Bar Harbor Bankshares Reports Third Quarter Results; Dividend Declared

Topic:

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

THIRD QUARTER FINANCIAL HIGHLIGHTS (compared to prior quarter):

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

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

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

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

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

DIVIDEND DECLARED

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

FINANCIAL CONDITION

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

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

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

RESULTS OF OPERATIONS

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

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

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

Non-interest expense increased to $23.4 million in the third quarter 2019 from $17.9 million in the prior year in part as a result of higher salaries and benefits attributable to previously announced strategic hires and an increase in professional service fees. Acquisition, restructuring, and other expense activity in 2019 totaled $3.0 million and are considered non-core as they do not represent reoccurring costs.

BACKGROUND

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

FORWARD LOOKING STATEMENTS

Certain statements under the heading "THIRD QUARTER FINANCIAL HIGHLIGHTS" contained in this document that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this earnings release the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions are intended to identify forward-looking statements, but these terms are not the exclusive means of identifying forward-looking statements. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that the Company files with the Securities and Exchange Commission, including but not limited to those discussed in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Because of these and other uncertainties, the Company's actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, the Company's past results of operations do not necessarily indicate future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. The Company is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. The Company qualifies all of its forward-looking statements by these cautionary statements.

NON-GAAP FINANCIAL MEASURES

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

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

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

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

TABLE INDEX	CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)
A	Selected Financial Highlights
B	Footnotes to Selected Financial Highlights
C	Balance Sheets
D	Loan and Deposit Analysis
E	Statements of Income
F	Statements of Income (Five Quarter Trend)
G	Average Yields and Costs
H	Average Balances
I	Asset Quality Analysis
J	Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data

BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED

	At or for the Quarters Ended
	Sep 30, 2019			Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018
PER SHARE DATA
Net earnings, diluted	$	0.32		$	0.39		$	0.47		$	0.49		$	0.58
Core earnings, diluted ^{(1) (2)}		0.47			0.41			0.47			0.59			0.58
Total book value		25.37			25.13			24.54			23.87			23.06
Tangible book value ⁽²⁾		18.49			18.23			17.63			16.94			16.11
Market price at period end		24.93			26.59			25.87			22.43			28.72
Dividends		0.22			0.22			0.20			0.20			0.20

PERFORMANCE RATIOS ⁽³⁾
Return on assets		0.55	%		0.67	%		0.83	%		0.85	%		1.01	%
Core return on assets ^{(1) (2)}		0.80			0.70			0.83			1.03			1.01
Return on equity		5.04			6.33			7.83			8.31			9.92
Core return on equity ^{(1) (2)}		7.36			6.57			7.83			10.01			9.98
Core return on tangible equity ^{(1) (2)}		10.31			9.30			11.19			14.46			14.52
Net interest margin, fully taxable equivalent (FTE) ^{(2) (4)}		2.75			2.65			2.77			2.78			2.81
Net interest margin (FTE), excluding purchased loan accretion ^{(2) (4)}		2.65			2.56			2.67			2.70			2.71
Efficiency ratio ⁽²⁾		65.02			68.48			63.94			59.91			57.88

GROWTH *(Year-to-date, annualized)* ⁽²⁾
Total commercial loans		10.5	%		10.1	%		(3.3	%)		1.4	%		2.8	%
Total loans		4.7			7.1			5.9			0.2			(0.1	)
Total deposits		0.6			(0.1	)		(2.8	)		5.6			2.2

FINANCIAL DATA (In millions)
Total assets	$	3,612		$	3,688		$	3,629		$	3,608		$	3,561
Total earning assets ^{(2) (5)}		3,270			3,355			3,312			3,263			3,253
Total investments		703			784			782			761			747
Total loans		2,577			2,578			2,527			2,490			2,484
Allowance for loan losses		15			15			14			14			13
Total goodwill and intangible assets		107			107			107			108			108
Total deposits		2,494			2,481			2,466			2,483			2,390
Total shareholders' equity		394			391			381			371			358
Net income		5			6			7			8			9
Core income ^{(1) (2)}		7			6			7			9			9

ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans		0.02	%		-	%		0.03	%		0.03	%		0.04	%
Allowance for loan losses/total loans		0.60			0.57			0.55			0.56			0.54
Loans/deposits		103			104			102			100			104
Shareholders' equity to total assets		10.92			10.59			10.50			10.27			10.04
Tangible shareholders' equity to tangible assets		8.20			7.92			7.77			7.51			7.24

_____________________________________

(1) Core measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions, restructurings, system conversions and gain or loss on sale of securities and premises and equipment. Refer to the Reconciliation of Non-GAAP Financial Measures in table J for additional information.
(2) Non-GAAP financial measure.
(3) All performance ratios are based on average balance sheet amounts, where applicable.
(4) Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.
(5) Earning assets includes non-accruing loans and securities are valued at amortized cost.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands)	Sep 30, 2019			Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018
Assets
Cash and due from banks	$	50,032		$	42,657		$	37,504		$	35,208		$	53,154
Interest-bearing deposits with the Federal Reserve Bank		21,561			17,203			16,599			63,546			19,420
Total cash and cash equivalents		71,593			59,860			54,103			98,754			72,574
Securities available for sale, at fair value		675,675			748,560			747,235			725,837			712,658
Federal Home Loan Bank stock		27,469			35,220			35,107			35,659			34,154
Total securities		703,144			783,780			782,342			761,496			746,812
Commercial real estate		923,773			881,479			821,567			826,699			840,018
Commercial and industrial		402,706			416,725			409,937			404,870			385,814
Residential real estate		1,143,452			1,167,759			1,184,053			1,144,698			1,140,519
Consumer		107,375			112,275			111,402			113,960			117,239
Total loans		2,577,306			2,578,238			2,526,959			2,490,227			2,483,590
Less: Allowance for loan losses		(15,353	)		(14,572	)		(13,997	)		(13,866	)		(13,487	)
Net loans		2,561,953			2,563,666			2,512,962			2,476,361			2,470,103

Premises and equipment, net		47,644			50,230			49,661			48,804			47,621
Other real estate owned		2,455			2,351			2,351			2,351			68
Goodwill		100,085			100,085			100,085			100,085			100,085
Other intangible assets		6,879			7,072			7,266			7,459			7,690
Cash surrender value of bank-owned life insurance		75,368			74,871			74,352			73,810			73,316
Deferred tax asset, net		4,988			5,649			7,632			9,514			11,527
Other assets		38,365			40,071			38,441			29,853			31,196
Total assets	$	3,612,474		$	3,687,635		$	3,629,195		$	3,608,487		$	3,560,992

Liabilities and shareholders' equity
Demand and other non-interest bearing deposits	$	380,707		$	354,125		$	342,030		$	370,889		$	372,358
NOW deposits		490,315			472,576			470,277			484,717			471,326
Savings deposits		360,570			352,657			346,813			358,888			354,908
Money market deposits		359,328			305,506			349,833			335,951			254,142
Time deposits		902,665			996,512			956,818			932,793			937,615
Total deposits		2,493,585			2,481,376			2,465,771			2,483,238			2,390,349

Senior borrowings		641,819			733,084			703,283			680,823			739,224
Subordinated borrowings		42,928			42,943			42,958			42,973			42,988
Total borrowings		684,747			776,027			746,241			723,796			782,212

Other liabilities		39,683			39,670			36,160			30,874			30,746
Total liabilities		3,218,015			3,297,073			3,248,172			3,237,908			3,203,307

Total shareholders' equity		394,459			390,562			381,023			370,579			357,685
Total liabilities and shareholders' equity	$	3,612,474		$	3,687,635		$	3,629,195		$	3,608,487		$	3,560,992

Net shares outstanding		15,549			15,544			15,524			15,523			15,509

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

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

DEPOSIT ANALYSIS

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

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

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

Income before income taxes		5,795		11,046		22,260		31,453
Income tax expense		780		2,076		3,847		6,136
Net income	$	5,015	$	8,970	$	18,413	$	25,317

Earnings per share:
Basic	$	0.32	$	0.58	$	1.19	$	1.64
Diluted	$	0.32	$	0.58		1.18		1.63

Weighted average shares outstanding:
Basic		15,547		15,503		15,536		15,478
Diluted		15,581		15,580		15,582		15,564

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

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

Income before income taxes		5,795		7,481		8,984		9,046			11,046
Income tax expense		780		1,364		1,703		1,426			2,076
Net income	$	5,015	$	6,117	$	7,281	$	7,620		$	8,970

Earnings per share:
Basic	$	0.32	$	0.39	$	0.47	$	0.49		$	0.58
Diluted	$	0.32	$	0.39	$	0.47	$	0.49		$	0.58

Weighted average shares outstanding:
Basic		15,547		15,538		15,523		15,516			15,503
Diluted		15,581		15,586		15,587		15,574			15,580

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

	Quarters Ended
	Sep 30, 2019			Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018
Earning assets
Commercial real estate		4.74	%		4.74	%		4.78	%		4.71	%		4.57	%
Commercial and industrial		4.78			4.75			4.79			4.61			4.59
Residential		3.88			3.93			3.94			3.83			3.83
Consumer		5.13			5.21			5.25			5.07			4.85
Total loans		4.38			4.39			4.42			4.31			4.25
Securities and other		3.44			3.29			3.47			3.28			3.21
Total earning assets		4.17	%		4.13	%		4.19	%		4.07	%		4.00	%

Funding liabilities
NOW		0.51	%		0.49	%		0.51	%		0.50	%		0.43	%
Savings		0.21			0.21			0.19			0.18			0.17
Money market		1.37			1.44			1.38			0.93			0.76
Time deposits		2.16			2.11			2.00			1.85			1.78
Total interest bearing deposits		1.33			1.32			1.25			1.12			1.06
Borrowings		2.62			2.74			2.74			2.53			2.26
Total interest-bearing liabilities		1.65	%		1.71	%		1.66	%		1.50	%		1.38	%

Net interest spread		2.52			2.42			2.53			2.57			2.62
Net interest margin		2.75			2.65			2.77			2.78			2.81

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED

	Quarters Ended
(in thousands)	Sep 30, 2019			Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018
Assets
Commercial real estate	$	900,568		$	846,921		$	825,596		$	836,813		$	837,058
Commercial and industrial		410,453			416,000			405,107			393,396			388,831
Residential		1,154,552			1,176,583			1,143,862			1,137,493			1,120,336
Consumer		109,562			111,641			113,060			114,960			117,735
Total loans ⁽¹⁾		2,575,135			2,551,145			2,487,625			2,482,662			2,463,960
Securities and other ⁽²⁾		732,925			779,072			777,458			762,901			773,562
Total earning assets		3,308,060			3,330,217			3,265,083			3,245,563			3,237,522
Cash and due from banks		62,999			52,728			50,298			68,904			63,272
Allowance for loan losses		(14,965	)		(14,459	)		(14,119	)		(13,922	)		(13,463	)
Goodwill and other intangible assets		107,058			107,252			107,446			107,657			107,887
Other assets		178,804			170,340			152,332			138,074			137,466
Total assets	$	3,641,956		$	3,646,078		$	3,561,040		$	3,546,276		$	3,532,684

Liabilities and shareholders' equity
NOW	$	487,506		$	459,572		$	468,392		$	475,449		$	461,875
Savings		359,242			352,733			346,707			346,905			356,834
Money market		338,013			338,095			335,882			272,612			259,738
Time deposits		947,949			935,616			894,160			914,674			964,108
Total interest bearing deposits		2,132,710			2,086,016			2,045,141			2,009,640			2,042,555
Borrowings		708,222			789,953			761,885			761,781			744,632
Total interest-bearing liabilities		2,840,932			2,875,969			2,807,026			2,771,421			2,787,187
Non-interest-bearing demand deposits		368,100			349,322			351,362			384,636			357,856
Other liabilities		37,975			33,107			25,520			26,569			28,943
Total liabilities		3,247,007			3,258,398			3,183,908			3,182,626			3,173,986

Total shareholders' equity		394,949			387,680			377,132			363,650			358,698

Total liabilities and shareholders' equity	$	3,641,956		$	3,646,078		$	3,561,040		$	3,546,276		$	3,532,684

_____________________________________

(1) Total loans include non-accruing loans.
(2) Average balances for securities available-for-sale are based on amortized cost.

BAR HARBOR BANKSHARES
ASSET QUALITY ANALYSIS - UNAUDITED

	At or for the Quarters Ended
(in thousands)	Sep 30, 2019			Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate	$	8,519		$	7,048		$	7,516		$	8,156		$	8,348
Commercial installment		2,077			2,081			2,192			2,331			2,303
Residential real estate		5,340			5,965			6,326			7,210			10,396
Consumer installment		743			861			565			538			727
Total non-accruing loans		16,679			15,955			16,599			18,235			21,774
Other real estate owned		2,455			2,351			2,351			2,351			68
Total non-performing assets	$	19,134		$	18,306		$	18,950		$	20,586		$	21,842

Total non-accruing loans/total loans		0.65	%		0.62	%		0.66	%		0.73	%		0.88	%
Total non-performing assets/total assets		0.53			0.50			0.52			0.57			0.61

PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	14,572		$	13,997		$	13,866		$	13,487		$	13,090
Charged-off loans		(215	)		(104	)		(231	)		(631	)		(298	)
Recoveries on charged-off loans		103			117			38			438			52
Net loans charged-off		(112	)		13			(193	)		(193	)		(246	)
Provision for loan losses		893			562			324			572			643
Balance at end of period	$	15,353		$	14,572		$	13,997		$	13,866		$	13,487

Allowance for loan losses/total loans		0.60	%		0.57	%		0.55	%		0.56	%		0.54	%
Allowance for loan losses/non-accruing loans		92			91			84			76			62

NET LOAN CHARGE-OFFS
Commercial real estate	$	1		$	114		$	(41	)	$	(25	)	$	(27	)
Commercial installment		62			(12	)		(15	)		53			(53	)
Residential real estate		(124	)		(65	)		(86	)		(31	)		(123	)
Consumer installment		(51	)		(24	)		(51	)		(190	)		(43	)
Total, net	$	(112	)	$	13		$	(193	)	$	(193	)	$	(246	)

Net charge-offs (QTD annualized)/average loans		0.02	%		-	%		0.03	%		0.03	%		0.04	%
Net charge-offs (YTD annualized)/average loans		0.02			0.01			0.03			0.05			0.06

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent		0.18	%		0.29	%		0.21	%		0.38	%		0.17	%
90+ Days delinquent and still accruing		0.03			-			-			0.01			-
Total accruing delinquent loans		0.21			0.29			0.21			0.39			0.17
Non-accruing loans		0.65			0.62			0.66			0.73			0.88
Total delinquent and non-accruing loans		0.86	%		0.91	%		0.87	%		1.12	%		1.05	%

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

			At or for the Quarters Ended
(in thousands)			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018
Net income			$	5,015		$	6,117		$	7,281		$	7,620		$	8,970
Plus (less):
(Gain) loss on sale of securities, net				(157	)		-			-			924			-
Loss on sale of premises and equipment, net				-			21			-			-			-
Loss (gain) on other real estate owned				146			-			-			5			(8	)
Acquisition, restructuring and other expenses				3,039			280			-			1,109			70
Income tax expense ⁽¹⁾				(720	)		(72	)		-			(485	)		(12	)
Total core earnings ⁽²⁾			$	7,323		$	6,346		$	7,281		$	9,173		$	9,020

Net-interest income	(B)		$	22,445		$	21,496		$	21,765		$	22,264		$	22,469
Plus: Non-interest income				7,643			7,453			6,167			7,450			7,126
Total Revenue				30,088			28,949			27,932			29,714			29,595
Plus: (Gain) loss on sale of securities, net				(157	)		-			-			924			-
Total core revenue ⁽²⁾	(C)		$	29,931		$	28,949		$	27,932		$	30,638		$	29,595

Total non-interest expense				23,400			20,906			18,624			20,096			17,906
Less: Loss on sale of premises and equipment, net				-			(21	)		-			-			-
Less: (Loss) gain on other real estate owned				(146	)		-			-			(5	)		8
Less: Acquisition, restructuring and other expenses				(3,039	)		(280	)		-			(1,109	)		(70	)
Core non-interest expense ⁽²⁾	(D)		$	20,215		$	20,605		$	18,624		$	18,982		$	17,844

(in millions)
Total average earning assets	(E)		$	3,308		$	3,330		$	3,265		$	3,246		$	3,238
Total average assets	(F)			3,642			3,646			3,561			3,546			3,533
Total average shareholders' equity	(G)			395			388			377			364			359
Total average tangible shareholders' equity^{(2) (3)}	(H)			288			280			270			256			251
Total tangible shareholders' equity, period-end ^{(2) (3)}	(I)			287			283			274			263			250
Total tangible assets, period-end ^{(2) (3)}	(J)			3,506			3,580			3,522			3,501			3,453

(in thousands)
Total common shares outstanding, period-end	(K)			15,549			15,544			15,524			15,523			15,509
Weighted average diluted shares outstanding	(L)			15,581			15,586			15,587			15,574			15,580

Core earnings per share, diluted ⁽²⁾		(A/L)	$	0.47		$	0.41		$	0.47		$	0.59		$	0.58
Tangible book value per share, period-end ⁽²⁾		(I/K)		18.49			18.23			17.63			16.94			16.11
Securities adjustment, net of tax ^{(1) (4)}	(M)			8,002			5,550			(1,842	)		(8,663	)		(17,152	)
Tangible book value per share, excluding securities adjustment ⁽²⁾		(I+M)/K		17.98			17.88			17.75			17.50			17.22
Total tangible shareholders' equity/total tangible assets ⁽²⁾		(I/J)		8.20			7.92			7.77			7.51			7.24

Performance ratios ⁽⁵⁾
GAAP return on assets				0.55	%		0.67	%		0.83	%		0.85	%		1.01	%
Core return on assets ⁽²⁾		(A/F)		0.80			0.70			0.83			1.03			1.01
GAAP return on equity				5.04			6.33			7.83			8.31			9.92
Core return on equity ⁽²⁾		(A/G)		7.36			6.57			7.83			10.01			9.98
Core return on tangible equity ^{(2) (6)}		(A+Q)/H		10.31			9.30			11.19			14.46			14.52
Efficiency ratio ^{(2) (7)}	(D-O-Q)/(C+N)			65.02			68.48			63.94			59.91			57.88
Net interest margin		(B+P)/E		2.75			2.65			2.77			2.78			2.81
Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)		$	658		$	676		$	684		$	633		$	654
Franchise taxes included in non-interest expense	(O)			119			111			120			39			129
Tax equivalent adjustment for net interest margin	(P)			503			514			515			488			493
Intangible amortization	(Q)			207			207			207			207			207

_____________________________________

(1) Assumes a marginal tax rate of 23.78% in 2019. A marginal tax rate of 23.78% was used in the third and fourth quarter of 2018.
(2) Non-GAAP financial measure.
(3) Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end.
(4) Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity.
(5) All performance ratios are based on average balance sheet amounts, where applicable.
(6) Adjusted return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, assuming a marginal rate of 23.78% in 2019 and 23.78% in the third and fourth quarter of 2018, by tangible equity.
(7) Efficiency ratio is computed by dividing adjusted non-interest expense by the sum of net interest income on a fully taxable equivalent basis and adjusted non-interest income.

SOURCE: Bar Harbor Bankshares

Topic:

Dividends

Earnings

Back to Newsroom