
| Senior borrowings | 735,924 | 742,198 | 786,688 | 775,582 | 872,021 | |||||||||||||||
| Subordinated borrowings | 43,003 | 43,018 | 43,033 | 43,048 | 43,063 | |||||||||||||||
| Total borrowings | 778,927 | 785,216 | 829,721 | 818,630 | 915,084 | |||||||||||||||
| Other liabilities | 31,444 | 32,214 | 28,737 | 28,534 | 28,201 | |||||||||||||||
| Total liabilities | 3,185,092 | 3,158,830 | 3,210,543 | 3,122,273 | 3,156,289 | |||||||||||||||
| Total common shareholders' equity | 355,963 | 352,157 | 354,641 | 353,459 | 347,122 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,541,055 | $ | 3,510,987 | $ | 3,565,184 | $ | 3,475,732 | $ | 3,503,411 | ||||||||||
| Net shares outstanding | 15,496 | 15,459 | 15,443 | 15,432 | 15,407 | |||||||||||||||
C
| BAR HARBOR BANKSHARES | ||||||||||||||||||||||||||
| CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED | ||||||||||||||||||||||||||
| LOAN ANALYSIS | ||||||||||||||||||||||||||
| Annualized Growth % | ||||||||||||||||||||||||||
| (in thousands) | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Quarter End | Year to Date | |||||||||||||||||||
| Commercial real estate | $ | 838,546 | $ | 824,721 | $ | 826,746 | $ | 793,572 | $ | 738,584 | 6.7 | % | 2.9 | % | ||||||||||||
| Commercial and industrial | 313,680 | 301,811 | 293,707 | 270,759 | 269,960 | 15.7 | 13.6 | |||||||||||||||||||
| Total commercial loans | 1,152,226 | 1,126,532 | 1,120,453 | 1,064,331 | 1,008,544 | 9.1 | 5.7 | |||||||||||||||||||
| Residential real estate | 1,127,895 | 1,132,977 | 1,155,682 | 1,152,628 | 1,160,832 | (1.8 | ) | (4.8 | ) | |||||||||||||||||
| Consumer | 118,332 | 119,516 | 123,762 | 125,590 | 127,229 | (4.0 | ) | (8.8 | ) | |||||||||||||||||
| Tax exempt and other | 86,613 | 85,394 | 85,716 | 86,313 | 80,042 | 5.7 | 2.1 | |||||||||||||||||||
| Total loans | $ | 2,485,066 | $ | 2,464,419 | $ | 2,485,613 | $ | 2,428,862 | $ | 2,376,647 | 3.4 | % | — | % | ||||||||||||
| DEPOSIT ANALYSIS | ||||||||||||||||||||||||||
| Annualized Growth % | ||||||||||||||||||||||||||
| (in thousands) | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Quarter End | Year to Date | |||||||||||||||||||
| Demand | $ | 341,773 | $ | 342,192 | $ | 349,055 | $ | 357,398 | $ | 332,339 | (0.5 | )% | (4.2 | )% | ||||||||||||
| NOW | 449,715 | 448,992 | 466,610 | 442,085 | 451,171 | 0.6 | (7.2 | ) | ||||||||||||||||||
| Savings | 350,339 | 361,591 | 364,799 | 373,118 | 360,306 | (12.4 | ) | (7.9 | ) | |||||||||||||||||
| Money Market | 260,642 | 303,777 | 305,275 | 300,398 | 285,312 | (56.8 | ) | (29.2 | ) | |||||||||||||||||
| Total non-maturity deposits | 1,402,469 | 1,456,552 | 1,485,739 | 1,472,999 | 1,429,128 | (14.9 | ) | (11.2 | ) | |||||||||||||||||
| Total time deposits | 972,252 | 884,848 | 866,346 | 802,110 | 783,876 | 39.5 | 24.4 | |||||||||||||||||||
| Total deposits | $ | 2,374,721 | $ | 2,341,400 | $ | 2,352,085 | $ | 2,275,109 | $ | 2,213,004 | 5.7 | % | 1.9 | % | ||||||||||||
D
| BAR HARBOR BANKSHARES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Interest and dividend income | ||||||||||||||||
| Loans | $ | 25,934 | $ | 24,226 | $ | 51,060 | $ | 45,420 | ||||||||
| Securities and other | 5,784 | 5,439 | 11,435 | 10,430 | ||||||||||||
| Total interest and dividend income | 31,718 | 29,665 | 62,495 | 55,850 | ||||||||||||
| Interest expense | ||||||||||||||||
| Deposits | 4,405 | 2,539 | 8,390 | 4,749 | ||||||||||||
| Borrowings | 4,321 | 3,317 | 7,955 | 5,920 | ||||||||||||
| Total interest expense | 8,726 | 5,856 | 16,345 | 10,669 | ||||||||||||
| Net interest income | 22,992 | 23,809 | 46,150 | 45,181 | ||||||||||||
| Provision for loan losses | 770 | 736 | 1,565 | 1,531 | ||||||||||||
| Net interest income after provision for loan losses | 22,222 | 23,073 | 44,585 | 43,650 | ||||||||||||
| Non-interest income | ||||||||||||||||
| Trust and investment management fee income | 3,122 | 3,324 | 6,084 | 6,188 | ||||||||||||
| Insurance brokerage service income | — | 327 | — | 691 | ||||||||||||
| Customer service fees | 2,347 | 1,991 | 4,571 | 3,764 | ||||||||||||
| Bank-owned life insurance income | 377 | 386 | 823 | 785 | ||||||||||||
| Other income | 1,275 | 530 | 1,881 | 1,076 | ||||||||||||
| Total non-interest income | 7,121 | 6,558 | 13,359 | 12,504 | ||||||||||||
| Non-interest expense | ||||||||||||||||
| Salaries and employee benefits | 10,375 | 10,127 | 21,364 | 20,448 | ||||||||||||
| Occupancy and equipment | 2,925 | 2,829 | 5,998 | 5,495 | ||||||||||||
| Loss on sales of premises and equipment, net | — | — | — | 95 | ||||||||||||
| Outside services | 581 | 716 | 1,141 | 1,313 | ||||||||||||
| Professional services | 360 | 489 | 793 | 929 | ||||||||||||
| Communication | 304 | 290 | 484 | 658 | ||||||||||||
| Amortization of intangible assets | 207 | 211 | 414 | 391 | ||||||||||||
| Acquisition, conversion and other expenses | 214 | 2,459 | 549 | 5,571 | ||||||||||||
| Other expenses | 3,719 | 2,925 | 6,794 | 5,977 | ||||||||||||
| Total non-interest expense | 18,685 | 20,046 | 37,537 | 40,877 | ||||||||||||
| Income before income taxes | 10,658 | 9,585 | 20,407 | 15,277 | ||||||||||||
| Income tax expense | 2,123 | 3,029 | 4,060 | 4,510 | ||||||||||||
| Net income | $ | 8,535 | $ | 6,556 | $ | 16,347 | $ | 10,767 | ||||||||
| Earnings per share: | ||||||||||||||||
Basic | $ | 0.55 | $ | 0.43 | $ | 1.06 | $ | 0.72 | ||||||||
| Diluted | $ | 0.55 | $ | 0.42 | 1.05 | 0.72 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 15,482 | 15,393 | 15,465 | 14,935 | ||||||||||||
| Diluted | 15,571 | 15,506 | 15,560 | 15,049 | ||||||||||||
E
| BAR HARBOR BANKSHARES | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED | ||||||||||||||||||||
| (in thousands, except per share data) | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | |||||||||||||||
| Interest and dividend income | ||||||||||||||||||||
| Loans | $ | 25,934 | $ | 25,126 | $ | 24,895 | $ | 24,661 | $ | 24,226 | ||||||||||
| Securities and other | 5,784 | 5,651 | 5,261 | 5,402 | 5,439 | |||||||||||||||
| Total interest and dividend income | 31,718 | 30,777 | 30,156 | 30,063 | 29,665 | |||||||||||||||
| Interest expense | ||||||||||||||||||||
| Deposits | 4,405 | 3,985 | 3,381 | 3,177 | 2,539 | |||||||||||||||
| Borrowings | 4,321 | 3,634 | 3,279 | 3,408 | 3,317 | |||||||||||||||
| Total interest expense | 8,726 | 7,619 | 6,660 | 6,585 | 5,856 | |||||||||||||||
| Net interest income | 22,992 | 23,158 | 23,496 | 23,478 | 23,809 | |||||||||||||||
| Provision for loan losses | 770 | 795 | 597 | 660 | 736 | |||||||||||||||
| Net interest income after provision for loan losses | 22,222 | 22,363 | 22,899 | 22,818 | 23,073 | |||||||||||||||
| Non-interest income | ||||||||||||||||||||
| Trust and investment management fee income | 3,122 | 2,962 | 3,042 | 3,040 | 3,324 | |||||||||||||||
| Insurance brokerage service income | — | — | 77 | 329 | 327 | |||||||||||||||
| Customer service fees | 2,347 | 2,224 | 2,495 | 2,638 | 1,991 | |||||||||||||||
| Gain on sales of securities, net | — | — | — | 19 | — | |||||||||||||||
| Bank-owned life insurance income | 377 | 446 | 374 | 380 | 386 | |||||||||||||||
| Other income | 1,275 | 606 | 530 | 554 | 530 | |||||||||||||||
| Total non-interest income | 7,121 | 6,238 | 6,518 | 6,960 | 6,558 | |||||||||||||||
| Non-interest expense | ||||||||||||||||||||
| Salaries and employee benefits | 10,375 | 10,989 | 9,524 | 9,617 | 10,127 | |||||||||||||||
| Occupancy and equipment | 2,925 | 3,073 | 2,866 | 2,700 | 2,829 | |||||||||||||||
| Gain on sales of premises and equipment,net | — | — | — | (1 | ) | — | ||||||||||||||
| Outside services | 581 | 560 | 780 | 907 | 716 | |||||||||||||||
| Professional services | 360 | 433 | 298 | 428 | 489 | |||||||||||||||
| Communication | 304 | 180 | 249 | 382 | 290 | |||||||||||||||
| Amortization of intangible assets | 207 | 207 | 209 | 212 | 211 | |||||||||||||||
| Acquisition, conversion, and other expenses | 214 | 335 | (2,615 | ) | 346 | 2,459 | ||||||||||||||
| Other expenses | 3,719 | 3,075 | 2,952 | 2,995 | 2,925 | |||||||||||||||
| Total non-interest expense | 18,685 | 18,852 | 14,263 | 17,586 | 20,046 | |||||||||||||||
| Income before income taxes | 10,658 | 9,749 | 15,154 | 12,192 | 9,585 | |||||||||||||||
| Income tax expense | 2,123 | 1,937 | 8,545 | 3,575 | 3,029 | |||||||||||||||
| Net income | $ | 8,535 | $ | 7,812 | $ | 6,609 | $ | 8,617 | $ | 6,556 | ||||||||||
| Earnings per share: | ||||||||||||||||||||
Basic | $ | 0.55 | $ | 0.51 | $ | 0.43 | $ | 0.56 | $ | 0.43 | ||||||||||
| Diluted | $ | 0.55 | $ | 0.50 | $ | 0.43 | $ | 0.56 | $ | 0.42 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 15,482 | 15,448 | 15,437 | 15,420 | 15,393 | |||||||||||||||
| Diluted | 15,571 | 15,553 | 15,537 | 15,511 | 15,506 | |||||||||||||||
F
| BAR HARBOR BANKSHARES | |||||||||||||||
| AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED | |||||||||||||||
| Quarters Ended | |||||||||||||||
| Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | |||||||||||
| Earning assets | |||||||||||||||
| Commercial real estate | 4.48 | % | 4.41 | % | 4.30 | % | 4.28 | % | 4.24 | % | |||||
| Commercial and industrial | 4.69 | 4.41 | 4.77 | 4.84 | 4.77 | ||||||||||
| Residential | 3.88 | 3.87 | 3.78 | 3.79 | 3.83 | ||||||||||
| Consumer | 4.65 | 4.47 | 4.17 | 4.34 | 4.71 | ||||||||||
| Total loans | 4.25 | 4.16 | 4.12 | 4.13 | 4.14 | ||||||||||
| Securities and other | 3.18 | 3.16 | 3.06 | 3.13 | 3.19 | ||||||||||
| Total earning assets | 3.99 | % | 3.92 | % | 3.87 | % | 3.89 | % | 3.91 | % | |||||
| Funding liabilities | |||||||||||||||
| NOW | 0.37 | % | 0.34 | % | 0.31 | % | 0.32 | % | 0.25 | % | |||||
| Savings | 0.17 | 0.18 | 0.19 | 0.18 | 0.13 | ||||||||||
| Money market | 0.79 | 0.68 | 0.58 | 0.52 | 0.45 | ||||||||||
| Time deposits | 1.51 | 1.39 | 1.19 | 1.13 | 1.01 | ||||||||||
| Total interest bearing deposits | 0.90 | 0.82 | 0.70 | 0.66 | 0.56 | ||||||||||
| Borrowings | 2.07 | 1.80 | 1.62 | 1.66 | 1.41 | ||||||||||
| Total interest-bearing liabilities | 1.25 | % | 1.11 | % | 0.97 | % | 0.96 | % | 0.85 | % | |||||
| Net interest spread | 2.74 | 2.81 | 2.90 | 2.93 | 3.06 | ||||||||||
| Net interest margin | 2.91 | 2.97 | 3.04 | 3.06 | 3.16 | ||||||||||
G
| BAR HARBOR BANKSHARES | ||||||||||||||||||||
| AVERAGE BALANCES - UNAUDITED | ||||||||||||||||||||
| Quarters Ended | ||||||||||||||||||||
| (in thousands) | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Commercial real estate | $ | 824,356 | $ | 819,531 | $ | 783,730 | $ | 764,770 | $ | 767,669 | ||||||||||
| Commercial and industrial | 396,471 | 380,029 | 362,881 | 353,194 | 322,147 | |||||||||||||||
| Residential | 1,126,714 | 1,147,010 | 1,161,865 | 1,158,069 | 1,159,714 | |||||||||||||||
| Consumer | 119,570 | 121,467 | 125,109 | 126,138 | 127,611 | |||||||||||||||
Total loans (1) | 2,467,111 | 2,468,037 | 2,433,585 | 2,402,171 | 2,377,141 | |||||||||||||||
Securities and other (2) | 767,886 | 765,328 | 753,282 | 754,450 | 761,546 | |||||||||||||||
| Total earning assets | 3,234,997 | 3,233,365 | 3,186,867 | 3,156,621 | 3,138,687 | |||||||||||||||
| Cash and due from banks | 50,869 | 53,151 | 65,145 | 49,169 | 87,332 | |||||||||||||||
| Allowance for loan losses | (13,107 | ) | (12,589 | ) | (12,202 | ) | (11,786 | ) | (11,292 | ) | ||||||||||
| Goodwill and other intangible assets | 108,118 | 108,349 | 108,769 | 109,147 | 109,108 | |||||||||||||||
| Other assets | 131,522 | 129,525 | 144,359 | 149,394 | 110,129 | |||||||||||||||
| Total assets | $ | 3,512,399 | $ | 3,511,801 | $ | 3,492,938 | $ | 3,452,545 | $ | 3,433,964 | ||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||
| NOW | $ | 441,645 | $ | 447,026 | $ | 449,669 | $ | 447,459 | $ | 440,452 | ||||||||||
| Savings | 351,712 | 362,508 | 368,714 | 368,443 | 362,899 | |||||||||||||||
| Money market | 288,169 | 305,105 | 308,071 | 292,110 | 275,687 | |||||||||||||||
| Time deposits | 872,149 | 857,796 | 799,348 | 793,489 | 732,188 | |||||||||||||||
| Total interest bearing deposits | 1,953,675 | 1,972,435 | 1,925,802 | 1,901,501 | 1,811,226 | |||||||||||||||
| Borrowings | 836,295 | 819,576 | 803,469 | 812,938 | 941,789 | |||||||||||||||
| Total interest-bearing liabilities | 2,789,970 | 2,792,011 | 2,729,271 | 2,714,439 | 2,753,015 | |||||||||||||||
| Non-interest-bearing demand deposits | 339,374 | 339,349 | 376,066 | 354,470 | 320,503 | |||||||||||||||
| Other liabilities | 28,386 | 29,000 | 30,971 | 30,079 | 13,145 | |||||||||||||||
| Total liabilities | 3,157,730 | 3,160,360 | 3,136,308 | 3,098,988 | 3,086,663 | |||||||||||||||
| Total shareholders' equity | 354,669 | 351,441 | 356,630 | 353,557 | 347,301 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,512,399 | $ | 3,511,801 | $ | 3,492,938 | $ | 3,452,545 | $ | 3,433,964 | ||||||||||
_____________________________________
| (1) | Total loans include non-accruing loans. |
| (2) | Average balances for securities available-for-sale are based on amortized cost. |
H
| BAR HARBOR BANKSHARES | ||||||||||||||||||||
| ASSET QUALITY ANALYSIS - UNAUDITED | ||||||||||||||||||||
| At or for the Quarters Ended | ||||||||||||||||||||
| (in thousands) | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | |||||||||||||||
| NON-PERFORMING ASSETS | ||||||||||||||||||||
| Non-accruing loans: | ||||||||||||||||||||
| Commercial real estate | $ | 8,883 | $ | 8,422 | $ | 8,343 | $ | 2,467 | $ | 2,090 | ||||||||||
| Commercial installment | 2,411 | 2,304 | 1,209 | 236 | 270 | |||||||||||||||
| Residential real estate | 9,945 | 8,548 | 4,266 | 3,619 | 2,783 | |||||||||||||||
| Consumer installment | 707 | 1,065 | 500 | 496 | 160 | |||||||||||||||
| Total non-accruing loans | 21,946 | 20,339 | 14,318 | 6,818 | 5,303 | |||||||||||||||
| Other real estate owned | 129 | 216 | 122 | 122 | 122 | |||||||||||||||
| Total non-performing assets | $ | 22,075 | $ | 20,555 | $ | 14,440 | $ | 6,940 | $ | 5,425 | ||||||||||
| Total non-accruing loans/total loans | 0.88 | % | 0.83 | % | 0.58 | % | 0.28 | % | 0.22 | % | ||||||||||
| Total non-performing assets/total assets | 0.62 | 0.59 | 0.41 | 0.20 | 0.15 | |||||||||||||||
| PROVISION AND ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||
| Balance at beginning of period | $ | 12,679 | $ | 12,325 | $ | 11,950 | $ | 11,442 | $ | 10,884 | ||||||||||
| Charged-off loans | (517 | ) | (461 | ) | (277 | ) | (297 | ) | (213 | ) | ||||||||||
| Recoveries on charged-off loans | 158 | 20 | 55 | 145 | 35 | |||||||||||||||
| Net loans charged-off | (359 | ) | (441 | ) | (222 | ) | (152 | ) | (178 | ) | ||||||||||
| Provision for loan losses | 770 | 795 | 597 | 660 | 736 | |||||||||||||||
| Balance at end of period | $ | 13,090 | $ | 12,679 | $ | 12,325 | $ | 11,950 | $ | 11,442 | ||||||||||
| Allowance for loan losses/total loans | 0.53 | % | 0.51 | % | 0.50 | % | 0.49 | % | 0.48 | % | ||||||||||
| Allowance for loan losses/non-accruing loans | 60 | 62 | 86 | 175 | 216 | |||||||||||||||
| NET LOAN CHARGE-OFFS | ||||||||||||||||||||
| Commercial real estate | $ | (92 | ) | $ | (91 | ) | $ | (92 | ) | $ | (16 | ) | $ | (6 | ) | |||||
| Commercial installment | (54 | ) | (140 | ) | 1 | 6 | (138 | ) | ||||||||||||
| Residential real estate | (64 | ) | 1 | — | (79 | ) | (13 | ) | ||||||||||||
| Consumer installment | (149 | ) | (211 | ) | (131 | ) | (63 | ) | (21 | ) | ||||||||||
| Total, net | $ | (359 | ) | $ | (441 | ) | $ | (222 | ) | $ | (152 | ) | $ | (178 | ) | |||||
| Net charge-offs (QTD annualized)/average loans | 0.06 | % | 0.07 | % | 0.04 | % | 0.01 | % | 0.03 | % | ||||||||||
| Net charge-offs (YTD annualized)/average loans | 0.06 | 0.07 | 0.04 | 0.04 | 0.04 | |||||||||||||||
| DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | ||||||||||||||||||||
| 30-89 Days delinquent | 0.14 | % | 0.24 | % | 0.37 | % | 0.35 | % | 0.55 | % | ||||||||||
| 90+ Days delinquent and still accruing | — | — | 0.02 | 0.01 | — | |||||||||||||||
| Total accruing delinquent loans | 0.14 | 0.24 | 0.39 | 0.36 | 0.55 | |||||||||||||||
| Non-accruing loans | 0.88 | 0.83 | 0.58 | 0.28 | 0.22 | |||||||||||||||
| Total delinquent and non-accruing loans | 1.02 | % | 1.07 | % | 0.97 | % | 0.64 | % | 0.77 | % | ||||||||||
I
| BAR HARBOR BANKSHARES | |||||||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED | |||||||||||||||||||||
| At or for the Quarters Ended | |||||||||||||||||||||
| (in thousands) | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | ||||||||||||||||
| Net income | $ | 8,535 | $ | 7,812 | $ | 6,609 | $ | 8,617 | $ | 6,556 | |||||||||||
| Adj: Security Gains | — | — | — | (19 | ) | — | |||||||||||||||
| Adj: Gain on sale of fixed assets, net | — | — | — | (1 | ) | — | |||||||||||||||
| Adj: Loss on other real estate owned | 23 | — | — | — | — | ||||||||||||||||
| Adj: Acquisition, conversion and other expenses | 214 | 335 | (2,615 | ) | 346 | 2,459 | |||||||||||||||
Adj: Income taxes (1) | (57 | ) | (81 | ) | 982 | (122 | ) | (924 | ) | ||||||||||||
| Adj: Tax reform charge | — | — | 3,988 | — | — | ||||||||||||||||
Total core income (2) | (A) | $ | 8,715 | $ | 8,066 | $ | 8,964 | $ | 8,821 | $ | 8,091 | ||||||||||
| Net-interest income | (B) | $22,992 | $23,158 | $23,496 | $23,478 | $23,809 | |||||||||||||||
| Plus: Non-interest income | 7,121 | 6,238 | 6,518 | 6,960 | 6,558 | ||||||||||||||||
| Total Revenue | 30,113 | 29,396 | 30,014 | 30,438 | 30,367 | ||||||||||||||||
| Adj: Net security gains | — | — | — | (19 | ) | — | |||||||||||||||
Total core revenue (2) | (C) | $30,113 | $29,396 | $30,014 | $30,419 | $30,367 | |||||||||||||||
| Total non-interest expense | 18,685 | 18,852 | 14,263 | 17,586 | 20,046 | ||||||||||||||||
| Less: Gain on sale of fixed assets, net | — | — | — | 1 | — | ||||||||||||||||
| Less: Loss on other real estate owned | (23 | ) | — | — | — | — | |||||||||||||||
| Less: Acquisition, conversion and other expenses | (214 | ) | (335 | ) | 2,615 | (346 | ) | (2,459 | ) | ||||||||||||
Core non-interest expense (2) | (D) | $18,448 | $18,517 | $16,878 | $17,241 | $17,587 | |||||||||||||||
| (in millions) | |||||||||||||||||||||
| Total average earning assets | (E) | $ | 3,235 | $ | 3,233 | $ | 3,187 | $ | 3,157 | $ | 3,139 | ||||||||||
| Total average assets | (F) | 3,512 | 3,512 | 3,493 | 3,453 | 3,434 | |||||||||||||||
| Total average shareholders' equity | (G) | 355 | 351 | 357 | 354 | 347 | |||||||||||||||
Total average tangible shareholders' equity (2) (3) | (H) | 247 | 243 | 248 | 244 | 238 | |||||||||||||||
Total tangible shareholders' equity, period-end (2) (3) | (I) | 248 | 244 | 246 | 244 | 238 | |||||||||||||||
Total tangible assets, period-end (2) (3) | (J) | 3,433 | 3,403 | 3,457 | 3,367 | 3,394 | |||||||||||||||
| (in thousands) | |||||||||||||||||||||
| Total common shares outstanding, period-end | (K) | 15,496 | 15,459 | 15,443 | 15,432 | 15,407 | |||||||||||||||
| Average diluted shares outstanding | (L) | 15,571 | 15,553 | 15,537 | 15,511 | 15,506 | |||||||||||||||
Core earnings per share, diluted (2) | (A/L) | $ | 0.56 | $ | 0.52 | $ | 0.58 | $ | 0.57 | $ | 0.52 | ||||||||||
Tangible book value per share, period-end (2) | (I/K) | 16.00 | 15.78 | 15.94 | 15.84 | 15.44 | |||||||||||||||
Securities adjustment, net of tax (1) | (M) | (12,594) | (10,237) | 1,711 | (1,155 | ) | (827 | ) | |||||||||||||
Tangible book value per share, excluding securities adjustment (2) | (I+M)/K | 16.81 | 16.44 | 15.83 | 15.91 | 15.49 | |||||||||||||||
Total tangible shareholders' equity/total tangible assets (2) | (H/J) | 7.22 | 7.17 | 7.12 | 7.26 | 7.01 | |||||||||||||||
J
| Performance ratios | |||||||||||||||||||||
| GAAP return on assets | 0.97 | % | 0.90 | % | 0.75 | % | 0.99 | % | 0.76 | % | |||||||||||
Core return on assets (2) | (A/F) | 1.00 | 0.93 | 1.02 | 1.01 | 0.94 | |||||||||||||||
| GAAP return on equity | 9.65 | 9.01 | 7.35 | 9.67 | 7.55 | ||||||||||||||||
Core return on equity (2) | (A/G) | 9.86 | 9.31 | 9.97 | 9.90 | 9.32 | |||||||||||||||
Core return on tangible equity (2) (4) | (A/I) | 14.43 | 13.72 | 14.56 | 14.53 | 13.81 | |||||||||||||||
Efficiency ratio (2) (5) | (D-O-Q)/(C+N) | 58.83 | 60.44 | 53.02 | 53.53 | 54.57 | |||||||||||||||
| Net interest margin | (B+P)/E | 2.91 | 2.97 | 3.04 | 3.06 | 3.16 | |||||||||||||||
Supplementary data (in thousands) | |||||||||||||||||||||
| Taxable equivalent adjustment for efficiency ratio | (N) | $ | 622 | $ | 645 | $ | 1,122 | $ | 1,107 | $ | 1,185 | ||||||||||
| Franchise taxes included in non-interest expense | (O) | 159 | 152 | 161 | 154 | 158 | |||||||||||||||
| Tax equivalent adjustment for net interest margin | (P) | 502 | 503 | 897 | 878 | 936 | |||||||||||||||
| Intangible amortization | (Q) | 207 | 207 | 209 | 212 | 211 | |||||||||||||||
_____________________________________
| (1) | Assumes a marginal tax rate of 24.15% in 2018 and 37.57% in 2017. |
| (2) | Non-GAAP financial measure. |
| (3) | Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Total tangible assets is computed by taking total assets less the intangible assets at period-end. |
| (4) | 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 24.15% in 2018 and 37.57% in 2017, by tangible equity. |
| (5) | Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income. The Company uses this non-GAAP measure to provide important information about its operating efficiency. |
K