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Bar Harbor Bankshares Reports Second Quarter Earnings
[July 19, 2018]

Bar Harbor Bankshares Reports Second Quarter Earnings


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."

"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 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.

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.

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.



       
TABLE

INDEX

   

CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)

A

   

Selected Financial Highlights

B

Footnotes to Selected Financial Highlights

C

Balance Sheets

D

Loan and Deposit Analysis

E

Statements of Income

F

Statements of Income (Five Quarter Trend)

G

Average Yields and Costs

H

Average Balances

I

Asset Quality Analysis

J

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

 
 
BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED
   
At or for the Quarters Ended
  Jun 30,
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  
 

_____________________________________

(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.

 
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  
 
 
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 %
 
 
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
 
 
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
 
 
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  
 
 
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.

 
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 %
 
 
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
 
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.


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