Bar Harbor Bankshares Reports First Quarter Results

BAR HARBOR, ME / ACCESSWIRE / April 30, 2020 / Bar Harbor Bankshares (NYSE American:BHB) reported first quarter 202 net income of $7.7 million or $0.50 per share, a 6% increase in net income over the same quarter of 2019 of $7.3 million or $0.47 per share.

FIRST QUARTER FINANCIAL HIGHLIGHTS (compared to the first quarter of 2019, unless otherwise noted)

6% annualized growth in commercial loans
10% annualized growth in non-maturity deposits
99% loan to deposit ratio, improved from 102%
3.06% net interest margin compared to 2.77%
37% increase in non-interest income
0.38% non-accruing loans to total loans compared to 0.66%

President and Chief Executive Officer, Curtis C. Simard stated, "While our financial performance in the first quarter was strong, our efforts have shifted rather quickly with the COVID 19 developments. Our team has been fully dedicated to supporting our customers, colleagues, friends and families during these difficult times and I am proud of the accomplishments being achieved every day. It's through adversity that we elevate the strength of our culture and further educate our customers about the strength of our Company's operating model."

"Although we are focused on the challenges posed by the health crisis, we remain committed to what has always been a cornerstone of our business operations: Risk management, ranging from underwriting practices to what is now at the forefront, crisis management and business continuity planning. Our ability to navigate during these uncertain times has been tested and proven successful as we continue to proactively work with customers, both large and small, as well as support our dedicated colleagues. From the onset, we've maintained open communication with customers and employees alike, as we transitioned to a mostly remote working environment. This transition was very smooth given the readiness of our information technology and operations teams. We modified our branch model to provide for the safety of our customers and colleagues, while balancing a personalized touch to meet the needs of our customers. That includes transitioning to mostly drive-up and walk-up windows along with in person meetings by appointment when necessary. The investments we've made in the past few years in online and mobile banking platforms have also been essential with the current environment helping accelerate adoption rates."

Mr. Simard further stated, "Despite our focus on the current environment, we have not lost sight of our long-term goals. Recognizing the importance of liquidity, we have opportunistically and appropriately utilized many of the various federal programs in an effort to insulate ourselves from potential risk and uncertainty. As you may recall in the fourth quarter of 2019 we refinanced and upsized our subordinated debt, which has further supported capital levels and the balance sheet. The lending teams outperformed this quarter as they kept pace with originations offsetting elevated payoff levels as typically seen with the lower rate environment. The growth in commercial loans offset the decrease in our residential portfolio as we strategically moved most of our production to the secondary market. The teams have also successfully rolled out the Small Business Administration (SBA) Paycheck Protection Program (PPP) in an effort to help our business partners and support our communities. To date we have over 1,500 PPP loans approved by the SBA with a total balance of $127 million. In addition, we also modified close to 500 existing loans, representing $271 million in balances. The loans modified under deferment plans are still accruing interest and all contractual principal and interest is expected to be collected."

Mr. Simard continued, "Our loan portfolio remains diverse with over 80 different industries and several geographies limiting concentration risk, which is further mitigated by the specific type and strength of the borrowers. These credit relationships are proven successful operators in their industry and have weathered difficult economic times in the past. We continue to carefully review opportunities with these proven borrowers while also stress testing the portfolio regularly."

"Given the recently passed CARES Act, we have elected to defer the new accounting for the allowance for loan losses known as "CECL" to prioritize resources around our customers and communities. That said, we increased the allowance for credit losses during the quarter due to elevated qualitative economic factors at quarter end. Additionally, our liquidity, capital ratios and overall balance sheet position are strong. Our wholesale borrowing reliance is further declining and our ability to access wholesale funding at fair pricing is at an all-time high."

Mr. Simard concluded, "Moving forward in 2020, we are executing strategies that will benefit our long-term profitability while being mindful of the short-term challenges and operating environment. Lower interest rates and the divergence in FHLB borrowings and brokered deposit spreads has provided us with an opportunity to lock into favorable rates with longer maturities. The benefits of these activities, along with the balance sheet strategies executed last year, are unveiled as we see the net interest margin expand nearly 30 basis points during the quarter. Non-interest income is also up for the quarter as we continue to provide hedging transactions to help meet our customers' needs. And while trust and investment management fee income is up significantly over prior year, it is also sensitive to market conditions and could vary as market dynamics persist with the pandemic. In summary, our teams are focused on activities that create value for long-term shareholders and the Company continues to build tangible book value at a quarterly annualized rate of close to 10%."

FINANCIAL CONDITION

Total assets were $3.7 billion and remained relatively flat with the fourth quarter of 2019. In anticipation of customer demand given their potential liquidity needs, cash increased $28.7 million as additional reserves were established. Securities declined $36.9 million as the Company continued to de-lever and remix the investment portfolio during the first of quarter. Loan balances in the first quarter 2020 were $2.6 billion, flat with the fourth quarter 2019. Total commercial loans grew at an annualized rate of 6% led by commercial real estate with an annualized growth rate of 8%. Residential real estate loans were relatively flat with the fourth quarter as most production was funneled through the secondary market platform. Payoff activity was experienced across all products lines as borrowers refinanced given the lower rate environment. The product mix of total commercial loans remains diversified among several hundred industries and over many geographic regions.

As of March 31, 2020, the loan portfolio consists of the following (in millions):

In the first quarter 2020, the Company elected to defer implementation of CECL as allowed under the CARES Act in an effort to prioritize resources around the various debt and government relief programs. As result, the Company continues to operate its incurred loss model, which has been adjusted to reflect current economic conditions increasing the allowance for loan loss. That increase has been offset by an improvement in other credit quality factors including several specifically reserved loans that were settled at approximate book value. The allowance for loan losses to total loans ratio for the first quarter remains at 0.58% with a coverage ratio to non-accruing loans at 152%, up from 133% as of year-end. Past due accounts between 30 to 89 days as a percentage of total loans was 0.84% for the first quarter compared to 0.74% at year-end 2019. The majority of the customers in that range have a history of making payments on a cycle that is about 30 days overdue and is not likely an indication of deteriorated credit quality.

The Company's liquidity position remains strong. At March 31, 2020, same day available liquidity totaled approximately $1.2 billion, including cash, borrowing capacity at the Federal Home Loan Bank of Boston (FHLB) and the Federal Reserve Discount Window and various lines of credit. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Company's amortizing securities and loan portfolios. At March 31, 2020, the Company had unused borrowing capacity at the FHLB of $539 million, unused borrowing capacity at the Federal Reserve of $27 million and unused lines of credit totaling $51 million. The Company utilized the Federal Reserve's Paycheck Protection Program Liquidity Facility to provide liquidity to fund PPP loans.

The Company's book value per share was $25.90 at the end of the first quarter 2020 compared to $25.48 at year-end 2019. Tangible book value per share (non-GAAP measure) was $17.70 at the end of the first quarter 2020 compared to $17.30 at year-end 2019; an annualized growth rate of 9%. The low interest rate environment continues to have a positive impact on the fair value of the Company's securities portfolio. Other comprehensive income included unrealized gains on securities totaling $9.6 million in the first quarter 2020 compared to $5.6 million at year-end 2019.

RESULTS OF OPERATIONS

Net income in the first quarter 2020 was $7.7 million, or $0.50 per share, compared to $7.3 million, or $0.47 per share, in the same quarter of 2019. Net interest margin in the first quarter 2020 increased to 3.06% from 2.77% in the same period of 2019. The increase is primarily driven by lower borrowing levels as the average balance decreased to $557 million in the first quarter 2020 from $762 million in prior year due to deleveraging strategies executed in late 2019 and a lower cost of funds. The balance sheet strategies executed during the second half of last year along with the rate cuts experienced in the first quarter reduced borrowing rates to 2.10% from 2.74% and interest-bearing deposits rates to 1.08% from 1.25% in the first quarter 2019. The Company continues to optimize its funding sources to take advantage of this lower rate environment through a mixture of various debt and derivative instruments. Yields from earning assets declined to 4.14% from 4.19% in the first quarter 2019 reflecting loan originations and repricing of variable rate products in a lower interest rate environment. The loan to deposit ratio was 99% in the first quarter 2020 as the Company maintained its fourth quarter 2019 deposit levels, which is due to strong customer relationships within its branch model.

The first quarter 2020 provision for loan losses increased to $1.1 million from $324 thousand in the same quarter 2019. As noted above, the Company is maintaining its incurred loss model for calculating the allowance for loan losses. The year-over-year increase in the provision for loan losses is due to qualitative adjustments made to reflect a downward economic trend in the first quarter 2020. Those downward adjustments were offset in part by improvements in other credit quality factors such as charge-off history and underwriting practices. While the impact of the health crisis is 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 review of the portfolio.

Non-interest income in the first quarter 2020 increased 37% to $8.4 million from $6.2 million in the same quarter in 2019. Trust income was $3.4 million in the first quarter 2020, up 22% from the same quarter of 2019 on higher assets under management within an expanded footprint given the branch acquisition which closed in October 2019. Customer service fees also increased significantly to $3.1 million compared to $2.2 million from the same quarter of 2019r due to transaction growth on a higher customer base. Customer loan derivative income also contributed to non-interest income in the first quarter 2020 as demand for these products remains strong within the commercial loan pipeline.

Non-interest expense was $22.4 million in the first quarter 2020 compared to $18.6 million in the same quarter of 2019. The increase is primarily due to higher salary and benefit and occupancy and equipment costs to support the Company's expanded branch model and wealth management business.

BACKGROUND

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

FORWARD LOOKING STATEMENTS

Certain statements under the heading "FIRST QUARTER FINANCIAL HIGHLIGHTS" contained in this document that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this earnings release the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions are intended to identify forward-looking statements, but these terms are not the exclusive means of identifying forward-looking statements. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that the Company files with the Securities and Exchange Commission, including but not limited to those discussed in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 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.

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CONTACTS

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

TABLE

INDEX

CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)

Selected Financial Highlights

Footnotes to Selected Financial Highlights

Balance Sheets

Loan and Deposit Analysis

Statements of Income

Statements of Income (Five Quarter Trend)

Average Yields and Costs

Average Balances

Asset Quality Analysis

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

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2020

2019

2019

2019

2019

PER SHARE DATA

Net earnings, diluted

$
0.50

$
0.27

$
0.32

$
0.39

$
0.47

Core earnings, diluted (1) (2)

0.50

0.56

0.47

0.41

0.47

Total book value

25.90

25.48

25.37

25.13

24.54

Tangible book value (2)

17.70

17.30

18.49

18.23

17.63

Market price at period end

17.28

25.39

24.93

26.59

25.87

Dividends

0.22

0.22

0.22

0.22

0.20

PERFORMANCE RATIOS (3)

Return on assets

0.85
%

0.46
%

0.55
%

0.67
%

0.83
%

Core return on assets (1) (2)

0.86

0.96

0.80

0.70

0.83

Return on equity

7.64

4.21

5.04

6.33

7.83

Core return on equity (1) (2)

7.71

8.81

7.36

6.57

7.83

Core return on tangible equity (1) (2)

11.54

12.66

10.31

9.30

11.19

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

3.06

2.95

2.75

2.65

2.77

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

2.99

2.88

2.65

2.56

2.67

Efficiency ratio (2)

64.82

62.56

65.02

68.48

63.94

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

Total commercial loans

6.4
%

6.0
%

10.5
%

10.1
%

(3.3
)%

Total loans

(0.9
)

2.0

4.7

7.1

5.9

Total deposits

(6.7
)

(1.8
)

0.6

(0.1
)

(2.8
)

FINANCIAL DATA (In millions)

Total assets

$
3,677

$
3,669

$
3,612

$
3,688

$
3,629

Total earning assets (5)

3,269

3,336

3,270

3,355

3,312

Total investments

646

684

703

784

782

Total loans

2,635

2,641

2,577

2,578

2,527

Allowance for loan losses

15

15

15

15

14

Total goodwill and intangible assets

128

127

107

107

107

Total deposits

2,651

2,696

2,494

2,481

2,466

Total shareholders' equity

404

396

394

391

381

Net income

8

4

5

6

7

Core earnings (1) (2)

8

9

7

6

7

ASSET QUALITY AND CONDITION RATIOS

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

0.18
%

0.08
%

0.02
%

–
%

0.03
%

Allowance for loan losses/total loans

0.58

0.58

0.60

0.57

0.55

Loans/deposits

99

98

103

104

102

Shareholders' equity to total assets

10.98

10.80

10.92

10.59

10.50

Tangible shareholders' equity to tangible assets

7.77

7.60

8.20

7.92

7.77

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.
Non-GAAP financial measure.
All performance ratios are based on average balance sheet amounts, where applicable.
Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.
Earning assets includes non-accruing loans and securities are valued at amortized cost.
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

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands)

2020

2019

2019

2019

2019

Assets

Cash and due from banks

$
68,481

$
37,261

$
50,032

$
42,657

$
37,504

Interest-bearing deposits with the Federal Reserve Bank

17,174

19,649

21,561

17,203

16,599

Total cash and cash equivalents

85,655

56,910

71,593

59,860

54,103

Securities available for sale, at fair value

626,341

663,230

675,675

748,560

747,235

Federal Home Loan Bank stock

19,897

20,679

27,469

35,220

35,107

Total securities

646,238

683,909

703,144

783,780

782,342

Commercial real estate

948,178

930,661

923,773

881,479

821,567

Commercial and industrial

426,357

423,291

402,706

416,725

409,937

Residential real estate

1,132,328

1,151,857

1,143,452

1,167,759

1,184,053

Consumer

128,120

135,283

107,375

112,275

111,402

Total loans

2,634,983

2,641,092

2,577,306

2,578,238

2,526,959

Less: Allowance for loan losses

(15,297
)

(15,353
)

(15,353
)

(14,572
)

(13,997
)

Net loans

2,619,686

2,625,739

2,561,953

2,563,666

2,512,962

Premises and equipment, net

49,978

51,205

47,644

50,230

49,661

Other real estate owned

2,205

2,236

2,455

2,351

2,351

Goodwill

119,477

118,649

100,085

100,085

100,085

Other intangible assets

8,398

8,641

6,879

7,072

7,266

Cash surrender value of bank-owned life insurance

76,400

75,863

75,368

74,871

74,352

Deferred tax asset, net

3,166

3,865

4,988

5,649

7,632

Other assets

66,139

42,111

38,365

40,071

38,441

Total assets

$
3,677,342

$
3,669,128

$
3,612,474

$
3,687,635

$
3,629,195

Liabilities and shareholders' equity

Demand and other non-interest bearing deposits

$
400,410

$
414,534

$
380,707

$
354,125

$
342,030

NOW deposits

578,320

575,809

490,315

472,576

470,277

Savings deposits

423,345

388,683

360,570

352,657

346,813

Money market deposits

404,385

384,090

359,328

305,506

349,833

Time deposits

844,097

932,635

902,665

996,512

956,818

Total deposits

2,650,557

2,695,751

2,493,585

2,481,376

2,465,771

Senior borrowings

497,580

471,396

641,819

733,084

703,283

Subordinated borrowings

59,849

59,920

42,928

42,943

42,958

Total borrowings

557,429

531,316

684,747

776,027

746,241

Other liabilities

65,601

45,654

39,683

39,670

36,160

Total liabilities

3,273,587

3,272,721

3,218,015

3,297,073

3,248,172

Total common shareholders' equity

403,755

396,407

394,459

390,562

381,023

Total liabilities and shareholders' equity

$
3,677,342

$
3,669,128

$
3,612,474

$
3,687,635

$
3,629,195

Net shares outstanding

15,587

15,558

15,549

15,544

15,524

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS – UNAUDITED
LOAN ANALYSIS

Annualized

Growth %

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

Quarter

(in thousands)

2020

2019

2019

2019

2019

End

Commercial real estate

$
948,178

$
930,661

$
923,773

$
881,479

$
821,567

7.5
%

Commercial and industrial

321,605

318,988

301,590

312,029

305,185

3.3

Total commercial loans

1,269,783

1,249,649

1,225,363

1,193,508

1,126,752

6.4

Residential real estate

1,132,328

1,151,857

1,143,452

1,167,759

1,184,053

(6.8
)

Consumer

128,120

135,283

107,375

112,275

111,402

(21.2
)

Tax exempt and other

104,752

104,303

101,116

104,696

104,752

1.7

Total loans

$
2,634,983

$
2,641,092

$
2,577,306

$
2,578,238

$
2,526,959

(0.9
)%

DEPOSIT ANALYSIS

Annualized

Growth %

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

Quarter

(in thousands)

2020

2019

2019

2019

2019

End

Demand

$
400,410

$
414,534

$
380,707

$
354,125

$
342,030

(13.6
)%

NOW

578,320

575,809

490,315

472,576

470,277

1.7

Savings

423,345

388,683

360,570

352,657

346,813

35.7

Money market

404,385

384,090

359,328

305,506

349,833

21.1

Total non-maturity deposits

1,806,460

1,763,116

1,590,920

1,484,864

1,508,953

9.8

Total time deposits

844,097

932,635

902,665

996,512

956,818

(38.0
)

Total deposits

$
2,650,557

$
2,695,751

$
2,493,585

$
2,481,376

$
2,465,771

(6.7
)%

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

Three Months Ended

March 31,

(in thousands, except per share data)

2020

2019

Interest and dividend income

Loans

$
27,987

$
26,864

Securities and other

5,507

6,363

Total interest and dividend income

33,494

33,227

Interest expense

Deposits

6,020

6,307

Borrowings

2,911

5,155

Total interest expense

8,931

11,462

Net interest income

24,563

21,765

Provision for loan losses

1,111

324

Net interest income after provision for loan losses

23,452

21,441

Non-interest income

Trust and investment management fee income

3,369

2,757

Customer service fees

3,112

2,165

Gain (loss) on sales of securities, net

135

–

Bank-owned life insurance income

537

542

Customer derivative income

588

29

Other income

680

674

Total non-interest income

8,421

6,167

Non-interest expense

Salaries and employee benefits

11,884

10,519

Occupancy and equipment

4,420

3,386

Loss on sales of premises and equipment, net

92

–

Outside services

534

411

Professional services

672

544

Communication

289

235

Marketing

388

295

Amortization of intangible assets

256

207

Acquisition, conversion and other expenses

103

–

Other expenses

3,721

3,027

Total non-interest expense

22,359

18,624

Income before income taxes

9,514

8,984

Income tax expense

1,793

1,703

Net income

$
7,721

$
7,281

Earnings per share:

Basic

$
0.50

$
0.47

Diluted

0.50

0.47

Weighted average shares outstanding:

Basic

15,558

15,523

Diluted

15,593

15,587

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

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands, except per share data)

2020

2019

2019

2019

2019

Interest and dividend income

Loans

$
27,987

$
28,361

$
28,157

$
27,660

$
26,864

Securities and other

5,507

5,756

6,105

6,125

6,363

Total interest and dividend income

33,494

34,117

34,262

33,785

33,227

Interest expense

Deposits

6,020

6,698

7,143

6,886

6,307

Borrowings

2,911

3,315

4,674

5,403

5,155

Total interest expense

8,931

10,013

11,817

12,289

11,462

Net interest income

24,563

24,104

22,445

21,496

21,765

Provision for loan losses

1,111

538

893

562

324

Net interest income after provision for loan losses

23,452

23,566

21,552

20,934

21,441

Non-interest income

Trust and investment management fee income

3,369

3,227

3,013

3,066

2,757

Customer service fees

3,112

2,791

2,553

2,618

2,165

Gain on sales of securities, net

135

80

157

–

–

Bank-owned life insurance income

537

495

497

519

542

Customer derivative income

588

475

828

696

29

Other income

680

738

595

554

674

Total non-interest income

8,421

7,806

7,643

7,453

6,167

Non-interest expense

Salaries and employee benefits

11,884

11,432

11,364

11,685

10,519

Occupancy and equipment

4,420

4,113

3,415

3,300

3,386

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

92

(3
)

–

21

–

Outside services

534

540

424

443

411

Professional services

672

370

707

570

544

Communication

289

114

189

283

235

Marketing

388

453

613

511

295

Amortization of intangible assets

256

240

207

207

207

Loss on debt extinguishment

–

1,096

–

–

–

Acquisition, conversion and other expenses

103

4,998

3,039

280

–

Other expenses

3,721

3,450

3,442

3,606

3,027

Total non-interest expense

22,359

26,803

23,400

20,906

18,624

Income before income taxes

9,514

4,569

5,795

7,481

8,984

Income tax expense

1,793

362

780

1,364

1,703

Net income

$
7,721

$
4,207

$
5,015

$
6,117

$
7,281

Earnings per share:

Basic

$
0.50

$
0.27

$
0.32

$
0.39

$
0.47

Diluted

0.50

0.27

0.32

0.39

0.47

Weighted average shares outstanding:

Basic

15,558

15,554

15,547

15,538

15,523

Diluted

15,593

15,602

15,581

15,586

15,587

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

Quarters Ended

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

2020

2019

2019

2019

2019

Earning assets

Commercial real estate

4.46
%

4.69
%

4.74
%

4.74
%

4.78
%

Commercial and industrial

4.89

4.58

4.78

4.75

4.79

Residential

3.84

3.89

3.88

3.93

3.94

Consumer

5.20

4.84

5.13

5.21

5.25

Total loans

4.30

4.33

4.38

4.39

4.42

Securities and other

3.53

3.49

3.44

3.29

3.47

Total earning assets

4.14
%

4.15
%

4.17
%

4.13
%

4.19
%

Funding liabilities

NOW

0.40
%

0.44
%

0.51
%

0.49
%

0.51
%

Savings

0.25

0.20

0.21

0.21

0.19

Money market

1.01

1.17

1.37

1.44

1.38

Time deposits

1.92

2.06

2.16

2.11

2.00

Total interest-bearing deposits

1.08

1.19

1.33

1.32

1.25

Borrowings

2.10

2.30

2.62

2.74

2.74

Total interest-bearing liabilities

1.28
%

1.42
%

1.65
%

1.71
%

1.66
%

Net interest spread

2.86

2.73

2.52

2.42

2.53

Net interest margin

3.06

2.95

2.75

2.65

2.77

BAR HARBOR BANKSHARES
AVERAGE BALANCES – UNAUDITED

Quarters Ended

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands)

2020

2019

2019

2019

2019

Assets

Commercial real estate

$
945,851

$
928,445

$
900,568

$
846,921

$
825,596

Commercial and industrial

423,393

412,595

410,453

416,000

405,107

Residential real estate

1,141,908

1,156,215

1,154,552

1,176,583

1,143,862

Consumer

130,471

127,425

109,562

111,641

113,060

Total loans (1)

2,641,623

2,624,680

2,575,135

2,551,145

2,487,625

Securities and other (2)

661,848

683,939

732,925

779,072

777,458

Total earning assets

3,303,471

3,308,619

3,308,060

3,330,217

3,265,083

Cash and due from banks

57,751

67,642

62,999

52,728

50,298

Allowance for loan losses

(15,242
)

(15,657
)

(14,965
)

(14,459
)

(14,119
)

Goodwill and other intangible assets

128,014

114,537

107,058

107,252

107,446

Other assets

187,765

179,512

178,804

170,340

152,332

Total assets

$
3,661,759

$
3,654,653

$
3,641,956

$
3,646,078

$
3,561,040

Liabilities and shareholders' equity

NOW

$
570,127

$
551,335

$
487,506

$
459,572

$
468,392

Savings

410,931

378,997

359,242

352,733

346,707

Money market

373,650

379,361

338,013

338,095

335,882

Time deposits

892,654

918,528

947,949

935,616

894,160

Total interest bearing deposits

2,247,362

2,228,221

2,132,710

2,086,016

2,045,141

Borrowings

556,824

571,936

708,222

789,953

761,885

Total interest-bearing liabilities

2,804,186

2,800,157

2,840,932

2,875,969

2,807,026

Non-interest-bearing demand deposits

406,951

418,324

368,100

349,322

351,362

Other liabilities

44,343

40,136

37,975

33,107

25,520

Total liabilities

3,255,480

3,258,617

3,247,007

3,258,398

3,183,908

Total shareholders' equity

406,279

396,036

394,949

387,680

377,132

Total liabilities and shareholders' equity

$
3,661,759

$
3,654,653

$
3,641,956

$
3,646,078

$
3,561,040

Total loans include non-accruing loans.
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

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands)

2020

2019

2019

2019

2019

NON-PERFORMING ASSETS

Non-accruing loans:

Commercial real estate

$
2,227

$
3,489

$
8,519

$
7,048

$
7,516

Commercial installment

1,996

1,836

2,077

2,081

2,192

Residential real estate

5,089

5,335

5,340

5,965

6,326

Consumer installment

744

890

743

861

565

Total non-accruing loans

10,056

11,550

16,679

15,955

16,599

Other real estate owned

2,205

2,236

2,455

2,351

2,351

Total non-performing assets

$
12,261

$
13,786

$
19,134

$
18,306

$
18,950

Total non-accruing loans/total loans

0.38
%

0.44
%

0.65
%

0.62
%

0.66
%

Total non-performing assets/total assets

0.33

0.38

0.53

0.50

0.52

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$
15,353

$
15,353

$
14,572

$
13,997

$
13,866

Charged-off loans

(1,211
)

(603
)

(215
)

(104
)

(231
)

Recoveries on charged-off loans

44

65

103

117

38

Net loans charged-off

(1,167
)

(538
)

(112
)

13

(193
)

Provision for loan losses

1,111

538

893

562

324

Balance at end of period

$
15,297

$
15,353

$
15,353

$
14,572

$
13,997

Allowance for loan losses/total loans

0.58
%

0.58
%

0.60
%

0.57
%

0.55
%

Allowance for loan losses/non-accruing loans

152

133

92

91

84

NET LOAN CHARGE-OFFS

Commercial real estate

$
(846
)

$
(92
)

$
1

$
114

$
(41
)

Commercial installment

(170
)

(331
)

62

(12
)

(15
)

Residential real estate

(1
)

(16
)

(124
)

(65
)

(86
)

Consumer installment

(150
)

(99
)

(51
)

(24
)

(51
)

Total, net

$
(1,167
)

$
(538
)

$
(112
)

$
13

$
(193
)

Net charge-offs (QTD annualized)/average loans

0.18
%

0.08
%

0.02
%

0.03
%

0.03
%

Net charge-offs (YTD annualized)/average loans

0.18

0.03

0.02

0.01

0.03

DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS

30-89 Days delinquent

0.84
%

0.74
%

0.18
%

0.29
%

0.21
%

90+ Days delinquent and still accruing

0.08

0.01

0.03

–

–

Total accruing delinquent loans

0.92

0.75

0.21

0.29

0.21

Non-accruing loans

0.38

0.44

0.65

0.62

0.66

Total delinquent and non-accruing loans

1.30
%

1.19
%

0.86
%

0.91
%

0.87
%

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

At or for the Quarters Ended

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands)

2020

2019

2019

2019

2019

Net income

$
7,721

$
4,207

$
5,015

$
6,117

$
7,281

Plus (less):

Gain on sale of securities, net

(135
)

(80
)

(157
)

–

–

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

92

(3
)

–

21

–

Loss on other real estate owned

31

20

146

–

–

Loss on debt extinguishment

–

1,096

–

–

–

Acquisition, restructuring and other expenses

103

4,998

3,039

280

–

Income tax expense (1)

(22
)

(1,440
)

(720
)

(72
)

–

Total core earnings (2)

(A)

$
7,790

$
8,798

$
7,323

$
6,346

$
7,281

Net interest income

(B)

$
24,563

$
24,104

$
22,445

$
21,496

$
21,765

Plus: Non-interest income

8,421

7,806

7,643

7,453

6,167

Total Revenue

32,984

31,910

30,088

28,949

27,932

Adj: Gain on sale of securities, net

(135
)

(80
)

(157
)

–

–

Total core revenue (2)

(C)

$
32,849

$
31,830

$
29,931

$
28,949

$
27,932

Total non-interest expense

22,359

26,803

23,400

20,906

18,624

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

(92
)

3

–

(21
)

–

Less: Loss on other real estate owned

(31
)

(20
)

(146
)

–

–

Less: Loss on debt extinguishment

–

(1,096
)

–

–

–

Less: Acquisition, conversion and other expenses

(103
)

(4,998
)

(3,039
)

(280
)

–

Core non-interest expense (2)

(D)

$
22,133

$
20,692

$
20,215

$
20,605

$
18,624

(in millions)

Total average earning assets

(E)

$
3,306

$
3,309

$
3,308

$
3,330

$
3,265

Total average assets

(F)

3,662

3,655

3,642

3,646

3,561

Total average shareholders' equity

(G)

406

396

395

388

377

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

(H)

278

281

288

280

270

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

(I)

276

269

287

283

274

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

(J)

3,549

3,542

3,506

3,580

3,522

(in thousands)

Total common shares outstanding, period-end

(K)

15,587

15,558

15,549

15,544

15,524

Average diluted shares outstanding

(L)

15,593

15,602

15,581

15,586

15,587

Core earnings per share, diluted (2)

(A/L)

$
0.50

$
0.56

$
0.47

$
0.41

$
0.47

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

(I/K)

17.70

17.30

18.49

18.23

17.63

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

(M)

9,560

5,549

8,002

5,550

(1,842
)

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

(I+M)/K

17.09

16.94

17.98

17.88

17.75

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

(I/J)

7.77

7.60

8.20

7.92

7.77

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

At or for the Quarters Ended

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands)

2020

2019

2019

2019

2019

Performance ratios (5)

GAAP return on assets

0.85
%

0.46
%

0.55
%

0.67
%

0.83
%

Core return on assets (2)

(A/F)

0.86

0.96

0.80

0.70

0.83

GAAP return on equity

7.64

4.21

5.04

6.33

7.83

Core return on equity (2)

(A/G)

7.71

8.81

7.36

6.57

7.83

Core return on tangible equity (2) (6)

(A+Q)/H

11.54

12.66

10.31

9.30

11.19

Efficiency ratio (2) (7)

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

64.82

62.56

65.02

68.48

63.94

Net interest margin

(B+P)/E

3.06

2.95

2.75

2.65

2.77

Supplementary data (in thousands)

Taxable equivalent adjustment for efficiency ratio

(N)

$
719

$
674

$
658

$
676

$
684

Franchise taxes included in non-interest expense

(O)

119

119

119

111

120

Tax equivalent adjustment for net interest margin

(P)

551

516

503

514

515

Intangible amortization

(Q)

256

240

207

207

207

Assumes a marginal tax rate of 23.87% for the first quarter of 2020 and the fourth quarter of 2019 and 23.78% in the first three quarters of 2019.
Non-GAAP financial measure.
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.
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.
All performance ratios are based on average balance sheet amounts, where applicable.
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 quarter of 2020 and the fourth quarter of 2019, and 23.78% in the first three quarters of 2019.
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 Bankshares

ReleaseID: 587870

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